IBM’s UK arm has seen a surge in profit of over £100m in 2023, driven by the demand for its AI and hybrid cloud services.
The Portsmouth-based division reported a pre-tax profit of £172.9m for the past 12 months, a significant increase from £70.4m.
Despite a slight dip in revenue from £3.1bn to £3bn, as revealed in recently filed accounts with Companies House, IBM’s core business units saw a 4.2% increase in revenue, City AM reports.
However, export revenue fell by 27.4%, attributed to “due to a change in the organisation of IBM group research and development activities”.
Consulting revenue rose from nearly £1.3bn to £1.4bn, while software and cloud solutions revenue dropped from £763.6m to £663.7m, and infrastructure sales decreased from £410.3m to £380.7m.
The company’s gross profit margin improved from 6.9% to 10% year on year, due to “a result of a greater mix towards high value offerings in consulting and software and by digitally transforming internal processes and scaling AI to enhance productivity within IBM”.
IBM also noted that an increase in interest income positively impacted the jump in its pre-tax profit.
In 2023, a dividend of £198m was approved, up from £150m in 2022. Over the course of the year, the average number of people employed by IBM UK fell from 7,660 to 7,309.
The board expressed satisfaction with the company’s performance amidst tough economic conditions, stating: “The directors are pleased with the performance of the company given the challenging economic environment.”
Board members highlighted significant strides in innovation and focus within IBM UK, part of the global IBM group, particularly in hybrid cloud and AI, saying: “In 2023 IBM UK, as part of the IBM group, made significant progress in its journey to become a more innovative and focused company, built around the two most transformational technologies of our time: hybrid cloud and AI.”
The expansion of partner ecosystems and productivity enhancements were also noted: “The company expanded its ecosystem of partners and enhanced productivity.”
IBM UK’s commitment to evolving client needs was underscored, with efforts to transform customer service, modernise software, and automate tasks: “IBM UK continued to address the evolving needs of clients to help revolutionise customer service, modernise countless lines of code and automate enterprise tasks.”
Looking ahead, IBM UK emphasised the critical role of technology as a competitive edge, adding: “Continued demand for technology will serve as a major driving force behind global economic and business growth as businesses look to scale, offer better services, drive efficiencies and seize new market opportunities.”
IBM UK addressed client queries on productivity and technology management across various environments: “Clients are asking how to boost productivity with AI and how to manage their technology stack, much of which is deployed across a hybrid environment: public, private and on-premise.”
The board statement added: “These trends continue to fuel demand for both hybrid cloud and AI.” For 2024, IBM UK plans to further those hybrid cloud and AI initiatives.
The broader IBM group has reported a revenue of $61.9bn (£52.1bn) for 2023, marking a three per cent increase on a constant currency basis. Software and consulting revenues saw a five per cent rise, while infrastructure revenue experienced a decline of the same percentage.
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