Logica logs in with surprising 8% boost

Published on Friday 7 August 2009 10:11

ANGLO-Dutch IT services firm Logica posted a better-than-expected 8 per cent rise in adjusted operating profits for the first half today, helped by cost savings.

On the back of a 6 per cent rise in turnover to 1.88 billion, profits jumped from 118 million to 127m. Analysts were expecting the group to report sales of 1.88bn and adjusted operating profits of 120m.

First-half pre-tax profits almost doubled, up from 13 million to 24m.

Chief executive Andy Green said: "Logica has produced good results in a challenging market by executing on our strategy."

The impact of the company's investments in customer facing teams was particularly clear in outsourcing services where orders are up 18 per cent, and in the UK where revenues are up 7 per cent.

"Our strong cost programme has ensured solid margin delivery despite volume and price pressure," said Mr Green.

"While there is still uncertainty in the consulting and professional services market, we have taken swift action in more difficult geographies to protect margins.

"We expect these actions and the strength of our outsourcing business to allow us to maintain margin in line with last year."

The company, which has three offices in Scotland, said the first half of the year reflected the reality of customers adjusting to an economic environment significantly more constrained than in 2008.

For IT services, this has meant an increased focus from customers on their cost reduction, with a consequent increase in the pipeline of outsourcing opportunities for Logica.

It has also led to a reduction in demand under consulting framework contracts and delays on systems integration projects.

Mr Green added: "While pricing appears to have stabilised on our major consulting framework agreements in recent months, our visibility of shorter-term consulting revenue streams for the fourth quarter remains limited.

"However, our visibility of total contracted revenue for the group is higher than this time last year."

Earlier this week, Logica won a multi-million-pound contract to supply and manage a new IT infrastructure for the Australian government.

Logica will design, supply and implement an IT system for Australia's CrimTrac law-enforcement information agency and then manage the system for the organisation's 220 employees and its customers for a minimum of three years from 2010.

The company did not put a value on the deal but a spokeswoman said it was in the single-digit millions of pounds.

The company also announced at the beginning of the week that it had formed a partnership with Callata & Wouters, a provider of core banking and multi-channel distribution solutions, to deliver the complete Thaler solution, Callata & Wouters' flagship product.