Logica shares hit three-year low over cuts

SHARES in technology consultancy firm Logica plummeted to a three-year low yesterday as the company sped up its internal restructure due to worsening conditions in European markets.

Logica cut its 2011 forecast for the second time in just over a month, expecting around three per cent growth – down from above three per cent in November’s prediction and five per cent earlier in the year.

The group put this down to the economic slump and said it intended to respond by speeding up the restructuring that would otherwise be spread over two years.

More than1,300 jobs will be cut, and the firm will take one-off charges of around £93m.

Logica, which was founded in 1969, will also take a further charge of £39m, mainly reflecting losses from smaller projects that are unlikely to return much revenue.

However, the Reading-based company said it expected to see a financial benefit of £25m to £35m from the second half of 2012, with full-year operating margin above 6.5 per cent next year despite the anticipated difficulties in the market.

“We are confident that taking tough decisions today will deliver the stability that our clients, the rest of our people and our shareholders need in difficult times and will build a more sustainable business for the future,” the company said in a statement.

Chief executive Andy Green added: “We deeply regret the impact job losses will have on the people affected in many of our businesses. But we are confident that it is best for our clients, people and shareholders that we face squarely into the difficult economic conditions ahead.”

Shares fell 16 per cent, closing yesterday at 62p.