SQS Software Quality Systems AG Share News (SQS)

SQS Software Services, a German-based provider of software testing and quality management services, expects second half profits to come in at the lower end of expectations due to the weak economy.Pre-tax profits for the period rose to €2m from €1.4m over the same period the previous year on revenues that climbed to €95.3m from €73.9m. But SQS, whose services are used in sectors such as retail, railways and government, said it will be scaling back hiring of consultants in the second half, which will hold back revenues and profits.Chief executive Rudolf van Megen explained to ShareCast that the company wanted to avoid making the same mistake as in 2008, when it failed to anticipate the effect the downturn would have on its trading."We're not seeing contracts cancelled, but some decisions are being delayed," he said, adding that there has been no moratorium on hiring in sectors that are performing resiliently, such as insurance and aerospace.He said that the company had successfully grown its managed services business, which now accounts for 19% of sales, up from 11% at the end of 2010. Managed services are contracted for longer than consultancy projects, SQS said, though in their earlier stages margins are lower.At 1.00pm, shares in SQS were down by 9% at 177p.---RG