Logica admits outlook uncertain
Shaky start for new CEO
IT services group LogicaCMG admitted today that its outlook for 2008 remains uncertain as it posted full year results that were below market expectations.
Pre-tax profit tumbled more than a quarter from £116.6m in 2006 to £84.1m for the year ended 31 December 2007.
Adjusted operating profit was up two per cent to £207.6m which represented an adjusted operating margin of 6.8 per cent. Logica described that figure as “disappointing compared to the pro forma 8.5 per cent achieved in 2006”.
Total revenues for 2007 were £3.07bn, up three per cent on a pro forma basis and in line with expectations.
The firm’s newly-installed CEO Andy Green, who replaced Martin Read in January, blamed a project cost overrun and weaker performance in commercial sectors at the UK arm of the Logica business, which saw revenue drop by eight per cent to £662.5m.
Although the group reported better results, particularly in the public sector in other parts of Europe, it also saw a decline in the international market. Logica said revenue fell by two per cent to £321.3m in that region.
"Everyone at Logica understands the need to improve on our 2007 performance," Green said in a statement. "We are committed to delivering value to shareholders and customers alike."
Read stood down as CEO last May following a profit warning.
Green said spending had slowed somewhat, and that the market outlook for 2008 remained uncertain.
He added that the Anglo-Dutch firm, which from today has been rebranded Logica, expects revenue growth for the year ahead to remain at around the same level as 2007. Green said he would announce the conclusions of his review of the biz at the start of May.
Logica shares, down 37 per cent over the past year, closed on Tuesday at 109.75 pence, valuing the business at £1.6bn. ®