The German TV maker Loewe has received court approval to undergo an administered insolvency process. This will allow the company to administer its own restructuring while maintaining direct contact with customers and suppliers. This follows its recent financial results, where low sales and under-utilised production capacity contributed toward a 24 million euro (32.6 million dollar) EBIT loss in the first 6 months of 2013. As part of its restructuring plan, it has made 150 employees redundant, and is required by its creditors to attain a new investor. Japanese TV maker Sharp, a minority shareholder in Loewe, will also take over production of entry level TV sets by Autumn 2013 in one of Sharp's European facilities, while also collaborating with Loewe on software development. Loewe has received several written purchase offers, which it is currently considering.
Loewe's TV business model has hinged on providing higher end TVs at high prices and low volumes to affluent consumers, primarily within the Western European region. After strong growth from 2004 to 2010, inspired by the launch of flat-panel displays and analogue switch-offs, the Western European TV market inevitably declined in 2011, 2012 and the first half of 2013. This should not have significantly affected Loewe, as a premium rather than mass market producer, but it has had an impact - particularly so in 2013, when the firm's core domestic TV market of Germany also began to decline. Moreover, in this time period the market has become increasingly price competitive, even for higher end models, while many competitors have introduced higher than 55 inch screen size models not currently offered by Loewe. This has increased competition for Loewe's target market, weakening its position.
The firm is now positioning itself more as a home entertainment solutions provider rather than just a TV manufacturer, with their latest TVs containing software enabling integration with their home audio systems. This may help it re-achieve product differentiation against brands offering competitively priced TVs with similar specifications. Loewe also has strength in areas of customer support and product distribution, particularly within Germany, where it still has a very strong brand name and reputation. If the firm can harness the latest display technologies like 4K and OLED, or the latest large-sized panel production technology, it still has an opportunity to position itself at the top-tier of the market, despite the pressure from rivals.