Computacenter’s H1 2025: Big top-line growth, slimmer margins, North America on fire
Computacenter has delivered a strong first half on the face of it, powered by a record performance in North America and a welcome return to growth in the UK. The trade-off: margins tightened, cash flow went backwards due to working capital, and Europe – particularly France – was soft. Guidance is unchanged, with management still expecting full-year adjusted operating profit ahead of 2024, despite a circa £4 million FX headwind.
Headline numbers investors need to know
| Metric | H1 2025 | H1 2024 | Change |
|---|---|---|---|
| Gross invoiced income (GII) | £5,665.3m | £4,536.6m | +24.9% |
| Revenue | £3,988.8m | £3,103.8m | +28.5% |
| Gross profit | £504.2m | £472.2m | +6.8% |
| Gross margin | 12.6% | 15.2% | -257 bps |
| Adjusted operating profit | £82.1m | £81.1m | +1.2% (+4.2% cc) |
| Adjusted profit before tax | £81.5m | £87.2m | -6.5% |
| Adjusted diluted EPS | 52.5p | 55.0p | -4.5% |
| Interim dividend | 23.6p | 23.3p | +1.3% |
| Net cash from operating activities | -£165.8m | £1.4m | Outflow |
| Adjusted net funds | £278.0m | £401.9m | -30.8% |
| Product order backlog (GII basis) | £2,195.9m | £1,775.0m | +23.7% cc |
Quick jargon buster: Gross invoiced income (GII) is the value of all customer invoices including items booked as agent under IFRS – it is a good proxy for volume. Basis points (bps) are hundredths of a percent.
North America leads the surge, UK back in the game
North America: hyperscale and AI drive a record half
- GII: £2,533.1m (+57.9% cc); Technology Sourcing revenue: £2,002.8m (+78.2% cc).
- Adjusted operating profit: £49.1m vs £26.1m (+97.2% cc).
- Services grew well too: +14.5% cc, with Managed Services up 29.1% cc.
- Backlog: £1,356.8m (+23.1% cc).
Mix matters: a heavier skew to hyperscale and AI infrastructure pulled gross margin lower (North America revenue margin down 286 bps), but the sheer volume more than compensated in profit terms. The region contributed 44% of adjusted operating profit before central costs.
United Kingdom: targeted approach paying off
- Total revenue: £640.0m (+18.0%); adjusted operating profit: £17.3m (+29.1%).
- Professional Services up 29.0% to £91.6m; Managed Services down 7.8% to £137.4m.
- Backlog: £449.0m (+24.7%).
The UK benefited from AI-related data centre projects and better execution with target customers. Managed Services remains a work-in-progress, but the pipeline – especially Device Lifecycle Management – is improving.
Germany and Western Europe: public sector lull bites
- Germany revenue: £878.7m (-1.1% cc); adjusted operating profit: £48.1m (-18.1% cc). Backlog £235.5m (+34.8% cc).
- Western Europe revenue: £358.3m (-12.1% cc); adjusted operating loss: £8.9m, mainly France.
Both countries felt the impact of political change and lower public sector buying. Management expects some recovery in German public sector activity in H2; France is flagged as remaining challenging.
Margins down: the price of volume growth
Group gross margin fell 257 bps to 12.6%. The story is straightforward: North America delivered much higher Technology Sourcing volumes at lower margins, especially into hyperscale customers and AI builds. Services margin actually improved by 80 bps, and Professional Services grew 6.5% in constant currency. The mix dilutes percentage margins, but not necessarily pounds of profit – which is why adjusted operating profit still grew at constant currency.
Cash flow and balance sheet: working capital hangover
Operating cash outflow of £165.8 million looks ugly, but the company explains two drivers: the unwind of unusually strong year-end customer prepayments (circa £100 million ahead of the prior year at 31 December 2024) and heavier H1 activity pushing up receivables and inventory. Working capital outflows totalled £251.2 million.
- Inventory: £316.8m (vs £307.2m at year-end) to support large North American projects.
- Adjusted net funds: £278.0m (excluding lease liabilities), after completing the £200m 2024 buyback.
Bottom line: still a strong balance sheet with ample liquidity, but investors should expect cash generation to skew to H2 as usual.
Dividends and shareholder returns
The interim dividend is up 1.3% to 23.6p, consistent with the policy of paying roughly one third of the prior year’s total dividend and targeting 2-2.5x cover on adjusted diluted EPS. Since 2013, over £1 billion has been returned to shareholders, and adjusted net funds remain healthy post the 2024 buyback.
Backlog and pipeline: visibility improving
The committed product order backlog stood at £2,195.9 million on a GII basis, up 23.7% year on year in constant currency, with healthy positions in all geographies. Managed Services pipeline is larger, and Professional Services continues to benefit from AI, workplace refresh ahead of Windows 10 support ending in October 2025, and data centre work.
Guidance and what to watch into H2 2025
- Outlook: management continues to expect FY 2025 adjusted operating profit to be ahead of FY 2024, including an adverse c.£4m currency translation impact.
- Q3 start: described as strong, especially in North America.
- Technical guidance: central costs £55-60m; adjusted ETR 29.5%-31.5%; capex c.£35m; dividend cover 2-2.5x.
Key swing factors
- Germany’s public sector recovery: budget approvals and framework drawdowns in H2 could help.
- France execution: management is sharpening focus and tackling legacy costs from BT Services.
- North America comparatives: H2 2024 was strong, so growth rates may moderate even if volumes stay high.
- FX: stronger sterling is already clipping reported profits.
- Cash conversion: expect improvement in H2 if working capital normalises and backlog converts.
Strategy and investment: building for scale
Computacenter is spending to stay competitive: £21.9 million on strategic initiatives in H1 (H1 2024: £17.6m). This includes moving Service Desks to a common platform, upgrading Integration Centers, rolling out CRM and pricing tools, an ERP upgrade, and further cyber investment. Short-term pain in costs, but sensible levers for long-term productivity and scalability – particularly relevant as AI-related infrastructure demand ramps.
My take: robust engine, different gears
This is a classic high-volume, low-margin half where scale and execution did the heavy lifting. The North American machine is humming, the UK is improving, and Germany has a credible H2 catalyst. France is the weak spot. Cash outflow is notable but explained, and leverage is low.
Why it matters: the growing base of major customers – now 197 – plus a bigger backlog makes the earnings base more resilient. If Germany’s public sector spend returns as flagged, and North America stays buoyant, the full-year ambition of higher adjusted operating profit looks realistic. Watch the mix – if Services keeps nudging margins up while Technology Sourcing maintains momentum, the quality of earnings improves. For income investors, a rising interim dividend and strong balance sheet are comforting. For growth-focused holders, the AI infrastructure wave remains the near-term tailwind to watch.
Regional snapshot at a glance
- UK: revenue £640.0m; adjusted operating profit £17.3m; Professional Services +29.0%.
- Germany: revenue £878.7m; adjusted operating profit £48.1m; backlog +34.8% cc.
- Western Europe: revenue £358.3m; adjusted operating loss £8.9m; France soft.
- North America: revenue £2,085.6m; adjusted operating profit £49.1m; backlog £1,356.8m.
Bottom line
Computacenter’s H1 2025 shows a company leaning into scale: big volumes, slimmer margins, and a growing footprint of major customers. The balance of risks looks manageable, guidance is intact, and the order book is stronger. If European public sector spend normalises and cash conversion improves as usual in the second half, shareholders should see that top-line momentum translate more cleanly into earnings and cash.
