Sony Ericsson reports fourth quarter and full year 2009 results

Q4 Highlights:

 

  • Improved quarterly financial results reflected success of refreshed portfolio  

  • Transformation programme bearing fruit and to continue  

  • Announced first Android-based phone, the XPERIA(TM) X10 

Press release
Jan 22, 2010 07:30 (GMT +00:00)

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2009 is as follows:

 

 

Q4 2009

Q3 2009

Q4 2008

FY 2009

FY 2008

Number of units shipped (million)

14.6

14.1

24.2

57.1

96.6

Sales (Euro m.)

1,750

1,619

2,914

6,788

11,244

Gross margin (%)

23%

16%

15%

15%

22%

Operating income (Euro m.)  

-181

-193

-262

-1,018

-113

Operating margin (%)

-10%

-12%

-9%

-15%

-1%

 

Restructuring charges (Euro m.)

150

2

129

164

175

 

Operating income excl. restructuring charges (Euro m.)

-32

-191

-133

-854

61

 

Operating margin excl. restructuring charges (%)

-2%

-12%

-5%

-13%

1%

Income before taxes (IBT) (Euro m.)

-190

-199

-261

-1,043

-83

 

IBT excl. restructuring charges (Euro m.)

-40

-198

-133

-878

92

Net income (Euro m.)

-167

-164

-187

-836

-73

 

 

 

 

 

 

Average selling price (Euro)

120

114

121

119

116

 

 

Bert Nordberg, President, Sony Ericsson comments; "The refreshed portfolio, coupled with the business transformation programme has started to positively impact our financial results. Continued cost saving activities and resource realignment are necessary in order to build a leaner, more efficient organisation capable of meeting the demands of the changing competitive landscape. We will continue to focus on returning the company to profitability by establishing Sony Ericsson as the communication entertainment brand based on an exciting portfolio of mid- and high-end products, such as our recently announced Android-based phone, the XPERIA(TM) X10. 2010 will still be challenging as the full benefit of cost improvements will not impact results until the second half of the year, however we are confident that our business is on the right track."  

 

Units shipped in the quarter were 14.6 million, a sequential increase of 3% and a year-on-year decrease of 40%. Sales for the quarter were Euro 1,750 million, a sequential increase of 8% and a year-on-year decrease of 40%. The sequential increase was driven by market seasonality and successful sales of Satio(TM) and Aino(TM) phones.   The year-on-year decrease in both units and sales was mainly due to a downturn in the global handset market and a faster than anticipated shift to touch screen phones in the mid-priced sector of the market. Average Selling Price (ASP) for the quarter rose sequentially by 5% to Euro 120 due to a more favourable product mix.

 

Gross margin percentage improved sequentially and year-on-year mainly driven by the successful sales of new, higher-margin phones as well as the positive impact of cost reduction activities.

 

Income before taxes for the quarter, excluding restructuring charges, was a loss of Euro 40 million compared to a loss of Euro 198 million in the previous quarter.  The reduced loss was due to the improved gross margin and the benefits of reduced operating expenses.  Excluding restructuring charges, Sony Ericsson made a loss for the full year 2009 of Euro 878 million compared with an income of Euro 92 million in 2008. The year-on-year deterioration was mainly attributable to the lower sales.

 

As of December 31, 2009, Sony Ericsson had a net cash position of Euro 620 million.

 

During 2009, Sony Ericsson secured external funding of Euro 455 million to strengthen the balance sheet and improve liquidity, out of which Euro 350 million has been guaranteed by the parent companies on a 50/50 basis. Euro 255 million was drawn by the end of 2009, but the remaining Euro 200 million, a two-year committed back-up facility, has not been utilised.

 

The programme started in mid-2008 to reduce annual operating expenses by Euro 880 million is continuing; with the full benefit expected during the second half of 2010. Since the start of the programme Sony Ericsson has reduced its global workforce by approximately 2,500 people to 9,100 by the end of 2009.  The total restructuring charges taken to date are Euro 339 million, and charges for the full programme are estimated to be well within the previously announced Euro 500 million.

 

Sony Ericsson estimates that the global handset market in units for the fourth quarter 2009 was flat year-on-year and that its market share was about 5% in the fourth quarter.  Sony Ericsson believes that the global handset market for the full year 2009 decreased in volume by around 8% year-on-year to around 1.1 billion units and that its market share in units for the full year 2009 was about 5%.

 

Sony Ericsson forecasts a slight growth in units in the global handset market in 2010.

 

-END -

 

The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB.

Aino(TM), Satio(TM) and XPERIA(TM) are trademarks or registered trademarks of Sony Ericsson Mobile Communications AB.

Sony is a registered trademark of Sony Corporation. Ericsson is a registered trademark of Telefonaktiebolaget LM Ericsson.

