Computacenter sees half-year profit soar

Reseller turns in record sales as services division booms.

Key contract wins and growth in services enabled Computacenter to post record sales and profit for the first half of the year, but analysts warned it to remain cautious in the run-up to the millennium.

For the six months ended 30 June, Computacenter recorded an increase of almost 17 per cent in turnover to £904.8m, compared with the same period last year. Pre-tax profit grew 30 per cent to £40.7m, up from £31.3m for the same period last year.

Philip Hulme, chairman of Computacenter, welcomed the long-term decline in hardware prices, even though it led to lower sales growth in the first half of 1998, because the growth in PC sales fuelled demand for services.

Strong growth in government and telecoms sectors offset weaker demand from the City.

Computacenter did not disclose the contribution of services to its results, but Phil Williams, the company's corporate development manager, admitted to PC Dealer that services accounted for about 20 per cent of its turnover and about 50 per cent of profit.

Steve Brazier, director of analyst group Canalys, said: "Computacenter needs to have a substantial services operation in the long term, but while it is the leading supplier of corporate PCs, it's very difficult for services to grow faster than product sales. However, the key is not services turnover, but how it contributes to profit."

Brazier also warned that corporate resellers were most vulnerable to a millennium-related slowdown in IT spend. "There is evidence that many IT purchasing decisions will be unaffected by the millennium, but Computacenter has to be cautious about the last quarter, as the most doubt is in the corporate sector," he said.

Hulme claimed that there was no evidence of a slowdown in demand for services, although Mike Norris, chief executive of Computacenter, admitted it had budgeted for this event in the final weeks of the year.

Norris added: "We believe there is significant pent-up demand within our customer base, which will be released next year."

Growth at Computacenter's German subsidiary was described as "in line with expectations", while staff numbers in France grew 113 per cent to 312 over the past year.