Computacenter straddles services hobbyhorse as product slows

Services again became the primary growth engine for Computacenter in Q2 but good old fashioned product sales also contributed to top and bottom line growth, albeit lower than the first three months of 2010. A half year trading update issued this morning showed group revenues were up 5% while profit

Services again became the primary growth engine for Computacenter in Q2 but good old fashioned product sales also contributed to top and bottom line growth, albeit lower than the first three months of 2010.

A half year trading update issued this morning showed group revenues were up 5% while profits were in excess of the 10% the services-based reseller posted a year ago.

Mike Norris, chief executive at Computacenter, said growth rates slowed marginally in Q2 but remained steady.

"We have seen a positive trend in IT capital expenditure in all regions compared to last year, with Computacenter France and Germany showing signs of improvement, as the period progressed," he said.

Excluding the sale of CCD, UK revenues jumped 6% including a 6% rise in product revenues compared to 9% in Q1, and a 7% climb in services following a modest 3% turnout.

Norris noted the "more subdued" product sales trend and attributed the start of new contracts to the rise in services, but expected growth rates to be maintained for the rest of the year, adding "our prospect pipeline for 2011 is promising".

Revenues at the German business, including an acquisition, were up 5%, however the challenging first two months of 2010 means profits will be lower than the year ago period. In France, product and services sales grew 10% and 5% respectively.

Norris said he was pleased with the group's overall results in H1.

"While we are fully aware that market conditions remain highly competitive and the economic outlook is far from certain, the first six months of 2010 has led us to believe that this will be another year of progress for Computacenter," said Norris.

Group net funds before customer specific financing were £95m compared to £47m a year ago "flattered by around £25m from an ongoing credit facility provided by a major supplier, which is due to run until the end of 2010".  

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