QXL, the online auction group, has said it is moving towards a profit thanks to cost-cutting and improved sales.

The group said it expected its operations in individual countries to become profitable before the end of the year. But overall, the company is still heading for a loss

QXL said it needed to address its "challenging cash position", because losses for the six months to 30 September stand at �10.2m ($16m).

The company said it would continue to look at its costs, including staffing levels, and would decide if it needed to keep trading its shares on the Nasdaq index in the US.

Earlier this year, QXL stopped trading its shares on Germany's Frankfurt stock exchange

Heading towards the black

QXL said that in the six months to 30 September the volume of trade increased by 56% and gross profits rose by 31% to �2.9m.

Chief executive Mark Zaleski said the company was continuing to develop a "more intuitive and faster platform" for its online selling.

"(This) will result in significant cost savings going forward which we expect to accelerate our path to profitability."

However, the average amount being spent by an online shopper slipped from �47 a year ago to �29. This was also a sharp drop from the �36 average reported for the three summer months from April to June this year.

Cash strapped

Mr Zaleski said QXL was making considerable steps towards profitability, having reduced its losses consistently for the last two years.

However, in the six months to September losses were still standing at �10.2m, down from �18.6m a year ago.

Mr Zaleski said the group was looking at further measures to cut costs and reach profitability more quickly, including a hint at possible job cuts.

"We are......taking the decisions necessary to bring the group to profitability, including an ongoing review of our organisational structure to ensure that the size of the organisation is appropriate to its profit-generating ability".