11th Mar 2016 10:49
LONDON (Alliance News) - IT infrastructure services provider Computacenter PLC Friday saw its 2015 pretax profit was boosted by a one-off gain and lower restructuring costs in 2015, but warned its profit for the first half of 2016 will fall behind that seen in 2015 as its its UK business faces a "more challenging year."
The FTSE 250-listed company said pretax profit jumped 66% to GBP126.8 million for the year to the end of December from GBP76.4 million in 2014. The increase was driven by a one-off gain made from the sale of Computacenter's RD Trading recycling subsidiary and from lower restructuring costs related to a redundancy programme in France.
On an adjusted basis, stripping out this one-off gain as well as amortisation and other exceptional costs, pretax profit rose to GBP86.9 million from 81.1 million.
Revenue dipped to GBP3.06 billion from GBP3.11 billion, partially due to the weak euro and the absence of revenue from the sold business.
Adjusted to exclude revenue from this business, revenue fell very slightly to GBP3.05 billion from GBP3.00 billion the year before, as the company faced continued sales weakness in France, where it has been exiting businesses and focusing on higher-margin revenue streams, though the country did perform ahead of Computacenter's expectations.
The company had previously guided that its revenue would be flat at actual exchange rates, but up 5% at constant currency.
UK revenue grew in the year, primarily driven by a strong performance from its services business, helped by significant contracts won the year before. However, the rate of business wins was "a little quiet" in 2015, which will have a knock on effect in 2016, Computacenter said.
The stronger performance in services helped offset a weaker result in supply chain in the UK, which performed below management expectations in the second half after a "decent" start to the year.
In Germany revenue was up 14% at constant currency, although only rose 2.8% at actual exchange rates due to the weak euro, on a strong supply chain performance and "solid" growth in services.
The company's French business, which underwent restructuring in 2014, started to see a "gradual, but consistent, improvement" during 2015. However, Computacenter kept its cautious stance on its prospects in France, saying there remains "significant work" to do to align its business model in the country with that of its businesses in the UK and Germany.
Revenue in the French business fell 6.3% at constant currency and 16% at actual exchange rates.
In its much smaller Belgian business, revenue was up 6.8% at actual exchange rates, as a good supply chain performance offset a decline in services.
The group said it will pay a second interim dividend of 15.0 pence per share, taking its total payout to 21.4p for 2015 from 19.8p in 2014.
Chief Executive Mike Norris said the company was encouraged by the momentum in its German business and said France should remain stable in 2016, though the chance of any acceleration in its performance in the country was low.
However, the company warned the UK will have a "more challenging year", particularly in its first half. Computacenter expects services revenue in the UK to fall in 2016 due to the expiry of a large contract at the end of the first quarter of 2015.
Additionally, Computacenter will increase spending on its strategic investments, weighted towards the first half of 2016, which will also hit its performance in the period.
"While it is too early to make any firm commitments on the year as a whole and there is much work to be done, we expect 2016 to be a year of further progress. However, it is worth making clear that the effects referred to above will impact the phasing of our profit delivery and mean that the first half profit is expected to be below that reported for the same period in 2015," Norris said in a statement.
"The company remains committed to long-term earnings per share growth through increased profitability and prudent use of our cash generation," Norris added.
Shares in Computacenter were down 3.9% at 794.00 pence Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews and Sam Unsted; [email protected]; @SamUAtAlliance
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