Computacenter Q1 trading update: UK market still a challenge as reseller expects progress in 2024

Computacenter is preparing investors for a year-over-year decline in revenue and profit before tax in Q1, while expecting large contracts to drive growth in the second half of the year

Computacenter is prepping the market for muted results in Q1, as it faces a challenging economic environment in the UK.

The tech and services giant expects revenue and profit before tax to be down year on year.

In a trading update for the first quarter ended 31 March 2024, the company reported that its overall performance was broadly in line with expectations, with solid underlying performances in Germany and North America offsetting continued difficulties in the UK market.

Technology sourcing revenue in Q1 was down, returning to 'more normal levels' compared to the same period last year.

This normalisation, along with growth achieved in Germany in the prior year, impacted the quarterly performance.

On the services side, revenue during the quarter was below the previous year, with continued growth in professional services outweighed by the expiry of certain managed services contracts.

Computacenter also reported it has commenced a large four-year public sector contract in the UK at the beginning of the second quarter, secured at the start of 2024.

"Our integrated technology sourcing and services model, our committed product order backlog, and our 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," a statement read.

While adjusted profit before tax for the first half is expected to be below the equivalent period in 2023 due to tough comparisons, Computacenter said it remains optimistic about its prospects for 2024 overall, driven by its strategic investments in future growth.

FY23 results

In its FY23 results, Computacenter reported a 11.4 per cent increase in gross invoiced income to over £10bn, driven by growth in technology sourcing (13.1 per cent) and services (3.1 per cent).

Gross profit rose 10.2 per cent, and adjusted EPS grew for the 19th consecutive year.

Effective inventory management led to improved cash generation and a record net cash position.

Technology sourcing benefited from large enterprise spend and market share gains, while services margin improved.

Germany reinforced its leading position with a 13.8 per cent profit increase.

North America demonstrated long-term growth potential with a 24 per cent profit rise.