Computacenter has warned that the cost involved in winning a recent rash of large contracts has hit its margins in the first few months of 2012.
Driven largely by strong services growth and last year's acquisition of French reseller Top Info, group revenue at the London-listed powerhouse are up nine per cent so far this year, according to a trading statement issued this morning.
Group services revenue powered up nine per cent on a reported basis, or 11 per cent in constant currency. The UK services business grew by eight per cent.
Revenue from products – or "supply chain" as Computacenter is now calling it – also rose by nine per cent on a reported basis, although half of that growth was generated by Top Info. In the UK, product sales fell by five per cent.
Although Computacenter said it is pleased with the services growth, it admitted the costs incurred in the on-boarding of services contracts and sales commissions had had a "not unexpected" impact on margin in the period.
"We expect these costs to continue in the short term, given the size and number of large contracts won, which are yet to go live, but we very much view these costs as an investment in the long-term profit growth of the group," the London-listed firm stated.
"In the UK, the on-boarding of contracts is going to plan; however, in this regard there are some challenges in Germany where more work is required."
Services will be the engine of Computacenter's growth, it added.
"We believe the services growth rate we have experienced so far in 2012 is set to not only continue, but increase, and it is critical that we maximise this opportunity," it said. "While our new contract cost of sale and the on-boarding challenges should not be underestimated, this services opportunity has the potential to underpin our growth rates in the years ahead."
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