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> Full year results 1998
1998 Results :
Positive net income and strong improvement in operating profit
Paris, March 17, 1999 - The Board of Directors of Thomson multimedia, chaired by Thierry Breton on 17 march 1999, reviewed the consolidated results of the Group which confirm the success of the recovery measures undertaken since 1997. 1998 results are above the Groupís objectives, one year ahead of the initial recovery plan, with a positive net result reaching FF 102 million and an operating result strongly increasing, from FF 143 million in 1998 to FF 1 063 million.
Profit & loss statement 1997-1998
|Millions of FF
||98 vs 97
% of revenues
Non current result
Net result after tax
|Group net result
||+ 2 883
|Net debt (31st dec.)
||+ 2 247
Revenues : refocusing on high margin and growing businesses
Revenues amounted to FF 37 039 million, decreasing from 1997 (-2.7%). This consolidation mainly reflects the refocusing strategy undertaken since 1997, which generated a significant increase in gross margin (+3.2%). As currency variations had a limited impact, activity evolution mainly resulted from the following factors :
In Europe, Thomson for the first time for 10 years, recorded a growth in revenues (+ 2.6%) thanks to a new commercial strategy (brand rationalisation, expansion of high-end sales) which allowed the Thomson brand market share to grow by 50% vs. 1997. End 98, the Groupís market share in its main European market , France, was above 20%, with Thomson brand alone gaining 14% of the market.
In the United States, despite a difficult ramp up of the new TV plant in Mexico, the Group maintained its leadership position with a market share of 23.1% in TV and 19.9% in VCR. Thomson strongly strengthened its position on the fast-growing markets for digital products, which revenues surged by 15% : in 1998, the Group market share reached 61% on DSS satellite set-top boxes and for the fourth quarter, 22.9% on DVD with the successful launching of DIVX-equipped DVDs.
The economic crisis in Asia in 1998 led the Group to reposition itself on the two major markets of the continent, India and China, with significant investments there to increase finished products and tubes sales.
Operating result : strong increase in result, with continuous R&D; efforts
Operating result reached FF 1 063 million, increasing by FF 920 million from 1997. The Group , after the first step in its recovery accomplished in 1997, thereby confirms its ability to strongly improve the profitability of its businesses, thanks to the key competitiveness programs launched since 1997: restructuring of manufacturing capacities, savings on all direct costs and overheads, reengineering of the supply chain to improve industrial flexibility and customer service quality. Main contributions to the operating result progress were:
- strengthening and development of the Spring program of cost control on all non-salary costs non necessary to the customers. The program focused particularly on the renegotiation of the contracts with suppliers of material and components for our manufacturing units as well as service suppliers for all functions.
- mix improvement thanks to the repositioning of our sales on high-end products, which increased our average product margins;
- manufacturing restructuring program started in 1997, whose full benefits accrued after the first quarter 1998;
- SAFE reengineering program, whose first effects started in 1998
Operating result evolution 1996-1998 (MFF)
The groupís gross margin, 3.2 points higher than in 97, reached the level of 22.4% . With this performance, the Group managed to improve its operating result while preserving its Research & Development expenses (1863 MF, or 5% of revenues), and increasing its advertising expenses to support its brands, and its investments in renovating its information systems
The financial result reached -716 MF, 760 MF higher than in 1997, thanks to the full year impact of the end-97 recapitalisation of 11 BnFF, and to the positive cash-flow attained in 98 for the second year in a row.
Non-current result of -184 MF includes a restructuring provision to complete the SAFE plan (provisioned in 1997 with a 1411 MF charge) and to cover additional Euro and Y2K costs.
Net result: Thomson multimedia is profitable
The Group net result after tax, for the first time , is positive at 102 MF against a loss of 2781 MF in 1997 , with one year in advance on the initial recovery plan, and before the return of the RCATL licensing revenues in the company.
This recovery obtained in two years time, is for the Group a major step. After the return to profitability in its core businesses, the Group intends to continue its development on the basis of the industrial partnerships formed mid-98 with Alcatel, Microsoft, DIRECTV and NEC. These industrial agreements were supported by minority equity purchases, under the form of a capital increase of 1.8 BnFF in December 1998.
1999 prospects: significative progress of results
For 1999, Thomson multimedia will further improve the operating result of all its businesses, and strongly increase its net result after taxes. The Group also intends to increase significantly its R&D; investments, particularly for the new joint programs with its industrial partners, and to accelerate development of new activities. It will also agressively pursue reengineering actions to improve productivity and competitiviteness.
Commenting those results, Thierry Breton, Chairman and Chief Executive Officer, said: "After strong progress in 1997, 1998 results show that Thomson multimedia has become a profitable company, one year in advance of the original recovery plan, and resolutely focused towards the future. With strong profitability pespectives in 1999, the support of powerful industrial shareholders, and the commitment of its staff who have widely subscribed to the employees shareholding plan, Thomson multimedia now holds powerful assets: it is ready to face new challenges to further its development."
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