Datatec heaps praise on Westcon

IT group's interim statement contains signs that tech equipment spending is starting to come back

The numbers are up: Westcon beat Q1 expectations

Datatec has become the latest channel outfit to report green shoots as distribution arm Westcon exceeded expectations for the start of its fiscal year.

In an interim management statement for the four-month period to 30 June, South Africa-listed Datatec said that market conditions had stabilised since the end of its fiscal 2009.

Cisco distributor Westcon was singled out for praise, with Datatec revealing that its profitability has improved compared with the third and fourth quarters of last year.

Westcon’s European business remained stable, while the Americas region saw a modest improvement in trading and Asia-Pacific remained strong, Datatec said.

Meanwhile, reseller arm Logicalis continued to encounter “soft” market conditions in both the US and the UK as larger projects were delayed.

However, Datatec stressed that it was heartened by Westcon’s performance, pointing out that distribution is a better gauge of short-term changes in capital equipment expenditure.

Datatec stated: “The Group expects Westcon's financial performance to continue to improve for the remainder of this year, particularly as this business will benefit strongly from the high operational gearing that now exists as a result of the significantly reduced cost base.”