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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 -
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