Computacenter provides some cheer with robust Q1 trading

Computacenter has provided the channel with some much-needed cheer after reporting that trading so far through the Covid-19 pandemic has been more robust than expected.

The last time the channel player updated the market with its FY2019 numbers was before the lockdown had really started to have an impact and, like everyone else, the firm expressed some uncertainty about what lay ahead.

In a first-quarter trading update, Computacenter revealed that although revenue had reduced slightly, profits remained in line with the previous year.

“Current trading has been more robust than we anticipated at the start of this crisis,” said the firm. “There has been a marked difference in need from customer to customer, depending on which sector their business is in. There has been a surge in demand from many of our customers to enable business continuity, particularly around homeworking and network resilience.”

Earlier this month, Computacenter CEO Mike Norris and group finance director Tony Conophy elected to reduce their base salary to zero from 1 April 2020 until 30 June to stand in solidarity with furloughed staff. The Q1 update revealed the extent to which the business has had to use that option for employees.

“In the industrial sector, where a large number of our customers have had to cease production, our engineers and consultants are unable to work,” said the firm. “To mitigate the cost of carrying these staff but retaining them for the long term, we have placed approximately 10% of Computacenter’s employees across Europe on wage-subsidy programmes utilising various governments’ initiatives. The majority of these employees are engineers, project managers and consultants.”

Like many in the channel, the key is cashflow, and the business has approved some requests for extended payment terms as it looks to keep business flowing. The board is proposing that a dividend is not paid out this year.

The trading update added: “Given the factors on the business, mentioned above, we are confident in the short-term outlook and the board believes that the pre-tax profit performance in the first half of 2020 will be broadly in line with, or slightly ahead of, that of the first half of 2019. The second half of the year is more difficult to predict, but currently our full-year expectations remain unchanged.”

Computacenter added that it was looking forward to welcoming back furloughed staff once the crisis was over and more normal business conditions emerged.

The trading statement also praised the government’s efforts, but indicated that it would be looking to reconsider the extent to which it had used the government’s Coronavirus Job Retention Scheme, which the firm had found to be “enormously helpful in the early and very uncertain days of this crisis”.

It added: “While it wouldn’t surprise us to see a short-term dip in demand, as enterprises return to work, we believe that the need to invest in technology and, in particular, a robust IT infrastructure has been brought in to clear focus by recent events.”