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Computacenter shows resilience in H1

Channel player Computacenter shares first half numbers and reveals its latest acquisition to bolster US revenues

Computacenter has followed on from a positive trading statement last week with its full half-year (H1) numbers revealing that its customer base has continued to invest even in the face of the coronavirus pandemic.

It accompanied the numbers with the details of a further move to bolster its North American business with the acquisition of IT solutions provider Pivot Technology Solutions, which derives 86% of its revenues from the US and the rest from Canada.  The deal will cost in the region of £61m but will add $1.2bn in US sales once the deal gets shareholder approval and is completed.

The channel player delivered a 1.5% increase in revenue to come in at £2.46bn for the six months ended, and pre-tax profits surged by 42.5% from £50.8m last year to £72.4m. The Group’s Technology Sourcing revenue increased by 2% to £1.8bn. Services was down by 0.2% to £594.4m, but within that category professional services revenue increased by 14% and managed services revenue decreased by 5.8%.

The UK saw strong demand from government and financial services verticals, with many customers reaching out to Computacenter to get the tools to enable working from home. That could be seen with a 7.2% increase in revenues in the Technology Sourcing operation. The firm also reported decent services margins, due to increased utilisation and reduced external contractor costs.

Professional services helped drive the German business, and the firm’s US business continued to show signs of growth. France was slightly more problematic, with revenues in the region slowing after a record couple of years. The impact of the pandemic could be felt more in the international business, with a number of customers reducing expenditure hitting the performance in the Netherlands and Belgoum.

In Switzerland and Spain, efforts to organically grow the business had an impact on profitability in the first half.

Overall though, the numbers left Mike Norris, chief executive of Computacenter, musing on the flexibility the firm had shown and the resilience of its customer base.

“While nothing can be taken for granted, it is the board’s view that, based on current business activity levels, our adjusted profit before tax for the year is unlikely to be less than £180m. We feel it is important to give specific guidance given the broad range of market expectations concerning our likely results,” he said.

“Our markets have proved resilient as our customers have invested in their infrastructure to support their businesses, they have utilised the skills of our people and we have managed our cost base,” he added.

With fears rising of a second wave of Covid-19 and a return of more restrictions on meeting in public places coming into force next week, it is a difficult time to be making predictions about the future, but Norris did have some thoughts to share with investors.

“It is impossible to predict exactly how the world will recover in 2021 and beyond, and the implications for our customer base. We do believe that our customers will continue to invest in technology and that we have built a substantial reseller business with the largest service capability of any reseller in the world, as well as the most substantial international footprint, which should enable us to deliver a reliable and consistent business for our customers, employees and shareholders,” he concluded.

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