Computacenter says margins squeezed

European IT services provider Computacenter said performance across its continental markets had made up for flat results from the UK in the first quarter.

However, it said margins had been hit during the period, due to the costs of moving staff into new roles in its services division and sales commissions.

"We expect these costs to continue in the short term, given the size and number of large contracts won, which are yet to go live, but we very much view these costs as an investment in the long term profit growth of the group," the firm said.

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

"In the UK, the on-boarding of contracts is going to plan; however, in this regard there are some challenges in Germany where more work is required."

Group revenues for the first quarter increased by 9%, Computacenter said, with revenue growth positively impacted by the acquisition in April 2011 of Top Info in France.

Services revenues grew 9%, while revenues at the group's supply chain division also grew by 9%.

Overall, the company's UK revenues remained flat on the same period last year, with a 8% increase in Services revenue and a 5% decline in Supply Chain revenue.

It has been hit in the UK by a freeze in spending in investment banking.

However, it said that double digit growth in both France and Germany had helped offset this.

The firm said that its outlook for 2012 remained unchanged.