OCT 01] MARCONI NEWS
Marconi Outlook Brighter
market has reacted well to Marconi's latest Trading Update
issued today - with the share price reaching over 28.3p by the
close from a low of 13.5p just a couple of weeks ago.
key plus points of the Trading Update for the three and six
months ended 30 September 2001 included:
quarter results in line with previous guidance
quarter breakeven at operating level pre goodwill
amortisation and exceptional items; first half operating
loss £222 million
quarter positive operating cash flow: £83 million
debt at 30 September 2001: below £4.3 billion
write-down of goodwill, provisions for inventory and
doubtful debts and total exceptional restructuring costs in
line with previous guidance
quarter sales in Core business: £893 million
progress towards cost reduction targets
debt target of £2.7 billion - £3.2 billion at 31 March
Parton, Chief Executive, said:
trading conditions continue to be tough, Group operating
profit and cash flow in the second quarter were in line with
our previous guidance. There is much to do and the new
management team remain focused on delivering the cost and debt
reduction targets arising from our Operational Review."
the Trading Update was more positive than some analysts
expected. The primary need for Marconi was to restore confidence
in the company and convince the markets that it is not about to
are however still areas for concern. Group sales during the
second quarter amounted to £1,444 million compared to £1,899
million during the same period last year, a reduction of 24%.
Second quarter sales in core areas of business were £893
million, a decline of 33% from a 2001 equivalent figure of £1,339
managed to make a small profit in the second quarter of £5m
against a breakeven forecast. This was a big improvement on the
previous quarter's operating loss of £227 million and was a
result of both increase in sales and benefits starting to show
from the company's major cost reduction programme.
costs in the core area were down 12% in the second quarter but
that was not enough to restore profitability. Small profits were
made in the Medical and Capital divisions of the company.
September a further 630 employees left Marconi as part of the
Company's cost reduction programme. This brings the total number
of employees who have left the Company as part of these plans
during the period 1 April - 30 September 2001 to 6,600. At 30
September, the number of employees in the Core had reduced to
32,600 - compared with 39,000 in March 2001.
big area of concern for the company is the debt burdern. Net
debt at 30 September 2001 was down slightly to £4.28 billion
from £4.44 billion at 31 August 2001. The debt stood at £3.17
billion at 31 March 2001.
is the debt that worries most market analysts. The company is
only kept afloat from a solid credit from the supporting banks.
But the company will have to work hard with much bigger profits
than £5 million, more sell-offs and continued cost reductions
to make any significant inroad into the debt mountain.
next financial marker will the publication of its interim
financial statements on 13 November 2001.
part of Marconi's retrenchment to its core activities it has
been selling off a number of non-core companies.
26 September Marconi announced its agreement to sell its entire
shareholding in French company, Lagardere, for Euro 68.8 million
(approximately £43.3 million). These proceeds were received on
1 October 2001 after the half-year end and, therefore, are not
reflected in the second quarter results.
10 October Marconi received US regulatory approval for the
disposal of its Medical Systems business to Philips. This
transaction remains subject to European Union regulatory
managed to stave off some potentially very damaging PR over
pay-offs to the former chairman and chief executive.
It had been
previously reported that the two former top men who resigned
last month would receive substantial lump sums as part of their
It was revealed
last week however that former chairman Sir Roger Hurn, who had
been tipped to get £300,000 has not sought, or been offered,
executive Lord Simpson, who it had been rumoured was in line for
a £1 million pay-off, will receive just £300,000. Lord Simpson
has agreed to waive all further entitlements under his contract,
which would have extended until July 2002.
says its former deputy chief executive John Mayo, who was in
line to succeed Lord Simpson, will receive £600,000.
ALSO : [02 OCT 01]
ON THE BRINK
SEE ALSO : [04 SEP 01] MORE
DOOM FOR MARCONI
SEE ALSO : [03 JUN 01] CISCO
POISED FOR MARCONI TAKEOVER
SEE ALSO : [10 APR 01] MARCONI
JOB CUTS HIT COVENTRY