Datatec (DTC) H1 2025 earnings summary

Executive summary

• Achieved strong profit growth and margin expansion, particularly in Westcon International and Logicalis International, with robust operating cash generation and improved performance in Logicalis Latin America.

• Gross profit increased despite a 5.5% decline in reported revenues, driven by a shift from hardware to recurring software and services, which are net accounted under IFRS.

• Adjusted EBITDA grew by 19% to $106.0m, with underlying earnings per share up 56% year-over-year.

• Interim dividend of 75 ZAR cents per share (approx. 4 US cents) declared.

• All divisions delivered improved year-on-year performance, despite some softening in certain European markets.

Financial highlights

• Group revenue was US$2.61 billion, down 5.5% year-over-year; gross profit increased 3.5% to US$432.7 million.

• Adjusted EBITDA increased 18.5% to $106.0m; EBITDA margin improved to 4.1% from 3.2%.

• Underlying EPS up 56.2% to 11.4 US cents; HEPS up 66.7% to 10.5 US cents.

• Net debt reduced to US$108.4 million from US$174.8 million year-over-year.

• Gross margin improved to 16.6% (H1 FY24: 15.1%).

Outlook and guidance

• All divisions are expected to deliver stronger full-year performance, with US market robust and Latin America recovering.

• Demand for cloud infrastructure and cybersecurity remains robust, while network infrastructure purchases have slowed.

• Adoption of AI anticipated to drive a new cycle of PC and networking refresh.

• Continued focus on driving efficiencies, controlling CapEx, and improving operating cash generation.