South African IT company Datatec posted lower first-half headline earnings, in line with its own forecast, and said it was looking to expand given the worst of the downturn was over.
We have passed the inflection point, chief executive Jens Montanana said in an interview on Wednesday. We are guiding going forward sequential and comparative growth.
Datatec, listed in London and Johannesburg and a distributor for companies such as Cisco Systems, said it had focused on generating cash and was now ready to do deals, particularly in China.
Its headline earnings per share for the six months to end-August fell 72 percent to 4.9 U.S. cents, while diluted headline EPS also fell 72 percent to 4.8 cents. The results met guidance in a recent trading statement. [ID:nLU50487]
Datatec said earnings were affected by fair value adjustments of put option liabilities. Excluding put option fair value adjustments, headline EPS would be 8.5 cents, it said.
We have exceeded expectations on the cash we generated, with over $184 million, and that puts us in a very strong net cash positive position, Montanana said, adding the company had identified targets to expand all of its divisions in equipment distribution, IT services and consulting.
Expect us to be inking some transactions shortly. Our core China presence is minimal and we think that's a big opportunity for our business, he said.
Datatec's biggest division, network equipment distributor Westcon, was seeing signs of growth in the United States, although Montanana expected the recovery to be patchy.
The group kept its guidance for the full year unchanged, with revenue forecast to be $3.7-$4.0 billion, pretax profit of about $44 million and headline earnings per share (EPS) of about 23 cents.
Datatec's shares, which have gained 68 percent since the beginning of the year, were flat at 27.50 rand in Johannesburg by 0805 GMT.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) fell 38 percent to $44.6 million, which included unrealised foreign exchange losses of $0.6 million and realised foreign exchange losses of $5 million.