Computacenter’s profit drops nearly a third as UK customers take ‘greater caution’

London-based tech firm Computacenter has reported that its profit slumped by nearly a third in the first half of 2024 amid weaker-than-expected demand in its home market.

The FTSE 250 firm, valued at £2.9bn, posted a pretax profit of £84m for the six months, down 31.6 per cent from £122.8m during the same period last year.

On an adjusted basis, this figure dropped 28.4 per cent to £87.2m – in line with its previous guidance.

Computacenter, which helps businesses set up and manage their computer systems and software efficiently, said its operating profit also fell 35.5 per cent to £78.4m. Revenue declined 13.4 per cent to £3.1bn from £3.58bn.

The company flagged that demand for hardware in the UK was weaker than expected at the start of 2024, with customers “exercising greater caution and purchasing decisions taking longer to conclude”.

It also pinned lower earnings on the timing of fulfilment for some large orders in North America being moved into the second half of the year. This was on top of a £5.7m rise in operating costs year on year due to “the phasing of our strategic initiatives investments.”

The firm said it was continuing “at pace with the rollout of our strategic initiatives, which will improve our capabilities and productivity, enable us to further leverage AI solutions, underpin our systems for the future, and create competitive advantage.”

Computacenter kept its expectation of £28m to £30m spending in the full year unchanged, compared to £28.4m in 2023.

“Our performance in the first half largely reflected the expected normalisation of technology sourcing volumes against an exceptionally strong comparative,” said Mike Norris, Computacenter’s chief executive.

“At the same time, we have executed well against our strategy by adding seven ‘podium’ customers in the half, broadening our customer base in North America. Professional services has also delivered good growth, leveraging our experience in Germany into other markets.”

He added: “We have made an encouraging start to our third quarter and continue to expect stronger momentum in the second half, resulting in progress in the full year on a constant currency basis.”

Computacenter highlighted its “strong balance sheet position” as adjusted net funds swelled to £401.9m from £116.8m, supporting a £200m share buyback announced in July. The firm said this programme would see its total shareholder returns reach almost £1bn since 2013.