August 25, 2017 / 7:29 AM / in 3 years

Computacenter to return 100 million pounds in fourth quarter, shares soar to 17-year high

(Reuters) - IT services provider Computacenter (CCC.L) said it would return 100 million pounds to shareholders in the fourth quarter, following a 15 percent rise in first-half revenue on favourable currency impact, strong growth in Germany and recovery in the United Kingdom.

Shares in the company, which provides computer services to customers including Domino’s Pizza (DOM.L), rose 24 percent to their highest level since May 2000.

Computacenter also reiterated it was on track for a “record performance” in 2017, and added that it is marginally ahead of the upgraded expectation made in April.

The company said, when reporting an update to its first-quarter performance in April, that it would exceed 2017 expectations as market conditions for new investments in technology were “buoyant” at its German business.

Computacenter’s 2017 pre-tax profit is expected to rise to 95.2 million pounds, according to analysts estimates compiled by Thomson Reuters. The company recorded a profit of 86.4 million a year ago.

Computacenter, which had been impacted by weakness in its domestic market as the UK prepared to leave the European Union, said it does not see any “major impact” on its day to day business activities other than a drop in short term demand for its products and services and a change in forex rates.

“Group is unable to comment on the likely impact when the United Kingdom withdraws from the European Union, as the terms and conditions remain under negotiation,” the company said in a statement.

Adjusted revenue from its U.K. business rose 5.1 percent to 678.3 million pounds in the first half of the year, recovering from earlier weakness, as growth across its segments offset lower margins at the region’s supply chain business.

“The business is a reliable deliverer with good earnings underpin and cash generation,” Investec analysts wrote in a note, after raising the stock’s target price by 11 pct.

The company’s adjusted revenue on actual currency basis rose to 1.70 billion pounds for the six months ended June 30, from 1.48 billion pounds a year earlier.

However, adjusted revenue was up just 8.7 percent on a constant currency basis.

Computacenter said pre-tax profit rose 65 percent to 41.9 million pounds, driven by a 13.6 percent rise in revenue from its German business, its biggest by revenue.

Reporting by Justin George Varghese in Bengaluru; Editing by Sunil Nair

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