Datatec - Better profitability across the board

Datatec’s H125 results confirmed improved profitability in each division, resulting in a 56% y-o-y increase in underlying EPS to 11.4c. Group revenue declined 5.5% y-o-y, mainly reflecting a shift towards net revenue- reported software, but gross profit increased 3.5% due to a better product mix. Combined with good cost control, adjusted EBITDA increased by 18.5% y-o-y, resulting in a 0.9pp increase in the adjusted EBITDA margin to 4.1%. The group closed H125 with net debt of $108m, down from $123m at the end of FY24. Despite softer European markets, the company expects all divisions to report improved financial performance in FY25. We are reviewing our forecasts.