Logica on track for boost in revenues

LOGICA CMG forecasts increased revenue in the second half within its IT services businesses but it does not expect a return to profitability in Germany for a while.

Planned job cuts there will save e17m (£11.3 million), to be taken as a second-half exceptional item. Logica is also selling two wireless network businesses.

In a trading statement, the company said first half results to be issued on 1 September are expected to be in line with its earlier estimates.

Chief executive Martin Read said the group was pleased with the continued strong performance for the UK and the return to growth in the Benelux countries. The actions being taken in Germany will benefit the second half and underpin improved performance for the group in 2005, he added.

Broker Merrill Lynch reacted by keeping its 'buy' rating, arguing that the Wireless Networks part of the business is worth 37p rather than the zero 'sum-of-parts' valuation currently attributed by the market.

The broker, however, cut its price target to 208p to reflect the recent slide in valuations for IT Services companies.

The shares fell 6 3/4p - nearly 4% - to 166 3/4p in early trading.