Datatec CEO Jens Montanana.
Image: Leon Nicholas
Datatec’s management have said that trading for the multinational ITC group has remained resilient in spite of supply chain volatility, and its management expect its 2027 financial year will be even stronger than 2026.
The group on Tuesday reported exceptional performance for its 2026 financial year after continued profit margin expansion and a strong profit-growth trajectory in its two key subsidiaries, Westcon and Logicalis International, while Logicalis Latin America achieved good traction in its turnaround.
“We are celebrating one of the strongest years in the Datatec Group’s history, underpinned by excellent execution, financial performance, and operating leverage. Solid profit growth has driven a 55% increase in the total dividend to 24 US cents,” said the CEO Jens Montanana.
Headline earnings per share was up by 56.5% to 39,9 cents a share. The final dividend was raised to 14 US cents from 11,2 US cents.
The proportion of higher-margin software and services continued to expand, now comprising over 70% of gross invoiced income. This is being fuelled by AI, which is driving increasing complexity within IT environments, requiring a growing reliance by businesses on specialised service providers with deep domain expertise, said Montanana.
Better cost management improved operating leverage and profitability and strong operating cash generation resulted in a big reduction in net finance costs across the group’s core divisions and a greater quality of earnings.
Datatec's Westcon International division increased invoiced income by 9.6% to $5.74 billion. Westcon’s gross profit rose 13.1% to $499.2 million, driven by demand for cybersecurity and network infrastructure across all geographies.
Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) increased 15% to $172.4m, demonstrating good operating leverage. Recurring sales now contribute 68% of total sales in this business.
Logicalis International grew gross invoiced income by 11.8% to $2.14bn due to strong order intake and growth in multi-year contracts. Montanana said all regions generated good momentum, and recurring gross invoiced income has expanded to 63% of total income. Gross profit grew by 8% to $385.9m. Operating efficiencies saw adjusted EBITDA increase by 21.8% to $114.5 million.
Logicalis Latin America’s considerably improved financial performance was underpinned by gross margin improvement, good operating expense management, and reduced finance costs on the back of a large increase in net cash. While gross invoiced income was marginally lower at $524.9m, gross profit was up 14% to $105m and adjusted EBITDA by a healthy 20.9% to $24.3m.
The group is doing a review of why there is a persistent gap between Datatec’s valuation and the value of its subsidiaries, said Montanana.
He said AI adoption is creating more complex IT environments and is increasing the reliance of businesses on specialised service providers with deep domain expertise to ensure resilience, scalability, and performance. These trends position the group favourably to capitalise on sustained industry growth.
Datatec’s share price fell by 7.4% to R79.55 on Tuesday morning, a price that has grown from R61.16 a year ago. Its net asset value at year-end was 540,3 US cents or about R88.33 at exchange rates on the day.
BUSINESS REPORT