Datatec profit growth boosts share price

On Thursday, the IT group Datatec [JSE: DTC] posted an increase in profit and revenue for the six months to end-August.

Its share price rose by 1.5% to reach R32.27 by early afternoon. Since 2015, its share price lost half its value after the company suffered losses following an aggressive acquisition spree.

It has since sold off a number of businesses, including in the US, and returned to profit last year.

On Thursday, it reported earnings before interest, tax, depreciation and amortisation (Ebitda) of $70.0 million, from $42.6m in the same period last year.

Group revenues grew by 2.6% to $2.06bn.

Datatec has two main divisions, Logicalis (ICT services) and Westcon International (network and data product distribution).

Logicalis' Ebitda increased by 45% thanks to big multi-year project in Latin America, and a favourable court ruling in Brazil with regards to certain overpaid indirect taxes.

Westcon International saw revenue growth of 3.5% and improved profitability. “Good progress continues to be made in terms of costs containment and the target reduction in central costs for FY20 is set to be achieved in accordance with management’s plan.”

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