Sales surge keeps Marconi on line
SALES at Marconi are powering ahead despite cut-throat competition in the world market for telecoms equipment. The company lifted revenue forecasts for the year ending next month but trimmed its anticipated operating margin slightly, leaving profit forecasts unchanged by analysts.
Turnaround chief executive Mike Parton, who oversaw lifesaving financial restructuring in 2003, said sales in the three months to the end of December had risen 5% to £330m from £314m on a constant-currency basis.
He added: 'We are very pleased with the progress made in winning significant new business and driving top-line growth. Pipeline opportunities give us confidence that we can continue to grow sales against a backdrop of fierce pricing pressure in a competitive marketplace.'
Big contract wins in the last three months included T-Com, Bulldog, Energis, Tube Lines and an unnamed Middle East defence organisation. BT remains Marconi's biggest customer, accounting for 26% of sales. The 0.1% downwards move in margins to 33% meant headline operating profits were in line at £10m.
Parton said his preliminary view for the next financial year to March 2005 is that the group will see similar levels of tendering for business and converting these into orders. Prices would remain under pressure but this would be offset by cost-cutting, he said.
Marconi only just staved off bankruptcy in 2002 and is now targeting adjusted gross margin for the 12 months to the end of March at the lower end of a 33-34% range after low orders from the US Government at its broadband routing and switching unit.
Back at its interim results in November, Marconi said achieving its 34% gross margin target would be 'challenging', a warning that sent its share price into a tailspin.
Despite cutting its gross margin target, Marconi said a strong performance at its Optical and Access Networks units would help it achieve full-year sales growth in the 'mid-single digits'. Previously, Marconi had forecast revenue growth in the 'low single-digits'.
