Westcon and Logicalis parent drops acquisition hint

Datatec says it will pursue further consolidation opportunities as it unveils upbeat half-yearly results

IT group Datatec has hinted it will continue on the acquisition trail after posting double-digit revenue and profit growth.

In a set of interim results that it branded "excellent", the Johannesburg-listed firm saw revenue rise by 14 per cent to $2.44bn and EBITDA surge by 46 per cent to $85.4m.

Datatec, which owns networking distributor Westcon and integrator Logicalis, claimed it has benefited from a desire among customers and suppliers "to do business with large, well capitalised multi-national companies".

For the six months to 31 August, Westcon generated 74 per cent of group sales as its top line spiked 11 per cent to $1.8bn. It drew just over half (51 per cent) of sales from Cisco, 20 per cent from security and 15 per cent from Avaya. The global distributor's operating profit boomed by 61 per cent to $57.3m.

Logicalis, which struggled during the depths of the downturn, generated 25 per cent of group sales with a top line of $602.2m, up 26 per cent year on year. EBITDA rose by 34 per cent to $29.2m.

During the period, Westcon made one acquisition (in Germany) and Logicalis two (UK Cognos partner Inca and US Cisco Gold partner Netarx). Datatec intimated it will continue to delve into its warchest.

"The group will seek to improve its competitive position and believes that the current economic climate has created a window of opportunity for further attractive consolidation opportunities to enhance margins, facilitate consolidation in proven markets, and extend the group's geographical reach," it stated.

Datatec chief executive Jens Montanana said: "These are very good results given the current environment. Despite the difficult economic conditions around the world, we have been able to grow revenues and improve margins in all divisions.

"In this economic climate, many customers and suppliers are increasingly seeking to do business with large, well capitalised multi-national companies. This is directly benefiting the group as our businesses are gaining market share in many of the markets and geographies in which we operate."