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August 2011 | Adam Leach
sector spending cuts hit profits at Anglo-Dutch IT and consultancy firm Logica, according
to its financial results.
company, which has contracts with the UK government, saw profits fall by £112
million in the first half of this year. Revenues in the public sector dropped
by £23 million or four per cent for the same period, with activity in the UK
and Benelux region hit particularly hard. UK revenue for the company for the
first six months of the year dropped by two per cent (based on actual revenues)
with Benelux revenue dropping by six per cent.
CEO Andy Green said: “Our public sector clients continued to implement spending
cuts, with a particularly sharp decline in the Netherlands leading to
disappointing profitability in the Benelux region. Margin improvement is now
dependent on progress in Benelux.”
the company, which provides IT services to the Metropolitan Police and Foreign
& Commonwealth Office, agreed to renegotiate existing contracts with the
government. Following meetings with cabinet office minister Francis Maude, it
agreed to continue to run all its contracts while making efficiency savings.
Logica saw profits fall to £113 million from £125 million last year, which
meant its operating profit margin contracted by one per cent to 5.7 per cent.
The company’s results said poor performance in the Benelux region, transitional
costs in Sweden (where it has outsourced certain operations) and £20 million
restructuring costs contributed to the drop.
contrast, activity in the media and telecoms sector grew by 17 per cent
compared with the first half of last year, holding an overall share of 9 per
cent of company revenues.