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April 15, 2004

Unisys Q1 profit hit by pension costs

IT services and hardware vendor Unisys Corp enjoyed strong growth in its outsourcing business during the first quarter, but saw its bottom line hit by pensions costs.

By CBR Staff Writer

In the three months to March 31, 2004, the Blue Bell, Pennsylvania-based company made a 25% decrease in net profit to $28.9m on revenue that grew 4.6% to $1.46bn. The company blamed the profit decline on $22.2m of pension expenses during the quarter, having reported a pension gain of $6.4m in the year-ago period.

Sales from Unisys’ services business increased 5.2% to $1.17bn, which was driven by new contract awards with the Department of Defense ($345m) and financial services processing company Interpay ($110m).

Revenue from Unisys’ computer hardware division grew 2% to $298m, but its operating margin fell to 8.6% from 11.1% in the year-ago quarter. Chief executive Larry Weinbach said the company had double-digit growth in sales of ES7000 systems, with new clients including Cox Communications and Safeco Insurance.

The company’s international business was the best performer during the quarter, with sales outside the US growing 6% to $781m driven by its European and South Pacific operations. Domestic revenue increased 3% to $682m.

Looking ahead, Weinbach reconfirmed the company’s target of mid-single-digit revenue growth, with earnings per share of about $0.83 to $0.87, excluding the impact of pension accounting.

This article is based on material originally published by ComputerWire

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