Global technology services group Dimension Data (Didata) said on Wednesday that it expected to continue with its double-digit revenue growth despite a “disappointing” performance in its European operations.
“We expect to continue with our double-digit growth in the medium term,” Didata CEO Brett Dawson said.
Dawson was speaking from London on a conference call, shortly after the group released its 2006 earnings.
He said that through its operational strategies — which give a clear road map and set of performance expectations — an expansion in margins would be maintained through 2009 as steps have been taken to remedy performance challenges at its European operations.
“Although Europe’s revenue growth of 9% [excluding Merchants] was satisfactory, the region’s operating result was disappointing,” the group said.
Over the past year the group appointed a new management team in Europe, which saw encouraging progress in Germany, Spain and Italy. However, the performance was negatively affected by disappointing results from the United Kingdom and from the Merchants Group.
Dawson said the company has taken steps to address both of these under-performing businesses, with the UK and Irish operations of the Merchants Group having already been rationalised.
Asked if the group was eyeing any acquisitions in the medium term, Dawson said that the company focused primarily on an organic game plan.
But the group did not rule out the possibility of complementing its organic-growth strategy through targeted acquisitions.
“We have looked to complement our footprint through select acquisitions,” said Dawson.
In the first half of 2006, the group acquired the remaining 20% in Internet Solutions — Africa’s leading communications service provider. The group also purchased the remaining 51% of Plessey, a supplier of telecommunications solutions to the African continent. In addition, Didata bought a 51% stake in ICL Africa.
Earlier on Wednesday, the group reported robust revenue growth of $3,1-billion — up by 15,9% — while its adjusted operating profit was 50% higher at $85-million from a previous $56,7-million. Its gross margin was 21,1% for the year compared with 21% in 2005 and its operating margin increased from 2,1% to 2,8%.
The growth in revenue reflects a 13,6% increase in the Network Integration line of business and an overall good performance from its Solutions lines of business. — I-Net Bridge