The suits in finance are cutting down on tech spend – Computacenter
Q1 trading update is tale of two countries – Germany 1, UK 0
Some financial services institutions are taking a break from spending cash on tech, London-based supplier giant Computacenter said today as it reported a Q1 trading update.
The services-based reseller revealed a four per cent year-on-year dip in UK turnover to £348.6m for the three months ended 31 March. Product sales dropped two per cent and services by five per cent.
Mike Norris, veteran CEO at the London headquartered firm, adopted a glass half-full attitude - largely because the other portion of its business is growing which ensured group sales kept swelling.
“We had weak product sales in Britain during the first quarter, really weak in January and February. I feel happier now than six weeks ago. March was a good month in isolation but not enough to recover [ in the UK] from the first two months of the quarter,” Norris said.
Of the industries Computacenter operates in, “the spend from investment banks was particularly poor, companies aren’t hiring or investing. Some of those chunky customer for us are quieter.”
Global equities are down ten per cent, oil prices are tanking and the Brexit vote is around the corner, while political uncertainty in Eastern Europe and the Middle East and other factors are adding to this uncertainty.
Norris said Intel servers were the quietest part of its product portfolio with big corporate buying fewer departmental servers. The UK services drop was due to a very strong comparison period a year ago, he added.
“I am pretty relaxed about things, I run a European business. We are running strong in Germany and profitability is returning to our French business.”
In Germany, revenues increased seven per cent in constant currency to £281.2m; services grew seven per cent and supply chain or product sales went up eight per cent. The bidding pipeline looked promising, said Computacenter.
In France, sales declined six per cent in constant currency to £88.7m; supply chain was down five per cent and services fell nine per cent. Pre-tax profit was up and though “much work remains to be done, significant progress is being achieved”.
At group level, Computacenter reported sales of £730.2m as reported. In constant currency this was flat on the prior year with services down one per cent and product sales up by the same.
The company remains convinced that 2016 will be another year of progress based on momentum in Germany, improvements in France though the UK will have a “more challenging year.” ®