Any rights not expressly granted herein are reserved. Subject to change without prior notice.

 

EDITOR'S NOTES:

 

Financial statements:

 

Consolidated income statement

Consolidated income statement full year

Consolidated income statement isolated quarters

Consolidated balance sheet

Consolidated statement of cash flows

Consolidated statement of cash flows full year

Consolidated statement of cash flows isolated quarters

 

Additional information:

 

Net sales by market area, by quarter

 

Sony Ericsson is a 50:50 joint venture by Sony and Ericsson established in October 2001, with global corporate functions located in London and operations in all major markets.  Our vision is to become the industry leader in Communication Entertainment; where new styles of communicating through the internet and social media, become entertainment.  Sony Ericsson offers exciting consumer experiences through phones, accessories, content and applications.  For more information please visit, www.sonyericsson.com.  

 

CONTACTS:

 

Investors / analysts

Ericsson investor relations

Susanne Andersson (Stockholm)

+46 10 719 4631

Lars Jacobsson (Stockholm)

+46 10 719 9489

 

Sony investor relations

Gen Tsuchikawa (Tokyo)

+81 3 6748 2180  

Shinji Tomita (London)

+44 20 7426 8696

 

Press / media

Sony Ericsson global communications and PR

Aldo Liguori (London)

+44 20 8762 5860

Merran Wrigley (London)

+44 20 8762 5862

 

A live webcast of the conference call discussing the company's results for the fourth quarter and full year ended December 31, 2009 will be available on January 22, 2010 at the following times:

 

TIMING:

15:30 UK time (GMT)

16:30 Central European time (CET)

10:30 US Eastern time (EST)

00:30 Japan time (JST) January 23, 2010

 

CALL-IN NUMBERS:

UK and Europe

+44 20 7806 1956

Sweden

+46 8 5352 6407

US:

+1 718 354 1389

Japan:

+81 3 3570 8228

 

REPLAY:

A replay of the conference call will be available approximately two hours after the completion of the conference call until 11:00 pm UK time on 28 January, 2010.

 

UK and Europe:

+44 20 7111 1244

Sweden:

+46 8 5051 3897

US:

+1 347 366 9565

Japan:

+81 3 5767 9615

 

Replay pass code: 8140934#

 

This press release contains forward-looking statements that involve inherent risks and uncertainties.  We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. For a detailed description of risk factors see Sony's and Ericsson's filings with the US Securities and Exchange Commission, particularly each company's latest published Annual Report on Form 20-F.

 

 

 

 

Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

 

Oct-Dec

EUR million

2009

2008

Change

 

 

 

 

Net sales

1,750

2,914

-40%

Cost of sales

-1,341

-2,476

-46%

Gross profit

409

438

-7%

Gross margin %

23.4%

15.0%

8%

 

 

 

 

Research and development expenses

-299

-359

-17%

Selling and administrative expenses

-299

-366

-18%

Operating expenses

-599

-725

-17%

 

 

 

 

Other operating income, net

8

24

-66%

Operating income

-181

-262

-31%

Operating margin %

-10.4%

-9.0%

-1%

 

 

 

 

Financial income

4

28

-88%

Financial expenses

-12

-27

-55%

Income after financial items

-190

-261

-27%

 

 

 

 

Taxes

36

81

-56%

Minority interest

-12

-7

75%

Net income

-167

-187

-11%

 

 

 

 

 

 

 

 

Number of units shipped (million)

14.6

24.2

-40%

ASP (EUR)

120

121

-1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EUR Million

Oct-Dec

 

Restructuring charges

2009

2008

 

  Cost of sales

41

67

 

  Research and development expenses

72

35

 

  Sales and administrative expenses

37

24

 

  Other operating income, net

0

3

 

Total

150

129

 

 

 

 

Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

 

Jan-Dec

EUR million

2009

2008

Change

 

 

 

 

Net sales

6,788

11,244

-40%

Cost of sales

-5,782

-8,750

-34%

Gross profit

1,006

2,494

-60%

Gross margin %

14.8%

22.2%

-7%

 

 

 

 

Research and development expenses

-1,108

-1,379

-20%

Selling and administrative expenses

-964

-1,249

-23%

Operating expenses

-2,072

-2,628

-21%

 

 

 

 

Other operating income, net

48

21

-

Operating income

-1,018

-113

-

Operating margin %

-15.0%

-1.0%

-14%

 

 

 

 

Financial income

21

101

-79%

Financial expenses

-46

-71

-35%

Income after financial items

-1,043

-83

-

 

 

 

 

Taxes

236

31

-

Minority interest

-29

-21

35%

Net income

-836

-73

-

 

 

 

 

 

 

 

 

Number of units shipped (million)

57.1

96.6

-41%

ASP (EUR)

