UK the laggard for Datatec in FY12

Logicalis and Westcon parent celebrates improved economy in upbeat results, but UK recovery "remains weak"

Logicalis and Westcon owner Datatec pointed to improved economic conditions as it posted solid FY11 numbers, but it lamented that the UK market's recovery "remains weak".

For the year to the end of February, the Johannesburg-based firm saw sales rise 15 per cent year on year to $4.3bn (£2.6bn). Operating profit was up 38 per cent on last year to $105m.

Westcon's global revenue rose 13 per cent to $3.2bn – 74 per cent of its parent company's total. The distributor's operating profit grew 38 per cent annually to $91m.

Some 52 per cent of sales came from Cisco gear, with Avaya chipping in 16 per cent and security products 17 per cent. The remainder came from niche players.

Westcon's top brass are forecasting "solid growth" in FY12, fuelled by steady margins and greater diversity of technologies and geographical markets.

Logicalis, which chipped in 24 per cent of Datatec's top line, saw turnover rise 25 per cent to $1.05bn. Three-fifths of this growth came organically. Strong Cisco and IBM sales were cited as the bedrock of a 26 per cent spike in product revenue, while services turnover grew 20 per cent.

The integrator's operating profit rose 24 per cent to $31.3m, helped by a rise in gross margins from 22.2 to 23 per cent.

South America – particularly Brazil – and Asia-Pacific were picked out as the top-performing markets. Datatec asserts that Logicalis' UK business is going along nicely, "despite a weak recovery and difficult trading conditions".

The South African firm's Consulting Services division – which comprises UK outfits Intact and Analysys Mason – contributed two per cent of total sales. Divisional revenues grew 14 per cent to $72.5m, but EBITDA shrank by almost three-quarters to $0.5m.

Datatec expects FY12 group revenue to rise to between $4.8bn and $5.2bn, with "further operating margin expansion".

Chief executive Jens Montanana said: "I am delighted to be able to report on strong results for the year, ahead of previous guidance.

"Despite an environment that remained challenging in many markets, our focus on operational performance has meant we have been able to increase revenues and expand margins, resulting in the bottom line growing at twice the rate of revenues.

"This performance is being driven by a combination of strong operational leverage and an improving global economy that is returning to a more predictable and aligned recovery across the majority of the group's geographies."