Contract issues in Germany, weak French ops hit Computacenter

April 24 Wed Apr 24, 2013 3:51am EDT

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April 24 (Reuters) - Computacenter Plc said it expects to make only a modest progress in performance this year due to the impact of ongoing contractual issues in Germany and a weak French business, sending the company's shares down nearly 14 percent.

The stock was trading at 470 pence at 0747 GMT on Wednesday, making it the biggest percentage loser on the FTSE 250 Midcap Index.

The company that supplies and services IT equipment and advises customers on IT strategy, said revenue from Germany - its second largest market - declined 7 percent to 280.6 million pounds ($428.9 million).

Computacenter said three contracts in Germany "remain stubbornly financially and operationally challenging" and may result in an increased provision this year for costs in future reporting periods.

The company said revenue from France grew 2 percent to 107.4 million pounds, but warned that 2013 would be a tough year for Computacenter in the country.

"The challenging economic environment in France has resulted in a distinct lack of professional services projects which affects our services margin and our performance on the bottom line. We see very little prospect of this abating this year," the company said.

Investec analyst Julian Yates said he cut his 2013 earnings estimates for the company, as he previously expected the worst of the 2012 contract issues were factored into the numbers and had viewed the French business as being stable.

"The progress in the UK is being hindered by these headwinds ... Progress has been made, but we were too early in drawing a line under 2012 issues."

($1 = 0.6542 British pounds) (Reporting by Abhirup Roy and Brenton Cordeiro in Bangalore; Editing by Roshni Menon)

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