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TCL Expects TV Output Up 42%

The world's largest TV maker, TCL International Holdings, expects output to soar 42 percent in 2005 after its venture with Thomson turned profitable at the end of last year, company data show.


Much of the growth will come from a two-third rise in sales outside China after TCL pooled its TV business last summer with the loss-making television assets of Thomson, owner of the RCA brand.


The overall rise exceeded a forecast of 25 percent growth by KGI Asia analyst Cliff Fan, who said much of the gain would come from the Thomson assets, which would be reflected in TCL's accounts in all of 2005, versus just five months in 2004.


"The 40 percent is even more optimistic than I imagined," he said, adding the growth might also reflect a reported deal by TCL to make more televisions for Matsushita Electric Industrial.


TCL International, part of Shenzhen-listed TCL Corp, owns 67 percent of the joint venture with Thomson, called TTE.


According to a company presentation, TCL expects to report that TTE made a profit in the fourth quarter of 2004.


TCL International, which vies with the likes of Sony and Samsung Electronics in the TV market, is targeting output of 24.44 million sets this year, compared with 17.17 million in 2004, according to the presentation.


The projected increase was in line with last year's output increase of 47 percent.


Sales in China were forecast to rise 14 percent to 10.88 million in 2005, while international sales were seen up 65 percent at 13.56 million.


TCL International's shares rallied 2.7 percent to outperform the market's 0.8 percent gain. But since the beginning of the fourth quarter the stock has lost 20 percent amid slipping margins.


TCL is one of handful of Chinese companies making inroads into international markets.


The Thomson-branded business in Europe was expected to have broken even between August and December, according to the presentation.


TTE's North American operation based on the RCA brand was expected to post a fourth-quarter loss that would be narrower than the third quarter, TCL said.


TTE had said previously it hoped to make the Thomson assets profitable by the end of 2005.


The positive news at TTE was at least partially offset by weakness at TCL's Schneider division in Germany, which was insolvent when TCL bought it for 8.2 million euros (US$10.9 million) in 2002 to boost its European presence.


TCL said the Schneider business performed "below expectation" and was estimated to have incurred a loss in 2004.


The division began a restructuring in the fourth quarter of last year, which included the closing of a plant in Germany and the shifting of manufacturing to TTE operations in either Poland or Thailand. TCL expected that revamp to finish in the current quarter.


(China Daily March 9, 2005)


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