Drop in profits for Logica as firm warns future looks bleak

Steve Dinneen
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Anglo-Dutch IT group Logica posted a six per cent fall in 2009 profits to £43m yesterday after clients cut spending in the Netherlands and the Nordic region, and said it did not expect a return to revenue growth in 2010.

Chief executive Andy Green said companies were still reluctant to spend money on new IT projects, although pressure on pricing had eased. “We are expecting it to remain tough,” he said yesterday. “For most of our clients, life has not returned to the sun-lit uplands of 2006 and 2007 and we have given our guidance on the basis of a fairly flat market.”

Logica expects revenue, which fell three per cent in 2009 to £3.7bn, to slip further in the first half of this year and to be flat for the year, with margins maintained at about 7.4 per cent.

The firm’s cautious outlook echoes its French rivals Capgemini and Atos Origin, both of which said last week trading would remain tough.

Analyst George O’Connor at brokerage Panmure Gordon, who rates the shares a “buy”, said the results were in line with expectations, with positives on the dividend, profit, order book and cash.