Logica steers a steady ship
SHARES in IT services firm Logica rose yesterday after it cut its full-year guidance but stepped up its cost-cutting programme.
Logica said that full-year revenue would fall three per cent rather than an earlier forecast of about two per cent, reflecting weak demand for consulting and professional services.
Analysts had expected the cut and instead focused on revenue of £862m for the three months to September, which was four per cent lower on a pro forma basis but just ahead of expectations. The group said that its outsourcing business grew 11 per cent, not enough to offset a 12 per cent drop in consulting revenue.
“Logica continued to deliver well in the third quarter with our investments in client facing activity showing through in good orders in a tough climate,” said the firm’s chief executive Andy Green.
Britain, where more than half of revenue comes from the public sector, was the only region to grow in the quarter.
Logica, which competes with Cap Gemini and Tieto, is stepping up its cost-saving programme, particularly in Benelux where it will cut more jobs and reduce the use of contractors. Logica has shed 2,200 jobs since the beginning of 2008.
“Overall we believe this is a solid third-quarter performance relative to expectations,” Cazenove said in a note. Logica is forecast to report full-year revenue of £3.67bn and pre-tax profit of £180.6m.
The stock closed up almost 6 per cent last night at 121.70p.