Computacenter has revealed 2008 profits are set to top market expectations as it reported an upturn in its services business.

The corporate resell mammoth has also hinted it will slash its middle management ranks this year in a bid to shave £15m from its annual cost base.

In a trading update this morning, Computacenter said group pre-tax profit is expected to be materially ahead of consensus market expectation of £38.1m. Its share price jumped about 16 per cent on the news.

UK sales grew by 2.5 per cent to £1.39bn as Computacenter pointed to strong services gains. Overall, services grew by 6 per cent but the VAR was also pleased with the high volume of long-term services contracts won as customers moved to reduce their operating costs.

UK product sales grew 1.7 per cent, with end user product sales growth topping 5 per cent and sales through its IT distribution unit, Computacenter Distribution (CCD), sliding 14 per cent.

Computacenter also revealed that CCD’s recent decision to exit PC and printer distribution would wipe £70m from its 2009 turnover. But the move will not reduce operating profits and would free up around £15m of working capital, the reseller added.

Despite the positive results, Computacenter hinted that far-reaching changes will be made to its UK business in 2009.

“While pleased with the results for 2008, we are far from satisfied,” the firm said.

“We will be implementing structural changes in our UK operations, aimed at significantly improving our effectiveness and competitive position. These changes will result in fewer layers of management, increased spans of control and have the not inconsiderable subsidiary benefit of reducing our ongoing expense base by more than £15m per annum, by the end of 2009.”

On the continent, Computacenter said it had enjoyed “a year of good progress” in Germany, while it admitted more “strategic change” was needed in France to boost profits to an acceptable level.