119

116

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EUR Million

Jan-Dec

 

Restructuring charges

2009

2008

 

  Cost of sales

39

75

 

  Research and development expenses

84

62

 

  Sales and administrative expenses

41

29

 

  Other operating income, net

0

9

 

Total

164

175

 

 

 

 

Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

 

2009

 

2008

 

EUR million

Q4

Q3

Q2

Q1

 

Q4

Q3

Q2

Q1

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

1,750

1,619

1,684

1,736

 

2,914

2,808

2,820

2,702

 

Cost of sales

-1,341

-1,367

-1,483

-1,591

 

-2,476

-2,192

-2,168

-1,914

 

Gross profit

409

252

200

145

 

438

616

653

788

 

Gross margin %

23.4%

15.5%

11.9%

8.4%

 

15.0%

21.9%

23.1%

29.2%

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

-299

-260

-245

-303

 

-359

-337

-344

-339

 

Selling and administrative expenses

-299

-205

-235

-225

 

-366

-303

-310

-270

 

Operating expenses

-599

-465

-480

-528

 

-725

-640

-653

-610

 

 

 

 

 

 

 

 

 

 

 

 

Other operating income, net

8

21

6

13

 

24

-8

-2

6

 

Operating income

-181

-193

-274

-369

 

-262

-33

-2

184

 

Operating margin %

-10.4%

-11.9%

-16.3%

-21.3%

 

-9.0%

-1.2%

-0.1%

6.8%

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

4

3

6

9

 

28

25

25

24

 

Financial expenses

-12

-9

-15

-10

 

-27

-15

-14

-15

 

Income after financial items

-190

-199

-283

-370

 

-261

-23

8

193

 

 

 

 

 

 

 

 

 

 

 

 

Taxes

36

42

74

84

 

81

6

0

-57

 

Minority interest

-12

-6

-4

-6

 

-7

-8

-3

-3

 

Net income

-167

-164

-213

-293

 

-187

-25

6

133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of units shipped (million)

14.6

14.1

13.8

14.5

 

24.2

25.7

24.4

22.3

 

ASP (EUR)

120

114

122

120

 

121

109

116

121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EUR Million

2009

2008

 

Restructuring charges

Q4

Q3

Q2

Q1

 

Q4

Q3

Q2

 

 

 

Cost of sales

41

0

-9

7

 

67

0

8

 

 

 

Research and development expenses

72

1

9

2

 

35

26

2

 

 

 

Sales and administrative expenses

37

1

1

3

 

24

3

1

 

 

 

Other operating income, net

0

0

0

0

 

3

6

0

 

 

Total

150

2

1

12

 

129

35

11

 

 

 

 

 

Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

 

 

Dec 31

 

Sep 30

 

Jun 30

 

Dec 31

EUR million

 

2009

 

2009

 

2009

 

2008

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total fixed and financial assets

 

779

 

757

 

736

 

590

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Inventories

 

358

 

397

 

404

 

531

Accounts receivable

 

832

 

917

 

936

 

1,629

Other assets

 

415

 

416

 

379

 

585

Other short-term cash investments

 

489

 

464

 

456

 

707

Cash and bank

 

389

 

532

 

509

 

418

Total current assets

 

2,483

 

2,726

 

2,685

 

3,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

3,262

 

3,482

 

3,421

 

4,460

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY AND LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

381

 

532

 

694

 

1,217

Minority interest

 

47

 

43

 

66

 

57

Total equity

 

428

 

575

 

760

 

1,274

 

 

 

 

 

 

 

 

 

Borrowing, Non Current

 

0

 

50

 

0

 

0

Other long-term liabilities

 

32

 

31

 

30

 

30

Total long-term liabilities

 

32

 

81

 

30

 

30

 

 

 

 

 

 

 

 

 

Accounts payable

 

852

 

1,019

 

848

 

990

Borrowing, Current

 

258

 

105

 

0

 

53

Other current liabilities

 

1,692

 

1,702

 

1,782

 

2,113

Total current liabilities

 

2,802

 

2,826

 

2,630

 

3,156

 

 

 

 

 

 

 

 

 

Total shareholders' equity and liabilities

 

3,262

 

3,482

 

3,421

 

4,460

 

 

 

 

 

 

 

 

 

Net cash*

 

620

 

841

 

965

 

1,072

 

 

* Net cash is defined as cash and bank plus short-term cash investments less interest-bearing liabilities.

