Phoenix claims turnaround is on track despite underwhelming Q1

IT services player lags forecast in various units

Phoenix IT Group claims its turnaround programme is on track, despite a number of its divisions falling short of expectations in the first few months of its fiscal year.

The London-listed services player today released an interim management statement covering the period from the start of its fiscal year on 1 April up until yesterday. The company claims "at a group level, it is trading broadly in line with market consensus for profit", and that "the level of net debt is in line with the board's expectations".

In Phoenix's managed services unit, "sale and the pipeline of new opportunities have developed well", the statement claims. Meanwhile "improvements to service delivery quality and efficiency are proceeding as planned".

However, the volume of orders in Phoenix's Business Continuity was lower than anticipated, "due in part to some delays in customer decisions". But, as revealed in a previous statement, one of the firm's biggest customers in this sector has renewed its contract.

In its indirect business, Phoenix claims that "our work on delivery efficiency is developing as planned". But the company has endured an "expected revenue decline" so far this fiscal year as a result of "contract losses during the last 12 months". In October 2013 the company was booted off the Cisco partner programme, resulting in the loss of a chunk of support services revenue.

"We are responding to lower than expected call volumes in field services with an acceleration in our efforts to move to a more fully variable cost base in this part of the business," adds the statement. "The change programme in the group as a whole is proceeding well and is on target to deliver the overall long term benefits that our strategy predicts."