Computacenter posts flat revenues after contract issues in Germany

published 24 April 2013

Computacenter reported flat revenues for the first quarter as a result of contractual issues in Germany.

The provider of IT infrastructure services said revenue remained unchanged at £659.4m for the year as growth in the UK was offset by a decline in Germany.

In the UK, revenue climbed by 6.0% to £294.9m as services increased 11% and supply chain rose 4.0%.

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"The comparator from 2012 for services growth will get more challenging from now, but our prospect pipeline has increased since we last reported giving us more confidence that our services growth rate can be maintained for some time to come," the firm said.

Germany, on the other hand, saw revenues drop by 7.0% to £280.6m with services down 2.0% and a supply chain earnings fall of 17%.

The decline in supply chain revenue reflected a large one-off low margin deal in the previous year.

"The moderate revenue performance in services was as expected due to our focus on resolving existing contractual issues over the winning of new services business throughout 2012," the firm added.

The group said three contracts in particular were financially and operationally challenging.

However, it said: "It is important to note that maintaining our overall relationship with these customers, as well as our reputation in the market place, makes us determined to ensure that we deliver on agreed service levels, in spite of any short or medium-term impact that this approach may have on our profitability."

Although Germany revenues fell, France grew 2.0% to £107.4m with services up 7.0% and supply chain up 2.0%. A tough economic environment resulted in a lack of professional projects which hit service margins and performance on the bottom line.

"We see very little prospect of this abating this year," Computacenter said. "Taken together with the major contract renewal that will take place in the second half of 2013, which we have noted previously, 2013 will be a tough year for Computacenter in France."

At the end of the quarter, net cash came to £98m, compared to £106m the previous year.

This year the company expects UK revenue to continue to drive business while IT works on securing more contracts in France and Germany.

However, given the German contractual issues and the current in-year performance in France, the company anticipates modest progress against the overall group performance achieved in 2012.