Computacenter's UK arm facing 'challenging year'

Germany the saviour as reseller and services powerhouse predicts tough year ahead for home operation

Computacenter's German operation was the its saviour in a stable first quarter. Its embattled French arm also showed signs of life in 2016's opening three months, but the the IT service and reseller giant's business in its homeland faces a "challenging year" ahead.

The UK-headquartered VAR and IT services titan today published a trading update revealing that Q1 sales were flat year on year in constant currencies, but rose two per cent on an as-reported basis to a total of £730.2m. A one per cent decline in services revenue was offset by growth of the same amount in its product business.

Computacenter Germany was the stand-out performer, with quarterly turnover increasing seven per cent annually in constant currencies to £281.2m. The increase came thanks to a seven per cent spike in services and an eight per cent jump in product.

"As indicated previously, we are expecting growth in our services business in Germany due to major contract wins in 2015 starting up in the first half of 2016," added the update. "We are also enthusiastic about potential further wins in 2016 which would contribute to growth in the future."

Although Q1 sales in France dropped six per cent excluding currency fluctuations to £88.7m, the reseller claimed its problematic French unit was showing signs of recovery.

The update said: "Our French business has continued the improved pre-tax profit performance seen last year and while much work remains to be done, significant progress is being achieved."

Computacenter's UK operation got a less glowing write-up for a Q1 performance which saw its top line shrink by four per cent year on year to £348.5m. Product sales were down two per cent, while the services business fell five per cent. The latter decline was expected, the VAR claimed, as the comparable quarter last year saw both the end of a big-ticket services contract coupled with a "large volume of new business take-on activity in the first half of 2015".

"We expect our comparative [UK] performance against 2015 to improve as we go through 2016," said the VAR.

The reseller reached the end of last month with net funds of £102.5m - almost four times the £26m it had as of the end of Q1 2015. Indeed, the company expects to finish 2016 with its highest ever net cash pile, following what it believes will be "a year of progress".

"Our momentum in Germany and pleasing performance - compared with the past - in France looks set to continue," the update concluded. "While the UK will have a more challenging year, particularly in the first half, as previously indicated, the new business pipeline is beginning to build."