Bechtle Q1: Sales dip as German economic slowdown bites

CEO Thomas Olemotz cites reluctant to invest SMEs as he pledges recovery in H2

German reseller giant Bechtle is one of many firms feeling the pinch of the German economic slowdown. Sales in the first quarter of 2024 fell by 2.3 per cent to €1.5bn.

In Germany, which makes up 58 per cent of Bechtle's business, sales fell 6.5 per cent. They grew by 4.2 per cent across the rest of Europe, with the UK being singled out as a positive performer alongside Belgium and the Netherlands.

"In Germany in particular, the delayed release of the budget has led to a postponement of government contracts," said CEO Thomas Olemotz, explaining the drop. Bechtle's predominantly SME client base remains "noticeably reluctant to invest."

This is the first drop in quarterly sales registered by the reseller in 15 years. The last time things went downhill was in 2009, when sales slumped by 6 per cent in the first quarter and did not recover over the course of the year.

However, Olemotz does not expect history to repeat in 2024.

"The first quarter was a good start, but not yet a benchmark for the year as a whole in terms of our aspirations," he said.

Bechtle's business volume (contracted long-term revenues that will be booked in later financial periods) increased by 3.4 per cent to €1.9bn, predominantly driven by the software business.

Strategically, Bechtle is focusing on the expansion of multi-cloud and managed cloud services as well as cybersecurity and artificial intelligence.

"Digital transformation is a strong business driver for us – in the public sector and industry alike. With our portfolio of solutions, we see ourselves in an excellent position here," says Olemotz.

Bechtle bets on new tech to drive growth in the second half of the year

"We want to and can pick up the pace over the course of the year. The second half of the year is crucial for our success," he adds.

That's why the Bechtle boss is not cutting corners and is maintaining his forecast for the year.

Hardware purchases, especially in the course of converting from Windows 10 (for which Microsoft will end support in October 2025) to Windows 11, should Bechtle's business a boost.

Overall, despite the challenging conditions, the management board once again expects positive growth compared to the market average for 2024.

Business volume, revenue and earnings are expected to increase significantly, and the EBT margin is expected to be roughly at the level of 2023.

Profit before tax rose 2.8 per cent to just under €82m in the first quarter of 2024.

As of the end of March, Bechtle had more than 15,200 employees, 6.4 per cent more than a year ago.

Bechtle shares lost 3.3 per cent to 44.44 euros in Xetra (the electronic trading arm of Deutsche Boerse) trading on Wednesday afternoon.