Optimism as Marconi cuts losses

Embattled telecoms equipment group Marconi said today that optimism for the long term looked “increasingly justified” after half-year losses narrowed.

The operating loss of £149m (€214.2m) for the six months to September 30 reduced from £485m (€697.2m) a year earlier as a cost-cutting drive and “pockets of increased demand” boosted the performance by Marconi.

Last month, the company announced its first quarterly sales improvement in 18 months as the figure for the three months to September 30 lifted 6% on the previous quarter to £389m (€559.2m).

Today, Marconi signalled another upbeat note on trading as it said it was now targeting a further increase in business during the current quarter. That compared with previous guidance for a “stable” showing.

Chief executive Mike Parton added: “Our markets are still difficult to predict beyond the current quarter. However, I believe our optimism for the longer term looks increasingly justified.”

Marconi, whose biggest customer is BT, said it continued to benefit from the improving market in Germany while there had also been heightened rates of spending by North American wireless customers.

The half-year figures come six months after Marconi completed a life-saving financial restructuring involving the exchange of £4.7bn (€6.8bn) of debt for equity. That move handed banks and bondholders control of a new company known as Marconi Corporation.

Chairman John Devaney said today’s performance reflected the balance sheet overhaul, changes to the board structure and “strong operational progress”.

He added: “We are building strong foundations to support the business and our stakeholders’ longer-term success.”

The company, which has UK bases at Coventry, Nottingham, Liverpool and Chelmsford, confirmed its aim of reducing headcount from 14,100 at September 30 to 13,000 employees by March 2004. Much of this reduction is likely to be achieved through outsourcing.