Return to a balanced operating result, positive cash flow
Paris. March 8, 1997. The Board of Directors of Thomson multimedia, presided over by Thierry Breton on March 6, 1998, examined the consolidated results and noted the progress achieved by the Group in 1997. These results show a significant improvement in Thomson multimedia's operating margin, reversing the trend of the previous three years.
Profit & loss statement
|In Millions of French francs
|-ind. restructuring in 96
|-SAFE reengineering in 97
|Net Result before tax
Consolidated revenues, 65% of which are generated in the Americas, remained stable at 38,075 million francs, up 1.1% over 1996. In 1997, emphasis was placed on the evolution of product mix towards the high end, with the aim of increasing operating margin by concentrating on profitable lines.
In 1997, Thomson multimedia succeeded in meeting its commitment to return to a positive operating result. The Group recorded a definite upturn in operating result, back in the black at 143 million francs, representing 824 million francs' progress compared with 1996. This was achieved in spite of unexpected market developments in the first half of 1997, in particular heavy price erosion on digital decoders in the US.
These results confirm the establishment, within the Group, of a real culture of progress and mark the restoration of confidence in the company. A number of factors contributed to this:
a program to reduce non-salary costs and costs of no use to customers, launched in March 1997, which resulted in savings of 1.4 billion francs
good performance by the Tubes and Key Components business, in particular OEM sales to emerging economies
more generally, the revitalization of the whole Group, which was reorganized around its three worldwide businesses (Key Components, Multimedia & Services, Audio & Communications) and three regional TV & Video activities (Americas, Europe and Asia).
The consolidated net result stands at (2,781) MFF, compared with (3,402) MFF in 1996. This includes a negative financial result of (1,476) MFF, on account of the Group's high level of debt over most of the year. Net debts, which stood at 15.5 billion francs on December 31, 1996, decreased to 5.6 billion at the end of 1997, thanks to the injection of 10.9 billion francs' capital subscribed to in December 1997 by shareholder THOMSON S.A. following the agreement of the European Union authorities. This recapitalization, which took place in November, did not have a marked effect on financial costs for 1997, but will be reflected in financial costs for 1998.
In addition, the net result takes into account a provision for extraordinary costs of 1,411 MFF (the SAFE program), destined to finance new measures, designed and implemented in 1997, to reengineer the Group's operating processes (value added chain, logistics, information systems, etc.) and revitalize sales.
Also, for the first time in more than five years, owing mainly to tighter management of inventory and customer accounts, in 1997 the Group returned to a positive cash flow, totaling 1.1 billion francs, compared to a negative cash flow of (1.75) billion in 1996, representing progress of over 2.8 billion francs over the year.
The 1998 financial year, in line with forecasts for the first two months, is expected to pursue these trends, with further significant improvement in both operating and net results, concentrating once more on profitable growth.
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