Full year results from South Africa-based reselling and services player Datatec show it is benefitting from growth in developing markets. But it’s been tougher going in the UK, where its Logicalis business continues to battle against challenging market conditions.
At the group level, Datatec saw revenue in the twelve months to the end of February up 17% at $5.03bn, with growth from Asia Pac and South America offsetting a weak Europe. That’s a continuation of the trend in the first half (see Emerging markets drive 20% organic growth at Logicalis). Full-year EBITDA grew 34% to $142m, although that means Datatec’s EBITDA margin is still just 2.8%.
Helped by acquisitions, Datatec’s Westcon business - a network-focused reseller that does half its business around Cisco kit - grew by 17% to $3.18bn in revenue.
Meanwhile Logicalis reported growth of 18% to $1.23bn, with organic growth at 11%. As for the group, developing markets drove the topline.
Logicalis is supplementing its traditional channel activities with growing ambitions in services, including here in the UK. As we’ve said before (see Logicalis acquires down under), we think the business is making some bold but potentially high-growth bets in hosted services and analytics, including here in the UK.
As things stand, however, it is not finding the growth it seeks. It looks as though Logicalis’s UK interests registered a flat performance at best last year in local currency. Significantly, EBITDA was down in the UK business too, from $12.7bn in FY11 to $9.7bn in FY12 (a 24% decline).
Meanwhile, with the business flagging up continuing headwinds in the UK market, plus the recent downbeat outlook from key partner Cisco (see Cisco sees caution and uncertainty ahead), it doesn’t look as though FY2013 is getting any easier for Logicalis UK.