The troubled telecoms equipment maker Marconi gave a bleak prognosis on trading yesterday as several billions of pounds worth of exceptional costs pushed it heavily into the red.
The company again refused to give any guidance on when its trading might improve and also gave scant information on the progress it is making on refinancing its bank facilities to give it extra financial headroom.
"There is much more to be done in the coming months and we expect little or no help from our major markets which remain depressed," said Mike Parton, the chief executive.
In the six months to 30 September, Marconi reported a half-year pre-tax loss of £5bn after a £4.5bn exceptional charge, mainly to cover the £3.5bn cost of writing down the value of goodwill and various assets. Shares in Marconi closed up 1.9p at 33p last night.
Mr Parton said Marconi's trading difficulties stemmed purely from the economic climate and that potential customers were not shying away due to its own internal problems.
"We would like to see quarter three and have a view of quarter four before we can really judge whether things are getting worse or getting better. At the moment, it doesn't feel like they're getting better but it doesn't feel like they're getting any worse either," he said.
Marconi has had a disastrous year so far, having issued two profit warnings, resulting in the departure of its top three executives and thousands of job losses. So far this year, 6,400 workers have left the company.
"If market conditions deteriorate, then we will have to reduce our costs further. If the market conditions stabilise, then we won't," Mr Parton said.
Marconi also reaffirmed its debt target of £2.7bn to £3.2bn by the end of next March, and reiterated that further asset sales were on the cards. At the end of September, Marconi's debt stood at £4.28bn or £3.5bn on a pro forma basis taking into account proceeds from the sale of its Medical Systems business.
No decision has been taken on whether Marconi will undertake a bond-buyback programme while discussions with banks over the refinancing of 7.5bn euros of loan facilities were described as "very early stage".
"If we meet those numbers [debt and cost reduction] then I feel that we will have succeeded," Mr Parton said, adding that not all of the businesses within Marconi Capital would need to be sold to hit those targets.
Last month, Marconi recorded a £222m operating loss before exceptionals, compared with a £320m profit last year. Sales dropped 19 per cent to £2.6bn including a 25 per cent drop in sales from its core business.Reuse content