Dicker Data (DDR) H1 2024 earnings summary

Executive summary

• Gross sales for H1 2024 were $1.6 billion, down 0.4% year-over-year, with Q2 sales up 8.3% sequentially, signaling market recovery.

• Net profit after tax was $35.4 million, down 5.7% year-over-year, and EBITDA declined 2.4% to $68.9 million, mainly due to higher employee costs and bad debt provisions.

• Gross profit rose 2.9% to $155 million, with margin improvements to 14.3% (net revenue basis), especially in New Zealand.

• Market share held steady in Australia and grew in New Zealand, with profitability in NZ nearly doubling and leadership maintained in the Australian IT distribution market.

• Strong July sales and positive momentum expected to continue into H2, supported by AI, PC refresh, and SMB recovery.

Financial highlights

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

• Finance costs increased by $2.7 million, impacting profit before tax, which declined by about 6% year-over-year.

• Interim dividends of 26.0 cents per share declared for H1 2024, up 108% from H1 2023, with a continued Dividend Reinvestment Plan.

• Net working capital investment increased by $18 million to $402.5 million, driven by higher receivables and inventory.

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

Outlook and guidance

• H2 expected to deliver low single-digit revenue growth in Q3 and stronger growth in Q4, with full-year revenue growth forecast at 3-4%.

• Gross margin expected to improve above 10% if SMB demand recovers; focus remains on stimulating SMB market.

• PBT margin guidance for full year is 3.2-3.5%, with expectations for improvement in FY2025.

• Software segment forecasted to grow 20-25% in H2, with clean comps post-Autodesk.

• FY2025 revenue growth expected in the 7-10% range, driven by PC refresh, AI, and SMB recovery.