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March 13, 1997updated 05 Sep 2016 12:02pm

FACTORYLESS ICL CUTS ITS LOSSES

By CBR Staff Writer

ICL Plc’s chief executive Keith Todd is extremely pleased with the progress of the five-point plan he introduced last year, but still disappointed with the bottom line. Now confirmed as a systems and services company divested of all manufacturing and high volume businesses (CI No 3,089), ICL achieved almost break- even with pre-tax losses right down to 2.5m pounds against losses last time of 188.3m pounds, on revenue that fell 6.3% to 2.92bn pounds, mainly due to the divested businesses. Nevertheless, Todd admitted he’d have liked to have seen a positive figure on the bottom line. Margins are also quite a disappointment, a paltry 1% at present with the intention being to raise them to at least 5% as quickly as possible, through further cost-cutting and efficiency improvements. The company reduced its building space in Europe by around 1 million square feet, and saw head-count down to 19,000 from 24,000 in the year. As far as the five-point plan is concerned, Todd feels he has delivered on all points in the year.

Global partnership

Firstly, he said he would sharpen the company’s focus on its core systems integration, multi-vendor services and facilities management businesses across Europe and he says the group consists only of operations consistent with these areas. Secondly, the company has put in place a global partnership with parent Fujitsu Ltd to exploit its TeamWare groupware product, especially in the US and Asia. Todd says the product is, according to the Gartner Group, a rising star which has sold nearly 2 million licenses so far. A new Internet product, Pl@za, is due to be launched today at the CeBIT show in Hannover. The third element of the plan was the launch of a new interactive services group dedicated to multimedia. This is now established under the leadership of John Davison and has already won a major contract with the BBC as a partner for the Corporation’s on-line servics. A taster of these started last month and the full-blown launch is scheduled for September. Number four on the list was the merger of the company’s volume products with Fujitsu, and Todd says his decision has been vindicated by Fujitsu ICL’s rise to sixth place in the European personal computer market last year. Finally, with the sale of contract electronics business Design To Distribution Ltd earlier this year (CI No 3,074), the company has, for the first time in its history, says Todd, no factories, which enables management to focus squarely on systems and services without distraction. In spite of the job losses, many of which went with the divesting of the non-core businesses, ICL reckons it has also re-trained a large number of staff, and set up a Windows NT center of excellence in Manchester and Java centers in Bracknell and Dublin. The newly-styled company is also now focusing on large, long-term projects, including government- led Private Finance Initiative projects such as the 1bn pound contract it won for the UK Post Offices network, and card-based payment system for the Social Security Benefits Agency. These projects involve high up-front investment, and revenues are not likely to be seen from either these or the BBC project until 1998, said Todd. He said they underlined the new type of business the company is now in. The company strengthened its capital base in the year raising 200m pounds in a rights issue in June underwritten by Fujitsu, which leaves Fujitsu with 90.1% and Northern Telecom Ltd with 9.9%. Todd has still got his work cut out, with margin improvement and profitability being his primary goals for the coming year, but he believes ICL has all the expertise needed to cope with the explosion of opportunity that will be created by low-cost communications, the shift to network- centered computing, and the continued need to integrate and manage change from legacy systems.

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