Computacenter set to continue 16-year growth streak this year, but warns of challenges for UK business

The company claims trading has been 'robust' despite the UK facing 'by far the most challenging comparison in the group'

Computacenter says that its 16-year-long earnings per share growth streak likely won't come to an end this year as it attempts to outdo a record year of trading during the pandemic.

The reseller acknowledged there was some "understandable scepticism" about whether it will be able to continue its streak of uninterrupted earnings per share growth after a 2020 which saw profits rocket by 46.5 per cent to £206.6m - its highest increase in 22 years as a public company.

But a trading update this morning said that it is "highly likely" the firm will continue to grow its earnings per share this year given a strong pipeline of business for the second half of the year.

"As we enter the second half of the year, our services backlog and more particularly our product backlog, across all geographies, are at a record high which gives us a high degree of comfort," the company said in the update.

"We do, however, remain concerned about product shortages within the industry and obviously further strengthening of the pound would create a stronger FX translation headwind, but we are not predicting either of these headwinds to get any worse.

"After a record-breaking performance in 2020, as we entered into 2021, there was some understandable scepticism as to whether Computacenter could continue with its 16 years of uninterrupted earnings per share growth.

"Given the performance in the first half, the current backlogs and the forecast to the end of the year, while nothing in life is ever certain and we face a stronger comparative in the second half, it is highly likely that 2021 will be another year of substantial progress for the group."

Computacenter's share price jumped by six per cent to 2,606 GBX on the back of the trading update.

The company said it has seen "strong" organic growth in both its Technology Sourcing and its Services business in the UK, Germany and the US, highlighting its German operations as a particular area of growth due to the majority of its industrial clients "now being fully operational".

Trading was "robust" across all categories, it said, though the UK endured "by far the most challenging comparison in the group".

Supply constraints caused by shortages of key components and the strengthening of the pound also held back progress, with Computacenter claiming that, without those two factors, profitability would have been even further ahead.

The UK reseller added that it expects to deliver an adjusted profit before tax for the first half of 2021 "circa 50 per cent ahead of the same period last year".

The group's interim results are set to be announced on Wednesday, 9 September.