A solid performance in its homeland was the anchor for a robust set of first-half figures for Computacenter.
A trading update issued today reveals that the UK's largest VAR's H1 2013 sales were flat on last year on an as-reported basis, although the top line showed a two per cent decline in constant currency terms. Services revenue grew four per cent, while product sales dipped two per cent annually.
Computacenter's net cash position – excluding customer-specific financing – improved from £102m in H1 2012 to £111m this time out. But the impact of a recent £75m shareholder return reduced the figure to £80m as of 30 June.
The firm's reported first-half UK turnover increased by two per cent year on year, with services up five per cent and product revenue flat. Today's statement noted that services growth in Q2 had suffered from a comparison with a very strong quarter in 2012.
"The comparison in the second half of the year is somewhat easier and we are confident that our services growth rate will return to levels broadly in line with those experienced in the first quarter of the year," adds the statement.
"Within the past few weeks we have successfully reached exclusive negotiations on a number of new contracts within the UK which, if successfully concluded, should enable us to maintain our services growth into 2014 and beyond."
Computacenter reported that it saw a slight uptick in margins on product in 2013's opening six months, with the mix of enterprise wares and commodity client computing kit remaining fairly stable.
On the continent
The reseller's German turnover dropped by one per cent over the course of H1 2013, despite a second quarter in which services revenue was flat and product sales increased by 15 per cent. But the business is still carrying three big loss-making contracts, with Computacenter expecting them to continue putting a drain on its bottom line until their conclusion.
"There is further work to do and customer negotiation to be undertaken to assess the full quantum of these losses," said the statement. "However, we expect that, once finalised, these losses will require an additional provision to be made, which due to its nature and size will be stated as an exceptional item."
The firm's French arm endured a tough first half, with sales down 12 per cent off the back of a 20 per cent reduction in product revenue in the year's second quarter. But half of the Q2 decline was chalked up to the rollout of a new ERP system, which has now been completed across all three countries.
"This completes our group ERP rollout on time and in line with our agreed financial plan excluding the impact of currency fluctuation," explained today's update. "In the second half of 2013, we will endeavour to implement our group operating model within the French business. Market conditions within France are clearly challenging but we are confident that our new ERP system now in place and our group operating model will go some way to improving the financial performance in the business over the medium term."
Computacenter's outlook for the next 18 months appears cautiously optimistic, but the firm notes that it is yet to fully understand how big an impact a potential writedown on its trio of loss-making German projects might have. It also points out that solidity in the UK and improvement in Germany during H1 was "offset by a further deterioration in France".
"The continued strong performance of our UK business is encouraging for the future, along with the improvement we are starting to see in Germany, both of which are supported by significant new business pipelines," concludes the statement.
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