Datatec boosts profits following UK listing

Rebecca Harrison

And it expects to beat that level of growth in the second half as it hunts for acquisitions in emerging markets and as lacklustre demand in Europe recovers.

JOHANNESBURG (Reuters) - South African IT firm Datatec posted a 30 percent jump in first-half headline earnings per share on Wednesday and predicted stronger growth in the second half, boosted by acquisitions and recovering demand in Europe.

Datatec, which listed in London last month, said headline EPS in the six months to end August rose to 15.65 U.S. cents from 12.12 U.S. cents in the year-ago period, meeting the company's own forecast for headline EPS of 15 to 16 cents.

Datatec Chief Executive Jens Montanana told Reuters the company expected to beat that level of growth in the second half as it hunted for acquisitions in emerging markets and as lacklustre demand in Europe recovers.

"Europe has been a bit of a dog for the past few years," Montanana said. "...but for the first time (in Europe) there seems to consistent, albeit pedestrian, revenue growth and we think it is going to continue."

Montanana, who dragged Datatec back to profit two years ago, after several years of losses, noted that key clients like Cisco Systems, IBM and Hewlett Packard had reported stronger profits recently and forecast further growth.

Datetec, which provides IT networking, consulting and distribution services, expects to boost its EBITDA (earnings before interest, tax, depreciation and amortisation) margin to 4 percent in the next couple of years from 3.2 percent now.

Datatec raised $25.8 million last month when it listed on London's Alternative Investment market (AIM) -- less than half the amount it had expected -- which it will combine with existing cash resources to expand into new markets.

Montanana said the company would try to push into markets adjacent to countries where the company is already strong -- for example Brazil, parts of Asia and Canada. Datatec already has business in the United States, Europe, Africa and parts of Asia and South America.

Datatec posted a 16 percent rise in first-half revenue to $1.7 billion and a 44 percent rise in operating profit to $43.4 million.

Headline EPS is the main profit gauge in South Africa and strips out certain capital, non-trading and one-off items.

Shares in Datatec edged up 0.17 percent to 29.85 rand by 0809 GMT, trading slightly below a firmer Johannesburg mid-cap index.

And it expects to beat that level of growth in the second half as it hunts for acquisitions in emerging markets and as lacklustre demand in Europe recovers.