Computacenter delivers 'record profit growth' in FY23: The highlights

UK's second largest reseller cites foreign markets, technology sourcing and services as strong points, despite H2 'normalisation'

Computacenter is set to report "record profit growth" for 2023, according to a trading update released this morning.

The UK's second largest reseller according to CRN's Top VARs, reported that the metric increased 12 per cent on both a reported and constant currency basis.

The uplift, according to Computacenter, was driven by strong performance across technology sourcing and services, demonstrating that the company's strategy of revenue diversification appears to be paying off.

Similarly to the rest of the market, however, the bulk of the performance was driven by a strong first half, while Q3 and Q4 saw what Computacenter termed a ‘normalisation'.

The VAR acknowledged inflation as a continuing headwind, signalling a potential slow start to the new financial year.

Germany and North America drive performance

While acknowledging challenges in the UK market, Computacenter singled out the strength of its operations in Germany and North America as standouts.

Strategic changes implemented in the UK are expected to enhance overall performance in the future.

The trading update also cited lessening supply chain pressures following a period of sustained disruption during and after the pandemic.

This follows the trajectory outlined by the reseller in its Q3 results, when Germany and the US performed ‘strongly' while the UK proved a ‘difficult' market.

Professional services and managed services in the UK were also down in its H1 results, dropping by 9.5 per cent and three per cent respectively.

Strong profit growth and improved cash position

This allowed the group to finish the year in a strong cash position, with net funds, excluding IFRS liabilities, at around £450m.

"Given the strength of our balance sheet, we are evaluating our options. Historically, Computacenter has a track record of returning surplus capital to shareholders when suitable acquisitions are not available," the update mentions.

The company alluded to previous occasions when it had returned surplus capital to shareholders if no strategic acquisitions were available, signalling an emphasis on organic growth over M&A.

Positive outlook and strategic investments

Looking ahead to 2024, Computacenter expresses optimism despite the uncertain macroeconomic backdrop.

The company anticipates the normalisation of technology sourcing volumes and continued growth in services.

Strategic initiatives will focus on enhancing systems, improving competitiveness, and delivering productivity benefits, which may

"Overall, we expect to make further progress in FY 2024 with a more challenging comparison in the first half of the year than in the second half," notes the update.