Computacenter on track for growth

Computacenter has added to the positive updates to investors issued by channel players with indications that the firm is on track for another year of growth after Q3.

Last week saw Westcon-Comstor, Softcat and Bytes update the markets with decent numbers, and today saw Computacenter follow with a Q3 trading update, covering the three months ended 30 September.

The firm indicated that the quarter was in line with expectations, with the trends in the first half continuing, which meant Germany and the US were strong but the UK “remained difficult”, according to the market update.

On the back of a strong H1, the firm’s Technology Sourcing business normalised as the business completing some high-revenue, low-margin projects. But the firm indicated to investors it remained “encouraged by the sales pipeline for Q4”.

Services revenue continued to increase and the firm is managing to successfully deal with inflationary pressures on that side of the business.

“We continue to make good progress with our targeted strategic investments to enhance Computacenter’s long-term competitive advantage,” the firm added.

Computacenter also signalled that its cash position continued to improve as industry supply chains normalised and it had trimmed its inventory levels.

The advantage of following a calendar year is that the fourth quarter, seasonally the channel’s busiest time, provides Computacenter with a chance to finish the year strongly.

“Notwithstanding that Q4 is our largest quarter and much remains to be done, we continue to believe FY 2023 will be another of year of progress with growth in profitability,” the firm stated.

“Looking further ahead, with our strength in Technology Sourcing, Professional Services and Managed Services, and focus on retaining and maximising customer relationships over the long term, we believe that we are well positioned to compete and gain further market share,” it added.

The channel player’s Q3 comes after it delivered a solid set of numbers for its first half, revealing increased revenues across all segments of the business.

The channel player saw revenues improve by 26.8% to £3.58bn for the six months ended 30 June. The Technology Sourcing business delivered a 33.5% improvement, and services climbed by 8.5%. Pre-tax profits improved by 13.9% to reach £122.8m. Inventory levels have reduced to almost normal levels, which has had a positive impact on the firm’s cash position, and the business is continuing to invest, to the tune of £13m, in improving its competitive position and enhancing long-term resilience.

At that point in time, the UK delivered 8.7% growth in gross invoiced income in H1, which was fuelled by an ongoing move away from hardware to software, which compared to  revenue growth of 30.9% in North America.

The firm is planning to provide a pre-close update at the back end of January after it gets through the busy next couple of months.