Logica wields the axe after profit warning

Shares in IT giant Logica fell more than 16 per cent yesterday after the company warned it would miss profit forecasts and will cut more than 1,300 jobs as its customers cut back on regular spending and put off new projects.

Its chief executive Andy Green said: "We as a company have to face up to what is going on out there, particularly in the eurozone."

Logica, which counts government departments and blue chip companies as its main customers, said the job cuts would largely be in Benelux and Sweden, but about 200 are also likely to go in the UK.

Mr Green said: "It's really sad when you have to tell 1,300 people that they are going and we have tried to avoid doing that for some time. It's a mixture of public-sector cutbacks across Europe and increasing caution among corporate clients.

"We have been watching what has been going on and what our clients are thinking about the future. It has become increasingly clear that they are thinking more and more carefully about their future expenditure. That means in some areas, particularly the Benelux countries and Sweden, we... have more people than we need for those regions."

Logica said it now expects underlying profits of £240m to £250m this year, some £15m lower than analysts' forecasts. Most cut their forecasts for the next two years by up to 10 per cent.

The shares fell 11.95p to 62.1p.