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Computacenter's top-line holds up

Revenues nudged up 1.5 per cent in the period
September 9, 2020

Winning new work from the government and the financial sector protected Computacenter (CCC) from lower spending by industrial customers during the first half of the year. Meanwhile a substantial improvement in technology sourcing margins boosted adjusted pre-tax profits more than a third. 

IC TIP: Buy at 2,248p

Technology sourcing sales increased by 2 per cent, as a wave of companies transitioned to remote working during global lockdowns. But the services business struggled with the fallout of the pandemic, leading to stagnant revenues. The decline in managed services was more pronounced in Germany, where it dropped by almost a tenth. The region suffered especially in the period as key industrial and automotive clients pulled back their expenditure. 

Management separately announced that it has acquired Pivot, a Toronto-listed IT solutions firm, for around $106m in Canadian dollars (£62m). The bulk of Pivot’s revenues come from its business in the US, where Computacenter plans to integrate its American operations. 

Investec forecasts adjusted pre-tax profits of £181m and adjusted EPS of 114.1p in the 2020 full year, compared with £146.2m and 92.5p in 2019. 

COMPUTACENTER (CCC)   
ORD PRICE:2,248pMARKET VALUE:£ 2.6bn
TOUCH:2,246-2,256p12-MONTH HIGH:2,250pLOW: 935p
DIVIDEND YIELD:0.5%PE RATIO:22
NET ASSET VALUE:500p*NET CASH:£24.4m
Half-year to 30 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20192.4350.833.6010.10
20202.4672.446.0012.30
% change+1+43+37+22
Ex-div:24 Sep   
Payment:23 Oct   
*Includes intangible assets of £180.6m, or 158p a share