News

Logica figures down, but upward trend expected

Warwick Ashford

Logica has reported first-quarter revenue of £939m, down 2% from the same period a year ago, but better than the 4% average decline for the past three quarters.

Consulting and professional services revenue was down 8% on the previous year, compared with an average decline of 11% for the past three quarters.

New orders were down 7% to £1.093bn compared with the first quarter of 2009, which had been boosted by big contracts with TeliaSonera and others.

"We saw some positive trends in the first quarter, with particularly strong demand in France and continued revenue growth in the UK balancing the continuing difficult market conditions in the Benelux and to a lesser extent, Sweden," said Andy Green, chief executive at Logica.

Logica UK reported a 3% year-on-year revenue increase to £187m, up from £182m in 2009, while Sweden's revenue was up 4% at £135m.

"This steals a march on Atos, which reported a 2% UK revenue decline," said Anthony Miller, analyst at TechMarketView.

Logica is among the suppliers to be hit by spending cuts in IT departments in 2009, but demand for outsourcing has continued to increase.

Logica's outsourcing services revenue bucked the negative trend, reporting an 11% increase compared with the first quarter of 2009.

Logica's offshore operations have improved, said Miller, with the group adding 100 workers to its offshore and nearshore headcount in the quarter.

This brings the total to 5,200, which is around 12% of the total workforce, with plans to add another 500 this quarter.

Miller said he is concerned about the fact that Logica's chief financial officer said offshore hiring was being driven by "just-in-time" recruitment.

"With Indian attrition now back to near pre-recession levels, it is really important to get ahead of the game if you want to recruit the cream of the crop," said Miller.

Looking ahead, Logic continues to expect revenue to "decline modestly" in the first half of the year, with full-year revenue and adjusted operating margin expected to be at a similar level to 2009 on a constant currency basis.


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