Computacenter reports mixed third quarter

IT infrastructure services provider Computacenter reported a 3% decline in third quarter revenue, but said its full year outlook remained in line with previous expectations.

The group was held back by its performance in France and Germany, although said it expects to see some improvement in both during the fourth quarter compared to the same period a year earlier.

With remedial measures taking hold, revenue from its French business increased by 5% in constant currency and was flat on a reported basis at £99m, bringing the year-to-date position to growth of 7% or 11% in constant currencies.

"The group has made some progress in France, and throughout 2015, year-on-year comparative improvement is expected within the French business," Computacenter said in a statement.

"Whilst much work remains to be done in France, we are starting to see payback from our significant effort to date, with a marginal reduction in the loss in the third quarter compared with the same period a year ago."

In Germany, revenue declined by 12% to £281m, bringing its year-to-date position to a 13% fall. The group explained that its results for the final quarter of the year would include some of the provision previously made as an exceptional item and said this was likely to total more than £1m.

"After what has been a tough year in Germany, particularly due to strong comparative periods, a more stable position going forward is expected. Significant effort is being focussed on accelerating services revenue growth and margin," the company continued.

The UK performance was much more positive, with overall revenue growth of 5% to £314m, bringing year-to-date growth to 11%, and expected to improve from new wins.

Both services and supply chain revenue grew by 5% in the quarter and by 7% and 14% respectively against the prior year-to-date position.

"Looking beyond the end of this year, the significant wins Computacenter has had to date in the UK and, to a lesser extent Germany, positions the group well, particularly for services revenue growth in 2015 and beyond," it said.

Broker Investec said the statement outlined "decent progress" towards the company's year-end targets and noted that the company said for the first time that the contract pipeline and on-boarding plans suggest underpinned growth in 2015 and 2016.

"With £62m net cash, this all points to a decent financial year 2014 and builds a good 2015 platform."