Key points:
- Computacenter reported a Q3 trading update
- The company expects investments to hold back short-term profitability
- CCC shares are down over 5% Friday
Shares of Computacenter (LON: CCC) tumbled Friday morning after the company released a third-quarter trading update saying it sees modest growth in 2022 adjusted profit before tax growth.
The company pointed to macro headwinds such as the unwinding of the Covid-19 cost and utilisation benefits it previously received as well as ongoing cost and inflationary pressures. Computacenter described the Covid-19 unwinding as a “substantial headwind.”
While the company is benefiting from currency movements and “the positive, but limited,” contribution from its in-year acquisitions, it stated that they are much smaller than the Covid headwinds.
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The IT services group told investors in its press release that during the third quarter, all segments saw strong performance in Technology Sourcing.
“The US acquisition we made in July 2022 has performed well. Our Services businesses were more challenged due to the post-Covid-19 effects mentioned above and ongoing cost and inflationary pressures, but some recent contract wins, which have not yet contributed, give us confidence,” Computacenter said.
Still, the ongoing supply chain challenges for the company have resulted in its inventories remaining much higher than last year, and while it sees the supply constraints and the inventory levels unwinding as the year progresses, it “will not be substantially resolved until well into next year.”
In 2023 the company expects another year of growth, but its heavy investments in its IT roadmap and cyber security are expected to continue to hold back short-term profitability. However, the company stressed that the investments are “essential” to secure its long-term success.
At the time of writing, Computacenter shares are down over 5% at 1,807p per share.