DiData services sales soar against slowing products growth

DiData services sales soar against slowing products growth

Integrator reports half-yearly revenue in Australia grew 6.8 per cent to $440.8m

Dimension Data's Australian chief is predicting a strong second-half for the integrator despite global economic unpredictability.

According to its listed South African parent's half-yearly report, the integrator's six-month revenues to March 31 grew by 6.8 per cent to $440.8 million. Operating profits also increased by 26.9 per cent to $19.1 million. Services showed the strongest growth, up by 28.8 per cent to $115.9 million.

Managed services grew by 22.3 per cent, propelled by new unified communication deployments, core technology refreshes and demand for datacentre solutions in government, enterprise and mid-tier segments, Dimension Data's local CEO, Steve Nola, said.

Skills recruitment also contributed to the growth and professional services were up 30.8 per cent as more customers opted for select sourcing, he said.

On the flip side, total product sales rose by just 1.5 per cent year-on-year to $324 million. Product sales had grown by 18 per cent in the first half of 2007 and 22.1 per cent in the first six months of 2006. DiData attributed flattening product sales largely to its distribution arm, Express Data, as a result of the strong Australian dollar and reduced customer spending.

"Technology is robust and there are very solid products out there. I think more resilience in those technologies means the lifecycle is longer than it was 10 years ago," Nola said. "We had reasonable growth at a technology level. We're trying to address the market place and clearly clients are demanding more services-oriented work. This may come at the cost of technology.

"From our perspective, we're always going to see services growing faster than technology revenue. There's a shift in terms of how important services are to clients."

Express Data managing director, Ross Cochrane, pointed to its double-digit profitability growth as more significant than its overall product growth rates.

"Our profitability has grown aggressively and it's a good reflection of how we are going. Our belief is that is what you need to do to invest in the future," he said. "Although we are a products distributor, ED has always been about value, innovation and bringing new technology into the market and we need profitability to invest in that.

"In US dollar terms our growth was stronger than the overall market - the fact that the Australian dollar has risen 12 or 13 per cent over the past 12 months means we've got to sell more to cope with that variance."

Although the industry continues to speculate on whether global economic concerns will affect Australian corporate spending, DiData's Nola was confident the market would continue to be strong during its second-half.

"Barring a major economic downturn, we are really confident about the rest of the year," he said.

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