TCL expects profits at Europe unit
Executives of TCL Multimedia Technology Holdings, the world's biggest television maker by unit sales, said the firm's newly established European business was expected to post a profit next year, thanks to a revamp of its operations there.
They made the announcement after the company posted a loss of HK$67 million for the first three months of this year, narrowing from a loss of HK$139 million a year earlier.
The company also reported a net loss of HK$2.5 billion for last year, compared with a net loss of HK$599 million for 2005.
TCL has invested about US$20 million to allow the new Paris-based unit to handle sales and marketing operations for the company's flat-panel televisions and bulkier cathode-ray-tube models, chairman Tomson Li Dongsheng said yesterday.
'Our new European business is now recording positive earnings before interest, tax, depreciation and amortisation. We aim to make a profit in Europe next year,' he said.
The company last week announced that its European joint venture with Thomson Group had filed a declaration of insolvency because it was unable to settle outstanding debts.
TCL's new European unit employs only 20 staff in addition to its plant in Poland, compared with more than 300 employees at the shuttered joint venture.
Mr Li said no additional provisions would be made this year for the closure, after the company made a provision of HK$695 million last year.
TCL Multimedia's failed venture highlighted the challenges mainland firms face when taking over fading Western brands as vehicles to expand into overseas markets.
Mr Li blamed the failure of the joint venture mainly on poor forecasting of trends in the European television market. 'We misjudged market demand for traditional CRT TVs, as European demand favoured LCD TVs,' Mr Li said.
Shares in TCL yesterday surged 9.68 per cent to close at 68 HK cents.