Computacenter's record H1 takes revenue above £2bn

UK sales grow, but two large contracts bring down margins

Computacenter has reported a record H1 revenue of £2bn, with the firm's UK arm seeing sales rocket 29.5 per cent.

For the six months ending 30 June 2018 the channel giant saw overall revenue rise 18.1 per cent year on year, while adjusted profit before tax increased 24.3 per cent to £52.1m.

Computacenter said that its UK revenue growth was "flattered" by two "very large margin-dilutive" contracts, valued at £34.1m and £36.7m, which brought margins down by 80 basis points.

Mike Norris, CEO at Computacenter, said: "While the second half of the year is a more difficult comparison to the first half, due to the outstanding performance in H2 2017, 2018 is proving to be a year of significant progress particularly for our technology sourcing business.

"The buoyant market conditions are being driven by a number of factors specifically, but not limited to, the need to increase network capacity, the constant need for enhanced cybersecurity, workplace upgrades and a move to the cloud. While it is impossible to predict how long these buoyant market conditions will continue, most of these drivers have significant momentum.

"As always, Computacenter will continue to focus on the long term, investing in our business, innovating our offerings and enhancing our customer service."

Computacenter saw around three quarters of its revenue come from what it refers to as technology sourcing (previous called ‘supply chain') in H1, while the remaining quarter came from services.

In the UK, revenue rose to £858.1m driven by product sales, but services declined 4.5 per cent to £225.1m, which Computacenter attributed to two "challenging projects" requiring additional resources.

The firm had previously warned that services would be hit by the conclusion of a large contract, but said that it has managed to retain a "large element" of this customer's IT operations. Nonetheless, it branded its services performance as "disappointing".

Margins on the product side of the business were brought down by 80 basis points as a result of the two large contracts.

In Germany Computacenter's revenue rose 11.4 per cent to €984.1m (£886.69m), driven by growth in both its product and services divisions.

The technology sourcing arm saw sales jump 13.6 per cent to €679.5m, while services grew 6.8 per cent to €304.6m.

Overall, adjusted operating profit grew 53.1 per cent to €36.6m in Germany.

Computacenter however warned that a lack of available talent in Germany is a "growth inhibitor", adding that some of its German operations could be run from outside the country in the future.

Earlier this year Computacenter opened up a services centre in Poland to support its German business.

Sales in France meanwhile were down 1.2 per cent to €262.2m, but Computacenter stressed that this was down to a particularly strong H1 last year. It added that the first half of this year matched its H1 from 2016.

Adjusted operating profit in France grew by 41.2 per cent to €2.4m.