Datatec points finger at SAP system - TechCentral

Datatec points finger at SAP system

Jens Montanana

Jens Montanana

JSE-listed multinational technology group Datatec has reported a mixed earnings picture in its latest financial results as expected growth failed to materialise in the US, emerging markets were depressed and Europe showed signs of improvement. It is also blaming the implementation of a business management system from SAP for not turning in a stronger performance.

Datatec reported group revenue of US$2,77bn in the six months ended 31 August 2013, up marginally from $2,62bn in the same period a year ago. Underlying earnings fell to 19,2c, from 23,5c before, while the dividend was maintained at 8c/share.

Solutions and services business Logicalis was the star of the show, with operating profit up by 45% to $32,7m. Another subsidiary, Analysys Mason, also performed strongly.

However, the group’s IT distribution business, Westcon, was affected by the roll-out of a complex enterprise resource planning (ERP) system and lack of expected growth in the US.

Datatec has previously blamed implementation of the SAP-based system for hurting sales volumes, in July warning in an interim management statement that the transition to SAP was causing “operating disruptions” that had “negatively impacted revenues”.

Currency weakness in many markets hurt demand.

“Performance in parts of Westcon’s North American business, where the new ERP system has been implemented, has been disappointing,” Datatec CEO Jens Montanana said in a statement alongside the interim results. “The volume shortfall in that region has been the main reason for the group’s underperformance in the period.”

In light of the first-half performance by Westcon, Datatec has issued a cautious outlook for full-year 2014 revenue and earnings. It expects revenues of between $5,6bn and $5,8bn, from $5,25bn in 2013, and underlying earnings similar to last year of about 43c/share.

“We are experiencing varying trading conditions in many parts of the world, with Europe recently showing signs of improvement, while developing markets have been impacted by currency volatility,” Montanana said.  — (c) 2013 NewsCentral Media

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