Shares in Datatec shot up almost 5% on Thursday as the technology group reported that it more than doubled its earnings for the half-year to August, as the announcement of a special dividend and demand for networking software, driven by the switch to remote working, offset the effects of the global microchip shortage.
The company, whose operations span more than 50 countries, has two main divisions, Logicalis and Westcon International, which distribute security and networking technology products.
On Thursday, Datatec reported its revenue was up 15% to $2.26bn (R34.14bn) in the half-year, from $1.96bn restated revenue recorded in the previous comparable period.
Earnings before interest, tax, depreciation and amortisation (ebitda) was a quarter higher at $75m, compared to $60.7m previously.
Within minutes of morning trade starting, the stock was up 4.54%, remaining steady for the rest of the day, to close 4.94% firmer. The share price is currently 67% stronger so far in 2021, valuing the company at R8.37bn.
The group said it achieved a strong operational performance as it continued to benefit from remote working, increased cloud usage and secured networking trends.
“All divisions delivered strong revenue and profit growth,” it said.
However, the group said the global semiconductor shortage “created extended lead times on certain hardware product deliveries”, which resulted in a significantly higher closing backlog — sales orders waiting to be fulfilled — in both Logicalis and Westcon International.
The group reported a 294% growth in earnings per share and headline earnings per share, both rising from 1.6 US cents to 6.3c.
A $70m special dividend was declared.
Datatec CEO Jens Montanana said: “Datatec’s first-half results were supported by excellent operational execution with all divisions delivering strong top- and bottom-line growth as the positive impact of increased digitisation on recurring software and services continues.”
He said the strategic review announced recently “is also progressing with several options and initiatives under review to unlock and maximise further shareholder value”.
Montanana expects a strong performance throughout the second half of the financial year due to pent-up demand “in many forms across the world”, however “the semiconductor shortage is expected to continue to result in significant backlogs across the group well into 2022”.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.