Datacentrix must capitalise on World Cup

Despite the strength of its managed services division, Datacentrix turned lower profits for the twelve months to February 2010.

Datacentrix released annual results today, revealing a 14,7 decline in revenues to R1,29 billion. Headline earnings per share slipped From 61,5 cents in 2009 to 41 cents this year. The company did however increase cash on hand from R232,8 million to R284,8 million at 28 February 2010 thanks to strong operating cash flows.

“Datacentrix will be disappointed with the performance of its infrastructure business,” notes Frost & Sullivan ICT analyst Silvia Hirano Venter. “However, it has shown increased focus on its managed services over the past year. This is reflected in both product innovation and the quality of its services offered by highly skilled personnel.”

In terms of services, Datacentrix is investing in its business intelligence and enterprise content management (ECM) offerings, as it believes that these are key growth areas in the country. In February 2010, the company implemented an ECM system at the Forensic Pathology Services, designed to optimise management time and reduce paper consumption.

“This could be the beginning of an increased demand for services from the government sector,” Venter says. “Moreover, its presence at the World Cup as the company responsible for all the printing across all stadiums will certainly increase its visibility in the SADC region.”

Venter however cautions that competition in the outsourcing market for IT services is growing.

“It is crucial that Datacentrix is able to clearly differentiate the benefits of its offering,” Venter says. “End users need to see a path to a clear return on investment.”

Datacentrix also needs to ensure that it is able to maintain the level of contracts it enjoys with government bodies, as these have made up an increasingly important portion of revenues. The company noted that the business generated from public sector contracts was lower than expected last year, which was a significant dampener on the performance of its infrastructure business.

“The worst of the economic downturn in the country is however now over,” Venter says. “The World Cup is certainly a great opportunity for Datacentrix to capitalise on any potential increase in demand for services from the public sector.”

Datacentrix declared a final dividend of 16,6 cents per share.

 

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Datacentrix must capitalise on World Cup