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Achtung, Computacenter

A profit warning that highlights issues in both Germany and France, responsible for 59 per cent of revenues, means we are bailing out of our buy advice.
April 24, 2013

With shares in Computacenter (CCC) down 13 per cent to 466p, we are bailing out of our recommendation as the company has failed to resolve contract issues in Germany, a key requirement of our buy tip. A profit warning also followed worsening trading in France as Broker Panmure Gordon cut adjusted pre-tax profit forecasts from £83m to £73m, giving EPS of 35.5p, down from 45p.

IC TIP: Hold at 466p

Computacenter said trading in the UK was going well, with revenues up 6 per cent to £294.9m, on double-digit growth in service revenues. The problems are mainly overseas. German revenue was down 7 per cent to £280.6m, and negotiations on three problem contracts there are ongoing with the prospect of additional provisions still a possibility. In France, the weak economy, combined with exposure to lower-margin supply chain contracts, means that management merely expects to break even, despite revenue inching ahead by 2 per cent to £107.4m.