IT infrastructure service provider Computacenter (CCC) saw half year profits slump as IT spending in the UK slowed further. the group reported adjusted pre-tax profit down 13% to £25.3 million in the six months to 30 June.
While Computacenter says its performance is marginally ahead of expectations, the company recognised the effect of lower volumes in the services division on margins.
Shares in the service supplier are 1.3% lower at 755.7p.
Computacenter has increased its adjusted revenue from £1,438 million to £1,478.2 million, driven by revenue growth across the German business and a strong performance in France.
UK revenue has fallen 5.3% to £653 million due to the loss of a managed services contract and lower new business wins.
In France, the firm traded better as profit is significantly ahead of expectations as a result of improved supply chain and services margins.
The firm says it’s too early to comment on the likely impact of Brexit, although the UK’s weaker performance may be partially due to uncertainty around the EU referendum.
Peel Hunt believes the results are a mixed bag as weakness in the UK was offset by profit in France, but notes that ongoing uncertainty may weigh on the stock in the near term.
However, the broker is upbeat about pre-tax profit expectations for the year end, which means its forecast remains broadly unchanged with a ‘buy’ recommendation.
Research firm Megabuyte is more downbeat due to the UK’s disappointing results, although it is encouraged by the improving pipeline and believes the firm needs to improve its win rate this year.
Computacenter chief executive Mike Norris says: ‘The pipeline of managed services growth in the group as a whole is encouraging and should deliver growth in 2017.
‘Even more noticeable is the growing pipeline for digital workplace projects, which we are looking to close in the second half of 2016, as customers look to take advantages of new operating systems.’