Proact reaches Holy Grail of five per cent profit margin

Datacentre specialist talks up positive impact digitisation trend is having on its business

Storage integrator Proact has finally fulfilled its long-held ambition of achieving a five per cent pre-tax profit margin, as it talked up the positive impact the "digitisation" trend is having on its business.

The pan-European datacentre and cloud specialist posted a 70 per cent annual rise in pre-tax profits to SEK49.7m (£4.5m) in the final quarter of 2016, equating to a margin of 5.7 per cent.

That propels its profit margin above its five per cent target, set several years ago by its previous CEO, for the first time.

Revenue also rose by 14 per cent to SEK868m (£78m) in Q4, bringing its annual tally to SEK2.92bn (£263m).

Its UK arm contributed a pre-tax profit of SEK10.6m (£954,000) in Q4, a rise of 54 per cent, on roughly flat revenues of SEK160m (£14.4m). That equates to a margin of 6.6 per cent.

CEO Jason Clark attributed the uptick in sales and profits to a range of factors, including good cost control, streamlining of its service operation, taking the "necessary measures" in underperforming countries, and increasing its emphasis on sales and marketing.

"This excellent trend also shows that our specialist expertise and market-leading offering with regard to datacentres and cloud services are very much appreciated by both new and existing customers," Clark added.

Proact also said the digitisation trend is driving demand for its wares.

"The combination of rapid digitisation and the increasing volume of business-critical information means that IT infrastructure is becoming increasingly complex and new demands are being made," Clark said.

Proact, which now operates in 15 countries, saw its headcount fall slightly during the course of 2016, from 743 to 718.

Breaking down total Q4 sales, systems revenues rose 15 per cent to SEK605m (£53.4m) and services revenues rose 12 per cent to SEK263m (£23.7m). Of the latter, cloud services revenues swelled 25 per cent to SEK93m (£8.3m).

In January, Proact moved to bolster its German operation with the €9m acquisition of Teamix, a datacentre specialist with 85 staff and €35m revenues.

"Teamix is a well-established company in the German market and has outstanding expertise in various IT technology and service fields," Clark said.