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> Full year results 1999
Net income in 1999 of 231 million Euros shows continued strong growth for Thomson multimedia
In 2000, the Group accelerates its development in Internet products and interactive services
Paris, March 1, 2000. The Board of Directors of Thomson multimedia, chaired by Thierry Breton, met on February 29, 2000, and examined the 1999 consolidated accounts. The Board welcomed the performance of the Group and its net income of 231 million Euros, an increase of 215 million Euros over 1998. This income exceeds the previously set objectives due to the Group's activities benefiting from a strong increase in revenues and operating income, which reached 366 million Euros(i.e., an operating margin of 5.5%).
Statements of income for 1999 and 1998 :
|In millions of Euros
||Variance 99 / 98
||+ 18,9 %
||+ 154 %
||(+ 12,1 %)
|Group Net Income
|Net Debt (Dec. 31)
* (After net cash discount restatement - French GAAP)
Revenue Growth of 19% with digital products leading the way
The consolidated revenues of fiscal year 1999 total 6.690 million Euros, an increase of 18.9%. This increase in revenues is particularly the result of the sustained growth of the Group's businesses and demonstrates the success of its digital and high-end products, the heart of the repositioning strategy implemented by Thomson multimedia since 1997.
An operating margin of 5.5%, among the best in the industry
The operating income reached 366 million Euros, an increase of 222 million Euros compared to 1998. The progression of the operating margin is largely linked to the strong growth in revenues. It has also benefited from the pursuit of industrial restructuring plans and reengineering programs initiated since 1997. As a comparable perimeter (excluding the assumption of RCA.TL licensing and patents activity), the operating income is 193 million Euros, a growth of 34% from last year. The Group attained this performance through its investment of 113 million Euros in interactive services, strategic partnership initiatives, information technology, advertising, and the opening of the new plant in Foshan (China).
Four business domains dedicated to customers
Focusing on developing and marketing interactive platforms supporting consumer entertainment and information services, the Group expanded its Internet initiatives dedicated to delivering services and reinforcing its link to the customer. To improve its efficiency, reduce costs and improve the quality of service to retailers, the Group has launched several business-to-business sites to manage the ordering process (thomsondealer.com), after-sales service, (service.tce.com) and training (thomsontraining.com). For consumers, the Group launched several e-commerce sites to promote its products and brands (rca.com, lyrazone.com, thomson-lyra.com, thomson-europe.com), on-line sales and interactive services distribution (tak-tv.com, thomson-music.com). The Group is organized into four main business activities :
Displays and Components
In 1999, Displays and Components activity experienced a strong revenue increase to 2,095 million Euros for total sales and 1,279 million Euros (+11.2%) for OEM sales. This growth particularly is the result of the performance of cathode ray tubes and the pursuit of aggressive growth in optical components. The operating income of the Displays and Components activity reached 216 million Euros, stable compared to 1998. It includes new expenses linked to the redeployment program in the tube activity, notably the opening of the plant in Foshan (China), and growing investments in plasma technology.
Revenues in the Consumer Products activity reached 5,124 million Euros, an increase of 16.3% over 1998. This performance is the result of strong growth in digital products (DVD and Digital Decoders), an increase in audio and communications sales, and the good performance of the TV/Video activity, particularly in high-end products. The operating income of the Consumer Products activity continued its progression, reaching 93 million Euros. This improvement is linked to a focus on high-end products and to the effects of restructuring programs implemented since 1997.
New Media Services
In 1999, the Group accelerated the implementation of its development strategy in interactive services within the New Media Services activity, a major investment area within the last two years. In 1999, the operating loss reached 55 million Euros and included important investments made in research and development in partnership with Gemstar and Microsoft, as well as costs linked to the creation of an installed base of televisions allowing the consumer to use interactive services. In the U.S., the Group deployed electronic program guides in more than 1.5 million televisions and launched @TV Media with Gemstar to manage revenues generated from the first worldwide portal of interactive television. In Europe, the Group strongly invested in order to launch interactive services for analog and digital televisions, particularly through its development of TAK technology.
Patents and Licensing
The Patents and Licensing activity quadrupled its revenues of 1998, reaching 278 million Euros following the successful assumption of the RCA.TL activity. The operating income reached 218 million Euros, including a contribution of RCA.TL of 173 million Euros. It also benefited from the launch of new licensing programs in the digital world of MP3 and MPEG technologies.
Current income of Euros 286 million
The current income reached 286 million Euros, an increase of 233 million Euros. This strong improvement is essentially due to the increase of the operating income. The financial income of (80) million Euros shows a slight improvement over 1998. It includes on one hand a reduction of interest expenses of 14 million Euros and on the other an increase of exchange rate losses of 6 million Euros.
Current income of Euros 231 million
The consolidated net income totals 231 million Euros, an increase of 215 million Euros over 1998. This very strong growth is mostly due to the improvement of the current income. The net income comprises a non-current income of (10) million Euros, which includes a provision of 75 million Euros spent to cover restructuring costs of the TIGER (Tube Initiative for Growth, Efficiency and Repositioning) program and capital gains of 77 million Euros mainly linked to the management of our financial assets.
A positive cash position
On December 31, 1999, the Group had no debt and showed a net cash position of 41 million Euros compared to a net debt of Euros 510 million on December 31, 1998. This positive cash position is essentially due to the capital increase of 632 million Euros from the initial public offering. Moreover, as in 1997 and 1998, the Group attained a positive cash flow, which amounted to 140 million Euros in 1999.
Split of the par value and notification of a general shareholder's meeting
The Board of Directors has decided to propose at the next shareholder's meeting, which will take place May 26, 2000, a 2-for-1 split of the par value. This split is intended to increase the liquidity of Thomson multimedia stock and make the stock more accessible.
Prospects for 2000
For 2000, the Group intends to increase its investments and its installed base of interactive products, allowing millions of consumers easy access to interactive information services and personalized entertainment. It anticipates a double-digit growth in revenues, supported by buoyant markets, particularly in the high-end and digital segments. The impact of the programs aimed at improving performance and the new investments supporting the Group's repositioning strategy should contribute to operating and net income in 2000.
"These results show that the recovery and repositioning strategy of the Group within the interactive realm are continuing to bear their fruits. Today, the firm action of an international management team allows Thomson multimedia to attain excellent results," declared Thierry Breton, Chairman and Chief Executive Officer of Thomson multimedia. "As a worldwide player engaged for the last three years in the development of technological platforms dedicated to personalized interactive services, Thomson multimedia intends to seize quickly the numerous opportunities created by the advent of the Internet and personalized services."
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