London, UK-based LogicaCMG returned to profitability in 2004, despite a drop in total group revenue of just over 2%, but continued to struggle in a number of business areas, including the Wireless Networks division that suffered a fall in sales of over 11%.
Group chief executive Martin Read was keen to stress the company’s 6.2% sequential revenue growth in the second half of the year, and also to highlight the recent signing of its 510m euro ($669.6m) deal with Portuguese utility company EDP, the biggest outsourcing contract in the company’s history.
Outsourcing has become an increasingly important part of LogicaCMG’s business, accounting for 23% of the group’s total revenue. In 2003, outsourcing contributed 20%.
The company will have been further cheered today by the announcement that it has been selected, as part of the Atlas consortium led by EDS, as preferred bidder for the UK Ministry of Defence’s Defence Information Infrastructure (Future) project. Read said the deal is worth an initial GBP 100m ($191m) to LogicaCMG.
For the year ended December 31, 2004, the group recorded a profit of GBP 13.8m ($26.4m), compared to a loss of GBP 46.1m ($88.1m) in 2003, on revenue of GBP 1.7bn ($3.2bn), down 2.2% on the previous year.
The company’s core IT services business performed well, making a profit before tax of GBP 110.6m ($211.3m), up 7.8% on the previous year, despite a 0.5% fall in total revenue to GBP 1.4bn ($2.7bn).
However, profit from continuing operations of LogicaCMG’s Wireless Networks unit fell to GBP 700,000 ($1.3m) from GBP 9.2m ($17.6m) in 2003. Revenue also fell 11.1% to GBP 237.3m ($453.2m), despite the division’s strong performance in the second half of the year, when it increased revenue by 11.5% compared to the first six months of 2004. However, in the EMEA sales region, revenue dipped 15.6% from the previous year, to GBP 127.1m ($242.9m).
Within IT services, LogicaCMG’s key business units enjoyed fluctuating fortunes. The public sector operation increased its revenue by 17% on 2003, to GBP 443.8m ($847.4m), while the company’s industry, distribution, and transport arm struggled, with revenue falling 14.6% to GBP 325.9m ($622.3m). The energy and utilities division, which had endured a difficult start to 2004, bounced back in the second six months, growing revenue 23.3% on the first half of the year.
In the UK, LogicaCMG’s home market, the company performed strongly, recording profit before tax of GBP 82.4m ($157.4m), up 14.6% on 2003, on revenue that grew 2.8% to GBP 679.3m ($1.3bn). The Benelux operation was also solid, growing pre-tax profit 11.1% to GBP 39.1m ($74.7m). However, outside these two regions LogicaCMG struggled. In Germany, a 40.7% drop in industry, distribution and transport revenue contributed to a 20.7% fall in total revenue on 2003, while in France, despite an increase in annual revenue of 8%, the company failed to improve on the loss of GBP 1.4m ($2.7m) it made in 2003.
