TCL sees end to 'earnings trough' as loss narrows
Subsidiary misses targets as it fails to keep pace with demand for flat TVs
TCL Corp, China's biggest publicly traded consumer-electronics maker, has said that its first-quarter loss narrowed to 130.3 million yuan, from 327.2 million yuan the previous year, as it emerged from an 'earnings trough' caused by previous acquisitions.
Sales rose to 11.9 billion yuan from 11.7 billion yuan, the company said in a statement to the Shenzhen stock exchange.
It forecast that losses in the first six months of this year would narrow from the previous year's losses of 692.6 million yuan, or 27 fen a share, without providing a figure.
The Guangdong-based company owns Hong Kong-listed TCL Communication Technology Holdings, a mobile-phone maker, and TCL Multimedia Technology Holdings, which teamed up with France's Thomson to create the world's largest manufacturer of televisions.
TCL Multimedia managing director Vincent Yan Yong said that the business had fallen short of its targets for the first quarter and blamed the company's inability to meet surging demand for liquid crystal display flat-panel televisions in Europe.
He revised the company's turnaround target, setting it back one year to next year.
'For this year, we could turn around our operations for the United States market but for the European market it would be more difficult. We will introduce new strategies for Europe hopefully by June,' said Mr Yan.
The European and North American markets provided 46 per cent of company's first-quarter $8.09 billion revenue and China contributed 38 per cent, with emerging markets and sales from its original equipment manufacturing business making up the rest.
TCL Multimedia made a $139 million net loss for the first quarter this year, an increase on its $48 million net loss a year ago but that figure did not include the acquisition of the loss-making French television giant Thomson in 2004.
Full-year net losses last year reached $598.89 million from a net profit of $308.98 million a year ago. The firm aims to sell 23 million televisions worldwide, little changed on the previous year.
With total debts of $2 billion and a high gearing ratio of 70 per cent, the company this year would need to refinance its shorter-term debt, mainly through the equity market, said Mr Yan.
'I would say the group hit an earnings bottom in 2005, although this year we still have some issues to resolve. We could perform better,' said Tomson Li Dongshen, who holds the post of chairman at both companies.