Computacenter on track for modest growth

Computacenter has indicated that it will still deliver modest profits this year, even in the face of economic headwinds.

The channel player has issued a trading update covering its third quarter, ending 30 September, to update investors.

Not only are trading conditions getting more challenging because of price rises and energy cost hikes, but it was always going to be difficult comparing this year with a couple of years boosted by pandemic spending.

“After two exceptional years, Computacenter believes that 2022 will be a year of modest adjusted profit before tax growth,” said the firm. “This will be achieved despite the substantial headwind of the unwinding of the Covid-19 cost and utilisation benefits we received in 2020 and 2021.

“We are benefiting from currency movements and the positive, but limited, contribution from our in-year acquisitions, but these are much smaller than the Covid headwinds.”

One of the themes of recent financial updates has been the positive impact of the US acquisitions Computacenter has made, with its most recent sealed in July also starting to show good performance.

The technology sourcing business is “strong” and services are also up, although that market is facing more difficulties, it said.

“Our services businesses were more challenged due to the post-Covid-19 effects mentioned above and ongoing cost and inflationary pressures, but some recent contract wins, which have not yet contributed, give us confidence,” the trading statement added.

Computacenter is also sitting on higher levels of inventory than last year as supply chain constraints continue to affect the industry.

The firm hopes those problems will ease over the fourth quarter, but warned that it would still be an issue well into its next fiscal year.

The statement concluded by restating the view that growth is coming this year and it is also taking steps, with investments in security and other strong growth areas, to improve its future fortunes.

“These investments, as they increase, will continue to hold back short-term profitability, but we believe they are essential to secure our long-term success,” saidf the firm. “This commitment to invest for the long term gives us confidence for the future.”

The Computacenter update come just a few days after Softcat issued its full-year numbers. Channel watchers will be reassured from the content and tone of those announcements, which both stress that growth is continuing and the fundamentals of the market, with the need for digital transformation support, remain in place.