Datatec FY24 Financial Performance: Revenue Up 6.1% to $5.46 Billion, EBITDA Surges by 80.7%

Datatec Limited has showcased a robust financial performance in the fiscal year ending February 29, 2024. The company’s impressive results underline its strategic initiatives and operational efficiency amid challenging market conditions. This article delves into the details of Datatec’s financial performance, segmental highlights, and future outlook, providing a comprehensive analysis for investors and stakeholders.

Financial Overview

Revenue Growth and Profitability

Datatec reported a revenue increase of 6.1%, reaching US$5.46 billion in FY24, up from US$5.14 billion in FY23. The company’s gross profit surged by 15.8%, totaling US$862.2 million compared to US$744.5 million in the previous fiscal year. This growth resulted in a gross margin improvement from 14.5% to 15.8%, reflecting better cost management and operational efficiencies.

Financial MetricFY24 (US$ million)FY23 (US$ million)% Change
Revenue5,457.95,143.16.1%
Gross Profit862.2744.515.8%
EBITDA177.698.380.7%

Earnings Per Share (EPS) Analysis

Datatec’s continuing underlying EPS saw a remarkable increase of 231.1%, rising to 20.2 US cents from 6.1 US cents in FY23. The combined underlying EPS also rose significantly by 155.7% to 20.2 US cents. However, the combined EPS decreased by 44.7% to 20.4 US cents, reflecting the impact of discontinued operations.

Divisional Performance

Westcon International

Westcon International demonstrated robust growth, with revenue increasing by 7.7% to US$3.69 billion from US$3.42 billion in FY23. The division’s gross profit surged by 22.7% to US$403.4 million, contributing to an improved gross margin of 10.9%. Westcon International’s EBITDA soared by 150.0%, reaching US$121.0 million, highlighting strong demand for network infrastructure and cybersecurity solutions.

MetricFY24 (US$ million)FY23 (US$ million)% Change
Revenue3,690.03,420.07.7%
Gross Profit403.4328.722.7%
EBITDA121.048.4150.0%

Logicalis International

Logicalis International posted a modest revenue increase of 1.5%, amounting to US$1.25 billion in FY24. The division’s gross margin improved to 27.1%, up from 24.9%, driven by higher product margins. Logicalis International’s EBITDA increased by 31.7% to US$66.5 million, showcasing strong operational performance despite market challenges.

MetricFY24 (US$ million)FY23 (US$ million)% Change
Revenue1,250.01,230.01.5%
Gross Margin27.1%24.9%
EBITDA66.550.531.7%

Logicalis Latin America

Logicalis Latin America faced challenging conditions, particularly in Argentina and Brazil. Despite a revenue increase of 4.5% to US$512.9 million, the division’s EBITDA declined significantly due to foreign exchange losses. The gross margin slightly improved to 23.0%, but EBITDA decreased to US$11.5 million from US$21.2 million in FY23.

MetricFY24 (US$ million)FY23 (US$ million)% Change
Revenue512.9491.04.5%
Gross Margin23.0%22.3%
EBITDA11.521.2-45.8%

Dividend Declaration

Datatec declared a final cash dividend of 130 ZAR cents per share for FY24, down from 195 ZAR cents in FY23. Shareholders have the option to receive a scrip distribution as an alternative to the cash dividend. This strategic decision aims to preserve cash flow while rewarding shareholders.

Future Outlook

Despite global economic and political uncertainties, Datatec is optimistic about its performance in FY25. The company expects to benefit from strong technology fundamentals and the adoption of artificial intelligence. These trends are likely to drive a new cycle of PC and networking refresh, contributing to revenue growth.

Strategic Initiatives and Operational Efficiency

Datatec plans to focus on efficient business management and mitigating high interest rates through effective working capital management. Improving supply chains remains a priority to ensure seamless operations and cost efficiency.

Board Changes

Several changes in the board and director roles were announced, reflecting Datatec’s commitment to strong governance. Notable changes include the retirement of Mr. JF McCartney and the appointment of Ms. SJ Everaet as an independent non-executive director. Adjustments in committee roles aim to enhance oversight and strategic direction.

Conclusion

Datatec Limited’s financial results for FY24 reflect a solid performance, driven by strategic initiatives and operational efficiency. The company’s divisions, particularly Westcon International, showcased significant growth, while Logicalis International and Logicalis Latin America faced mixed results. Looking ahead, Datatec is well-positioned to capitalize on technology trends and maintain its growth trajectory. The declared dividend and strategic focus on shareholder value highlight the company’s commitment to rewarding investors. As Datatec navigates global uncertainties, its robust financial health and strategic initiatives promise a positive outlook for FY25.