Westcon and Logicalis owner sees double-digit fortunes in full-year results

Both partners performed well across Europe despite ongoing supply constraints, which Datatec’s CEO expects will influence the group’s FY23 performance

Datatec has posted a double-digit rise in both revenue and profits for the year ended 28 February 2022 as both Westcon and Logicalis come out strong in their FY22 results.

Revenues for the technology group were up 12.8 per cent to $4.6bn (€4.3bn) while EBITDA climbed 30.3 per cent to $154.5m (€144.3m).

"The group delivered a strong operational and financial performance across all divisions during FY22 despite global semiconductor shortages and ongoing supply chain constraints which have resulted in a growing backlog," said Datatec CEO Jens Montanana.

"While we see continued demand for our products and services across the world, and have positioned our operations to take full advantage of this, the supply chain headwinds compounded by various factors, including the war in Ukraine, lockdowns in China and global inflationary pressures will impact our performance in FY23."

Turnaround year for Logicalis

Logicalis saw revenues grow 14.2 per cent to $1.6bn (€1.5bn) with EBITDA coming in at $92.5m (€86.4m), an uptick of 12.9 per cent.

The VAR managed to turn the tides in its FY22 performance after last year's results dragged down its parent company's revenues in FY21.

Datatec said that while Logicalis is "ideally positioned" to continue to respond to changing market needs as technology plays an even more integral role in the global economy, the supply chain shortages experienced as the world emerged from the Covid-19 pandemic remain "mostly unresolved".

This, coupled with recent geopolitical issues such as the war in Ukraine, energy prices, economic uncertainty in South America and China's ongoing response to Covid-19, have created a lot of uncertainty, both in the short and medium term, that will impact on the division's performance, it claims.

Revenues increased across all regions for the UK-based group, with Latin America bringing in the bulk, accounting for 31 per cent of its total earnings.

EMEA followed closely, contributing 29 per cent of total revenues, while North America made up 21 per cent.

Logicalis also had a strong order intake during FY22. Shipment delays as a result of the global supply chain issues resulted in a significant increase in backlog impacting EMEA with South America suffering the most.

Product backlog at the end of FY22 came to $400m compared with $206m for FY21.

On the technology side of things, Datatec said Logicalis continues to develop its capabilities within cloud, IoT, software, security, data management and intelligent networks.

It added that Logicalis remains confident about the long-term prospects for the industry and its positioning within it, however, macroeconomic conditions are expected to remain volatile in the short-term.

Logicalis is currently facing the severe impact of supply chain issues, particularly in the South America business. This is not only causing delays to revenue recognition but also leading to changes in customers' purchasing preferences based on availability.

Westcon continues growth momentum

Value-added distributor Westcon International saw revenues grow 11.8 per cent to $2.8bn (€2.7bn) during the year.

Datatec attributed the growth to a strong demand for networked infrastructure, remote access solutions with enhanced cybersecurity for flexible working and virtual office environments and unified collaboration.

EBITDA surged 52 per cent to $68.1m (€63.6m).

"Our focus on portfolio expansion with software and subscription-based solutions has helped us to not only record double-digit, organic revenue growth-- despite material product supply constraints-- but to drive unprecedented EBITDA improvement as well," said Westcon-Comstor CEO, David Grant.

Europe emerged as Westcon's strongest market, making up 63 per cent of revenues.

Datatec said Westcon International remains focused on revenue growth and margin expansion supported by continued investment in process automation, digital tools to support the channel and cost controls.

Its product backlog also increased significantly because of the semiconductor shortage and supply chain constraints.

Backlog at the end of FY22 was $824m compared with $261m for FY21.