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Thomson Q2 CE Sales Drop 36%

7/23/2003 10:11:00 AM Eastern

Paris - A difficult U.S. market environment in the second quarter impacted Thomson's consumer product sales with revenue sliding 36 percent to $787.5 million, down from 1.2 billion in the year-ago period.

On the bright side, Thomson said overall DVD unit sales doubled in the three months, compared with the year-ago period.

Thomson' consumer products segment reported a 33 percent decline in first half revenue, hitting $1.6 billion, down from $2.4 billion in the first six months of 2002. Revenue fell by 24 percent, to $1.8 billion at a constant exchange rate, in the same period.

The French manufacturer's consumer products segment recorded an operating loss of $91.8 million in the first half, compared with a loss of $57.8 million in the same six months a year earlier.

Consolidated Thomson second quarter revenue — driven by the U.S. slowdown, as well as heavy price pressure in all segments, underscored by strong competition from Asia — decreased to $2.2 billion, down from $2.8 billion year-on-year. Excluding the significant impact of currency changes of $298 million, or 14 percent, second quarter consolidated net sales show a decrease of 13 percent.

Consolidated sales in the first half decreased to $4.2 billion, down from $5.6 billion year-on-year. Currency translation reduced first half sales by $616.4 million, or 14 percent. At constant rates, first half consolidated sales show a decrease of 12 percent.

First half consolidated operating income slipped to $162 million, down from $279.9 million in 2002. Thomson reported a consolidated net loss of $104.2 million in the first half, compared with net income of $139.4 million in the first six months of last year. The full half year net result includes a restructuring charge of $124.6 million

'During the first half, we invested significantly in our key growth activities, which have delivered in line with, or ahead of, our expectations,' said Charles Dehelly, Thomson CEO. 'We have taken the necessary measures to adapt to the difficult markets that we face in our components and consumer mainstream businesses in the United States.

'Our second half objectives are to manage firmly our cost base and to focus on our growth and repositioning strategy, so as to deliver our full year and 2004 financial commitments,' he said.

Looking ahead, Thomson expects second half sales of between $5.3 billion and $5.8 billion, which implies a return to growth on a constant currency basis. Part of the revenue growth will be driven by new higher end and digital products in the United States, said Thomson, known for RCA-branded CE products.

Thomson also anticipates second half growth in accessories, notably in the United States. The company completed the purchase of Recoton's CE accessories products business a number of weeks ago.

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