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We rarely tire of extolling the virtues of the top-notch strategy and execution of Computacenter. Indeed, we can even forgive them styling themselves “the European IT infrastructure services provider”, even though over 70% of its revenues derive from product resale. But let’s not pick nits.
In the UK, Computacenter finished the year even better than they signalled in January (see Stellar year for Computacenter UK services), notably with services revenues growing by nearly 14% (to £381m) rather than the 11% previously mooted. Indeed services grew faster than product sales, with total UK revenues up 11% to £1.27b, 47% of the total. Computacenter UK is now responsible for two-thirds of group (adjusted) operating profit (3.4% margin, up from 3.1%).
Across the group, (continuing) revenues grew by 11% to £2.68b, (some 10% like for like), with product sales growing faster (15% like for like) than services. Services revenues grew by nearly 9% like for like to £788m. Group gross margins trimmed back 30bps to 13.7%, but a careful eye on SG&A saw operating margins increase by 40bps to 2.5%. By the time you get to the bottom line, this resulted in a 31% increase in (diluted) EPS. Super. And, as ever, ‘cash is king’, with net funds up 60% to £139m. There was also excellent news from across the channel, with France now profitable – the first time since 2001. Now only tiny Luxembourg remains in loss. Operating margins in Germany slipped a tad to 2.0%.
But we must return to the services side of Computacenter’s business because this is frankly from where the strategy is being led. The announcement earlier this year of Computacenter’s first ‘cloud’ email service (see Computacenter reaches for the cloud) is just the first step along the path towards a new portfolio of cloud services naturally extending from Computacenter’s infrastructure ‘knitting’. These services lift Computacenter way beyond being a pure infrastructure support play, though of course pitch them head to head against a tranche of services suppliers normally considered to be higher up the value chain – including, of course, key hardware partners like HP and key clients like BT. But this is the name of the ‘cloud’ game. So long as Computacenter continues to stick to doing what it knows it can do best – and where it knows it can do it – it will surely carve out for itself an increasingly larger share of the market.
