Unisys has delivered a good end to its FY13 with the Services operating margin hitting 9.8%, the higher end of its 8-10% target range. For the full year, the Services margin was 6.2%, down 20bp. IT Outsroucing revenues declined 3%, while SI was down 11%. Both, however, grew in Q4 (4% and 2% respectively).
The improvement in the Services business was driven by a better mix of higher-margin services, as well increased cost efficiencies in service delivery. However, just as CEO Ed Coleman points out, this level of performance was not sustained throughout the year (e.g. Q2 Services margin was just 4%).
Across the business more broadly, total revenue was down 7% to $3.45bn, while the operating margin slipped from 8.6% to 6.4%.
In terms of driving profitable growth over the next couple of years, Unisys is looking to areas such as end user outsourcing services (though in the UK it better watch out for Fujitsu who is on something of a roll right now! See UPDATE: Fujitsu Q3 UK performance), Cloud (e.g. its mortgage solutions in the UK), and application managed services. For Unisys, the general aim has to be consistency of performance. It needs to scale its more profitable services and be sure it can maintain a certain level of profitability in existing outsourcing contracts through strong management and delivery of those deals.
We hope to catch up with the team in the UK sometime soon to learn more about the performance there specifically.