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Sales dip but profits hold firm at Computacenter in 2009

Microscope contributor

Computacenter's exit from trade distribution pushed down 2009 revenues marginally but the march toward services continued as profits held their ground in the face of economic turmoil.


Group sales fell 2% to £2.5bn but excluding CCD, which was sold to Ingram Micro for £3m, revenues would have risen 0.7%. The sale freed up £20m of working capital but is likely to hit profits by £1m in 2010. Net cash was £86.4m.


Profit before tax climbed 25.8% to £54.2m while retained profits were largely flat at £37.7m. Operating expenses dropped £30m and it incurred exceptional charges of £5.3m related in part to redundancy costs in the UK and France.


Product revenues across the group declined 2.3% to £1.68bn but as predicted, as services went up 8.1% to £740m, this trend was even more apparent - and magnified by the CCD factor - in the UK as revenues fell 7.3% to £1.14bn.


"This fall was driven by product revenue declines as the condition of the UK economy caused our customers to reduce capital expenditure where possible," said Mike Norris, Computacenter chief executive.


Services sales in the UK grew 2.2% to £334m and vital long term contractual revenues went up by 6% as professional services related to short term hardware projects fell 6.8%.


"The decline professional services revenue was caused by a lack of large infrastructure projects throughout 2009," he said.


The German operation saw a 1.4% decline in revenues to €1.03bn as product sales were under pressure and in France Computacenter made an operating loss of €3.1m on the back of a 7.6% drop in sales to €358.7m.


The group made two acquisitions in the year; systems provider becom Informationsysteme GmbH in Germany and Thesaurus Computer Services Limited in the UK, the latter which bolstered Computacenter's sales of IBM System Z.


Encouraging signs of uplift in the fourth quarter in the UK have continued, said Norris, and while Germany has seen a challenging start to 2009 it was too early to predict the level of customer demand for the current financial year.


"While the economic outlook remains uncertain, customers will continue to focus on reducing their operating costs and focusing on core activities," said Norris.


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