Technicolor today announced its result for the first half of 2014, and it certainly shows that the company is doing pretty well for itself.
Revenues from continuing operations amounted to €1,505 million in first half of 2014, including a negative forex impact of €69 million. Revenue growth was 1.7 per cent at constant rate and scope (excl. legacy activities), reflecting solid performances in Production Services, particularly Visual Effects, and in the Connected Home segment, which reinforced its market leadership and benefited from a number of customer wins and new awards, as well as continued resiliency in DVD Services, despite a challenging year-on-year comparison.
In the Technology segment, the revenue decrease reflected weaker contribution from MPEG LA, due to a one-off adjustment in the first quarter and ongoing softness in optical disc drive demand from PC makers, partly offset by double-digit growth in revenues generated by direct licensing programs, driven by a good level of new contracts and renewals, with notably the contribution of an LG smartphone licensing agreement and successful renewals with two major US digital TV providers during the period.
Adjusted EBITDA from continuing operations amounted to €213 million in the first half of 2014, including a negative forex impact of €7 million compared to the first half of 2013. Adjusted EBITDA margin was 14.2 per cent, up by 1.2 points year-on-year, reflecting significant margin improvement in Connected Home, driven by higher shipments and better mix, stable margin in Entertainment Services, due to strong performance in Production Services and continued operating efficiencies in DVD Services, and lower corporate costs, mostly related to transversal functions.
Total operating expenses decreased year-on-year, driven by a sharp reduction in the Entertainment Services segment, with operating expenses down 17 per cent at a constant rate, and material declines for the Connected Home segment and at corporate level.
Adjusted EBIT from continuing operations amounted to €127 million in the first half of 2014, up 17.3 per cent at constant currency compared to the first half of 2013, with margin of 8.4 per cent, up by 1.4 points year-on-year, resulting from the growth in Adjusted EBITDA and lower D&A expenses.
EBIT from continuing operations totaled €122 million in the first half of 2014, up 42 per cent at constant currency compared to the first half of 2013, with margin of 8.1 per cent, up by 2.6 points year-on-year, due to the increase in Adjusted EBIT, lower restructuring costs and a gain on disposal of available-for-sale financial assets.
The Group’s financial result amounted to € (74) million, broadly stable year-on-year, reflecting the following:
Net interest costs amounted to €39 million in the first half of 2014, a significant reduction compared to €63 million in the first half of 2013, reflecting reduced borrowing costs stemming from the refinancing and repricing transactions and from the material decrease in gross debt during the period.
Other financial charges amounted to €35 million in the first half of 2014, including costs related to the refinancing and repricing transactions for €25 million, including an IFRS reversal recognized as a non-cash charge for €19 million due to the debt prepayments done in 2014 and repricing transaction costs.
Net income was a profit of €27 million in the first half of 2014, increasing from a profit of €6 million in the first half of 2013. Restated from refinancing and repricing charges, net income was a profit of €46 million.
Technicolor CEO Frederic Rose stated: “We are well on track to achieve our 2014 objectives and to exceed our prior guidance on free cash flow generation. Our performance continues to be fueled by profitable growth in Connected Home, the signature of new license agreements and the very strong growth in visual effects.”
Technicolor is targeting to reach an Adjusted EBITDA between €550 million and €575 million; and expects to exceed the upper range of its free cash flow objective of €180 million to €200 million, despite the impact of higher cash restructuring charges compared with 2013; expects a positive net income; confirms its objective to reach a Net Debt to Adjusted EBITDA ratio below 1.2x at end December 2014.
To read the complete financial release: Click Here
