Computacenter interim figures out and down

Revenues slipped from £1.23 billion to £1.15 billion but the company says its cash balance improved to £87 million from £41 million.

Ron Sandler, Chairman of Computacenter plc, said in the statement: "The first half of 2005 has been a challenging time for Computacenter. The decline in performance is largely attributable to a steep fall in product margins in the UK business. On a more positive note, our UK Managed Services continued to make progress. We believe that for the foreseeable future our UK product business will continue to face the challenges of intense price competition, vendors seeking to sell direct to large accounts and substantially lowered vendor rebates."

The firm which is undergoing huge reorganization, said despite a slow July and August it would meet full expectations.

UK revenue was down 6% to £716m with a 2.1% operating margin from 3.9% last year.

UK product margins were down £18m and £14m of this related to lower vendor rebates, however revenue in government was described as ‘disappointing'. Germany reported falling turnover to £300m and it moved into losses, EBITA -£1.5m, while in France losses were up to -£7.9m EBITA, -£2.0m last year. Benelux reported a £0.1m operating loss.

George O' Connor, principal tech analyst at Shore Capital Stockbrokers said: “Even though you must dig deep to find them, there are some bright spots: management did a stirling job in managing resources - cash conversion was 1064% with net cash up to £87.3m - there was a discernible shift in favour of enterprise products, Computacenter won its legal battle with GE and it is ‘considering the best use of cash resources' - we have long argued for acquiring an IT infrastructure services firm.”

“Computacenter needs to manage the longer decline in reselling as channel disintermediation will continue to dog the sector, in our view. It is clear that even vendors who are not going direct are looking to emulate the benefits of the direct model - by squeezing both ends of the supply chain. Note, for example that HP just has reduced rebates for early payments to 1.25% from 1.5% a move which should cost Computacenter £1m.” µ