Technicolor Q2 2011 revenues and H1 2011Wednesday, July 27th, 2011
PARIS, France — The Board of Directors of Technicolor (Euronext Paris: TCH) met today to review the Group’s first half 2011 results.
Q2 2011 revenues
Group revenues from continuing operations amounted to €747 million in Q2 2011, down 6.1% at current currency compared to Q2 2010, and up 1.2% at constant currency.
- Technology revenues were up 4.1% YoY at constant rates, with Licensing benefitting from a stable revenue stream from MPEG-LA and from the sustained performance of the other licensing programs.
- Entertainment Services revenues were up 16.8% YoY at constant rates, driven by increased activity levels in Creation Services and higher DVD and Blu-ray™ volumes.
- Digital Delivery revenues declined by 14.6% YoY at constant rates as a result of an unfavorable overall product mix, reflecting in particular a degraded economic environment in Europe, and a less favorable geographic mix due to stronger demand in Latin America.
H1 2011 key indicators
- Group revenues from continuing operations amounted to €1,559 million in H1 2011, up 4.0% at current currency compared to H1 2010, and up 8.3% at constant currency.
- Adjusted EBITDA from continuing operations reached €167 million or 10.7% of revenues in H1 2011, an increase of 1.2 points compared with H1 2010. The increase in Technology and Entertainment Services profitability more than offset the drop in Digital Delivery Adjusted EBITDA in H1 2011.
- Group Free Cash Flow reached €32 million for H1 2011 and Group net debt as per consolidated financial statements reduced by €45 million in the first half to €948 million on 30 June 2011.
- The Group confirms its previously stated objectives for FY 2011. In H2 2011, the continued resilience in Licensing and improved trends in Entertainment Services are expected to compensate the weakness in Digital Delivery revenues and margins, and enable the Group to achieve slight revenue growth overall at constant rates for the full year and generate an Adjusted EBITDA comparable or slightly up compared to the level achieved in 2010.
- In addition, the Group expects to generate a positive Free Cash Flow in the second half of 2011.
Significant customer wins
Technicolor has been selected by a second Tier 1 European operator for the supply of next generation set-top boxes (STB) as well as content management services. The STB will integrate Technicolor’s Digital Home Software Suite, a single, scalable and secure platform designed to allow NSPs to provide a unified digital home experience to the end-user. The Digital Delivery segment has also won additional contracts over the second quarter, including with three cable operators in the US. These new contracts will start generating revenues in 2012.
In the second quarter of 2011, the Connect business recorded a significant decrease in revenues compared with the same period last year. This weakness resulted from an unfavorable overall product mix, reflecting in particular a degraded economic environment in Europe, combined with a less favorable geographic mix due to stronger demand in Latin America.
- In Satellite, set top box volumes posted healthy growth, driven by solid customer demand in North America as well as strong orders from Latin American customers. The Satellite product mix was however less favorable compared to last year, reflecting the greater weight of Latin America in overall Satellite volumes.
- In Cable, volumes continued to grow at a very fast pace, driven by very large shipments of digital-to-analog adapters (“DTAs”) to a key customer in North America as well as by a significant increase in deliveries of Cable gateways to Latin American customers. The Cable product mix was however less favorable compared to last year, due to a very high proportion of DTAs in overall Cable volumes.
- In Telecom, revenues were impacted by a volume decline and a less favorable mix. Year-over-year comparability was affected by an unfavorable base effect resulting from the phase out of two products in Q2 2010. In addition, volumes and mix were impacted by challenging market conditions in Western Europe. Pending new service launches by operators expected in 2012, demand in the second quarter of 2011 was more oriented towards lower-end products, a segment of the market where price and competitive pressures intensified in the first half of 2011.
Digital Home Products Indicators. KPIs (in million units):
Q2 2010 Q2 2011 H1 2010 H1 2011 ------- ------- ------- ------- Cable 1.7 2.2 2.8 3.8 Satellite 1.9 2.1 3.5 4.3 Telecom 2.4 1.8 4.5 3.7 ------- ------- ------- ------- Total 6.0 6.1 10.8 11.8 Change +1% +10%
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