Computacenter warns on first-half profits

(Sharecast News) - Computacenter warned on first-half profits on Wednesday, citing strong prior-year comparatives and challenging UK markets. In an update for the first quarter, the company said it expects to make further progress this year, as it has performed broadly in line with its expectations. Germany and North America delivered "solid" underlying performances, but the UK "remained challenging", it said.

As expected, Q1 revenue from the technology sourcing business returned to more normal levels versus the same period last year, which benefitted from a small number of exceptional contracts.

"The performance in the quarter largely reflected the normalisation of higher-volume, lower-margin technology sourcing contracts in North America and the excellent growth achieved in Germany in the prior year," it said.

Towards the end of Q1, it won a "significant" new contract in technology sourcing with a large customer in North America, which it expects to start fulfilling towards the end of the second quarter. Computacenter said it has a strong and growing pipeline of technology sourcing opportunities in North America for the rest of the year.

Meanwhile, revenue from the services segment was below the prior year, as expected, with continued growth in professional services outweighed by the expiry of certain managed services contracts.

At the start of the second quarter, it began a large four-year public sector contract in the UK which was secured at the start of the year. Computacenter said its pipeline of professional services opportunities across the group is also encouraging.

"For the full year in 2024 we expect to make further progress, while continuing to invest in future growth," it said.

"Given the first half comparison we have previously highlighted, adjusted profit before tax for the first half is expected to be below the equivalent in 2023. The strength of our integrated technology sourcing and services model, our committed product order backlog and pipeline of opportunities, give us confidence in delivering a stronger performance with growth weighted to the second half of the year, underpinning our expectations of further progress for the full year."