Restructured Thomson forecasts profit surge

22nd July 2004, Comments 0 comments

PARIS, July 22 (AFP) - The French consumer electronics group Thomson forecast Thursday a 40-percent rise in operating profit this year and announced a major new investor, demonstrating that restructuring and Chinese TV deals were paying off.

PARIS, July 22 (AFP) - The French consumer electronics group Thomson forecast Thursday a 40-percent rise in operating profit this year and announced a major new investor, demonstrating that restructuring and Chinese TV deals were paying off.

The company detailed a five-point strategic plan that won acclaim from analysts and its share price gained 4.90 percent to EUR 15.4 in a midday Paris market that was 1.40 percent lower overall.

Thomson announced that the capital development fund Silver Lake was taking a stake in the group. The market saw this as evidence its stock was undervalued.

Thomson said operating profit should grow by 40 percent from the 2003 figure of EUR 252 million (USD 310 million dollars).

Group first-half net loss had more than doubled to EUR 189 million, from a loss of 92 million in the same period a year earlier, owing to heavier taxes and EUR 168 million in restructuring costs at its US TV tube division.

But first-half operating profit showed a 5.1-percent increase to EUR 146 million, while the group's operating margin rose to 3.8 percent from 3.7 percent.

Sales increased to EUR 3.871 billion, or by 8.2 percent to EUR 4.089 billion at constant exchange rates, the group said in a statement.

Thomson raised its full-year sales forecast to an increase of six percent from four percent previously.

Thomson said it would receive a USD 500-million strategic investment from Silver Lake Partners in exchange for privately-held junior subordinated convertible bonds.

After conversion, Silver Lake would hold a stake of around 7.5 percent in the French company.

A Paris analyst who declined to be named said: "Capital development companies rarely invest in technology companies and usually do so when they know a company is spectacularly under-valued."

Thomson said it would ask shareholders on September 15 to approve the appointment of France Telecom chief financial officer Frank Dangeard as the electronics company's chief executive, replacing Charles Dehelly.

Dehelly would become Thomson's managing director.

Dangeard would also retain his position as chairman of Thomson's supervisory board.

The five-point action plan also includes the purchase of EUR 400 million worth of shares and a stock-option scheme for staff.

At Fortis Bank, analyst Stephane Houri said: "All of the facators look positive" and at Deutsche Bank, Eric Alalouf said they were "very positive".

Thomson is turning itself around in particular through deals with Chinese firms that produce television sets and DVD players, helping the French group remain competitive on global markets.

In early March, it unveiled an accord with the two main bodies representing Chinese makers of DVD players, defining the conditions under which they can use Thomson patents.

The agreement was signed with the CAIA audio industry association and the CCCME chamber of commerce for electrical equipment.

Chinese companies manufacture more than half of all DVD players worldwide, while Thomson was a founding member of the consortium that developed DVD technology.

In November, the French group announced a blockbuster deal to create the world's largest television maker with Chinese rival TCL.

Thomson said it planned to merge its television and DVD player operations with TCL International, China's largest producer of TVs, in a joint venture aimed at securing Thomson's access to the fast-growing Chinese market.

In mid-March the French group said it would close TV tube plants and lay off 1,500 workers in the US states of Indiana and Ohio, taking a charge of EUR 150 million to cover the costs.

© AFP

Subject: French news

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