Press releases
   > Thomson multimedia
      > 2002

      > 2001
   > THOMSON products
      > 2002

      > 2001
   > RCA products
      > 2002

      > 2001
   > Technicolor
      > 2002

      > 2001
 Press room
 Group's publications
You are in : Press > Press releases > Corporate press releases > 2002
   
 
Third quarter sales:
Performances means full-year prospects confirmed in key areas
No change to full year profitability targets


  • Revenues for the quarter were 2,330 million euros (2,277 million dollars), compared to 2,379 million euros (2,143 million dollars) for the same period last year
  • Excluding foreign exchange, revenues grew 3.8% year-on-year
  • Year-to-date sales excluding foreign exchange impact grew 7.1%
  • Continued strong growth at Digital Media Solutions
  • Positive reception to the high-end Scenium product in the U.S. market
  • Programs in place to deliver full-year profitability and cash objectives, which remain clear priorities over sales growth in a volatile market environment.
  • Concerns exist over US port dispute


  • Summary third quarter unaudited consolidated sales

    In million d'Euros
    3Q02
    3Q01*
    Absolute Variation
    Variation
    at constant currency
    Euro
    USD
    Euro
    USD
    Digital Media Solutions
    687
    664
    504
    452
    +36.2%
    +44.2%
    Displays & Components
    351
    347
    378
    340
    -7%
    -1.7%
    Consumer Products
    1,198
    1,174
    1,390
    1,255
    -13.8%
    -8.5%
    Patents & Licensing
    81
    80
    93
    83
    -12.1%
    -7.8%
    New Media Services
    12
    11
    13
    11
    -6.7%
    -1.5%
    Others
    1
    1
    1
    2
    n.m
    n.m
    Thomson Group
    2,330
    2,277
    2,379
    2,143
    -2.1%
    +3.8%

    * after restatements, including deduction from sales in accordance with EITF 01- 09 (18M€).


    Summary year-to-date unaudited consolidated sales

    In million d'Euros
    YTD02
    YTD01*
    Absolute Variation
    Variation
    at constant currency
    Euro
    USD
    Euro
    USD
    Digital Media Solutions
    1,854
    1,716
    1,118
    995
    +65.7%
    +70.9%
    Displays & Components
    1,251
    1,158
    1,092
    972
    +14.5%
    -17.4%
    Consumer Products
    3,904
    3,614
    4,504
    4,009
    -13.3%
    -10.7%
    Patents & Licensing
    274
    254
    285
    254
    -4%
    -1.8%
    New Media Services
    31
    28
    27
    24
    +11.5%
    +15.3%
    Others
    6
    6
    7
    6
    n.m
    n.m
    Thomson Group
    7,320
    6,776
    7,033
    6,260
    +4.1%
    +7.1%

    * after restatements, including deduction from sales in accordance with EITF 01- 09 (53 M€).

    Paris, October 8th, 2002 - Thomson published today sales for the third quarter 2002. In a continuing difficult economic climate, these showed satisfactory progress in the Group's key priority areas. Net sales decreased by 2.1% to 2,330 million euros. Excluding the effects of currency movements, however, sales grew by +3.8%.

    Many of the positive and negative trends already noted during the first half and second quarter continued during the third quarter. Sales in all divisions are affected by the translation effect of a weaker US$ and some other currencies relative to the Euro. The quarter was characterised by resilience of consumer purchases of the video content produced by Digital Media Solutions on the one hand and volatility in U.S. consumer purchases of hardware on the other. In general, July and August were below expectations but September saw stronger sales in many areas. Overall, the Group saw more robust demand for higher-ticket items, notably televisions (with a positive follow-on impact on tubes demand), relative to smaller-ticket audio, video and telephony goods. Satisfactory progress was achieved in Patents and Licensing towards achieving the full year goal. The lock-out of American West Coast ports at the end of the quarter is a concern.

    Thomson continued the roll-out of a number of key programmes in the quarter. Progress continued at the Digital Media Solutions division with key customer wins in the VHS, film and post-production activities. Within consumer products, the Group launched its new Scenium range of high-end televisions in the United States. The reaction from retailers and consumers has been very promising. Thomson started to ship set top boxes to its retail clients to support Echostar's DISH network. The transition of the design and management activities related to video products to Asia was completed during the quarter. The first revenues related to the MPEG-LA patent pool were also received, although only at the end of the quarter. The integration of the businesses acquired in first half 2002, notably Panasonic Disk Services Corporation, proceeded well during the quarter.

    Two small acquisitions were announced. Thomson signed an agreement to purchase in cash Canal Plus Technologies from Canal Plus Group for a gross purchase price of 190 million euros including the cash and liquid assets in the business. This acquisition will strengthen significantly Thomson's position in copy protection and middleware technology and intellectual property. In addition, Thomson signed an agreement to purchase the U.S. Screen advertising business of Val Morgan for a small, undisclosed sum, increasing its important presence in this market.

