This morning from Paris, Technicolor announced their first half of 2021 earnings – representing the fourth quarter in a row of successful results for the company under CEO Richard Moat and part of a larger company turnaround that has been underway since November 2019 when Moat joined.
As Hollywood, advertising and broadband move forward to a post-COVID future, all while navigating potential new waves of the virus, Moat has an interesting story to tell about how he positioned the company to ride out COVID and innovate virtually across a global footprint of studios, connecting a set of historically siloed creative industries. Today’s announcement of Technicolor’s first-half results and its strong upcoming pipeline, including tentpole film projects such as The Little Mermaid and the prequel to The Lion King, shows how the industry is moving forward with purpose.
“Technicolor’s first half of 2021 results are positive and in line with expectations. The Group is
experiencing growing demand across all of its businesses and is benefiting from improved profitability
as a result of our disciplined operational focus. Demand for creative VFX artistry and technology
continues to improve across media and entertainment, in combination with the progressive return of live
action production,” Moat said to shareholders this morning.
He also noted, “In particular, we are pleased by the fact that we have secured our target VFX sales
pipeline for 2021 and a material part of 2022, a milestone which clearly demonstrates the tangible
recovery of the Media and Entertainment industry. The creation of Technicolor Creative Studios was
well timed in the light of the upcoming surge in content. The division is led by a strong new leadership
team focused on redefining content experiences across film, episodic, gaming, marketing, and
advertising through a powerful combination of storytelling and innovation. In Connected Home, despite
very strong demand in North America and in Eurasia, revenue has been impacted by component
shortages leading to sales being pushed into the second half of the year.”
REELated: Labor Report: Jobs in advertising rose in June
Moat shared that Technicolor’s DVD Services saw a 4% increase in total replicated disc activity, showing the attractiveness of the back catalog and the resiliency of packaged media.
Based on business activity for the first half and the continued successful optimization of its businesses, the Group is confident of achieving its outlook for 2021 and 2022.
Other highlights from this morning’s call:
- Technicolor’s new Creative Studios division has secured its target sales pipeline for 2021 and 2022, a milestone that also demonstrates the tangible recovery of the industry.
- The broadband gateways division is also performing well thanks to the very strong demand in North America, Asia and Europe. One issue they have, just like everyone else involved in hardware production, is the component shortage crisis, which caused a significant amount of sales to be pushed back to the second half of the year. They could easily have tripled their sales.
- Demand for VFX technology continues to improve in line with a growing number of theatrical and episodic projects being launched and awarded to Technicolor Creative Studios. Adjusted EBITDA and Adjusted EBITA are also benefiting from the positive impact of operating efficiencies.
- Connected Home revenues were down (1.0)% year-on-year at constant rate and (8.2)% at current rate. Despite very strong demand in North America and in Eurasia, the division has been impacted by component shortages leading to sales being pushed to the second half, and a challenging Latin American market.
