Marconi to axe another 854 jobs.
Marconi yesterday said another 854 staff would lose their jobs in the coming year, with around 150 going in the UK, after a fall in forecast first quarter sales prompted the telecoms equipment firm to lower its sustainable cost base target.
Mike Parton, chief executive, said 260 jobs would go in Italy from the closure of its mobile telecoms operation, called UTMS, which it had hoped to sell, with another 594 leaving from across the international group.
Added to the 406 staff who are transferring to Computer Sciences Corporation and BT as part of a pounds 450 million IT outsourcing deal, announced earlier this week, Marconi is taking its core workforce down to 13,000 people by March next year. UTMS's staffare treated as non-core. Mr Parton said the bulk of the staff reductions in the UK would come from departments working on Marconi's pounds 4 billion debt restructuring, which was completed 11 days ago, with legal and finance support staff most vulnerable.
The job cuts are needed because Marconi now believes first quarter sales will come in at less than pounds 400 million, down from the pounds 426 million achieved in the three months to the end of March.
'We did make money in Q4. We are now moving the breakeven target down, but only slightly given we have gone from pounds 894 million (of operating costs) last year to pounds 490 million,' said Mr Parton, who was speaking at the release of Marconi's full year figures.
'We are now saying we are going from pounds 490 million to pounds 425 million. Obviously, it is really unfortunate for the 500 people, but we see it as a refinement rather than a wholesale change to the figure.'
Mr Parton remained cautious about the outlook for trading, but he has set a target of selling Marconi's telecoms equipment and services at a 27 per cent gross margin by the end of this year, suggesting it will become more profitable than initially expected.
While sales are forecast to continue to fall, Mr Parton intends to make Marconi more efficient, with more profits left from the reduced sales as the cost savings from the job losses and a continuing focus on sweating assets, like stock levels and debtors, all take effect.
'We are ahead of where we thought we would be so with the plans we have in place we think we can take it to 27 per cent,' Mr Parton said.
Further progress on reducing the number of days it takes to collect debts from customers will partly depend on where Marconi's future sales come from, Mr Parton added, with UK and US customers paying in about half the group average of 94 days, while Italian customers take up to 270 days.
In the UK, Marconi said its core optical networks business had suffered as largest customer BT had cut its spending.
In the US, the company's outside power and plant operation and portfolio of copper and fibre based digital equipment have both been put up for sale, although Mr Parton said the businesses could remain with Marconi for some time as improvements are made to increase their sale value.
The two contributed pounds 235 million of sales last year, but both saw significant reduction in demand. Overall, Marconi posted a pre-tax loss of pounds 1.33 billion for the year, including goodwill amortisation and exceptional items totalling pounds 729 million.
It had pounds 808 million of debt at the end of March, offset by a better than expected pounds 783 million cash balance.
Shares closed up 2 1 /2p at 65p, valuing Marconi at pounds 660 million.
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|Publication:||The Birmingham Post (England)|
|Date:||May 30, 2003|
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