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By | Paul Kunert 16th May 2012 14:53

Logicalis profits throttled by tight-fisted biz

UK earnings down a quarter

Logicalis UK has been hit by a freeze in demand as customers weathered the biting economic storm.

The British subsidiary saw sales edge up 1 per cent to $296m (£185.8m) year-on-year and a 24 per cent fall in earnings before interest, taxes, depreciation and amortization to $9.7m (£6.09m) for fiscal 2012 ended February.

At group level, Logicalis increased revenues 18 per cent to $1.234bn and EBITDA shot up 27 per cent to $67.4m, benefiting from a broader geographic spread with a more bullish performance in certain emerging markets.

Ian Cook, Logicalis chief exec, said that "in line" with many channel firms across the UK and Europe trade in its fiscal second half year was typified by project postponements.

He told Channel Reg that demand from businesses for products "dropped off" as organisations "sweated their assets more and did not replenish".

"Major projects are taking longer to come to fruition because people are cautious, there is still a strong headwind at the moment while the Euro issue plays out. Cycles are being extended by three months," said Cook.

Cook said he was still on the lookout for "good people" and the company is "not tightening its belts or pulling out of businesses".

He expects customers will only be able to hold off purchases for a finite period of time before they open the wallets again and draw from either capital expenditure or operational expenses.

The firm acquired IBM Cognos partner Inca Software last April to drive its analytics-as-a-service biz and said hosting clouds for customers out of its two UK data centres remained a priority.

Phil Codling, research director at TechMarketView, said Logicalis had "positioned" itself to benefit from both traditional on-site tech delivery models and from cloud or managed services.

"Cap-ex is under big pressure, you only needs to look at Cisco's [conservative] outlook. It's across all sectors but the public sector in particular. I'm not convinced Logicalis has built enough scale in managed services to counter that," he said.

Logicalis, part of the Datatec Group, also shares the stables with distributor Westcon, which saw sales rise 17 per cent to $3.7bn and a 27 per cent climb in EBITDA to $133.3m

Unlike Logicalis, Westcon said revenues and profits were higher in H2.

"The South America region in particular had an exceptionally strong performance, as telecommunication service providers continue to invest in their core infrastructures. The UK and US markets were more challenging," Datatec said. ®

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