Logica posts a profit but remains cautious

Published on Friday 7 August 2009 21:41

IT SERVICES group Logica has beaten expectations to post an 8 per cent rise in profit, boosted by a programme of cost savings.

But the firm, which employs about 300 people in Scotland and has a turnover from its Scottish division of close to 40 million, said it was cautious in its outlook as companies held back on major IT projects.

Anglo-Dutch Logica reported adjusted operating profit of 127m for the six months to the end of June and said revenue rose 6 per cent to 1.88 billion, mainly due to a weak pound.

Chief executive Andy Green said there were some signs of stabilisation in the market but added that consulting and systems integration remained tough, and said the focus would remain on costs.

The group, which recently appointed Martin Ewart as its new general manager for Scotland, is cutting 75m of costs in 2009 and plans a further 110m of savings in 2010.

Green said: "Given the continued execution of our cost sav-ings programme, we expect to maintain margin in line with last year. This year is all about margin protection."

But he tempered his outlook from April, when margin was predicted to be "at least in line" with 2008, reflecting a "margin-al" deterioration in trading conditions.

Shares in the company, which have risen 25 per cent in the last week – after better-than-expected quarterly earnings from peers Capgemini and Fujitsu – fell in early trading, but ended the day 2.4 per cent higher at 111.6p.

Analyst George O'Connor at Panmure Gordon, who has a "buy" recommendation on the stock, said Logica was ahead on profit and in line on revenue.

But he added that the out- look was subdued: "The outlook statement flags up the difficulties in consulting and professional services – no surprise."