Dicker Data (DDR) H1 2024 earnings summary

Executive summary

• Gross sales for H1 2024 were $1,590.1m (AUD 1.6 billion), down 0.4% year-over-year, with Q2 sales up 8.3% sequentially, offsetting a subdued Q1 and high prior-year comparatives.

• Net profit after tax declined 5.7% to $35.4m, and EBITDA fell 2.4% to $68.9m, mainly due to higher employee and finance costs and increased bad debt provisioning.

• Gross profit rose 2.9% to $155.0m, with gross profit margin improving to 14.3% (net revenue basis), driven by New Zealand operations and higher-margin business.

• Market share held steady in Australia (35%) and grew in New Zealand (29%), with NZ profitability nearly doubling and the gap to the top distributor closing.

• Strong July sales and positive momentum expected to continue into H2, with optimism for Q4 and 2025, supported by AI, cybersecurity, and PC refresh cycles.

Financial highlights

• Gross profit margin increased to 14.3% (net revenue basis), up from 13.6% year-over-year.

• Finance costs rose by $2.7m, impacting profit before tax, which declined by 6.1% year-over-year to $50.8m.

• Net working capital investment increased by $18.0m to $402.5m, driven by higher receivables and inventory in anticipation of demand.

• Dividend payout maintained at 100% of NPAT, with interim dividends totaling 26.0 cents per share ($46.9m), up from the prior period.

• Net debt increased to $314.7m, up $25.4m since Dec 2023.

Outlook and guidance

• H2 expected to see sales growth and stable gross margins, with Q4 forecasted as a particularly strong quarter.

• Full-year revenue growth projected at 3-4%, with 7-10% growth targeted for 2025, driven by SMB recovery, AI, and PC refresh cycles.

• Gross margin expected to improve above 10% as SMB demand returns; PBT margin guidance for FY24 is 3.2-3.5%.

• Inventory levels expected to normalize by year-end as stock sells through.

• Strategic expansion in New Zealand and convergence of physical security with IT channel expected to accelerate growth in 2H24 and FY25.