Logicalis on road to recovery

Cisco, IBM and HP partner drops out of $1bn club but enjoyed a strong end to the year

Heading in the right direction: Logicalis enjoyed strong end to year

Logicalis’ recovery is “well underway” despite the integrator posting a 17 per cent slide in annual sales, according to parent company Datatec.

South Africa-based Datatec today posted its audited results for the year to 28 February and indicated that distribution arm Westcon had begun its recovery half a year ahead of resell arm Logicalis.

Total group sales fell 11 per cent to $3.74bn (£2.55bn) with EBITDA down 21 per cent to $126m.

Datatec chief executive Jens Montanana said: “All of the group’s operating divisions now appear to have passed their inflection points and returned to revenue growth.”

Montanana singled out Westcon – the Cisco, Avaya and security distributor that generates just over two-thirds of its sales – for praise. Its revenues fell seven per cent to $2.6bn, with EBITDA rising 10 per cent to $74.7m.

Cisco, HP and IBM partner Logicalis’ recovery has been slower, although its performance “improved markedly” in the second half, with the UK in particular enjoying a strong year end.

“As we have stated previously, Logicalis is a business that typically improves later in the economic cycle, in part due to the longer term and contractual nature of its customer relationships,” said the firm.

“As anticipated, its recovery has lagged that of Westcon by five to six months, but appears to be now well underway.”

Last year Logicalis broke the $1bn revenue barrier but the top line fell back to $838.5m this time around. Sales were down 17 per cent on a constant currency basis and if the contribution from two small acquisitions is put aside. EBITDA stood at $42.4m, down from $57m a year earlier.