Computacenter profits rise as France, Germany perform well

(Sharecast News) - Computacenter reported a rise in full-year profits on Thursday as solid performances in France and Germany helped to offset weakness in the UK but the company struck a cautious note on the outlook.
In the year to the end of December 2019, adjusted pre-tax profit was up 23.8% to ?146.3m and statutory pre-tax profit increased 30.4% to ?141m as revenue rose 16.1% to ?5.05bn. The dividend was lifted 22.1% to 37p a share.

The company said France had had an "excellent" year, with a 15.7% increase in organic revenues, led by a buoyant technology sourcing marketplace, and an increase in adjusted operating profit of 76.3%, both on a constant currency basis.

Germany delivered "another strong performance", it said, with revenue growth of 5.2%, driven by a "resilient" technology sourcing business and a "strong" professional services result, which led to a 27.9% jump in adjusted operating profit, also at constant currency.

"This was a very good performance given the material spend reduction from a key customer, that declined down to normal volumes rather than those seen in the prior year, which created a challenging comparison," it said.

In the UK, however, revenue fell 1.8% as both services and technology sourcing revenues declined. Computacenter said the prior year comparative result contained two very large margin-dilutive technology sourcing deals that were one-off in nature. Adjusted operating profit rose 10.6%, with improvements in both services and technology sourcing margins.

Chief executive Mike Norris said: "As we stated back in January, the results for 2019 set a high bar for the business in 2020. It is too early to predict the outcome for the year as a whole and there is still much work to be done, particularly as we have not yet completed our first quarter. Our services pipeline is the strongest we have seen for some time in both professional and managed services.

"While we still believe customers will continue to invest in product, particularly in the areas of security, networking and cloud, it may well be difficult to achieve the same growth rates we have seen in recent years."

Norris said the Covid-19 outbreak makes forecasting the future "even more challenging".

"To-date, supply constraints from our technology providers have been minimal, although there are some concerns going forward. We do however have some concerns that in the medium-term, customers may postpone significant IT infrastructure projects while the current uncertainty remains."

At 0810 GMT, the shares were down 10.4% at 1,310p.