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Thomson turns from US to China for TV tube manufacturing

French consumer electronics maker Thomson SA is blaming anticipated losses in its components arm for its failure to meet operating profit and margin targets for the first half and full-year 2003. In p…

French consumer electronics maker Thomson SA is blaming anticipated losses in its components arm for its failure to meet operating profit and margin targets for the first half and full-year 2003. In particular the components arm has been hit in 2003 by the problems at Thomson“s U.S. television tube and glass manufacturing business, the company said 13 June 2003. Thomson added that it will book charges of EUR 90 million in the first half of 2003 to finance the restructuring of the unit. In a press statement, Thomson SA said it expects its first-half 2003 operating profit to be between EUR 140 million and EUR 150 million, compared to its previous profit target of more than EUR 200 million. It blamed the effect on its components arm. The company also said it was reducing its full-year operating-margin target by one percentage point from an initial forecast of 7.5%. It held its target range for its 2004 operating margin steady at between 8.0% and 9.0%. In the first six months of 2002, the company had an operating profit of EUR 242 million. The company, however, confirmed its free cashflow objective of at least EUR 500 million for full-year 2003. As part of a restructuring of its U.S. television tube business, the company said it will close down two production lines at its plant at Marion, Indiana. In addition, it will halt plans to renew a glass line at a second factory at Circleville, Ohio. In its statement, Thomson said its U.S. tube and glass manufacturing business had become unprofitable, due to competition from cheaper imports. “Demand and prices for TV tubes in the U.S. have declined sharply.” Thomson has four tube-manufacturing lines in the U.S. at Marion, plus another two at Mexicali in Mexico, as well as a glass-manufacturing plant at Circleville, Ohio. Thomson said its components division is now expected to make an operating loss of between EUR 70 million and EUR 80 million before restructuring charges in 2003, compared with an operating profit in 2002 of EUR 84 million. In response to the decline in the U.S. market, Thomson said it is investing more in its China tube operations, hoping to take advantage of what it called “the world“s largest and fastest-growing television manufacturing market”. Thomson said it will open a second 1-million tube production line at its plant at Foshan in China in the 3Q of 2003. It also promised “further initiatives shortly” to expand its China tube business. In the company“s statement, Thomson Chief Executive Charles Dehelly said the moves showed “determination to accelerate the repositioning of our tube business to China”.

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