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Thomson U.S. Sales Fall, Profit Climbs

2/12/2003 09:58:00 AM Eastern

Paris - Slower overall market demand and increased competition from low-priced imports for core-value televisions led to a decline of overall second half U.S. revenue in the consumer products division at Thomson.

However, the French consumer electronics maker noted progress in its high-end segment, thanks to the fall 2002 launch of its Scenium product line. This segment recorded U.S. market share gains in higher end TVs and significant growth in sales of digital TVs in the fourth quarter. The improved product mix, combined with the impact of strong cost controls led to increased U.S. market profitability, according to Thomson.

The U.S. West Coast dock strike last fall had a major impact on Thomson's audio, video and communications business, with this segment posting lower sales in the second half. Excluding camcorder sales and currency effects, sales in the audio, video and communications segment dropped 10.6 percent for the full year and 14.6 percent in the second half, relative to 2001. Market share gains and an improved mix offset price pressure and some areas of weaker demand, mainly audio. Nevertheless, the segment posted record profitability for the six months and 2002.

The West Coast port dispute caused missed sales of $75.1 million to $85.9 million and an estimated $21.5 million of lost operating profit, as well as some build-up of inventory, said Thomson.

The decision to exit the camcorder business in late 2001 accounted for about $165.3 million in the decline of sales volume in 2002.

Overall revenue in Thomson's consumer products division dropped 17.8 percent in 2002, down to $5.8 billion, from $7 billion in 2001. Operating income in the division nose-dived to $41 million in 2002, compared with $148.1 million the previous year.

Consumer products, Thomson's largest division by far - which includes television and home audio and video, as well as accessories, retail services, personal audio and video and telephony products - accounted for 43.4 percent of company sales in 2002.

Overall fourth quarter revenue in the consumer products division took an even bigger hit than the year-end results, dropping 22.3 percent, to $1.7 billion, down from $2.2 billion in the year-ago period. In the second half, operating income decreased to $48.3 million, down from $107.4 million in the same six months in 2001.

Thomson consolidated results for the year saw sales dip 2 percent, to $10.9 billion, from $11.3 billion in 2001. Net sales would have grown 2.3 percent, excluding the negative impact of the weaker U.S. dollar, among other factor.

Operating income was up 13 percent for the year, to $770.8 million, from $682.7 million, while net profit rose 30 percent, to $400.4 million, compared with $307 million in 2001.

In the fourth quarter, Thomson consolidated revenue fell by 14.9 percent, to $3.1 billion, down from $3.6 billion in the fourth quarter of 2001.