Computacenter's 'robust' Q1 sees impact from COVID-19
Services giant reports reduced year-on-year revenue but remains optimistic that full-year earnings will marry with expectations
Computacenter has shelved plans to pay a dividend to shareholders for its FY19, despite "pleasing" trade in its first quarter.
The services giant reported a slight year-on-year decline in revenues for the three months ending 31 March 2020 but said that profitability has remained in line with the same period in 2019. It did not reveal any numbers.
It is confident that, in the short-term, the pre-tax performance in H1 2020 will align with, or be ahead of, the first half of 2019, and that its full-year expectations remain unchanged, though it did caution that H2 will be more difficult to forecast.
"Current trading has been more robust than we anticipated at the start of this crisis. There has been a marked difference in need from customer to customer, dependent upon which sector their business is in," it stated in the trading update.
"There has been a surge in demand from many of our customers to enable business continuity particularly around homeworking and network resilience."
Computacenter has put 10 per cent of its workforce across Europe on furlough, the majority of which are engineers, project managers and consultants unable to do their work due to a large number of the reseller's industrial customers ceasing production.
It has approved a number of requests for extended payment terms from its smaller customers and those that have been "materially affected" by the COVID-19 crisis. As a result, Computacenter is cancelling payment of dividends to shareholders for its year ending 31 December 2019.
"Whilst the group's cash position is strong and trading is in-line with our expectations, the company continues to explore all opportunities to maintain cashflow and preserve cash balances in light of heightening macro-economic uncertainty directly related to the COVID-19 crisis and its duration," it stated.
"The board recognises the importance of dividends to shareholders, and the company prides itself on a long track record of paying dividends and other special cash returns. The company will continue to monitor the current crisis and resume distributing cash to shareholders as soon as it is appropriate."
The firm will review the extent of its involvement in the UK government's Coronavirus Job Retention Scheme in the coming weeks and anticipates an increased demand for IT services once customers resume work.
"While it wouldn't surprise us to see a short-term dip in demand, as enterprises return to work, we believe that the need to invest in technology and in particular a robust IT infrastructure has been brought in to clear focus by recent events," it added.