Computacenter warns of further drag on sales in H1 trading note

The resale and services giant cited normalisation across technology sourcing and negative currency effects as key drivers

Computacenter has issued a trading update, preparing the market for lower year-on-year sales delivered during the first half of 2024.

Despite an uptick in technology sourcing in North America, the company anticipates that overall technology sourcing volumes have normalised compared to the exceptionally strong performance seen in H1 2023.

The resale and services giant reported a solid underlying performance in Germany and North America.

However, in the UK, it cited weaker than expected demand for hardware, with customers exercising greater caution and taking longer to conclude purchasing decisions.

The light at the end of the tunnel, according to the note, is that Computacenter's committed product order backlog has grown significantly since the start of the year, driven by notable technology sourcing wins in North America.

The company expects the figures for H1 2024 are expected to be lower than the prior year equivalent.

The adjusted profit before tax for H1 2024 is anticipated to be approximately £87m, compared to £121.8m in H1 2023. This is due to a negative currency translation, as well as the timing of certain large orders in North America, moving them into H2, the company said.

The reseller highlighted increases in strategic initiative investments, with an additional £6m spent compared to the same period in 2023. The full year investment is expected to remain unchanged at £28m to £30m.

Looking ahead, Computacenter expects stronger momentum in the second half of the year, underpinned by the size of its committed product order backlog and a wider pipeline of opportunities.

While mindful of the continuing geopolitical and macroeconomic uncertainty across its markets, the company continues to expect progress for the full year 2024 at constant currency.

Computacenter will publish its half-year results for the period ending 30 June 2024 on Monday, 9 September 2024.

In light of the group's strong positive adjusted net funds position and currently anticipated capital needs, Computacenter has also announced a share buyback programme worth up to £200m.

The drag on revenue continues a similar trend from Q1, but is accelerated in the H1 results.

Technology sourcing revenue in Q1 was down, returning to 'more normal levels' compared to the same period last year. This 'normalisation', along with the growth achieved in Germany in the prior year, impacted the quarterly performance.

On the services side, revenue during the quarter was below the previous year, with continued growth in professional services outweighed by the expiry of certain managed services contracts.

Computacenter also commenced a large four-year public sector contract in the UK at the beginning of the second quarter, secured at the start of 2024.