Computer hardware manufacturer Network Technology today warned the City not to expect a full recovery in its hard-hit markets until 2005.

Like many in the sector, the firm - which makes hardware for IT networks - has been rocked by the hi-tech slump and today revealed it did not expect a recovery in its European and Asian markets before 2004 to 2005.

The warning came as Network Technology, based in Burgess Hill, West Sussex, showed that turnover in the six months to September 30 eased from £1.8 million to £1.6 million.

Chairman Klaus Bollmann said: "A receding economy in the USA and the further downturn of almost all sectors continued to have a negative impact on our growth capabilities."

But he added that the group was continuing "on the road to recovery" and pre-tax losses came in at £650,000, only slightly higher than last year's losses of £639,000.

In addition, the company also predicted conditions in the US were likely to improve first.

The US is one of Network Technology's core markets, providing 41% of turnover in the first half, and the group is expecting an upturn by the latter end of 2003.

Network Technology has introduced a range of new products recently in an attempt to limit its exposure to the tough Japanese market, expand the range of technologies it offers and grow the business.

No dividend will be paid, however, until the group completes its recovery.