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Logica Expects Higher Margins In 2012; Shares Rise - Update

2/22/2012 6:07 AM ET

Shares of British business and technology services firm Logica Plc (LOG.L) rose more than 6 percent on Wednesday morning, after the company said it expects operating margin for 2012 to be above 6.5 percent, despite an uncertain revenue outlook. The company posted a lower profit for full year 2011 hurt by restructuring and contract charges.

Looking ahead, Logica expects its Benelux business to return to profit in 2012, Swedish business to deliver an improved margin and its outsourcing business to be strongly competitive.

"We continue to be cautious about the economic outlook in our main markets and our guidance for 2012 remains unchanged, with revenue growth expected to be in the range of -2% to +2%," the company said.

For the full year 2011, profit before tax dropped to 32.7 million pounds from 192.9 million pounds in the previous year. On a per share basis, earnings were 1.7 pence, down from 9.4 pence per share reported a year ago.

Revenues for the year grew 3 percent to 3.92 billion pounds from 3.7 billion pounds in the preceding year. Underlying revenues increased 7 percent from last year.

Logica said its operating margin dropped 430 basis points to 1.4 percent.

Andy Green, CEO of the company said, "2011 was a more difficult year then we had expected. While our order book at £4.6 billion was strong and revenue was up 3%, restructuring and contract charges resulted in a lower adjusted operating profit."

Orders for the year improved 13 percent to 4.63 billion pounds, with a 23 percent rise in outsourcing orders.

In addition, the directors are proposing an unchanged final dividend of 2.3 pence per share, to eligible shareholders of record on April 13, 2012, payable on May 16. LOG.L is currently trading at 86.39 pence, up 4.99 pence or 6.12 percent, on a volume of 9.58 million shares, against a three-month average volume of 5.98 million shares.

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by RTT Staff Writer

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