Glotel shares slump on tough conditions

Telecom recruitment company Glotel saw its shares take another tumble today after it said trading conditions remained difficult…

Telecom recruitment company Glotel saw its shares take another tumble today after it said trading conditions remained difficult and sales slow.

The comments, which follow two profit warnings earlier this year, came as Glotel said pre-tax profits for the year to March 31st had slumped to just £757,000, compared to £6.2 million.

Sales were up 25 per cent at £165 million.

The group has been hit by the slowdown in the telecoms sector and tough conditions in the US.

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It has also suffered from an "exceptional level of bad debts" as a result of two US clients filing for Chapter 11 bankruptcy.

In response the group has cut costs and around 75 jobs in the US and Europe, and closed a number of offices.

It has closed its Edinburgh and Manchester offices, and is serving clients in these areas from a centre in Birmingham, while in the US, it has shut its Los Angeles and Louisville offices.

Mr Les Clark, chairman, today said trading conditions continued to be difficult and the group was responding by continuing to reduce costs.

He added reorganisation costs would impact results in the first half of the current year.

"The global slowdown in technology expenditure is continuing. In spite of our efforts sales remain slow in all of our trading units, with our client still reducing their cost base and major projects being delayed," he said.

"We do, however, remain confident that there is a latent demand for our services, which will be released when our market improves."

Shares slid 23%, falling 13p to 421/2p - far below their high last year of 800p.