Technicolor

EU: TCH

€135.4m market cap

€0.33 last close

Technicolor is a worldwide technology leader operating in the media and entertainment industry. Its activities are organised in two business segments, Entertainment Services (the combined Production and DVD Services businesses) and Connected Home.

Investment summary

Technicolor’s new CEO, Richard Moat, appointed in November 2019, has completed his review of the group. He has now set out his strategy to play to the group’s commercial strengths and put it on a firmer financial footing. More detail will be added at a capital markets day scheduled for 19 February. Cost savings of €150m have been identified (an additional €110m to those already being implemented, and at an implementation cost of €90m over three years) and an underwritten rights issue of €300m is envisaged. Key lenders will then extend the debt facilities, subject to the successful completion of the rights Issue.

Y/E Dec
Revenue (€m)
EBITDA (€m)
PBT (€m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2017A 4253.0 341.0 7.0 1.9 17.2 N/A
2018A 3988.0 266.0 (3.0) (1.0) N/A N/A
2019E 3809.0 301.0 (69.0) (22.5) N/A N/A
2020E 3747.0 346.0 (10.0) (2.1) N/A N/A
Industry outlook

Connected Home operates in a large (FY18: $16.4bn) but tough market, with little growth, thin margins and limited visibility. Scale is key, giving access to cheaper components and leveraging platform development costs. The DVD market continues to decline, although increased market share has allowed some offset. A broad customer spread in Production Services ensures a high base workload, bolstered by the appetite for high-end content from VoD platforms and growth in VFX-heavy movies. Studios increasingly outsource animation and the strength of the gaming market is driving enhanced user experiences.

Last updated on 19/02/2020
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (€m) 1081
Forecast gearing ratio (%) 386
Price performance
%
1m
3m
12m
Actual (52.0) (58.6) (67.1)
Relative* (52.3) (60.2) (72.1)
52-week high/low €1.3/€0.3
*% relative to local index
Key management
Bruce Hack Chairman
Richard Moat CEO
Laurent Carozzi CFO
Emilie Megel VP Investor Relations