Computacenter sees 2009 profit jump

Revenue down slightly on 2008, but VAR giant is feeling bullish for the year ahead

Mike Norris: Computacenter expects steady revenue growth in 2010

Computacenter’s decision to exit trade distribution last year had a slight impact on its 2009 revenue, but pre-tax profit rocketed 22 per cent.

The corporate VAR giant posted pre-tax profit of £48.4m, a 22.4 per cent leap from the £39.5m posted in 2008. Revenues hit £2.5bn, a slight drop of 2.2 per cent compared to £2.56bn in 2008. Its cash position also strengthened with net cash of £86.4m prior to customer specific financing, compared to £4.6m in 2008.

Computacenter’s UK business saw revenue decline by 7.3 per cent in 2009 to 1.4bn, mainly attributed to product revenue declines as customers cut cap ex because of the economy. In the fourth quarter the UK business rallied two per cent.

In line with overall performance adjusted profit for the UK business increased 27.8 per cent to £37.8m, compared to £29.6m in 2008. The VAR stated that the profit growth ‘could not have been achieved’ without the major cost reduction programme it started last year, which has seen it reduce operating expenses by over £30m in constant currency.

Its German business saw adjusted operating profit grow 21.9 per cent to €22m, and France saw an operating loss of €3.1m, described as being ‘materially ahead’ of internal and external expectations. Its Benelux business showed an adjusted operating loss of €851,000 last year with overall revenues dropping by 22.1 per cent.

The firm also pointed out how it has cemented its position as IBM’s largest business partner in Europe following its acquisitions of Thesaurus in the UK and becom in Germany, and also how its services business was growing across the board, growing 2.2 per cent in the UK, 8.4 per cent in Germany and 10.2 per cent in France.

Mike Norris, chief executive of Computacenter, said: “Computacenter has delivered a strong performance in 2009 with increased profits, earnings per share and a materially improved cash position. The increase in the Group’s annual service contract base is clear evidence that customers are turning to Computacenter to help them reduce their operating costs. As a result, we expect steady revenue growth in 2010.

Looking forward, he added: “The encouraging signs we saw in the fourth quarter in the UK have continued into the first quarter of 2010. Germany has seen a challenging start to the year when compared with the first quarter of 2009. In the longer term we believe the investments we are making in our business, together with our strong balance sheet, positions the Group well to take advantage of market opportunities. While the economic outlook remains uncertain, customers will continue to focus on reducing their operating costs and focusing on core activities.”