October 23, 2019 / 10:35 AM / 25 days ago

Softcat sees buoyant UK IT spending despite economic uncertainty

LONDON (Reuters) - Economic uncertainty in Britain is not slowing investment in security and cloud technology, IT products and software provider Softcat (SCTS.L) said on Wednesday, as it reported a 24% rise in both full-year revenue and operating profit.

Chief Executive Graeme Watt said growth was broad based, with strong demand from small and medium-sized businesses, large enterprises and the public sector, and across all technologies.

“We are not seeing economic uncertainties playing into demand; demand remains strong,” he said in an interview.

“People want the best and most up-to-date technology they can get their hands on.”

About 30% of growth is from the market and the remaining 70% from gains in share, where Softcat is edging out rivals to win new customers and more business from existing ones, he said.

“I think market demand would continue at, I would estimate, 5-6% growth in this coming year,” he said, adding that with only a very modest share of a fragmented market, Softcat had a “tonne of opportunity” to win business from new and existing customers.

Softcat, which reported a 24.4% increase in revenue to 991.8 million pounds ($1.27 billion) for the year to the end of July and a 24.3% rise in operating profit to 84.5 million pounds, said trading in the first 11 weeks of its new year was on track.

Its shares, which have risen 35% in the last 12 months, were trading down 2.7% at 916 pence.

Berenberg analysts said they were pleased to see the bulk of revenue growth coming from selling more to existing customers.

“While an inline statement today may not be what some had been hoping to see, we expected nothing less given the Brexit uncertainty and it being so early in their financial year,” they said.

“We continue to think Softcat is a multi-year winner although recognize the shares could be a little weaker today on a lack of upgrade.”

Reporting by Paul Sandle; Editing by Mark Potter

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