    Third quarter and year-to-date 2002 Group revenues

    For the third quarter 2002, Thomson's consolidated net sales decreased by 2.1% to 2,330 million euros (third quarter 2001, 2,379 million euros). This variation would have been a growth of 3.8% excluding the negative impact of currency changes, notably a weaker US$ compared to the euro. During the quarter, the changes in perimeter added 224 million euros of revenues (notably, the consolidation of DSL and new acquisitions such as Panasonic Disk Services, Grass Valley Group, Southern Star Duplitek, Grundig's business and VidFilm). On a like-for-like basis, therefore, consolidated net sales showed a decline of 11.5% or a decline of 5.9% excluding the negative impact of currency changes.

    For the first three quarters of 2002, Group revenues grew by 4.1% to 7,320 million euros compared to 7,033 million euros for the first three quarters of 2001. This growth would have been 7.1% excluding the negative impact of currency changes. During the first three quarters, the changes in perimeter added 445 million euros of revenues. On a like-for-like basis, therefore, consolidated net sales over the first three quarters showed a decline of 6.5% or a decline of 3.8% excluding the negative impact of currency changes.

    Divisional review

    Digital Media Solutions

    Third quarter 2002 revenues grew by 36.2% to 687 million euros (third quarter 2001, 504 million euros). The currency impact on growth was 8 pts. Panasonic Disk Services, Grass Valley Group, VidFilm, Still-in-Motion, Southern Star Duplitek and Victoria Film were acquired in the first half 2002 and accounted for 149 million euros of the third quarter sales. Excluding currency effects, the Division continued its recent track record of double-digit organic growth - like-for-like growth 2001 to 2002 excluding perimeter effects was 6.7%, or 13.5% excluding currency effects. Sales in Broadcast equipment were only slightly down on last year's levels, an improvement on the first half 2002.

    Activity in the Division's core Home Entertainment unit remained robust. The replication of DVD units grew 77% year-on-year and the Group ended the quarter operating at capacity. The timing of some film releases shifted to Q4 slowed film replication revenues in the quarter. Post-production and distribution revenues grew strongly by contrast so that the Entertainment services division showed year-on-year growth in revenues.

    During the quarter, the Division continued the integration of activities acquired in the first half of the year. Within Home Entertainment, the focus for the whole of the second half will be on customer fulfilment rather than the extraction of synergies. The potential for synergies at a later stage has however been confirmed. Synergies from the integration of Grass Valley Group are expected to be significant in the fourth quarter. Going forward, all of the Group's professional broadcast equipment will be marketed under the Grass Valley brand name. New key contracts have also been won during the period in film replication, VHS and post-production, all of which will have a positive impact at different times starting in the first half of 2003.

    Patents & Licensing

    Third quarter 2002 revenues showed a decline of 7.8% compared to the third quarter 2001 excluding negative currency movements or 12.1% including. The decline is accounted for largely by timing issues. A decline of underlying volumes shipped in the quarter and accrued relative to last year has not yet been offset as expected by MPEG-LA revenues. The first revenues from MPEG-LA were collected at the end of the quarter but do not reflect a full quarter's activities. There is accordingly no change to the full year outlook for this Division.

    Displays and Components

    Excluding negative currency impact, total sales for the division grew 0.8%. Including currency impact), third quarter 2002 total revenues fell by 4.4% to 519 million euros (third quarter 2001, 543 million euros). Third quarter 2002 consolidated net revenues fell by 7.0% to 351 million euros (378 million euros third quarter 2001). Excluding a 5.3 pts negative currency impact, consolidated revenues fell only 1.7% year-on-year.

    Revenues in optical components rose 3% year-on-year reflecting growth in excess of 30% year-on-year at mainstream optical components. Total tube sales fell 1.1% compared to last year excluding currency changes, reflecting higher volumes and market shares in some categories offset by lower prices. The Group's large and very large sized tube operations operated near to capacity for the quarter, although more production was sold internally than in previous quarters reflecting good demand for the Group's television products offsetting inter alia the exit of mid-sized tube production in the U.S. and much lower sales to Latin America. The Group continued to invest in the production of true-flat tubes, the fastest growing segment in the market, in order to improve its mix going forward.


    Consumer Products

    Retail consumer products sales were only slightly down year-on-year on a constant currency basis and excluding broadband and those areas exited in 2001 such as the camcorder segment. Broadband sales were down year-on-year 25.1%, or 21.4% excluding currency movements. Taken together, therefore, third quarter revenues for the Division fell by 13.8% to 1,198 million euros (third quarter 2001, 1,390 million euros. The negative currency effect was substantial and sales excluding such effects fell by only 8.5% for the Division for the quarter.

