Logicalis gain but Westcon pain in mixed FY13 for Datatec

Reseller arm growing nicely but distribution margins pinched for South African channel titan

Strong top- and bottom-line growth from Logicalis offset declining profits at Westcon as channel giant Datatec endured a mixed FY13.

For the year to the end of February, the South African firm saw revenue grow four per cent annually to $5.25bn (£3.44bn). However, EBITDA was down three per cent to $185.5m as operating margins declined from three per cent to 2.7 per cent.

Westcon, which accounts for 73 per cent of group turnover, saw sales grow three per cent year on year to $3.82bn. But a 16 per cent hike in operating costs – which stood at $594.8m – put a squeeze on the distributor's bottom line, as EBITDA fell 12 per cent to $117.3m.

For the coming year, Datatec believes the "environment remains challenging" for its distribution arm, and that the "year ahead will be one of consolidation". Westcon will "focus on profit growth and restoring operating leverage" as well as deepening its ties "with leading OEMs that seek multi-country engagement".

Helped by a "good recovery in the UK", Logicalis enjoyed a robust FY13, with turnover up nine per cent to $1.35bn The VAR now garners 27 per cent of its revenue from services, compared with 25 per cent last year. EBITDA jumped 17 per cent to $78.6m with well over half – $41.5m – of this coming from the integrator's Latin American operations.

Despite the fact that Datatec sees "no short-term improvement in trading conditions" for its reseller arm, Logicalis is "planning for revenue and profit growth" again in FY14. The firm will also "continue to look for acquisition opportunities".

Datatec chief executive Jens Montanana said: "Last year presented contrasting trading periods and differing divisional achievement. In the first half we performed well in most operations around the world and met our financial expectations. However, in the second half, Westcon experienced a slowdown in revenues, particularly in Europe and North America. Logicalis, by contrast, continued to perform strongly throughout the year, especially in the UK and USA."