Computacenter reports strong first-half as inventory levels shrink

(Sharecast News) - Corporate and public sector technology provider Computacenter reported total first-half revenue of £3.59bn on Friday, making for a 26.8% increase from the previous year. The FTSE 250 company said its technology sourcing segment saw a substantial uptick, with gross invoiced income reaching £4.34bn, a 34.9% increase.

Furthermore, technology sourcing revenue stood at £2.77bn, up by 33.5%.

For the six months ended in June, services brought in a revenue of £816.5m, a rise of 9.5%, while the company's gross invoiced income reached £8.16bn, reflecting growth of 29.9%.

In terms of profitability, Computacenter recorded an adjusted profit before tax of £121.8m, which was up by 8.8% from the prior year.

Adjusted diluted earnings per share grew 5.3% to 73.5p, and the dividend per share was hiked by 2.3% to 22.6p.

The group's financial health appeared robust, with cash and cash equivalents standing at £301.6m, a significant rise from the £193.5m reported in the first half of 2022.

Additionally, net cash inflow from operating activities reached £116.5m, a stark contrast to the £8.1m recorded a year earlier.

Adjusted net funds stood at £285.1m, up from the £159.3m in the prior year.

On the operational front, Computacenter said that in a bid to bolster its long-term resilience, competitiveness and growth, it had embarked on a significant strategic initiative programme.

The company said it expected additional expenditure of around £13m in the full year, compared to the previous financial year.

A notable achievement was its significant reduction in inventory levels, which had dropped by £217.2m since their peak in the third quarter of 2022, contributing to the improvement in cash reserves.

"Our performance in the first half sets us on course for our 19th year of uninterrupted full-year adjusted diluted earnings per share growth," said chief executive officer Mike Norris.

"Coupled with this first half performance, we have seen good progress in the third quarter to date.

"Due to the industry returning to normal supply conditions we have seen a significant generation of cash as our inventory has reduced in the first half of 2023."

Norris said the firm expected that to continue in the second half, which would leave Computacenter with a strong balance sheet by the end of the year.

"We are pleased with our progress towards both our short-term financial objectives and our long-term aspirations.

"The investments we are making, predominantly through our profit and loss account to make

Computacenter a more secure and competitive organisation, are progressing well and continuing at pace.

"We are as excited and optimistic about the future as we have ever been."

At 0832 BST, shares in Computacenter were up 7.42% at 2,316p.

Reporting by Josh White for Sharecast.com.