Datatec - Benefiting from operating leverage

Datatec is a global IT services group that has successfully operated a buy-and-build model throughout its 34-year history. The group operates in over 50 countries and is a global partner to Cisco, which represents c 40% of group revenues. After a challenging past few years, having finally bedded down a group-wide SAP implementation, the streamlined business returned to profitability in FY19, with both its major divisions, Westcon and Logicalis, profitable in FY20. In its latest trading update, cost-cutting led to improved year-on-year EBITDA, despite a slight fall in year-on-year revenues. Supported by a weakening US dollar and positive operating leverage, if this trend continues it will demonstrate the resilience of the business.