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Thomson 2003 CE Sales Off 3.1%

Paris — Although 2003 sales in Thomson’s consumer electronics division, which hit $4.1 billion, decreased 3.1 percent on a constant currency basis, the French CE maker said this result was ‘a sharp improvement on the trend of the first three quarters of 2003.

The company recorded a 12-month operating loss of $157.5 million in its CE business, for the year ended Dec. 31.

Thomson reported CE sales of $2.3 billion in the second half, and $1.3 billion in the fourth quarter. Second-half operating loss reached $54.6 million, but this number was significantly narrower than the $1.3 million operating loss recorded in the second half of 2002.

The CE division reported a second-half restructuring charge of $77.5 million related to the formation of TCL-Thomson Electronics last November, a TV-producing partnership with Chinese CE maker TCL International, which is expected to be up and running by mid-year.

Looking at the specific CE segments, Thomson said its mainstream goods, such as televisions and A/V products, suffered declining revenue in the fourth quarter, but ‘were considerably more resilient’ than in the previous quarters of 2003. Heavy price pressure continued in all segments in the United States, on all product categories. However, Thomson said it gained significant market share in high-end digital TV. A loss for Thomson’s mainstream segment in the second half ‘reflects investment in new product introductions to gain market share’ as well as a continuing competitive market.

In its essentials CE segment, which includes accessories and portable A/V products, Thomson said it achieved its key goal of integrating the Recoton retailer base into its operation, while also broadening its product and service offering. In turn, the company said the combining of Recoton’s CE accessories business, which Thomson purchased last year, ‘grew revenue’ during the fourth quarter.

Thomson’s essentials segment, which represented 35 percent of the CE division’s sales in the fourth quarter, was ‘profitable in line with expectations’ during the second half, said the company, despite a $6.4 million charge relating to a swift integration of Recoton’s former customers.

Solid growth in Thomson’s content and networks and licensing segments parlayed into a fourth quarter consolidated net sales increase of 4.2 percent at constant currency. This compares with decreases of 13.2 percent and 5.7 percent at constant currency rates for the first half and the third quarter of 2003.

Consolidated sales for 12 months in 2003 hit $10.7 billion, compared with $12.9 billion year-on-year, a 6.5 percent drop at constant currency. Operating income in 2003 dropped 23.1 percent at constant currency, to $645.2 million, from $911.9 million the previous year. Net income for the same period decreased to $33 million, from $473.7 million year-over-year.

For 2004, Thomson anticipates full-year constant currency sales growth of about 4 percent, and expects to reach $12.7 billion in sales in 2007, driven by both organic growth and future expansion.