Technicolor S.A.

Revenue in H1 2023 was €1.038 billion, down 12.9% year over year. Group EBITDA was €49 million versus €73 million in H1 2022; EBITA was €9 million versus €22 million, and EBIT was negative €150 million versus €11 million a year ago. Non-recurring items totaled minus €146 million, mainly from a €132 million goodwill impairment in SCS; net result of the group share was minus €229 million versus minus €14 million in H1 2022. Free cash flow before interest and tax was negative €74 million versus negative €21 million last year, free cash flow after interest and tax was negative €104 million, liquidity was €39 million, and net debt was €448 million. Management reiterated full-year guidance for the 3 KPIs and expects H2 to be seasonally stronger, though still below last year in top line and profitability.

Luis Martinez-Amago said the quarter tracked the company’s plan, but the environment was weaker than expected across consumer electronics and telecom-related demand. He emphasized customer inventory depletion in Connected Home and DVD, but said strict cost controls and operational efficiencies are limiting the EBITDA hit. He was upbeat on new-generation products and diversification, highlighting first wins in DOCSIS 4, progress in Wi-Fi 7, Ecovadis Platinum renewal, and early IoT and microfluidics initiatives.

Lars Ihlen said EBITDA fell to €49 million, mainly due to negative volume effects not fully offset by cost cuts, and noted EBITA of €9 million and EBIT of negative €150 million. He pointed to a €74 million negative free cash flow before interest and tax, a €104 million negative free cash flow after interest and tax, €39 million of liquidity, and €448 million of net debt. On financing, he said net interest expense in H1 was €29 million, roughly €4 million of which was leasing, and that full-year net interest expense could be roughly €60 million, with stable second-half run-rate assumptions. He added that the company is working on new liquidity sources and additional working capital instruments to offset seasonality.

Analysts focused on what drives the expected H2 improvement, higher full-year net interest expense, liquidity, chip cost pass-through, and the outlook for SCS microfluidics and Connected Home diversification. Management said H2 should improve mainly due to normal seasonality in both businesses, with stronger operator campaigns and holiday-related DVD demand, while still expecting full-year revenue and profit to be weaker than last year. On financing, Lars said current liquidity is acceptable but the company is pursuing additional funding sources; on chip costs, Luis said price increases were passed through quickly and there is no meaningful margin impact. On microfluidics and IoT, management said these are still early-stage but moving through customer engagement and proof-of-concept work.