Dutch IT outsourcer PinkRoccade NV has continued to struggle in the first half of 2004, experiencing a 75% drop in profit.
Voorburg, Netherlands-based PinkRoccade reported a net profit of 1.9 million euros ($2.32 million) for the six months ended June 30, down 75% from 7.5 million euros ($9.15 million) in 2003, on revenue that fell seven percent to 347 million euros ($423.3 million). In the second quarter, however, PinkRoccade managed to claw back into profit, reporting net earnings of 1.3 million euros($1.59 million) compared to a loss of 694,000 euros ($846,680) in 2003, on revenue that fell 5.7% to 172.4 million euros ($210.3 million), and down 1.3% sequentially.
PinkRoccade blamed the fall in revenue during the first half on long-term contracts which it had seen extended but at reduced rates, as well as the ongoing effect of contracts that were not renewed in 2003. The profit made in the second quarter of 2004 was largely due to a recovery in infrastructure managed services. PinkRoccade ended the period with 7,117 employees, down from 7,576 in the first half of 2003.
Despite the poor results, PinkRoccade appeared optimistic about its prospects. In a statement the company said: The ICT services market has become livelier, especially for infrastructure management services. Fees are rising slightly in this area and the deployment ratio of PinkRoccade is also increasing. Demand for application services is slowly recovering, at least in the market sector.
However the company said that demand within the central and local government sectors, which are both core markets, remains depressed. Central government saw revenue slump ten percent to 111.7 million euros ($136.3 million) during the half, while local government slid 16% to 51.1 million euros ($62.3 million). Revenue was also down in the financial services, industry and international divisions, with the only area showing growth being healthcare, which was up 6.6% to 22.5 million euros ($27.5 million).
One of the worst performers for PinkRoccade has been the UK, where the company has been reducing headcount by ten percent during the first half. The company said that this has now enabled the operation to achieve break-even, and this will continue in the second half.
At the same time, the company announced that it is currently seeking a replacement for CEO Henk Bosma, 51, who is due to retire in mid-2005.