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Jan 12 French media and entertainment company
Technicolor said on Thursday that core profits last
year fell short of its forecast, hit by lower than anticipated
sales in its Connected Home business and changes in foreign
A 5 million euro negative contribution from exited
activities also hit profits.
The company said it expects to report full year 2016
adjusted earnings before interest, tax, depreciation and
amortisation (EBITDA) of about 565 million euros. In October it
reaffirmed a forecast of 600-630 million euros.
In 2015 Technicolor bought Cisco System's
Connected Devices business, a move intended to boost its
presence in the home entertainment market and expand its North
The company said it was ahead of schedule with synergies
from the Cisco Connected Devices acquisition, but revenue in the
Connected Home division, which deals in digital and cable
set-top boxes, as well as broadband devices, had been affected
by the devaluation of Latin American currencies versus the U.S.
dollar, hitting client spending in the region.
Connected Home revenue was also affected by the decision of
two large U.S. customers to cut spending, component shortages
and pricing pressure on memory chips.
This resulted in a decline of about 12 percent in 2016
connected home revenue.
Although the Cisco Connected Devices acquisition has
increased new contract wins, particularly in the U.S., the
impact on the top line will not be felt until late 2017 or early
2018, the company said.
The company also booked a negative foreign exchange impact
in its Entertainment Services division of about 10 million euros
related to the depreciation of the British pound.
Despite the problems in the Connected Home division, the
company said free cash flow was in line with its target at above
240 million euros.
(Reporting by Alan Charlish; Editing by Greg Mahlich and