Product. Reselling. Lives. Computacenter sales fly due to product, not services

Windows 10 workplace and data centre refreshes come good

Proof, if proof were needed, that the world is not shifting wholesale to the cloud came this morning as unashamed product reseller Computacenter reported a bumper crop – so to speak – for calendar '18.

The London-based tech seller filed sales of £4.35bn for the year, up 14.7 per cent or £559m on the prior 12 month's trading. And it was classic hardware and software sales that bulked out the top line expansion.

Technology sourcing, Computacenter's term for product reselling, jumped 20.4 per cent to £3.18bn: growing 17.1 per cent in the UK to £1.16bn; up 9.9 per cent in Germany to €1.50bn; and up 3.6 per cent in France to €444.9m.

Computacenter sells to large corporate enterprises that continued to "modernise their infrastructure" in the UK. In Germany, there were "broad customer investments in private and hybrid cloud". Growth in France was less dramatic due to the loss of a software contract in the public sector.

On the services side, the company's successes were more muted as it reported group revenues of £1.18bn, up just 1.5 per cent. Professional Services was up 0.8 per cent to £321.9m and managed services was up 1.8 per cent to £853.1m.

"Overall Services performance was disappointing but the contrast in performance between the two components of Services was stark," said Computacenter.

Professional Services had a "challenging year" – due in part to a tough comparison period the year before when Windows 10 corporate refreshes were taking place with wild abandon and growth of 21.2 per cent had been recorded, helped by a one very large contract.

"With this contract completed in 2017, the business was unsuccessful in replacing the volume of work during 2018 leading to utilisation impacts, particularly in the Workplace Service line.

"Compounding this has been several other material customer engagements, that have now been delivered, that underperformed in terms of margin achieved as costs incurred to complete the engagements were in excess or what were originally envisaged," said Computacenter.

In the UK, services turnover shrank 5.6 per cent to £450.2m with Professional Services down 17.8 per cent to £116.4m and managed services down 0.4 per cent to £333.8m.

Across the channel in continental Europe, services revenue in Germany grew 4.5 per cent to €612.8m due to "increasing demand for Windows 10 proof of concepts, migrations and rollouts". But the stream was down 6 per cent in France to €112.5m due to the "loss" of contact with a utility customer.

Go back two decades and all tech resellers were scrambling to jump on the services bandwagon: anyone that didn’t have managed services operation was toast, analysts and journalists proclaimed. This was clearly as stupid as saying that all workloads will shift to the cloud.

The International division – with ops in Switzerland, the Netherlands, Belgium and US, couples with global service desk entities in Spain, Malaysia, South Africa, India, Hungary, Poland, China and Mexico – grew to £380.8m from £105.4m a year ago.

Computacenter made buys in the Netherlands and picked up Fusion Storm in the US in 2018.

Gross profit for the year was £548.5m, flat with a year ago, and after admin expenses operating profit was down to £109.3m, down from £118.7m.

This drop was attributed to amortisation of acquired intangibles, a higher portion of lower margin software sales and costs to "Stabilise and resolve technical challenges" in new managed services contracts.

Profit after tax was £80.92m, down from £87.35m.

The London Stock Exchange reacted positively to Computacenter's numbers – the £4.35bn 2018 sales beat expectations of £4.28bn – and its share price was up more than 5 per cent at the time of writing. ®

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