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LogicaCMG profits in line, integration on track

Anglo-Dutch computer services firm LogicaCMG on Wednesday posted a second-half profit before exceptionals and tax of £54.5m - in line with forecasts - and said its integration after a recent merger was progressing well.

In the first set of results since its creation in December through the merger of Britain's Logica and Anglo-Dutch CMG, LogicaCMG predicted some pressure on margins in the first six months of this year, but saw cost savings boosting them in the second half.

Its revenues fell 7% from the previous six months to £882.5m.

Analysts surveyed by Reuters had expected Europe's third-largest computer services company to post a pre-tax profit of £53-55m on revenues in the range of £873m to £883m.

The company said in a statement that CMG's former Chief Executive Alistair Crawford had resigned effective March 4 from LogicaCMG's board to pursue similar leadership opportunities.

Ahead of the merger, which created a global leader in mobile text messaging, both Logica and CMG had suffered along with most of their peers as companies slashed IT budgets to the bare bones amid economic slowdown and geopolitical uncertainty.

The two were especially hurt by telecoms companies nearly stopping investment after spending heavily on yet unproven third-generation mobile services.

LogicaCMG updated the market in early February, saying its merger was going according to plan, and that trading was in line with expectations for the six months to end-December.

"A detailed review of the cost base following the merger has led to an increase in the expected merger cost-savings, now estimated to be 80 million pounds on an annualised basis (£20m more than originally anticipated), of which approximately £40m will be realisable during 2003," the company said in a statement.

The company said it planned to cut 2,200 jobs, or 9.5% of a combined workforce that was already reduced by nearly 1,000 jobs since June.

LogicaCMG is seeing greater price stability in its key British and Benelux markets, but the markets in France and Germany continue to weaken, the group said.


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