Datatec takes a breather
Datatec’s latest annual results were strong, but once-off gains and acquisition accounting gave investors pause and resulted in the share price falling by 7.95%, analyst Jean Pierre Verster said.
Verster, the founder and CEO of Protea Capital Management, told Business Day TV that a trading statement published two weeks before Datatec’s results had created an expectation of strong results.
However, he said when the full annual financial statements came out, the company’s normalised growth may not have been as strong as some investors expected.
Datatec is a Sandton-based ICT solutions and services group with operations including Westcon International, Logicalis International, and Logicalis Latin America.
The company reported profit after tax of $108.7 million for the year ended 28 February 2026, equal to roughly R1.78 billion.
This represented 56.9% growth from the $69.3 million (R1.12 billion) profit after tax reported for the previous financial year.
Revenue increased by 3.4%, rising from $3.55 billion (R58.19 billion) in 2025 to $3.67 billion (R60.16 billion) in 2026.
Datatec also reported EBITDA of $269.1 million, or roughly R4.41 billion, up 21.6% from $221.3 million in the prior year.
The company attributed the performance to margin expansion and profit growth at Westcon and Logicalis International, alongside progress in Logicalis Latin America’s turnaround.
Datatec CEO Jens Montanana said the company’s strong profit growth drove a 55% increase in its total dividend to $0.24 per share.
“We are celebrating one of the strongest years in the Datatec Group’s history, underpinned by excellent execution, financial performance, and operating leverage,” he said.
Datatec’s gross invoiced income increased by 9.3% to $8.5 billion (R139.3 billion), driven by demand for AI software and services.
The company said software and services now represented more than 70% of gross invoiced income, improving the margin mix across the group.
It said AI was increasing complexity in IT environments, requiring businesses to rely more heavily on specialised service providers with deep domain expertise.
Westcon International increased gross income to $5.74 billion (R94.1 billion) during the year, while gross profit rose to $499.2 million (R8.2 billion).
Logicalis International increased gross invoiced income by 11.8% to $2.15 billion (R35.24 billion), supported by strong order intake and multi-year contract growth.
Its gross profit increased by 8.0% to $385.9 million (R6.3 billion), adding to the group’s higher-margin software and services exposure.
Datatec said disciplined cost management had helped improve operating leverage and profitability across the business during the financial year.
Market takes a break from Datatec
Verster explained that the trading statement, which JSE rules required Datatec to publish before its results, created expectations of strong numbers.
“When the details came out, there were some once-offs in that number,” Verster stated.
“People just thought that maybe the more organic, like-for-like, or normalised growth wasn’t quite as strong as what investors thought when they saw the trading statement.”
He said Datatec’s regular small acquisitions made it difficult to assess underlying growth because the company often increased stakes over several years.
These transactions could move from small minority stakes to controlling holdings, creating acquisition-accounting effects that complicate comparisons between reporting periods.
“There’s a lot of acquisition accounting in Datatec,” Verster said, explaining that the company reported regular tuck-in deals and staged stake increases every year.
However, Verster said the broader Datatec story remained positive, supported by strong cash flow, dividends, share-price performance, and consistent management execution.
“Cash flow was strong, and they are paying a special dividend, which is an indication thereof,” he said.
Verster said Datatec had performed well since selling the large Westcon business in the United States and focusing on remaining operations.
He highlighted Westcon International and Logicalis as important parts of the group’s progress since that transaction, with management executing well.
Verster also noted that Montanana had continued buying Datatec shares and now owned approximately 20% of the company.
“It’s a very good story, but sometimes when a story has been so strong, it needs a bit of a breather,” Verster said.
He said the once-off items in the detailed results appeared to give the market an opportunity to pause after a strong run.
Datatec share price of the last two years
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