Dicker Data (DDR) H1 2024 earnings summary

Executive summary

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

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

• Gross profit rose 2.9% to $155.0m, with margin improvement 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 closing the gap to the top distributor.

• Strong July sales and positive momentum expected to continue into H2, with optimism for Q4 and 2025.

Financial highlights

• Gross profit margin increased to 14.3% (net revenue basis), up from 13.6% in the prior period.

• Finance costs rose by AUD 2.7m, impacting PBT, which declined by about 6% year-over-year.

• Net working capital investment increased by AUD 18m, driven by higher receivables and inventory in anticipation of education, retail, and AI PC demand.

• Dividend policy maintained at 100% NPAT payout, with interim dividends totaling 26.0c per share ($46.9m), up 108% from H1 2023.

• Net tangible assets: $153.0m (down from $160.8m at Dec 2023); net working capital days increased to 44.2.

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.