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Computacenter cashing in amid client drive to 'digitise'
Computacenter reported on a better start to 2018 than it had expected thanks to increased demand for its IT infrastructure procurement skills from companies striving to keep up in the digital age.
The FTSE 250 group's revenues in the first three months of the year were up 17% in constant currency excluding a one-off licence sale, which if included would see the top line rise 21%, or 23% if currency benefits were also taken into account. The not-to-be-repeated £34.1m licence sale in the UK was profitable but diluted group margins.
With the performance better than expected, directors said that while it is still early in the year they believed that 2018 "is likely to be a year of further progress for Computacenter in profitability as well as earnings per share".
Supply chain revenue increased by 33%, or 31% in constant currency, or 25% if excluding the one-off contract and in constant currency 25%. The services business, which last year represented just under a third of group turnover, saw flat revenues in constant currency.
Clients companies, which are served by offices across the UK, Germany, France, the Benelux countries, Spain and South Africa, have continued the drive to 'digitalise' their business, which drove strong demand in the quarter for the supply chain services, particularly the UK and Germany.
"Overall, we do not see any obvious reason why the current positive market conditions for Computacenter should not continue in the near term."
Excluding the one-off deal, UK revenue was up 21%, with supply chain up 37% but services down 7%. German sales were up 19% in constant currency, with services up 7% and supply chain 25%. Computacenter said the flat French sales was due to a "difficult comparison" with the strong performance last year.
"We are responding to our customers' desire to take cost out of long-term support contracts by increasing the competitiveness of our services offerings through productivity improvements which protect our profitability. However, this market trend does put corresponding pressure on our services top line growth which is currently being more than compensated by the supply chain performance."