Logica chief quits after profit warning

Britain’s fiercely competitive IT services market on Sunday claimed the scalp of Martin Read, chief executive of LogicaCMG, who declared he was stepping down as a direct consequence of last week’s profits warning from the Anglo-Dutch group.

Logica announced it would look both inside and outside the company for a replacement. Mr Read, who has run the company for the past 14 years, will stay
on until a successor is identified.

His departure came after Logica warned first-half revenues and margins at its UK business would be lower than last year, and full-year revenues would be below those of 2006. The profit warning has knocked 9 per cent off the company’s share price.

Mr Read said the reasons for the decline, a downturn in UK trading and a £10m-£15m overrun on one project, were neither “huge” nor “strategic” problems.

But a statement from Logica’s board on Sunday said that “in the light of the unsettling speculation following the company’s recent trading update, Martin Read has decided to accelerate his retirement plans”.

The company also said its 14-strong board, which is seeking more non-executive directors, would reconsider its size and structure.

It is understood that, following the profit warning, several leading shareholders told board members it was time for the company to look at the issue of succession.

Mr Read, who is 57, is thought to have previously broached the subject of his retirement with several board members, and decided that, with shareholders voicing their disquiet, he should accelerate his departure.

Cor Stutterheim, chairman of Logica, said he accepted Mr Read’s decision with regret, noting he had built a UK business of 3,000 staff into an international operation of 40,000 employees in 41 countries.

Logica is the seventh largest IT services company in Europe by revenues, and 19th in the world.