Global ICT solutions and services provider, Datatec, announced a strong set of annual results today, 16 May 2012 once again underlining the resilience of the group in the face of a difficult recovery in global economic conditions.
Over the full year reporting period ending February 2012, Datatec saw its revenues exceed the $5.0 billion mark, up from $4.3 billion in the corresponding period of 2011. A deliberate management focus on optimising the business mix, as well as improving operational efficiencies, enabled Datatec’s EBITDA to increase by 34% from the previous year.
A successful diversification strategy is paying off handsomely with an even revenue split across the group’s three main operating platforms of North America, Europe and the rest of the world.
“Datatec has a strategic advantage in that it has a balanced spread across the major geographies, a desirable hedge in these difficult economic times. The key differentiator for Datatec lies in its diversification, not only from a geographical standpoint, but also in terms of business lines and its assortment of partners. As the group continues to extend its global reach, it has leveraged this position to build a strong network of suppliers, and grow its order book, thus reducing its overall business risk," states Frost & Sullivan’s ICT Industry Analyst, Ishe Zingoni.
Although North America and Europe remain Datatec’s core markets, the group has sought to increase its exposure to dynamic emerging markets. Datatec expects the contribution from this bloc to remain robust, with Latin America being the main engine of growth.
“These fast-growing markets are not only key top-line drivers, but also double-up as opportunities to enhance margins. In this regard, Datatec has continually been on the look-out for opportunities, as shown by the group’s acquisition of an Indonesian IT distributor in March 2012. This acquisition was notable as it gave Datatec its first significant presence in South-East Asia’s most populous country, and fast-growing economy," adds Zingoni.
In South Africa, Datatec has been intently looking at exploiting opportunities that would allow it to improve its offerings as well as expand into the rest of the continent. Pursuant to the group’s acquisition of Biodata in 2010, Datatec went onto acquire Sentronics, a value-added IT distributor, in December 2011. With the focus in Africa now shifting from infrastructure development to IT-related services, unprecedented growth in IT markets is beckoning and Datatec is already positioning itself to benefit from this trend.
In developed markets such as the US and Europe, economic recovery remains slow and fragile, and enterprises have thus been reluctant to commit to capital projects and major upgrades. Investment in IT security however remains non-discretionary, and hence represents a key opportunity for Datatec’s Westcon business. At the same time, a steady shift in preference towards managed and cloud-based services will continue to boost Datatec which is already leveraging this trend. In the year under review, annuity service revenues in Logicalis, a Datatec subsidiary, grew by 41%.
Overall, Datatec’s long-term future outlook remains strongly positive as it expands into fast-growing and more profitable territories, and continues to consolidate its position in key mature markets.
Frost & Sullivan
