{"id":637379,"date":"2026-03-31T11:29:39","date_gmt":"2026-03-31T09:29:39","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=637379"},"modified":"2026-03-31T11:29:42","modified_gmt":"2026-03-31T09:29:42","slug":"datatec-expects-big-increase-in-gross-profit","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/it-services\/637379-datatec-expects-big-increase-in-gross-profit.html","title":{"rendered":"Datatec expects big increase in gross profit"},"content":{"rendered":"\n

JSE-listed international ICT services company Datatec has published a trading update notifying shareholders that it expects to report a 10% rise in gross profits.<\/p>\n\n\n\n

In a notice on the JSE News Service on Tuesday, Datatec said overall gross profits would increase from approximately $910 million (R15.6 billion) to $998 million (R17.1 billion).<\/p>\n\n\n\n

This was chiefly due to Westcon International’s gross profits increasing by 13% from $441 million (R7.5 billion) to $499 million (R8.5 billion).<\/p>\n\n\n\n

\u201cThe group built on the strong operational and financial performance reported for the first half of FY26 and continued to benefit from demand for the group’s technology solutions and services,\u201d it stated.<\/p>\n\n\n\n

\u201cAs indicated in the results announcement for the 6 months ended 31 August 2025 and published on 30 October 2025, an increasing proportion of software and services is accounted for on a net basis.\u201d<\/p>\n\n\n\n

This affects the comparability of reported revenues with prior periods. Therefore, Datatec\u2019s board believes that gross profit offers a more accurate reflection of the business’s underlying performance.<\/p>\n\n\n\n

\u201cRevenue from sales arrangements where the group acts as agent is recognised on a net basis and only the commission or gross profit earned on these contracts is recognised as revenue,\u201d it explained.<\/p>\n\n\n\n

\u201cWhere the group is deemed to be acting as a principal, revenue is recognised on a gross basis.\u201d<\/p>\n\n\n\n

Datatec said Westcon International continued to deliver very strong financial performance in the second half of FY26, while Logicalis International delivered exceptional performance.<\/p>\n\n\n\n

Logicalis Latin America saw a slight increase in gross profit, and its overall financial performance continued to improve compared to FY25.<\/p>\n\n\n\n

Datatec said it intends to release its 2026 financial year results on the JSE News Service on or about 26 May 2026.<\/p>\n\n\n\n

Datatec is cheap but has risks<\/h2>\n\n\n\n
\"\"<\/figure>\n\n\n\n

Rand Swiss founder Gary Booysen previously said that, although Datatec\u2019s stock remains relatively cheap, investors should consider several risks<\/a> before buying it.<\/p>\n\n\n\n

These include Datatec\u2019s somewhat tightly held shares and traditional information and communication technology (ICT) business models facing disruption.<\/p>\n\n\n\n

Booysen said Datatec is often sidelined because of how tightly it is held. CEO Jens Montanana holds over 18% of the company, and government owns 16.74% through the Public Investment Corporation.<\/p>\n\n\n\n

\u201cOne of the other asset managers is also sitting at about 15%,\u201d said Booysen.<\/p>\n\n\n\n

\u201cSo, it\u2019s an interesting one. It\u2019s well diversified. It operates across fifty countries with 11,000 customers and is not particularly expensive at 15 times earnings either.\u201d<\/p>\n\n\n\n

Booysen also highlighted Datatec\u2019s dividend as an attractive feature for shareholders. He said the earnings-per-share performance announced in the recent trading statement suggests a higher dividend, too.<\/p>\n\n\n\n

\u201cMy issue around it is\u2026 ICT is a very complex business to invest in. Through Westcon, they look at security, network, and technology products, which is essentially reseller partnerships,\u201d he said.<\/p>\n\n\n\n

\u201cThey also do implementation agreements for people like Cisco and Palo Alto. While these are best-in-class solutions, the ICT landscape is changing very quickly at the moment.\u201d<\/p>\n\n\n\n

Booysen said there was a drive into AI, which could disrupt the business models of mature ICT companies like Datatec.<\/p>\n\n\n\n

\u201cSure, they\u2019ve been around since 1986. However, traditional business models might not work the same way in the next 5 years as they did for the last 5 years,\u201d he said.<\/p>\n\n\n\n

\u201cWith the disruption that\u2019s happening in ICT and specifically around the reseller models, there\u2019s potentially an outsized risk.\u201d<\/p>\n\n\n\n

Booysen said that could explain why Datatec is trading at a price-to-earnings ratio of 15, even though it appears to offer excellent value.<\/p>\n\n\n\n

\u201cThat said, hats off to management. The business is performing exceptionally well. It\u2019s well diversified. It\u2019s got US dollar earnings. There\u2019s a lot to like about it.\u201d<\/p>\n\n\n\n

Datatec FY26 expected divisional gross profit<\/h2>\n\n\n\n
Division<\/th>FY26 Gross Profit<\/th>FY25 Gross Profit<\/th>% Change<\/th><\/tr><\/thead>
Westcon International<\/td>$499 million<\/td>$441 million<\/td>+13%<\/td><\/tr>
Logicalis International<\/td>$386 million<\/td>$357 million<\/td>+8%<\/td><\/tr>
Logicalis Latin America<\/td>$105 million<\/td>$104 million<\/td>+1%<\/td><\/tr>
Corporate and Management Consulting<\/td>$8 million<\/td>$8 million<\/td>0%<\/td><\/tr>
Total Gross Profit<\/strong><\/td>998<\/strong><\/td>910<\/strong><\/td>+10%<\/strong><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

ICT services company Datatec has published a trading update notifying shareholders that it expects to report a substantial increase in gross profits.<\/p>\n","protected":false},"author":15,"featured_media":553657,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49317],"tags":[2404,2410],"class_list":["post-637379","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-it-services","tag-datatec","tag-jens-montanana"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/637379"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=637379"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/637379\/revisions"}],"predecessor-version":[{"id":637386,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/637379\/revisions\/637386"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/553657"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=637379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=637379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=637379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}