Thomson ’04 Sales Slide 6%

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Paris — Thomson’s 2004 sales dropped 6 percent to $10.5 billion from the previous year’s $11.1 billion, as the French consumer electronics giant posted lower profits for its CE division.

Operating income for the digital contents solutions segment at Thomson — mainly the company’s CE business — dropped to $390.1 million in 2004, compared with $476.8 million in 2003, as division results reflected the impact of currency translations and margin pressures.

CE segment operating margin decreased to 13.1 percent in 2004, compared with the previous year’s 16 percent, due primarily to a sharp decline in VHS volumes and, to a lesser extent, increasing raw materials prices and DVD pricing. The start-up costs for North American distribution expansion also exacerbated margin impact.

Thomson did not break out end-of-year sales for its digital contents solutions division, but included full-year CE revenue under a wider displays and CE banner. Here, revenue for 2004 reached $2.8 billion, down from $3.5 billion year-on-year. Operating loss for 2004 hit $257.5 million, down from a loss of $319.2 million the previous year.

For the 12 months, licensing segment operating income declined to $426.9 million, down from $539.9 million in 2003.

Full-year earnings, after restructuring costs, at Thomson’s CE segment, moved down to $349.4 million from a year-ago $415.1 million. Costs in 2004 hit $40.7 million for the segment, compared with $63.1 million the previous year.

Consolidated operating profit at Thomson for the 12 months dipped to $570.1 million, down from $667.3 million in 2003, but would have been $749.4 million in 2004, after adjusting for extraordinary items.

Income for the company was impacted by $1.2 billion in exceptional items taken during the past year, mainly for restructuring and reorganization.

Thomson reported a consolidated net loss of $835.4 million in 2004, including the $1.2 billion in charges. This compares with net income of $34.2 million in 2003.

The company’s second-half loss reached $587.2 million in 2004, compared with the same period in 2003, which produced net income of $155 million. Thomson said much of this decrease was due to costs attributed to the company exiting the TV tube business.

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