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Datatec details Middle East performance

Datatec annual results show sales growth from emerging markets

Networking services group Datatec - which counts the Westcon and Comstor distribution brands among its stable - has revealed that the Middle East and Africa now accounts for 6% of its $4 billion turnover.

Datatec's strategy of pushing deeper into emerging territories is clearly proving a wise one after the recent publication of audited annual results confirmed the company achieved group-wide EBITDA of $151m on organic sales up 12% year-on-year during its last financial year.

The report also offers a compelling insight into the status of the South Africa-based outfit's business in the Middle East and Africa, where it now presides over several entities including Westcon, OnLine Distribution, Comstor and Analysys Mason.

Cisco-centric distribution arm Comstor succeeded in delivering revenues of $13.1m during the twelve months to the end of February, but failed to make a profit in its first full year of operation - slipping to a "marginal loss" instead.

However, Johannesburg- and London-listed Datatec believes 2008 will see the unit climb out of the red. "Comstor expects to generate increased revenue growth and profitability during the next twelve months due to the growing market in the Middle East," stated Datatec.

Sister company OnLine Distribution, meanwhile, managed to increase EBITDA 7% to $2.9m as its focus on a number of data networking and convergence vendors led to sales expanding 24% year-on-year to $55.6m.

Elsewhere in its MEA distribution group, Westcon Africa Middle East made sales of $50.8m and minor EBIDTA following a year that saw it boost its African coverage with the acquisitions of International Technology Distributor, Jet Distribution and Resolv Computers. That sales figure does not include the contributions of Westcon South Africa or African Legend Indigo, Datatec's 55%-owned South African operation, however.

Away from distribution, Westcon hailed the progress of its technical consulting business Analysys Mason, which reduced its dependence on the UK market largely as a result of its efforts in the Middle East and North Africa. The unit, which posted $64m in revenues, recently opened an office in Dubai to capitalise on the opportunities for advisory and consulting services among telecoms operators, regulators and government bodies.

Datatec admits the African businesses it has acquired aren't likely to blossom for another year, but it's confident the Middle East part of its operation is capable of delivering a strong return over the coming quarters.

"The growth outlook in Westcon SA remains strong whereas it is expected that ‘other' Westcon Africa Middle East operations will take a further 12 months before starting to realise the high growth opportunity in Africa and to deliver margins in line with the rest of the group," stated the company. "The growth in the Middle East market has been sustained this year and is expected to remain buoyant during the next twelve months with investments expected in finance, health and hospitality sectors."

Jens Montanana, chief executive at Datatec, says the current year has started in line with the company's expectations. "We remain confident that our increasing international reach and business mix, together with operating leverage brought through scale, will enable us to continue to grow the group organically above industry averages, even in more difficult market conditions," he said. "We are also continuing to expand our business by acquisition in faster developing markets," added Montanana.