UPDATE 1-Maintenance deals drive Micro Focus earnings beat
* H1 core earnings up 3 pct, beating expectations
* Sees second-half revenue similar to first half
LONDON Dec 6 (Reuters) - Information technology company Micro Focus International posted better-than-expected first-half core earnings after it moved towards more lucrative maintenance contracts, with fewer low-margin consultancy deals.
The British mainframe software specialist posted a 3 percent rise in adjusted core earnings of $92.2 million on Thursday, ahead of analysts' average forecasts of about $86 million.
Revenue at the business, which works on the large computers that crunch data for banks and retailers, slipped 5 percent to $207.3 million, broadly as expected by the market.
Executive Chairman Kevin Loosemore said it was a "solid" performance against a backdrop of weak demand in markets like Spain, Italy and Japan.
"We are cautious about the macro stuff, but not to the point where we think it will cause any great downturn," he said in an interview.
He said revenue in the second half would likely be similar to the first.
The target for the core earnings margin, however, was increased to 40-45 percent, from a previous range of 37-42 percent, reflecting the changed product mix.
Loosemore has repositioned the business to drive cash returns for shareholders rather than chasing high revenue growth.
A total $313.9 million was returned to shareholders in the previous 12 months, he said, and the board intended to return more cash in November next year and in 2014.
It also increased its interim dividend by 45 percent to 11.9 cents.
Shares in the group, which have risen by 29 percent in the last six months, were flat at 570.5 pence at 1010 GMT.