IT services business Computacenter (CCC) surges 13.2% to 997p as it reports adjusted pre-tax profit in the first half of 2017 has nearly doubled from £25.3m to £41.9m thanks to an improved operational performance and currency movements.
The company also flags an upcoming cash return of £100m in the fourth quarter of 2017 and confirms it is on track for a ‘record’ performance, marginally ahead of the upgraded expectations in April.
Computacenter increased its guidance earlier this year due to buoyant market conditions and new investments in technology, particularly in the German business.
The strategy is paying off as the German division delivered revenue growth of 13.6% in constant currency, driven by key supply chain accounts and demand in the services portfolio.
Investec’s Julian Yates has raised his earnings before interest, tax and amortisation estimates by 3% for the year to 31 December 2017 and 2018 to £98.3m and £98.8m, respectively.
This is even more impressive considering the analyst previously hiked his estimates by 5% in the first quarter of the year.
He highlights the company’s strong progress as UK managed services renewals and new contracts helped the division return to growth after difficult trading in 2016.
UBS analyst Michael Briest says the most noteworthy area of Computacenter’s results was free cash flow of £2m, up from a decline of £9m, and its net cash of £137m.
Pre-tax profit is expected to jump to £99m by the end of 2018, while Computacenter trades on a 16.1 times forecast earnings per share.
