Sales and profits slide at Logicalis and Westcon


Sales and profits slide at Logicalis and Westcon

Microscope contributor

Datatec is confident of returning to revenue growth in H2 of fiscal 2010 after the recession ravaged group sales and profits in the first six months of the year.

This was particularly true of its integration business Logicalis which saw sales dive 27.3% to $394m (£242m) as revenues at distribution arm Westcon fell 20% to $1.2bn (£735m). Group profit dived 72.7% to $8.7m (£5.35m).

“Whilst trading conditions remain challenging, they are becoming more predictable and we are confident of a return to overall revenue growth on our traditionally stronger second half,” said Datatec chief exec Jens Montanana.

The firm’s financials will benefit from “high operational gearing as a result of the significantly reduced cost base”, he added.

Sales at Westcon, which accounted for 69% of group revenues, were largely flat in Europe, improved modestly in the US and strongly in Brazil and Asia Pacific. Operating expenses fell 17% to $90m.

The Westcon Emerging Markets operation, 7% of group turnover saw revenues fall 14% to $128.7m.

The worst hit segment of Datatec was Logicalis – a trend that emerged in Q1 - as revenues from product sales went down 33% year-on-year across all the main lines including Cisco, IBM and HP.

“Revenues from services were more resilient, down only 2% year-on-year,” the firm said, with a 16% rise in maintenance sales a highlight, “as customers in downturns often increase their reliance on services associated with their install base.”

Product margins at the integrator were under pressure due to the hyper aggressive nature of hardware business in the UK and US channels, the group said.

Analysys Mason, part of the Consulting Services division had a tough start to the year - especially in strategy consulting where operators and service providers cut discretionary spend - resulting in an EBITDA loss of £200k.

Networking services and support consultancy business Intact – which spun out of Logicalis earlier this year - grew 7% to $8.9m and made a profit of £400k.

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