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.
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.