Information technology services firm Logica surprised the City yesterday by revealing it expected to beat its sales growth target for this financial year.
Information technology services firm Logica surprised the City yesterday by revealing it expected to beat its sales growth target for this financial year.
The group, which is cutting 1300 jobs worldwide in a restructuring, said revenues growth will be closer to 4%, compared to previous guidance of 3%.
It reported slower spending among financial services and some consumer-focused customers, but said markets remained positive in the first half of its financial year, particularly in energy and utilities and the public sector.
Shares in the firm rose 15.25p to 127.75p, with analysts also pleased with half-year operating profits of £118m, against £90m a year earlier.
Investec Securities said the figure was 7% ahead of its forecast, with outperformance largely because of higher profit in France and the Nordic region. It noted the 6% gain in first-half revenues and said the improved forecast still pointed to a downturn in second-half revenues growth.
Analyst Julian Yates added: "While it is pleasing the group is able to increase its targets, this still implies the momentum is set to markedly slow into the second half. This in turn sets what we would see as a bleak picture for 2009, where we would see mainland Europe start to slow materially."
The firm employs 39,000 staff in 36 countries, but is in the process of cutting around 500 jobs in the UK. It has increased headcount in offshore locations to more than 3900.
Logica has grown through a series of mergers and acquisitions in recent years, starting with the takeover of, and merger with, rival CMG in the Netherlands in 2002. It has already shed a number of jobs following the deals, but said there was still duplication of roles in many operations.
Chief executive Andy Green, who joined the board in January, reported strong revenues and profitability improvement in the UK and said plans to revitalise the business remained on track.
He added: "Over the last four months, we brought in experienced new management talent, won a number ofsignificant long-term contracts, transitioned work offshore, began to put the right organisation and incentives in place and initiated cost savings to fund our investments."
UK revenues rose 6% on a pro-forma basis to £354m, resulting in an £18m rise in half-year profits to £22m.
Demand from public sector and utilities clients drove the improvement, while figures for 2007 included provisions in relation to cost overruns on a contract.
