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Computacenter comes through 2023 strongly
Firm indicates to shareholders that despite it being a tough market, it has grown pre-tax profits
Computacenter does not represent the entire channel, but along with the likes of Softcat and Bytes, it is seen as an indicator of the health of the industry.
The firm’s positive tone pervading its pre-closing trading statement will have provided those hoping that 2023 was a tough year but not an apocalyptic one with plenty to cheer about.
The pre-closing statement for the year ending 31 December 2022 indicated to investors that the firm had been able to generate record adjusted pre-tax profits, with cash generation ahead of expectations.
Total revenue, on a Gross Invoiced Income basis, increased by 12%, with a decent performance in both the Technology Sourcing and Services businesses.
“We expect FY 2023 to be another record year of adjusted profit before tax,” the firm stated. “This result has been delivered against the backdrop of uncertain macroeconomic conditions throughout the year while, as planned, increasing the level of investment in strategic initiatives. It reflects the strength of our integrated Technology Sourcing and Services model as well as our geographic diversity.”
The statement highlighted strong contributions to the Group from the North America and German operations, underlining the rewards of the investment strategy in the US.
Computacenter benefitted from the component shortages that had plagued the past couple of years normalising over the course of 2023. The channel player has kept on top of inventory levels and managed to finish the year in a strong cash position.
M&A activity
The trading statement hinted the destination of some of that higher-than-expected cash was not yet decided, and that it could support M&A activity.
“Given the strength of our balance sheet, we are evaluating our options,” the firm stated. “Historically, Computacenter has a track record of returning surplus capital to shareholders when suitable acquisitions are not available.”
Many in the market are keeping their fingers crossed that a noticeable recovery in tech spending starts to kick in from the second quarter, and Computacenter’s statement talked of uncertain macroeconomic conditions lasting as it moved into the fiscal year 2024.
The firm stated it was in a strong financial position and well positioned to continue taking market share.
“As anticipated, we expect to see Technology Sourcing volumes normalise in 2024 as some of the high-volume, low-margin projects we delivered, especially in the first half of 2023, were completed,” the statement added. “In Services we expect continued growth, while inflationary pressures are expected to moderate further.”
For this year, the business will continue investing in systems and activities that can support market growth.
“Looking further ahead, we are excited by the pace of innovation and growth in demand for technology,” it said. “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 placed to deliver profitable growth and sustained cash generation.”
