Datatec posted a strong set of interim results as a diversified business profile enabled it to achieve solid growth against the backdrop of a continually weakening global environment.
In the six-month period ending August 2012, Datatec managed to grow its overall revenues to $2.62 billion up from $2.44 billion in the 2011 corresponding period. The group’s increased exposure to resilient, emerging markets was pivotal in offsetting a marked slowdown, particularly in developed markets. Whilst growth slowed down in all regions, particularly in the second quarter, Latin America was the exception, continuing on a solid growth trajectory.
"Faced with strong headwinds in the form of difficult global operating conditions, Datatec has been able to rely on its diversified position to sustained growth," noted Frost & Sullivan’s Information & Communication Technologies Industry Analyst, Ishe Zingoni. "The group’s most important strength lies in its diversified scope in terms of both global footprint and business lines".
As the outlook in developed markets has been uncertain, companies are increasing their exposure to high growth markets, such as Asia and Latin America. In-line with this trend, Datatec has moved to consolidate its presence in emerging markets through acquisitions in Indonesia, Latin America and Australia. Underlining the increasing importance of Latin America to Datatec’s growth prospects, its subsidiary, Westcon, acquired Latin American and Iberian multinational security, virtualisation and data centre distributor Afina Group in July 2012.
Whilst Datatec has achieved an even balance in the geographical distribution of its revenues, its presence in Africa has largely been limited to South Africa. Thus, expansion into the rest of Africa has been identified by Datatec as a future area of growth.
"As part of its growth strategy, Datatec has also increased its presence in select product segments in order to offset margin pressures currently experienced in IT markets", explained Zingoni. "Recent acquisitions, concluded by both Westcon and Logicalis, have sought to enhance margins, while at the same time, broaden and deepen Datatec’s overall product mix".
Key areas that have been prioritised by Datatec in its growth strategy include cloud computing, virtualisation, managed services and security solutions; all part of the high-growth segments predicted in the next five years. Robust demand for third-party services has particularly seen security solutions become a key opportunity area, and Datatec is uniquely positioned to benefit from it. IT security can be viewed as a defensive area, which is a non-discretionary expenditure for firms, and hence not quite as responsive to economic downturns.
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