Computacenter let down by Germany in Q3 financials
UK is top performer, but overall outlook is positive for Q4
Despite flat overall group revenue for the third quarter of its FY 2014, Computacenter’s German arm saw revenue slide for the second consecutive quarter.
In an interim management statement covering the period from 30 June to date, the firm revealed that revenue was flat in constant currency with a decline of three per cent on an as-reported basis to £707m, compared with £729m in 2013.
The UK was the star performer for the group, with overall revenue growth of five per cent to £314m, compared with £299m in 2013, bringing the year-to-date growth to 11 per cent.
Both services and supply chain revenue in the UK grew by five per cent in Q3, and by seven per cent and 13 per cent respectively against the prior year-to-date figures.
This growth was attributed to a "significant managed services agreement" with a delivery and logistics company earlier on in the quarter, and the statement said this win, together with an existing strong pipeline, will underpin the group’s growth outlook for services both next year and in 2016.
In France, Computacenter admitted that there was still work to be done, but that its strategy in the region was beginning to bear fruit. French revenue increased by five per cent in constant currency, and was flat on an as-reported basis at £99m, bringing the year-to-date position to growth of 11 per cent in constant currency and seven per cent on an as-reported basis.
Service revenue growth in France in Q3 was 15 per cent, bringing the year-to-date position to growth of five per cent. Supply chain revenue in Q3 increased by three per cent in constant currency, with the year-to-date position to growth of 13 per cent.
The statement said: “While much work remains to be done in France, we are starting to see payback from our significant effort to date, with a marginal reduction in the loss in the third quarter compared with the same period a year ago.
“This trend is expected to improve in the fourth quarter, as implementation of the Social Plan for France has now commenced. The costs of the Social Plan are expected to be in line with the provision taken at 30 June 2014.”
However, it was Germany that let the side down for the quarter, with revenue dropping by eight per cent to £281m, from £320m in 2013. This brings the year-to-date decline to nine per cent in constant currency and 13 per cent on an as-reported basis.
Services revenue also slid four per cent, resulting in a flat year-to-date position in constant currency. However, the firm was optimistic that despite the loss of a significant services contract at the end of the quarter, it would no longer affect comparative services performance, and stressed that along with new services contracts signed, the growth of its services business in Germany should see growth rates increase.
Supply chain revenue in constant currency declined by 10 per cent in the quarter, meaning the year-to-date decline stands at 13 per cent.
However, all attention is now on Q4, the statement added.
“As is the case every year, the fourth quarter is always the most important for the group’s annual financial performance. It is clear that in the year to date Computacenter has had a strong performance in the UK, but also that the group has been held back by the performance in both France and Germany,” it said.
“We expect to show some improvement in both France and Germany in the fourth quarter compared with the same period in 2013. This, coupled with continued progress in the UK, means the outlook for the group's trading result for the whole of 2014 remains in line with the board's expectations.”