Marconi Plans Further Cuts

Interim results call for 'further agressive management of cost base'

December 16, 2002

1 Min Read

LONDON -- Commenting on the results, Mike Parton, Chief Executive, said 'The results forthe first six months of the year demonstrate clearly that the aggressive costreduction actions undertaken, together with our focus on cash generation anddebt reduction, are beginning to flow through. This has been achieved despitefurther deterioration in the telecoms equipment and services market world-wide.Furthermore, our continued commitment to customer service has been rewarded byour customers' ongoing support.

'The improvements in our operational performance, together with the commitmentof our creditors to our financial restructuring and the appointment of our newBoard announced today, illustrate the progress that has been made in buildingsolid foundations for the business.'


Solid progress on cost reduction and cash generation initiatives despite continuing tough market conditions

  • Core sales £992 million; Q2 vs Q1 decline contained at 6%

  • Core operating cost run-rate reduced to £635 million by end September 2002

  • Significant reduction of operating cash outflows in second quarter; progressing towards operating cash breakeven

Further aggressive management of cost base

  • Breakeven Core sales to be reduced to below £1.9 billion per annum

  • Plans to achieve Core gross margin run-rate of 24 to 27 percent of sales and Core operating cost run-rate of £450 million during next financial year ending 31 March 2004

Financial Restructuring progressed to next phase

  • Agreement with Syndicate Banks and informal bondholder committee regarding revised proposals will allow Restructuring to be formally documented and launched

  • On track to deliver £260 million cash distribution to creditors as part of proposed financial restructuring (including £95 million interest accrued at 15 October 2002 and already paid)

  • Completion now expected by 15 March 2003

Marconi plc

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