Datatec hails margins improvement but Westcon continues to disappoint

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Datatec, JSE and London-listed technology firm, reported on Wednesday that it had a sound trading start to the year with improved gross margins in a tough global macro environment marked by continuing volatility in many markets. By Staff Writer

The owner of Logicalis and Westcon today issued a trading statement for the four months to end-June 2016 showing gross margins at 13.8%, up from 12.8% in the same period last year.

“The improvement in our gross margins is encouraging in a period where revenues have been comparatively softer, as the much stronger US Dollar continued to impact emerging markets,” Jens Montanana, Datatec’s CEO, said in a statement on Wednesday.

“We are committed and focussed on completing the restructuring initiatives within Westcon which will enhance our operational performance, including the new ERP system roll-out and Business Process Outsourcing transformation.”

The R9 billion firm reported a 11% drop in revenues to $1.97 billion versus $2.22 billion for the four months to June, due to a strong dollar.

Datatec added that Westcon’s gross margins improved to 10.6% from 10% but revenues was down 13% due to strong revenue growth in the same period last year, particularly in Comstor business.

The company was excited to report that the foreign exchange losses in Westcon business in Angola have reduced markedly to $0.4 million versus $7.8 million. The Logicalis business saw a 1.1% improvement in gross profit contribution, despite a slight decline in revenues of 5.6%, while gross margins expanded to 22.8% from 21.3%.

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