Logica profits disappoint investors
- Reduce text size Decrease text size
- Increase text size Increase text size
- Print article Print
- Jump to comments Comment
- Share this article Share
- Email article to a friend Email
IT services provider blames decline in Dutch government spending for missed profit target, which triggered steep share drop
Shares in UK-headquartered IT services provider Logica fell by 20% yesterday after the company reported a year-on-year decline in profit.
During the first six months of the year, the company's net profit was £58.4 million, down 14% from £67.7 million in the same period of 2010.
Logica attributed this decline to its troubled Benelux division where operating profit was just £1 million, down from £12 million last year.
"Our public sector clients continued to implement spending cuts, with a particularly sharp decline in the Netherlands leading to disappointing profitability in the Benelux," said CEO Andy Green. "Margin improvement is now dependent on progress in the Benelux."
The company's overall revenues grew 5% year-on-year to £2 billion. The outsourcing division provided most of the growth, up 11% to £880 million, while the larger consulting division grew by just 1% to £1.2 billion.
Revenues from the UK fell by 2% to £361 million, due in part to declining public sector IT spending, although the company said the UK sales rose in the second quarter of the year.
Logica revealed some new UK contract wins, including a deal to lead a consortium of suppliers in upgrading the Ministry of Defence's Electronic Warfare Database, which is used to support battlefield operations.
