Marconi sees losses slashed

TELECOMS parts maker Marconi lifted its profit margin target for the year today as it posted much smaller losses and forecast a sales rebound over coming months.

Chief executive Mike Parton said the group, which almost went bust three years ago, is now finding stability in customer demand, particularly in its major European markets.

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 targets.'

Sales fell nearly 8% to £339m for the first three months of Marconi's current financial year - the quarter to 30 June - typically the weakest 90-day period in the group's calender.

But Parton is sticking to his target of 'low single-digit' growth for the 12 months to March 2005.

Marconi also now expects to achieve an adjusted gross margin of 34% compared with a previous target of 33%.

The margin uplift comes from the recent decision to sell the non-core Outside Plant & Power division, the last act in the group's tortuous restructuring.

Operating losses for the first quarter were £3m against £45m in the same period a year ago. Pre-tax losses were slashed by 63% to £39m.

Marconi has only recently emerged from its £3.5bn debt-for-equity swap but Parton has already hit four of the five targets he needs to bag almost £23m in incentive bonuses.