Computacenter shares soar on Q1 statement

A strong services business has helped corporate reseller giant Computacenter beat its first quarter 2008 performance despite difficult market conditions.

Computacenter’s shares soared 7.2 per cent this morning, and continued to rise after the firm released its interim management statement, which revealed it has generated £52m net cash, compared to a net debt of £17.2m in the same quarter 2008.

Group revenue for Q1 declined one per cent to £602.4m on an as-reported basis, but by eight per cent on a constant currency basis. The interim statement said the change was ‘consistent with plans to improve the group’s return on capital and sharpen focus as a services and solutions company’.

Mike Norris, chief executive of Computacenter said he was "delighted" with the results.

The UK part of the business saw revenue decline 12 per cent, but operating profit was ahead on the same period last year, helped by a six per cent growth in services, and a focus on operating costs. The French and German parts of the business saw revenue increase by eight per cent and 16 per cent respectively.

According to the statement, the firm’s product business has been challenged due to reductions in capital expenditure by customers, but the results were buoyed by the strengthening of the euro against sterling.

Computacenter also revealed that its £15m cost-reduction plans were ‘on target’ for 2009, but that it would result in an exceptional charge of around £5m this year. A late Easter had a slight impact on revenue from ongoing operations in Q2, the statement said.

“We are encouraged by the solid performance we achieved in Q1,” the statement said. “Our focus on developing propositions that reduce our customers’ operating costs is enabling our services business to prosper in undoubtedly difficult economic times.

“While the economic climate is having some impact on capital projects and our product business, our growth in services and our cost-reduction activity are expected to at least offset this impact. While much remains to be done, the business remains on track for the year as a whole.”