An IT services company with sales of more than £2 billion a year rocked investors yesterday with its second profits warning in as many months.
Computacenter, which provides computer equipment and IT services to companies and government departments, said it did not expect an easing in trading conditions after signs in April of a sales recovery came to nothing.
Shares plunged 23 per cent as Computacenter followed a ten per cent first quarter sales drop with a warning that business was just as tough in the second quarter.
It said first half sales were likely to be down ten per cent on a year earlier, although the outcome still hinged on the final days of this month.
Profits forecasts in the City are now likely to be between £25 million and £28 million, rather than the £42 million and £46 million indicated prior to yesterday.
With sales running below expectations, Computacenter also faces a reduction in the level of rebates it receives from the major computer manufacturers.
It added: "Combined with the sales performance this has had a material impact on the achieved margins in the first half." The firm warned earlier this year that a shift towards lower-margin and away from higher-margin servers had also hit the business.
It told the City: " The improving trend seen at the end of the first quarter was not sustained and product sales in the second quarter have been below our expectations."
The company added: "We do not see these trading conditions improving for the rest of 2005 and as a consequence we expect Computacenter's profit to be substantially below current market estimates."
Shares closed down 51p to 181p.