Logica moved yesterday to tone down expectations for its second half despite nearly doubling its profits in the first six months of the year.

Andy Green, the chief executive of the Anglo-Dutch IT services provider, said he expected Logica to achieve an operating margin at the same level as last year. That equates to a 7.4 per cent margin, a slight downgrade from its previous guidance.

However, even the lower outlook raised eyebrows, particularly in light of Capgemini’s recent margin downgrade and Mr Green’s poor track record of margin guidance when he ran BT’s troubled Global Services division.Under his leadership, BT consistently targeted a 15 per cent operating margin for the division despite significant scepticism from analysts. Those doubts proved well founded when BT was forced to write down the value of its IT contracts by more than £1 billion.

Mr Green said that the lower outlook represented a “pretty marginal change” and reflected poor visibility of the company’s fourth-quarter prospects: “I’m seeing signs of stabilisation, not green shoots.”

Credit Suisse, the investment bank, said: “We believe Logica’s margin guidance still appears optimistic, particularly in the context of [its] restructuring plan.” The average expectation for the company’s operating margin is about 6.7 per cent.

George O’Connor, an analyst with Panmure Gordon, said there had been a structural shift in the margin profile of the industry because of lower pricing models in the sector. “The glory days when Logica reported a margin of 11.3 per cent in 2005 are over. I struggle to see them sitting over 8 per cent,” he said. While the company was performing well in the UK, Mr O’Connor added that its businesses in France and Germany would hit profitability.

Logica’s first-half results followed that pattern with pre-tax profits rising to £24 million from £12.6 million a year earlier, while revenue slipped only 2 per cent in a market declining by as much as 6 per cent. The performance was aided by cost cutting and winning more work in the public sector.

Its shares have risen 60 per cent this year and gained a further 2½p to 111½p yesterday.

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