Technicolor has published its results for the first half of 2018. The French Media services group saw revenues from continuing operations amount to €1,769 million, down 9.3 per cent year-on-year at constant rate, with an adjusted EBITDA of €57 million compared to €82 million in the first half 2017.
Production Services recorded a solid performance (+4.6 per cent year-on-year at constant rate) driven by high capacity utilisation and strong growth in Film and TV VFX as well as Advertising VFX.
In DVD Services, revenues declined 9.5 per cent at constant rate year-on-year, reflecting lower Standard Definition DVD volumes partly compensated by continued growth in Blu-ray and Ultra HD.
Connected Home saw an overall 13.6 per cent decline in revenues year-on-year at constant rate, as the shortage of key components led to €210 million of orders which could not be delivered in the first half. Nevertheless, revenues outside North America grew by 15 per cent at current rates year-on-year, only partly compensating for the declines in the US.
Connected Home launched a three-year transformation targeting market share gains while improving profitability and being able to absorb potential new headwinds in the market. The plan includes reducing the annual fixed cost structure by 40 per cent representing c. €140 million of savings compared to 2017, over a period of three years. Expected future cash costs associated with this plan amount to c.€55 million with an average pay-back of less than 15 months.
Free cash flow from continuing operations was at €150 million, down by €41 million year-on-year at constant rate, reflecting mainly lower adjusted EBITDA, working capital affected by seasonality of DVD services and higher taxes.
Solid financial structure, with a nominal gross debt of €1,113 million, was up €10 million compared to December 2017. The Group also had a strong level of liquidity at end of June, including cash on hand of €197 million and committed undrawn credit lines of €392 million.
With regard to the disposal of the Patent Licensing business of Technicolor that was announced on March 1st, Technicolor and InterDigital have now entered into a definitive acquisition agreement, the terms of which are in line with those announced on March 1st.
The Board of Directors has appointed Maarten Wildschut as Board Observer for an 18-month term and intends to propose his election as a Director at the next shareholders meeting. Wildschut is Co-Head of RWC European Focus Fund, a London investment fund which owns 10.1% of Technicolor’s share capital.