German growth boosts Computacenter in third quarter

IT infrastructure services provider Computacenter reported a 27% improvement in overall revenue in its third quarter to £931m on Friday, or a 20% uplift in constant currency.

The FTSE 250 company said in its trading update for the period to 30 September that year-to-date revenue was ahead 18% on an as-reported basis, and 12% at constant currency.

Group services revenue grew by 15% on an as-reported basis, and increased by 9% in constant currency in the third quarter, resulting in year-to-date growth of 12% on an as-reported basis and 8% in constant currency.

Computacenter said group supply chain revenue grew by 33% on an as-reported basis and increased by 25% in constant currency in the third quarter, resulting in year-to-date growth of 20% on an as-reported basis and 15% in constant currency.

The outlook for the group's trading result for the whole of 2017 remains in line with the board's expectations, Computacenter reported, which had already been upgraded twice this year.

“Whilst the UK is growing slightly slower than the group as a whole, the results in the third quarter clearly demonstrate an improved performance with overall revenue growth of 8% to £335m, improving the year-to-date position to an overall growth of 6%,” Computacenter’s board said in its statement.

“Services revenue in the third quarter increased by 7% bringing the year-to-date position to a growth of 6%, with supply chain revenue growing by 9% in the quarter, bringing the year-to-date position to an increase of 6%.”

Revenue in the German operation grew in the third quarter by 26% in constant currency and by 40% on an as reported basis to £453m, bringing the year-to-date position to an increase of 18% in constant currency and 28% on an as-reported basis.

Services revenue in Germany increased in the third quarter by 9% in constant currency and by 20% on an as-reported basis, bringing the year-to-date position to an increase of 7% in constant currency and 16% on an as-reported basis.

German supply chain revenue increased in the third quarter by 36% in constant currency and increased by 50% on an as-reported basis, bringing the year-to-date position to an increase of 24% in constant currency and 35% on an as-reported basis, the board said.

“A significant percentage, but by no means all, of the supply chain growth comes from one large customer at margins below the group average.”

In France, revenue grew in the third quarter by 34% in constant currency and by 48% on an as-reported basis to £127m, bringing the year-to-date position to an increase of 12% in constant currency and 22% on an as-reported basis.

French services revenue increased in the third quarter by 16% in constant currency and by 26% on an as-reported basis, bringing the year-to-date position to an increase of 19% in constant currency and 29% on an as-reported basis.

Supply chain revenue in the French operation increased in the third quarter by 39% in constant currency and by 54% on an as-reported basis, bringing the year-to-date position to an increase of 11% in constant currency and 20% on an as-reported basis.

Looking at the books, group net funds were £151.5m as at 30 September - an improvement of approximately £54.5m on an as-reported basis and £53.3m in constant currency against the same period last year.

“We remain on track to complete the return of value of approximately £100m in the fourth quarter of 2017 which we announced at the time of our interim report,” the board said.

“The momentum we have experienced across the group, particularly in Germany, in the first half of the year has been maintained, if not improved during the third quarter of 2017.

“Whilst the fourth quarter is our most difficult comparison to 2016 of any quarter in the year, we remain on track for a record performance.”

Computacenter said new technologies, digitalisation and customer appetite to invest was “as buoyant” as the board could remember, which was driving its professional services and supply chain services.

“However, as noted in our 2016 final results, it is also true to say our target market's desire to reduce operating costs, and therefore the cost of running their IT, has intensified which is eroding our contractual services base, thus increasing the need to invest in productivity and innovation to remain competitive.”