Shortfall at LogicaCMG

LogicaCMG, the Anglo-Dutch IT services firm, said its first-half adjusted operating profit dropped to £89.7 million, missing analysts’ forecasts and reducing its shares. According to the company, margin pressures in France, along with weakness in the UK are responsible for the shortfall. The group’s outlook for the market remained unchanged.

The first-half performance saw revenue growth in European markets including Germany and France, but was held back by an 8.3% drop decline in the UK. The group commented that weakness in the UK, stemming from the termination of a contract in the transport sector, resulted in a profit warning in May this year. The group added that the main priority for the remainder of 2007 is improving the operational performance in the UK.

The profit figure which was down from £108.2 million on a document basis 12 months ago was approximately 10% below Numis’s forecast and 4.5% below Landsbanki’s. Numis commented that the shares are expected to be weak.

Revenue increased 36.2% to £1.525 billion, in accordance with a trading update in August. The group also highlighted that chairman Cor Stutterheim is retiring and will be replaced by Deputy Chairman David Tyler. Jim McKenna, currently Chief Operating Officer, will become interim chief executive in September following the resignation of Chief Executive Martin Read.

An analyst at Landsbanki’s implied that the group could be a takeover target while the CEO position remains empty. Rumours within the market linked the company to an offer by private equity house, Permira, in early 2007.

LogicaCMG is a major international force in IT services. It employs 40,000 people across 41 countries.

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