By Graham Hayday, 25 January 2002 07:10
NEWS Energis is on the brink of taking drastic action to get itself out of a crisis which yesterday culminated in a huge plunge in the company's stock. After issuing a profits warning - its third in six months - the value of Energis more than halved to stand at £400m. At its peak, the business was worth over £12bn. As a result, management is considering a rights issue, the closure of some overseas operations, or even the complete sale of the business. There are also fears that Energis will breach its banking covenants. The company said that earnings for the year to the end of March will be 10 per cent below market expectations of around £155m. Revenue will be five per cent below expectations because of weak December performances from its German and UK operations. Customers switching from metered to unmetered net access packages also hit the company hard. In a statement, it said: "This disappointing recent performance is the result of a lower than expected conversion of orders received into billed revenue, a decline in overall order flow... a more adverse than anticipated margin mix, including the speed of shift from metered to unmetered internet traffic, and a concern that these factors will not show an uplift before the end of this financial year." It plans to cut costs by £30m as well as reducing capital expenditure from £340m to £300m for the current year. This could lead to further job cuts on top of the 450 announced last year. Despite the gloom, Energis is doing its best to sound optimistic. It said: "The board of Energis remains confident in the fundamental strengths of the business, its market position and its ability to create value."
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