Johannesburg - Specialist global IT services and solution provider Dimension Data Holdings Plc (DDT) said Monday that it recorded a sound trading performance for the three months to end December 2009. Reported turnover reflected an approximately 6% increase in relation to the three months to December 31 2008.
Key features of the quarter were a solid performance from the Systems Integration (SI) business, in particular a turnaround in the USA, offset by a poor trading result from Plessey, it said.
On a constant currency basis, turnover for the quarter showed an approximately 9% year on year reduction, although sequentially in relation to the preceding quarter turnover was flat.
"The turnover performance is consistent with management's expectations, taking into account that Q1 2009 was a very strong comparative period having enjoyed the benefit of a strong order book from the prior year.
"As a result, the effects of the global economic downturn were only felt by the group from Q2 2009. Comparisons are therefore expected to become more favourable in the second quarter of this financial year," the company said.
By business, SI product turnover was down year on year, while services continued to show growth. By region, Middle East and Africa, Australia and Europe all recorded improved contributions, with a significant improvement in operating profit in the Americas. Asia's contribution reduced slightly in line with investment in the expansion programme outlined at the year end.
SI recorded good sequential growth in order rates in relation to the preceding quarter, and the business remains well positioned going into the second quarter.
Internet Solutions grew turnover and improved operating profit in line with expectations. Express Data reported turnover declines against a backdrop of a very strong Q12009, and a stronger Australian Dollar which impacted unit prices.
Plessey had a very weak quarter, reflecting reduced demand from its mobile service provider clients in Africa. In response, the business reduced its cost base, but expects order rates and trading to improve in the second quarter.
There were no major changes to working capital and the group's cash position remained strong throughout the period.
Looking ahead, Didata said the group delivered a sound performance for the first quarter of 2010, benefiting in particular from a resilient performance in the SI business.
"Looking forward, we are seeing improved demand in some regions, although the overall demand environment by region and business remains mixed.
"Order intake in the first quarter reflected sequential growth over Q4 2009. Management's expectation of flat constant currency turnover in the first half of the financial year, and single digit constant currency turnover growth for the full year, is unchanged from when the group reported its year end results in mid November 2009.
"This, together with anticipated stable gross margins, means that the group remains well positioned to deliver on its internal objectives for the half and for the full year," it said.
Assuming no significant exchange rate movements from current levels, the group's reported results for the first half will benefit from the strength, relative to the comparative period, of its major trading currencies against the US dollar.
"We remain optimistic about the positioning and prospects for Dimension Data both in the short and medium term and continue to see good opportunities for growth in many parts of the group. We are committed to continue to invest in our execution capabilities and to enhancing our competitive position to capture opportunities in the markets within which the group operates.
Didata is scheduled to release its annual results for the six months to end March 2010 on May 12 2010.
- I-Net Bridge