Computacenter profit surges on strong German growth

Computacenter’s annual profit jumped by more than a fifth as strong growth in Germany offset falling profit at the IT infrastructure company’s UK business.

Adjusted pre-tax profit for the year to the end of December rose 22.9% to a record £106.2m as revenue rose 16.9% to a record £3.8bn. The annual dividend rose 17.6% to 26.1p a share.

Statutory pre-tax profit rose 28.2% to £111.7m.

Adjusted operating profit at Computacenter’s German business jumped 57% to €68.3m (£60.6m) as business customers spent to improve their systems in a push to go digital.

In the UK revenue returned to growth, rising 8.8% to £1.5bn driven by spending on supply chains and by professional services firms. But UK operating profit fell 18.2% to £38.3m as competition squeezed margins and the business absorbed higher performance bonuses and group investment spending. In France, adjusted operating profit rose 80% to €6.3m.

Computacenter shares fell 9% to 1,024p at 08:10 GMT. The shares had gained 45% in the year before the results were unveiled, driven by a series of strong trading statements, most recently in January.

Mike Norris, Computacenter’s chief executive, said the UK should return to operating profit growth in 2018, helped by contract wins. Business will be challenging in France, where large contracts are up for renewal, he added.

He said Computacenter had good earnings momentum, supported by a recent share buyback, and that the company expected to increase earnings in 2018 as businesses spend on digitising services and introducing automation to reduce costs.

Norris said: “We have seen good growth in our German business for the last few years, which we believe should continue with rising revenue from our supply chain business and margin improvement from our services business. The two major trends that we have highlighted over the last few years have strengthened still further.

"Firstly, our customers' appetite to invest in digitalisation to enhance their customers' and users' experience continues to grow. Secondly, our customers increasingly want to reduce the ongoing cost of running their IT, by introducing more innovative solutions such as automation."