Logicalis had its best revenue growth in six years and across all regions, which was led by continuing strength in services which grew by 15%.
Revenue from operations increased by 11% to $1.7 billion (FY18 $1.6 billion). Revenue increased across all regions in absolute terms. Growth in Europe was driven mainly by Germany and Spain. Latin America showed improvement notably in Brazil which was supported by a large multi-year deal, despite currency headwinds. Asia Pacific increased largely because of the full year impact of the FY18 acquisition of Packet Systems Indonesia, although in addition a number of territories in the region experienced high organic growth.
Services revenues were up 15% with growth in both professional services and annuity revenue. Our services continue to grow at a faster rate than overall product sales by 5%.
Revenues from product were up 9% driven by Latin America, with Cisco in particular driving this growth. Our portfolio of technologies continues to diversify; however, over half of our product sales continue to be derived from Cisco, and this relationship remains one of several key partnerships for Logicalis.
In September 2018, Logicalis completed the acquisition of Coasin Group, an IT system integrator with operations both in Chile and Perú.
Logicalis also acquired Clarotech, a South African IP telephony cloud and managed services business, and in October 2018, Logicalis’ Australian operation, Thomas Duryea Logicalis, acquired CNI, a Microsoft Certified Gold Partner.
Logicalis’ gross margins were 23.6% (FY18 25.0%). This reduction was driven in part by a large multi-year Latin American contract and as a consequence of poor performance in the UK where actions have been taken to remodel and restructure the business.
Operating expenses remained well controlled. Gross profit was up 5% to $410.1 million (FY18 $392.5 million). EBITDA was $93.3 million (FY18 $91.4 million), with a corresponding EBITDA margin of 5.4% (FY18 5.8%). Operating profit was $65.9million (FY18 $65.4 million).
Logicalis’ outlook has a number of favourable factors as well as macro challenges. The IT market remains stable globally with strong growth rates being experienced in the security and cloud markets. There is uncertainty across Europe, while growth is robust in the US and across the Americas and the dollar is expected to remain strong.
Logicalis is well positioned to support its customers on their journey to adopt cloud solutions as an integrated part of their overall IT infrastructure and will continue to expand its services mix through new offerings.