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Computacenter Q3 results are a mixed bag

German division is star of the show, UK continues in the right direction and the less said about France, the better

Computacenter issued a trading update this morning, revealing a mixed prognosis for Q3.

Overall revenue rose 4% year-on-year to £721m on reported basis or 10% on a constant currency basis. Year to date, revenue was up 2% YoY or 8% when taking the currency headwinds into account.

The IT services firm said that the increase in revenue was a result of strong performance in the group services division, which saw a 7% increase in constant currency. The group supply chain division reported a 12% year-on-year increase, again at constant currency.

As is always the case with Computacenter, the real story resided in regional performance.

The UK, which has been - single-handedly - keeping European operations above water for some time, continued to perform admirably. Overall revenue was up 7%, with services revenue up 10% and supply chain revenue up 5%. Computacenter noted that there was a strong pipeline for new contract wins in Q4 but added that contract wins were ‘by no means certain’. 

The real star of the show was Germany, which managed – finally - to steal the limelight from the UK operation. Revenue saw a 20% increase at constant currency. Fresh contracts boosted services revenue in local currency and while it doesn’t look like much on a reported basis (7%), the hike marks a turning point for German operations.

“We are clearly pleased with the performance levels that we have maintained in the UK and even more pleased with the consistently improving position of Computacenter in Germany,” the firm said. 

And that is where the good news ended. Computacenter and pundits had been expecting poor performance from France, and the division did not disappoint. Revenue fell 14%, or 5% at constant currency, bringing the year-to-date result to a decline of 7% and 16% respectively.  Services revenue fell by 16% in constant currency and by 25% on an as reported basis, while supply chain revenue in the third quarter declined by 2% in constant currency and by 12% on an as reported basis.

The firm said that ‘some’ of the decline had been ‘intentional and expected’, as it shifted its target market to be more in line with the rest of the Group.

“The business in France is in a more predictable position than 12 months ago and its bottom line performance has improved,” the update noted. “However, much work remains to be done.” 

The Hatfield-based company pointed out that contract wins in Q4 would be critical to supply chain performance for the year.

“The outcome on these will largely determine whether the UK business will be able to maintain its impressive growth performance of recent times.”

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