Logica shares tumble on grim outlook

Logica shares tumble on grim outlook

Shares in Logica have tumbled after the UK-based IT services group reported a 25% drop in annual profit, dragged down by a sharp drop in financial services and telecoms revenues.

Profits before tax fell by 25% to £116 million on revenues of £1,102.3 million, down 3% for the year ended 30 June 2002. Operating margins fell to 10.1% from 12.4% in the previous year, while basic earnings per share were 25% down at 19.1p. For the full year, the net loss was £257.4 million, or 58.4 pence a share, compared with a net income of £89 million, or 20.6p, in the previous year. The 2002 net loss included goodwill-impairment costs of £261.2 million against the acquisitions of PDV Unternehmensberatung and Carnegie Group.

The company says telecoms and financial services sectors were particularly affected by a downturn in trading in the second half. Overall, the financial services business declined 9% (with a 19% organic decline offset by the acquisition of PDV in Germany) as banks tightened spending. Logica says that key clients such as Commerzbank and BNP Paribas reduced spend significantly. The company says that daily labour rates also came under pressure as the year progressed.

Logica chief executive, Martin Read says: "This has been an extremely tough period for the global IT and telecoms industries. Logica’s results reflect the difficult environment."

Shares in the group fell to a low of £1.36 by mid-morning, their lowest price since July 1997. The company's stock has lost 78% of its value this year.

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