Logica’s Turnaround Emerges With Strong Results

Chief Executive Officer Andy Green, who took over in January, said he raised the forecast after first-half sales rose 16 percent, boosting ``confidence.'' He's cutting expenses and adding 8,000 jobs in cheaper locations in Morocco, the Philippines and Bangalore to revive profit growth. Logica aims to save 80 million pounds a year by 2010 with the overhaul, which has already created 3,900 jobs.

``After a number of years of Logica being a company that misses targets the new management has started off well,'' said Roger Philips, an analyst at Evolution Securities who recommends buying the stock. ``They are starting to prove to the market that they can manage expectations effectively.''

The company's three-year contract to provide services to tiremaker Michelin ``is one of the most important contracts in Europe this year,'' Green said on the conference call. Spending by energy and utilities clients, as well as public- sector customers, ``continues to be robust,'' according to the statement. While some financial-services and consumer-related companies have cut spending, ``our markets have generally remained positive in the first half,'' Logica said.

First-half sales rose 16 percent to 1.77 billion pounds. In May, Logica said first-quarter revenue rose 11 percent to 856 million pounds. At the time, the company said some customers curbed spending, yet the overall market was proving resilient. Logica had 46 million pounds in one-time costs in this year's first half, mostly related to the overhaul announced in April.

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