Computacenter this morning announced another “record year” of adjusted profit before tax, as it revealed its top line has smashed through the £10bn barrier.
Here we round up the key takeaways from its full-year 2023 trading update (which is based on preliminary unaudited financial information for the year ended 31 December 2023).
1. £10bn player
LSE-listed Computacenter revealed it grew its gross invoiced income by 12% in 2023, meaning its top line now exceeds £10bn.
Priding itself on having “the largest services business of any value-added reseller”, and “the largest value-added reseller capability of any services business”, Computacenter has enjoyed frenetic growth in recent years partly off the back of two big North American acquisitions, FusionStorm and Pivot, in 2018 and 2020.
Although Computacenter didn’t divulge its 2023 gross invoiced income, a 12% uplift on last year’s £9.05bn tally would imply a top line of around £10.14bn.
That puts it in the same league as US-headquartered peers including CDW ($24bn), WWT ($17bn), SHI ($14bn) and Insight ($8.4bn).
“This result has been delivered against the backdrop of uncertain macroeconomic conditions throughout the year while, as planned, increasing the level of investment in strategic initiatives,” Computacenter stated.
See where Computacenter finished in IT Channel Oxygen’s Oxygen 250 here (brief registration process required)
2. Product sales normalise
That 12% growth is down sharply on the 30.7% uplift recorded in 2022 and “extraordinary” 29.9% growth generated in the first half of 2023, however.
Based on the percentage numbers Computacenter gave and its H1 GII (which hit £5.16bn), we think it must have generated a GII of just under £5bn in the second half (down fractionally on the £5.08bn generated in H2 2022).
Computacenter’s technology sourcing (or product resale) business saw an “anticipated normalisation of activity” in the second half as “certain projects were completed”, it said.
Services revenue growth for the year was “solid”, but inflation “remained a headwind”.
3. ‘Weaker’ UK
By geography, a “weaker” performance in the UK – where Computacenter said it has “made changes to improve our performance” – was offset by the strength of its German and North American business.
Computacenter’s UK arm grew noticeably more slowly than its overseas counterparts in the first half, namely by 8.7% to £1.27bn.
In contrast, Germany, France and North America saw GII swell 42.9% to £1.42bn, 26.4% to £431.1m and 39.6% to £1.88bn, respectively.
The trading update echoes the October full-year results statement of more product-oriented peer Softcat, whose pace of growth moderated sharply in 2023 amid customers “noticeably slowing their rate of investment”.
4. Plan for when suitable acquisitions “not available”
A “normalisation” in industry supply chains during the period enabled Computacenter to generate “strong” levels of cash, meaning its net funds finished the year at around an expectation-busting £450m.
Having been unusually acquisitive in recent years, the Hatfield-based giant hinted it may now use its strong balance sheet to reward shareholders, rather than splash out on further M&A.
“Given the strength of our balance sheet, we are evaluating our options,” it stated.
“Historically, Computacenter has a track record of returning surplus capital to shareholders when suitable acquisitions are not available.”
5. “Well placed to deliver profitable growth”
Computacenter gave a mixed outlook for the year ahead, saying technology sourcing volumes are expected to “normalise” against some high-volume, low-margin projects delivered a year previously, but that services are set to continue growing.
“Overall, we expect to make further progress in FY 2024 with a more challenging comparison in the first half of the year than in the second half,” it stated.
“Looking further ahead, we are excited by the pace of innovation and growth in demand for technology. With our strength in technology sourcing, professional services and managed services, and focus on retaining and maximising customer relationships over the long term, we believe that we are well placed to deliver profitable growth and sustained cash generation.”
