Computacenter's Q3 numbers add to concerns of market slowdown

Computacenter's share price tanks by 17 per cent overnight as the channel giant adds weight to industry warnings that business is slowing down for resellers

Computacenter has sounded a warning that a slowdown in the infrastructure managed services market could hamper future growth as it posts sales declines in its Q3 results.

Group revenues, excluding acquisitions made during the quarter, shrank by three per cent year on year to £900m (€1.01bn) during the three months ending 30 September.

Services revenues grew by one per cent, but its Technology Sourcing segment, which alludes to its supply chain business, declined by five per cent.

Its share price tumbled by 17 per cent during overnight trading.

The UK was Computacenter's poorest performer in Q3. Revenues shrivelled by nine per cent to £296m, as Technology Sourcing revenues tumbled by 12 per cent and services by four per cent.

France followed suit, reporting a six per cent dip in revenues to £119m. Technology Sourcing revenues decreased by eight per cent, or seven per cent in constant currency, while services declined by one per cent.

Computacenter's German business, however, managed to continue its upward trend established in the first six months of the year, but growth slowed dramatically in Q3. Sales grew by one per cent to £451m, or two per cent in constant currency. Services and Technology Sourcing sales both grew by one per cent during the quarter.

Computacenter echoed warnings made by Canalys CEO Steve Brazier just last month that Europe's channel partners have a tougher year ahead as revenue growth from reselling product begins to slow down.

The channel giant said that while its pipelines for professional services is "building nicely", growth for its infrastructure managed services business is "somewhat more challenged" due to tougher market conditions.

World Wide Technology CEO Jim Kavanaugh's recent summation of the market chimed with Brazier's and Computacenter's forecast. He issued a note of caution to traditional resellers that their business will slow down or even decline if they fail to innovate and shift towards selling services.

Its downcast Q3 results have not prompted Computacenter to alter its expectations for the end of the year, but the firm did warn that growth in Q4 before acquisitions would not "reach the levels seen in the first half of the year".

Computacenter highlighted that it has seen buoyant growth based on a nine-month comparison. Thanks to an extremely strong first six months of the year, year-to-date revenues are up by 11 per cent year on year at a group level, with revenues in the UK 28 per cent higher than last year from a year-to-date perspective.

It also assured that its core technology drivers of digitisation, cloud, security and networking and its recent overseas expansion moves - in the Netherlands through buying up Misco Solutions and in the US via its blockbuster acquisition of $600m-revenue reseller FusionStorm - have "positioned [Computacenter] well for future growth into 2019 and beyond".