UK technology integrator Morse is reporting a half-year slowdown in sales, partially offset by a 12% increase in service revenues and higher gross margins.
Sales for the most recent quarter, ending 31 December 2002, were £92 million (2001: £115 million) resulting in H1 sales of £185 million (2001: £226 million).
Services revenues in Q2 were £32 million (2001: £28 million) resulting in sales for the half year of £57 million (2001: £51 million), representing 12% growth. Service revenues now account for 31% of total earnings at Morse.
Infrastructure revenues for Q2 decreased to £60 million (2001: £87 million) resulting in half year infrastructure sales of £128 million (2001: £175 million).
Shares in the company have climbed 13% on the promise of higher gross margins leading to operating profits before goodwill amortisation for the six months to December 31 2002 of approximately £6 million. This is before restructuring costs of £1 million, arising predominantly in Germany.
Duncan McIntyre, chief executive, comments: "The infrastructure business remains well placed to benefit from any increased activity from the current low level in the financial and telecommunications markets, albeit that we don't anticipate an improvement in these sectors in the near future. Meanwhile we continue to be very focused on managing costs and on cash."