    The Division's priorities during the quarter remained the careful management of profitability and cash during a volatile quarter of retail sales, notably in the US market. Sales of televisions were amongst the robust product categories and rose year-on-year on a constant currency basis. The launch of the high-end Scenium product into the US market has been well received by consumers and retailers leading to a rise in U.S. high-end sales in September, the first full month of supply. Sales rose across television product categories in Europe. Accessories and after-sales revenues also rose sharply. Sales of audio, video and telephony hardware products were generally weak and Thomson's sales fell over 10% year-on-year. Video products showed significant price declines notably at the end of the quarter in Europe and the U.S. and the group maintained its policy of carefully managing volume and value market share in this category.

    The Group sold 1.3 million decoders and cable modems worldwide during the quarter, compared to 1.6 million in the third quarter of 2001 - in both cases excluding DSL modems. Cost-cutting measures in this activity continued, although. The evidence of the quarter is that Thomson's set top box markets did not deteriorate at a faster rate than in the second quarter. At the end of the period, the Division began to ship set-top boxes through its US retail distribution channels for Echostar.

    New Media Services

    Third quarter revenues reflected a first-time contribution from the European ScreenVision joint venture.

    Extraordinary General Assembly, 8th October 2002

    The Group holds an extraordinary general assembly today 8th October. Amongst the key resolutions proposed to shareholders are the changes to Thomson's management, the change of name of the Group from Thomson multimedia to Thomson and the presentation of new board members. Thomson announced on October 2nd decisions and recommendations of the Board following the nomination of Thierry Breton to the Chairmanship of France Telecom. The shareholders' meeting is called to approve the modification of Thomson's bylaws in order to allow the separation between the roles of Chairman and Chief Executive Officer, as provided by the French New Business Regulations law and in keeping with broader international corporate governance principles. Following the shareholders' approval, the Board will formally decide to separate the roles of non-executive Chairman and Chief Executive Officer. The Board will confirm the appointment of Charles Dehelly as Chief Executive Officer and approve the appointment of Frank E. Dangeard as Chairman of the Board.

    Second half initiatives and outlook

    Thomson's key priorities for the second half have not changed:

  • Pursue organic growth and integration synergies within DMS
  • Progress with RCA Scenium product line and plan for next generation products in CP retail
  • Select certain "future essential technologies" and expand research (incl. through patents acquisitions)
  • Firm up on IC development plans
  • Monitor carefully restructuring in DMS, D&C, Broadband and CP retail
  • Contain the set-top box market decline through new clients already obtained
  • Prioritize operating income and cash generation
  • At the beginning of the half, Thomson noted that it did not expect a significant rebound in the underlying economic environment during the half. Market conditions are expected to remain tough into the fourth quarter although some indicators - such as the low levels of channel inventories - are positive relative to a year ago. Cost-containment programs have been put in place throughout the group. These include actions on raw materials and input prices, and similar actions to those put in place last year to control of costs have also been started already in the third quarter.

    At the end of the quarter, a dispute led to the forced closure of a number of ports on the U.S. West Coast which are key in Thomson's supply chain. This dispute has led to some increased costs and lost sales already. If the dispute continues, the effect would clearly be significant for the Group. With this caveat, however, and in the light of the strong internal actions already undertaken by the Group, as well as the relative visibility of its Digital Media Solutions and Patents and Licencing businesses, the Group therefore reiterates its commitment to growth of around 20% in operating profits for the year (and therefore an increase of around 1 point in operating margin), significant growth in net income and to strong cash generation for the year as a whole.

    For your information, translation of amounts from Euro into US dollars has been made at the rate of 1 euro to 0.976998 US dollar for 3rd Quarter 2002, to 0.90101 US dollar for 3rd Quarter 2001 and to 0.92572 US dollar for YTD September 2002, to 0.89004 US dollar for YTD September 2001.

    * * *

    Certain statements in this press release, including any discussion of management expectations for future periods, constitute "forward-looking statements" within the meaning of the "safe harbor" of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements due to changes in global economic and business conditions, consumer electronics markets, and regulatory factors. More detailed information on the potential factors that could affect the financial results of Thomson multimedia is contained in Thomson multimedia's filings with the U.S. Securities and Exchange Commission.

    * * *

    About Thomson
    With sales of 10.5 billion Euros (U.S. $ 9.3 billion) in 2001 and 73,000 employees in more than 30 countries, Thomson multimedia (Paris Euroclear: 18453) (NYSE: TMS), provides a wide range of video (and enabling) technologies, systems, finished products and services to consumers and professionals in the entertainment and media industries. To advance and enable the digital media transition, Thomson multimedia has five principal activities: Digital Media Solutions, Displays and Components, Consumer Products, Patents and Licensing, and New Media Services. The company distributes its products under the Technicolor, Grass Valley, RCA and THOMSON brand names.


    Press Relations
    Stéphane Rougeot - Tel: 331.41.86.5003 -
    Print this page