23 July 2002 -- Marconi plc's group sales in Q1 were £592m (down 48% on a year ago, mainly due to the disposal of businesses from Marconi Capital during second-half fiscal 2002). Of this, Core sales were £510m (down 22% on a year ago and 26% sequentially): 63% Network Equipment, 37% Network Services. US and Central America/Latin America (CALA) Core sales were down 39% and 59%, respectively, on a year ago.
Optical Networks accounted for 25% of Core sales (down 6%), with a slight increase in both EMEA and APAC offsetting the drop in CALA. SDH equipment accounted for over 80% of Optical Network sales, with a focus on lower-end STM1-16 products.
Operating loss was slightly higher than Q4's £116m due to the loss in Public and Private Mobile Radio. In the Core, further operating cost reductions enabled a slight improvement on Q4's £119m loss. Over 80% of the £90m exceptional costs were related to restructuring. Net debt was £3.017bn at end-June (up £152m on end-March).
"We have met our business plan sales target for the first quarter despite the difficult market conditions and we continue to reduce our cost base," said Chief Executive Mike Parton. "We continue to move forward toward a restructuring of our balance sheet and we remain focused on delivering on our business plan." Nevertheless, further provisions and write-downs could be necessary, Marconi warned.
Marconi's restructuring is likely to involve a debt for equity swap for a significant proportion of its indebtedness, significantly de-gearing the Group. The board has warned that it expects a very substantial dilution in value for its existing equity holders.
* Marconi's Core business has been redefined to account for April's transfer of Marconi's Mobile assets to Capital and of Marconi Interactive from Capital to the Core.