Philips Licenses Its Indian TV Business to Videocon in Funai-Like Deal

Philips signed a five-year “brand licensing agreement” under which Videocon will assume all responsibility for making and marketing Philips consumer TVs in India, Philips said Monday.

The Videocon pact “is the same kind of deal” Philips signed two years ago in which it licensed to Funai the responsibility for making and marketing Philips TVs in North America, Chief Financial Officer Pierre-Jean Sivignon said on a Q1 earnings call Monday. The Funai deal was later expanded to include most categories of CE products. Sivignon said the agreement with Videocon, which is based in Mumbai, India, is much smaller than Funai’s, not disclosing financial terms. It’s estimated that Videocon generates just over $2 billion in annual sales.

Philips isn’t ruling out more such licensing deals, including agreements in emerging markets, Sivignon said. “I'm not going to guide you on this, but it’s a possibility,” he said when asked about additional deals. “And that is something that we will be looking at, but certainly not a decision made at this particular point of time."

Meanwhile, Philips is “counting on” a 5-billion-euro sales bounce in its TV business from World Cup hype, Sivignon said. That’s the “revenue spread” in TVs it expects in the year-long period ending Q2 2010, he said. Q1 sales in the Philips Consumer Lifestyle sector, which includes TVs, jumped 11 percent to 1.9 billion euros. Sivignon attributed the increase to strong TV demand in Europe on World Cup fever and heavy promotional activity surrounding the Chinese new year. Still, “in the consumer markets, demand remains more difficult to read as consumer confidence indicators, particularly for mature markets, continue to give mixed signals,” Sivignon said.

In Consumer Lifestyle, EBITA swung to a 166-million-euro profit from a year-earlier 49-billion-euro loss, Philips said. Its TV business cut its EBITA loss 77 percent to 19 million euros, and one of management’s key 2010 goals is for the TV operations to finish the year in the black, Philips said. Overall EBITA at Philips swung to a 504-million-euro profit from a year-earlier 74-million-euro loss. Sales across all Philips sectors jumped 12 percent to 5.7 billion euros. The company swung to a 201-million-euro net profit from a 57-million-euro net loss.