Marconi hails market stability after losses narrow

Telecoms equipment group Marconi today said it remained on track to meet full year sales targets as it posted narrower first quarter losses.

The company, which needed a complex financial restructuring to stay afloat in 2003, said a 3% increase in first quarter sales on a constant currency basis confirmed its market stability.

Marconi posted pre-tax losses of £39m (€58.6m) for the three months to June 30 against a decline of £105m (€157.7m) last time, as customers continued to endorse its next generation network technology.

The group also said it had revised its targets for full year margins to 34%, from a previous target of 33%.

Chief executive Mike Parton said Marconi remained on track to meet full year sales and margins targets.

He added: “We see more opportunities for sales of our next generation equipment and services than at any time in the last three years, which gives us confidence in our medium-term growth prospects.”

Marconi confirmed that customer demand for telecoms equipment and services was stabilising, particularly in its major European markets.

Contracts with companies such as its biggest customer BT and Australia’s main telecoms operator Telstra contributed to the improved results.

Today’s figures showed first quarter margins stood at 32.2% – down from 34.4% in the previous quarter but higher than indicated in a trading statement last month.

The main drivers for the amendment to full year margin targets included savings in procurement and its supply chain.

Marconi employs 12,400 people worldwide. It recently put an end to 18 months of falling sales.

The signs of improved fortunes follow a £4.7bn (€7bn) debt-for-equity restructuring that put the group on a more stable footing – a move that also handed control of the new company to banks and bondholders.