Datatec is banking on ongoing rapid adoption of artificial intelligence (AI) to drive demand for new networking and personal computing systems after it raised headline earnings per share (HEPS) for the year to the end of February to 14.2 US cents against a continuing headline loss per share of 10.8 US cents in 2023.
In line with its HEPS uplift for the year to end February 2024, Datatec yesterday declared a final cash dividend with a scrip distribution alternative for the year under review of R1.30.
This amounts to a total of R298.4 million in shareholder payouts.
Datatec, which has technology distribution and managed services operations across many countries, said the “adoption of artificial intelligence should lead to a new cycle of PC and networking” refresh.
It was, however, keeping an eye out for higher interest rates and managing its working capital effectively, it said.
“The group continues to manage its businesses efficiently and mitigate the effects of high interest rates through effective working capital management and improving supply chain,” the company explained.
Gross margins for the period under review grew to 15.8% against the backdrop of a climb up in gross profit from $744.5m (R13.7 billion) last year to $862.2m in the 2024 full year.
Revenues for the period, however, grew 6.1% to $5.5bn.
Resultantly, the HEPS performance by Datatec grew from a continuing headline loss per share of 10.8 US cents in 2023 to 14.2 US cents in the current period under review.
Datatec said the “increase in gross margin is largely due to a return to more stable foreign exchange rates compared to FY23 when the rapid strengthening of the US dollar against the euro and pound sterling had a significant negative impact” on gross margins in the Westcon Europe subsidiary.
The company had a product backlog, made up of open and unfulfilled sales orders, worth about $706m compared to $1.2bn a year earlier.
Datatec’s CEO, Jens Montanana, said the group had “managed to successfully capture growth opportunities across many markets” to deliver improved quality of earnings.
“The group maintained a strong operational performance in the second half of the year to deliver a solid full-year result as global demand continues for our technology solutions and services,” he said.
The Westcon International unit had continued on a growth trajectory although “challenging conditions in Argentina and Brazil impacted” Logicalis Latin America.
In December last year, Datatec made a further investment into Mason Advisory, bumping up its shareholding from 42.5% to 80%.
Operationally, the group’s subsidiary Westcon International increased revenues by 7.7% to $3.7bn due to strong demand for network infrastructures and cybersecurity solutions.
Revenue in Logicalis International was 1.5% stronger at $1.2bn while in constant currency, revenues in the unit grew by nearly 1%.
Overall operating costs across Datatec’s operating subsidiaries amounted to $684.6m compared to $646.2m in 2023.
Datatec generated $175.6m in cash from operations during the full year to the end of February. It closed the same period net debt of $123.1m.
Excluding lease liabilities, the group’s net debt would have been much lower at $51.3m, it said.
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