UPDATE 1-Indra says worst may be over for Spanish business

Wed Feb 26, 2014 1:19pm EST

Related Topics

(Adds detail, forecasts)

MADRID Feb 26 (Reuters) - Spanish technology firm Indra posted a 13 percent fall in 2013 net profit on Wednesday but indicated the worst may be over for its domestic business, with a particular improvement expected in defence and security activities.

Indra, whose IT business services include energy, finance and defence, said net profit fell to 115.8 million euros ($158 million), hit by weak sales in its home market - just emerging from recession - and currency depreciation in more robust markets abroad.

Revenue fell 1 percent to 2.9 billion, in line with expectations. The net profit beat forecasts in a Reuters poll.

The company said it would target free cash flow of more than 100 million euros in 2014 and expected operating profitability to be similar to that of 2013.

Pressure on prices would continue in Spain, but profitability should improve in Latin America, it said.

Its operating profit margin fell to 7.8 percent in 2013 from 8.5 percent in 2012.

"(We expect) a mild economic recovery in Spain in which the fall in sales will tail off significantly," Indra said.

It foresaw an improvement in Spanish public contracts, which have suffered most during a crisis that led to deep spending cuts.

Its Security and Defence business should see double-digit sales growth after shrinking in the past five years, it added.

"Order intake (in Security and Defence) at the end of 2013 was very strong (up 21 percent), which could anticipate a change in trend for domestic sales in coming quarters," the company said.

Latin America was expected to slow slightly, it said, but overall sales growth in the region should also exceed 10 percent in local currencies in 2014. ($1 = 0.7317 euros) (Reporting By Elisabeth O'Leary; editing by Sonya Dowsett and Tom Pfeiffer)

FILED UNDER: