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Lack of confidence in small players benefits Westcon, Logicalis

Alex Scroxton

Datatec, the parent of networking and convergence distie Westcon, services house Logicalis and support specialist Intact, has suggested that a lack of business confidence in smaller channel outfits has played into its hands in recent months.

Chief executive Jens Montanana made the remarks as the group unveiled a strong first half performance.

"In this economic climate many customers and suppliers are increasingly seeking to do business with large, well-capitalised multinational companies," said Montanana.

"This is directly benefiting the group as our businesses are gaining marketshare in many of the markets and geographies in which we operate," he added.

Overall, the group posted revenues of $2.44bn (£1.54bn), up 23% on the same period last year, while gross margins expanded just under one percentage point, EBITDA rose 46% to $85.4m and pre-tax profit grew over 100% to $60.9m after fair value movements on put option liabilities.

The firm said its key units, Westcon and Logicalis, which account for 74% and 25% of group sales respectively, saw an improving business mix, with sales of security kit booming through Westcon, while Logicalis grew its annuity revenues at a fair lick.

Westcon booked sales of $1.8bn, up 11% year-on-year, and operating profit of $57.3m, up 61%, while Logicalis sales rose 26% to $602.2m, including the benefit of two acquisitions made during the period, notably of IBM partner Inca in the UK.

Datatec said that Logicalis had seen strong increases in Cisco and HP sales during the period, and anticipated stronger growth in the second half of the year despite challenging conditions in its key British and American markets.

Meanwhile, Datatec's Consulting Services division, which includes Intact Integrated Services and management consultancy Analysys Mason, saw sales grow 11% to $38.7m, although it saw reduced demand in the UK.

The group said that despite weak consumer markets, poor economic data and the growing Eurozone crisis, innovations in technological services around cloud and related growth in internet usage were likely to insulate it somewhat. It now expects to book full year sales of approximately $5bn, at the high end of forecasts made in May.


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