Logica revamp costs 2m pounds

INTERIM profits at Logica were hit by restructuring costs of pounds 2.1m following the arrival last summer of a new chief executive, Martin Read, from GEC-Marconi. Pre-tax profits at the computer services group were up 46 per cent before these costs but then fell to pounds 3.2m from pounds 4.1m at the same stage last year.

Dr Read said: 'We are committed to change. Logica is 25 years old and could be described as having a mid-life crisis.'

It has laid off about 100 administrative staff, and will increase its sales and marketing. Operating margins have improved but are still low. The group increased profits in the UK and mainland Europe, and reduced losses in its troubled US businesses. The Asia-Pacific arm went into the red, however.

The fastest sales growth came in the finance sector, which accounted for a third of Logica's turnover. Sales to industry fell, mainly due to the disposal of some unprofitable Continental businesses. Turnover in Logica's traditionally strong public sector market fell in the UK but rose elsewhere in Europe.

The company's organisation by country will change to a focus on international lines of business. Dr Read said the key to improving margins was selling the same product across markets. Logica recently made senior management changes to implement the reorganisation. It is also introducing a policy for common product development.

The company is to concentrate on its strongest areas, including finance, telecommunications and energy. In telecoms, it is working on a home-shopping project in the US. It is a preferred supplier to Reuters in several of its finance and media businesses. Dr Read said it would be disappointing if operating profits did not continue to rise in the second half. The interim dividend rose from 1.25p to 1.4p and the shares closed 4p higher at 310p.