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God bless Brit biz spending, gushes Computacenter

Group sales up despite weakness in continental ops

In spite of a currency headwind and economic fragility on the continent, Computacenter exited calendar 2014 with an ever so slightly swollen top line, aided by a UK sales bounce in product reselling and tech services.

According to a trading update, the London-based outfit closed off the year on a high, with group turnover up four per cent as reported or seven per cent in constant currency. Over the 12 months, group revenues were up a more modest one per cent as reported but grew four per cent excluding for-ex conversions.

Across the operations in Blighty, France and Germany, group services edged up two per cent, and product sales – classified as supply chain revenue – were up one per cent.

The numbers were in line with management forecasts, the company said, lest we forget there’s nothing that ruins a day more for investors than surprises.

For the second consecutive year it was the UK that came good for the reseller, with total revenue up ten per cent on the back of an eleven per cent bounce in hardware and software, and nine per cent in services.

“There have been a number of large contracts secured during 2014 that will assist revenue growth in 2015 and beyond,” the company gloated.

“While there will be a headwind to services growth in 2015, due to the significant reduction in one particular contract, we have also achieved a number of significant renewals during the year, particularly in the fourth quarter which will underpin the contractual services revenue base,” it added.

Computacenter said in the last quarter its UK arm saw an eight per cent spike in sales, including 12 per cent growth in services and six per cent in product.

The same warm glow was not cast over operations in Germany, with calendar ’14 turnover down eight per cent as reported, or a three per cent fall in constant currency. Services fell five per cent and products were down ten per cent.

There is perhaps some light at the end of the tunnel; the contracted services issues with three customers in the country have been cleaned up; and there was an uptick in Q4 when total sales jumped six per cent in constant currency, including a nine per cent hike in product but a three per cent dip in services.

“While it is disappointing to see total revenue decline in 2014, the overall performance of the business has gradually improved as the year has progressed… resulting in our German business entering 2015 in a stronger position than it entered 2014”.

Over in France, annual revenue grew one per cent as reported or six per cent in constant currency. Services and product reselling both grew by a single digit, despite Q4 ending on a low.

“It has been an extremely challenging year for Computacenter France. Our customer services offering has improved materially during the course of the year, assisted by the appointment of new local management and group management input.

“However, general market conditions have remained difficult and we have suffered from poor service quality delivered by the business in 2013. Our systems are now stable which is enabling us to rebuild our business, with a particular focus on the services pipeline”.

Computacenter said it has “made progress” in reducing working capital tied up in the business, “but there remains much to do in this area, including taking sustained action to lower levels of overdue debtors”.

Analysts expect 2014 revenues for Computacenter to come in at £3.1bn, a modest rise on the prior year.

Momentum in the UK and the bullish end to the ops in Germany give management some reasons to be cheerful, but “it is far too early to make any predictions in respect of 2015”.

The continued trend of the weakening Euro in relation to Sterling will certainly provide firms with business in mainland Europe some food for thought. Only last week the British pound climbed to a 15-year high against the single European currency. ®

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