Computacenter’s UK sales team must be in self-licking mode after a barnstorming start to calendar ’15 – but revenue zapping currency conversions and an unsettled French operation hit the group’s top line.
In a trading update, the London-listed services-based reseller said Q1 revenues reduced by two per cent as reported to £715.9m but in constant currency were actually up three per cent.
The UK was up a healthy seven per cent to £361.4m including a very respectable five per cent jump in product sales to £232.6m. This was set against a tough comparison period a year ago when the unit was up 27 per cent, in part due to the Windows XP upgrade cycle.
“We have experienced strong growth in enterprise data centre and networking equipment as customers finish end user operating system upgrades and are now investing their budgets elsewhere,” the company said.
Could this be a certain Windows 2003 refresh the firm is alluding to ahead of Microsoft shuttering support for the ageing OS? Yes.
Strategically more important services revenue jumped eleven per cent to £1288m, and though Q2 signals the end of a a long-term contract, the firm reckons this will be “more than offset” by new ones starting up.
“Our professional services pipeline remains strong and significant new contractual services opportunities are emerging,” Computacenter said.
The same warm glow, however, doesn’t emanate from the trading subsidiaries on the European mainland. In Germany, sales were up five per cent in constant currency to £252.3m – but were down six per cent when the cash generated was converted into sterling.
In constant currency the product and services units were up seven per cent and two per cent respectively, but in actual terms they declined four per cent and nine per cent. Progress is being made in the underlying operation, the company said.
Computacenter France dropped 21 per cent as reported to £90.8m and was down 12 per cent in constant currency. Product reselling led the declines, falling 23 per cent as reported but services dropped ten per cent.
Not a week goes without a tech supplier bemoaning unfavourable foreign exchange rates, typically in relation to US dollar which has surged since the summer in relation to the pound and the euro.
Forecasts for the pound indicate it will recover later in the year – the rise of the dollar has stabilised since the end of 2014, but there is less certainty in estimates for the euro.
Year of progress
Computacenter remains bold on its prognosis for 2015, predicting a “year of progress” for the corporation.
“The business is not without its challenges, particularly as we take on a large amount of new business in the UK. We are pleased that it is currently progressing well but it is likely to take another two quarters to get through this period of peak workload associated with bringing new customers on board,” it said.
The direction of travel for the German business was generally positive and can see light ahead for the loss-making French business, the firm added.
The Q1 results exclude sales for recycling biz RDC, which Computacenter sold to Arrow in February for £56m.
Computacenter did not provide a profit update; this is due when half-year numbers are released in August. ®