600 Group reports 'positive signs'

The remarks are contained in its interim management statement for the period from September 27 to January 25.

The statement said that, while conditions in certain of the group's markets remained difficult over this period, signs of recovery continued within its machine tools and laser markets, particularly in North America, and this was reflected in its trading performance.

The statement continued: "Order intake levels for the 14 weeks ended January 2 2010 increased by 20 per cent and underlying revenue was 25 per cent higher when compared to the previous quarter.

"Our forward order book for these markets remains stable and we expect order intake to remain at these levels for the remainder of the current financial year.

"Overall gross margin improved to 33 per cent and the overhead cost savings anticipated under the board's turnaround strategy have been achieved. These factors have enabled the group to generate a positive EBITDA (earnings before interest, taxation depreciationa and amortisation) for the period."

The company said that overall borrowing facilities totaled 6.5m, which the board believes is sufficient for the group's ongoing operational needs.

Net working capital levels continued to reduce during the period and the board is seeking opportunities to continue this improvement.

The statement continues: "As previously reported, the board is now focused on further strengthening the group's supply chain and developing its manufacturing footprint in order to increase capacity and reduce lead times.

"The product range has been improved during the current financial year and has been focused on higher margin lines such that the improvement in gross margin can be sustained. The remaining actions in our cost reduction programme, relating to the consolidation of our European sales, finance and manufacturing activities, will be completed by March 27 2010.

"The group's performance during the period was in line with the board's expectations and, following the implementation of the cost reduction strategy and increase in EBITDA, the group is well positioned to benefit from any further improvement in trading conditions."