UK a problem child for IBM in Q4

Issues in the UK, Germany and Brazil have meaningful impact on Q4 results, says Big Blue

The UK was one of three problem countries for IBM in Q4, with issues in this market - alongside Germany and Brazil - collectively contributing to a one percentage point impact on its revenue.

For the three months ending 31 December 2016, GAAP net profit from continuing operations was up one per cent annually to $4.5bn, on sales which over the same period were down one per cent to $21.8bn.

For the full year, sales were down two per cent to $79.9bn, while GAAP net profit from continuing operations slumped 11 per cent to $11.9bn.

In a statement read out on its earnings call with financial analysts, IBM's CFO Martin Schroeter flagged up the UK as having had a negative impact on business in the final quarter.

"On a geographic basis, we had sequential improvements in both the Americas and Asia Pacific, while EMEA decelerated," he said. "Performance by country would generally be what you'd expect, based on macro and geopolitical trends. We've all read about various issues in countries such as the UK, Germany, Brazil, Russia, Turkey, and so our performance in these countries reflects that reality.

"Some of these countries, UK, Germany, and Brazil for instance, have a meaningful impact to our results. Collectively, these three countries had over a one point impact on our revenue performance in the quarter. Others, like Russia, Turkey and Egypt were also a drag on our growth, though less of an impact given their size. We had really good results in China. In fact, China grew strong double-digits in the fourth, which resulted in revenue growth for the full year. This strength was in the banking sector, where our largest clients are upgrading to our latest technology to continue to run their infrastructure. I should mention that we also had good revenue performance in the US, where we returned to growth."

Schroeter said IBM has made "a lot of progress" on transforming the business, pointing to the strong performance of its strategic imperatives business, led by cloud.

"In 2016 we continued to make a lot of progress in the transformation of our own business," he said. "We had strong growth in our strategic imperatives - cloud, analytics, security and mobile. These offerings generated $33bn in revenue, and now represent over 40 per cent of our revenue. And they're high value offerings, with a gross margin that raises overall IBM."