Computacenter performing well but warns on 2012 profits

European IT services provider Computacenter has said it expects its Supply Chain business to experience high single digit growth for the first half of 2012, but warned it will be required to invest significantly over the remainder of the year.

Service revenue continues to grow "substantially", and the company sees no indication that the previously announced growth rate of more than 15%, in constant currency, will moderate, as it is underpinned by contracts already won, as well as a substantial new business pipeline.

However, the firm warned that the significant amount of new business growth requires material investment to deliver successful take-on of the new business and drive high customer satisfaction to underpin its success in the years ahead.

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These capital investments, which include the recruitment of over 700 new Services personnel, will result in an inevitable increase the company's depreciation costs. The new business has also attracted significant costs associated to sales commissions, which are predominately paid up-front.

These incremental investments are likely to cost Computacenter in the region of an additional £7.0m in 2012, compared with its previous expectations. In addition, the depreciation of the euro against sterling, if it were to remain at the current level, would reduce Computacenter's profit in 2012 by around an additional £3.0m.

Chief Executive Officer Mike Norris said: "While we highlighted the necessity for investment in our statement of April 18th, both the size and scope of the opportunities we have won have increased significantly, requiring us to invest further."

The firm was keen to emphasise that investment by its customers in capital expenditure projects remains "satisfactory", despite the current challenging market conditions.

NR