Logica steers a steady ship

SHARES in IT services firm Logica rose yesterday after it cut its full-year guidance but stepped up its cost-cutting programme.<br /><br />Logica said that full-year revenue would fall three per cent rather than an earlier forecast of about two per cent, reflecting weak demand for consulting and professional services.<br /><br />Analysts had expected the cut and instead focused on revenue of &pound;862m for the three months to September, which was four per cent lower on a pro forma basis but just ahead of expectations. The group said that its outsourcing business grew 11 per cent, not enough to offset a 12 per cent drop in consulting revenue.<br /><br />&ldquo;Logica continued to deliver well in the third quarter with our investments in client facing activity showing through in good orders in a tough climate,&rdquo; said the firm&rsquo;s chief executive Andy Green.<br /><br />Britain, where more than half of revenue comes from the public sector, was the only region to grow in the quarter.<br /><br />Logica, which competes with Cap Gemini and Tieto, is stepping up its cost-saving programme, particularly in Benelux where it will cut more jobs and reduce the use of contractors. Logica has shed 2,200 jobs since the beginning of 2008.<br /><br />&ldquo;Overall we believe this is a solid third-quarter performance relative to expectations,&rdquo; Cazenove said in a note. Logica is forecast to report full-year revenue of &pound;3.67bn and pre-tax profit of &pound;180.6m.<br /><br />The stock closed up almost 6 per cent last night at 121.70p.