* H1 adj operating profit 127 million sterling vs 120 million consensus
* Cost savings of 30 million pounds in H1
* Will maintain margins for the year
* Sees signs of stability, market remains tough
* Shares down 1 percent in London and Amsterdam
(Adds CEO comments, analyst reaction, shares)
By Paul Sandle
LONDON, Aug 7 (Reuters) - Anglo-Dutch IT services firm Logica said cost savings had helped it post a better-than-expected 8 percent rise in profit, but tempered its outlook as companies held back on major IT projects.
The company, which is listed in London and Amsterdam, reported adjusted operating profit of 127 million pounds ($216 million) for the six months to end-June on revenue of 1.88 billion pounds, up 6 percent due to the weak pound.
Chief Executive Andy Green said there were some signs of stabilisation in the market but consulting and systems integration remained tough, and the focus would remain on costs.
The group, which is listed in London and Amsterdam, is cutting 75 million pounds of costs in 2009 and a further 110 million in 2010.
"Given the continued execution of our cost savings programme we expect to maintain margin in line with last year," Green said in a call on Friday with reporters. "This year is all about margin protection."
However, Green tempered his outlook from April, when margin was predicted to be "at least in line" with 2008, reflecting a "marginal" deterioration in trading conditions.
Shares in the company, which have risen 25 percent in the last week after better-than-expected quarterly earnings from peers Capgemini and Fujitsu, were down 0.8 percent at 108.1 pence by 0924 GMT, after touching a 10 month-high of 111 pence in early trade.
In Amsterdam, the shares were down 1.1 percent at 1.26 euros, broadly in line with a 0.7 percent lower European technology index.
Analyst George O'Connor at Panmure Gordon, who has a "buy" recommendation on the stock, said Logica was ahead on profit and in line on revenue, and he raised his 2009 earnings per share (EPS) forecast to 11.1 pence from 10.5 pence.
But he said the outlook was subdued: "The outlook statement flags up the difficulties in consulting and professional services -- no surprise."
Brokerage Numis said tight cost control and significant restructuring led to a 4 percent beat on profit, and the shares could be well underpinned at current levels in the near term. Longer term, however, it was less positive.
"Structurally, we still think Logica has some serious challenges, but this is likely to be masked by the cycle for now," Numis analysts said.
OUTSOURCING GROWTH
Green said the group had grown its outsourcing business, with revenue up 10 percent in constant currency, and now accounting for 36 percent of the total.
"We are still looking to grow outsourcing," he said. "But we are still investing in consulting and systems integration, which is the heartland of what Logica is known for, so the balance is there for when markets change."
The outsourcing margin was 6.5 percent in the first half, up 0.5 percentage points year-on-year, Chief Financial Officer Seamus Keating said. Across the rest of the business the margin fell to 6.9 percent from 7.1 percent.
Keating said the group deployed the same skills in outsourcing as it did in systems integration or consulting, and it expected to get the same margins.
"It's not a structurally lower margin business so it's important we maintain growth in it," he said.
Logica reported basic EPS of 5.5 pence against 5.4 pence a year earlier, while pretax profit was 24 million pounds, up from 13 million pounds.
Analysts were expecting the group to report sales of 1.88 billion pounds, adjusted operating profit of 120 million pounds, and EPS of 4.9 pence, according to a company-supplied consensus.
The company is paying an interim dividend of 1.0 pence a share, down from a 2.4 pence payout a year ago. ($1=.5887 pounds) (Editing by Victoria Bryan and Mike Nesbit)