Thomson to cut U.S. tube lines
Shares plunge in Paris on outlook, China is the focus
By Emily Church, CBS.MarketWatch.com
Last Update: 3:48 AM ET June 13, 2003
cbs.marketwatch.com
LONDON (CBS.MW) - Shares of French electronics maker Thomson SA dropped 9.8 percent in Paris on Friday after the company disclosed plans to cut sharply back on television tube-making in the U.S. as it shifts its focus to China.
Thomson (TMS: news, chart, profile) warned the losses in its U.S. components business would impact profit for the year. Shares (FR:018453: news, chart, profile) dropped 1.58 euro to 14.56 euro in opening French trade.
Thomson said it planned to close two of its four tube lines in Marion, Ind. It currently operates two lines in Mexico as well. The company further said it won't invest to renew a glass line at its Circleville plant.
"The business environment in the U.S. for TV manufacturing has deteriorated in 2002 and notably 2003 with significant market share losses among local producers to competitive imports," Thomson said in a statement.
"Demand and prices for TV tubes in the U.S. have declined sharply," it added. Thomson said its U.S tubes and glass manufacturing operations are unprofitable.
Thomson expects a net book value of the remaining two lines at Marion around 35 million euro ($41 million) at end of June 2003. It expects to cut the Marion workforce by half.
"Today's announcement reflects the group's determination to accelerate the repositioning of our tube business to China," Charles Dehelly, CEO of Thomson, said in the statement. It termed China the world's largest and fastest-growing TV manufacturing market.
Thomson expects to take charges of 90 million euro for the restructuring. It anticipates losses in components will reduce operating profit in the first half of the year to around 140 to 150 million euro. Operating margin for the year is now expected around 6.5 percent, below the 7 percent in fiscal 2002 and below its 7.5 percent target for this year.
Emily Church is London bureau chief of CBS.MarketWatch.com. |
