THERE is sustained global demand for IT solutions and services in networking, cybersecurity and cloud computing infrastructure, helping drive up full year revenues for February 28 for Datatec although the company has a bigger backlog in orders owing to worldwide supply chain constraints.
The JSE-listed Datatec, currently trading under a cautionary as it pursues the offloading of Analysys Mason, operates in about 50 countries in Africa, Middle East, North America, Latin America, Europe and Asia-Pacific.
In the first half of its trading year to end February, the group’s South African and Brazilian units benefited from a stronger exchange rate matrix, although, the recent volatility in the rand would have paused some headwinds.
However, the company’s stronger financial performance for the period left it in a position to pay a final dividend of $15 million (7 US cents per share), taking the total payout for the year $85m (R1.3 billion), inclusive of a special dividend. This was after Datatec lifted revenues by 12.8 percent to $4.6bn.
Datatec chief executive, Jens Montanana, said the stronger financial performance for the period was “despite global semiconductor shortages and ongoing supply chain constraints which have resulted in a growing backlog”.
Despite this, the company saw “continued demand for our products and services across the world” while it had now “positioned operations” to take full advantage of this.
“The war in Ukraine, Covid-19 lockdowns in China and global inflationary pressures will continue to disrupt global supply chains for the foreseeable future. This is expected to especially impact Logicalis in Latin America during the first half of the current financial year as macroeconomic challenges are compounded by these severe supply chain constraints.”
Supply chain delays hammered the company immensely, to the extent that this slowed down its “sales process from order to delivery causing a notable increase in the quantum of open, unfulfilled sales” it classifies as backlog items. These amounted to about $1.2bn as at the end of the period under review, compared to about $467m in the previous year.
Datatec had cash generation of $96.7m for the period from operations against $234.4m in the previous contrasting period. It also closed the February 28 year end period with a net debt position of $130.1m against $60.9m the previous year.
“Excluding lease liabilities, net debt would have been $35.7 million. The operating cash outflows were mainly as a result of an increase in inventory as well as increased receivables on the back of the very strong revenue growth,” it said.
Its Logicalis division is supported by a corporate facility of $155m, which covers most of its markets except Latin America, which is separately financially backed by “a number of uncommitted overdraft” facilities.
The Westcon International subsidiary has an invoice assignment facility of €390.6 million (R6.5bn) for its European operations. It also has a securitisation facility in South Africa worth R250, in addition to overdraft facilities amounting to $1bn for its other African markets.
BUSINESS REPORT ONLINE