 

 

 

Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

Oct-Dec

EUR million

2009

2008

 

 

 

OPERATIONS

 

 

Net income

-167

-187

Adjustments to reconcile net income to cash

48

37

 

-119

-150

 

 

 

Changes in operating net assets

-97

-168

Cash flow from operating activities

-216

-318

 

 

 

INVESTMENTS

 

 

Investing activities

-10

41

Cash flow from investing activities

-10

41

 

 

 

FINANCING

 

 

Financing activities

 100

- 46

Cash flow from financing activities

100

-46

 

 

 

Net change in cash

-126

-323

Cash, beginning of period

996

1,473

Translation difference in Cash

8

-25

Cash, end of period

878

1,125

 

 

 

Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

Jan-Dec

EUR million

2009

2008

 

 

 

OPERATIONS

 

 

Net income

-836

-73

Adjustments to reconcile net income to cash

135

146

 

-701

73

 

 

 

Changes in operating net assets

333

-323

Cash flow from operating activities

-368

-250

 

 

 

INVESTMENTS

 

 

Investing activities

-84

-64

Cash flow from investing activities

-84

-64

 

 

 

FINANCING

 

 

Financing activities

 205

-754

Cash flow from financing activities

205

-754

 

 

 

Net change in cash

-247

-1,068

Cash, beginning of period

1,125

2,155

Translation difference in Cash

-1

37

Cash, end of period

878

1,125

 

 

 

 Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

 

2009

 

2008

EUR million

Q4

Q3

Q2

Q1

 

Q4

Q3

Q2

Q1

 

 

 

 

 

 

 

 

 

 

OPERATIONS

 

 

 

 

 

 

 

 

 

Net income

-167

-164

-213

-293

 

-187

-25

6

133

Adjustments to reconcile net income to cash

48

20

37

29

 

37

39

40

31

 

-119

-143

-176

-263

 

-150

15

46

164

 

 

 

 

 

 

 

 

 

 

Changes in operating net assets

-97

49

60

321

 

-168

88

-142

-101

Cash flow from operating activities

-216

-94

-115

58

 

-318

102

-96

64

 

 

 

 

 

 

 

 

 

 

INVESTMENTS

 

 

 

 

 

 

 

 

 

Investing activities

-10

-42

-13

-19

 

41

-55

-29

-22

Cash flow from investing activities

-10

-42

-13

-19

 

41

-55

-29

-22

 

 

 

 

 

 

 

 

 

 

FINANCING

 

 

 

 

 

 

 

 

 

Financing activities

 100

 159

 0

- 53

 

- 46

- 238

- 8

- 462

Cash flow from financing activities

100

159

0

-53

 

-46

-238

-8

-462

 

 

 

 

 

 

 

 

 

 

Net change in cash

-126

22

-128

-14

 

-323

-191

-133

-421

Cash, beginning of period

996

965

1,116

1,125

 

1,473

1,591

1,711

2,155

Translation difference in Cash

8

9

-23

5

 

-25

74

13

-24

Cash, end of period

878

996

965

1,116

 

1,125

1,473

1,591

1,711

 

 

 

Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER

EUR million

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

2008

Isolated quarters

 

Q4

Q3

Q2

Q1

 

Q4

Q3

Q2

Q1

Europe, Middle East & Africa *

 

966

875

927

977

 

1,642

1,427

1,386

1,494

Americas

 

222

232

195

200

 

636

703

740

486

Asia  

 

562

512

562

559

 

636

678

694

722

Total

 

1,750

1,619

1,684

1,736

 

2,914

2,808

2,820

2,702

* of which Western Europe

 

678

636

678

721

 

1,117

947

900

979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

2008

Sequential change (%)

 

Q4

Q3

Q2

Q1

 

Q4

Q3

Q2

Q1

Europe, Middle East & Africa *

 

10%

-6%

-5%

-40%

 

15%

3%

-7%

-34%

Americas

 

-4%

19%

-3%

-69%

 

-10%

-5%

52%

-24%

Asia  

 

10%

-9%

1%

-12%

 

-6%

-2%

-4%

-18%

Total

 

8%

-4%

-3%

-40%

 

4%

0%

4%

-28%

* of which Western Europe

 

7%

-6%

-6%

-35%

 

18%

5%

-8%

-38%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

2008

Year over year change (%)

 

Q4

Q3

Q2

Q1

 

Q4

Q3

Q2

Q1

Europe, Middle East & Africa *

 

-41%

-39%

-33%

-35%

 

-27%

-17%

-20%

-7%

Americas

 

-65%

-67%

-74%

-59%

 

0%

23%

48%

33%

Asia  

 

-12%

-25%

-19%

-23%

 

-28%

-17%

-21%

-25%

Total

 

-40%

-42%

-40%

-36%

 

-23%

-10%

-9%

-8%

* of which Western Europe

 

-39%

-33%

-25%

-26%

 

-29%

-14%

-18%

-9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

2008

Year to date

 

0912

0909

0906

0903

 

0812

0809

0806

0803

Europe, Middle East & Africa *

 

3,744

2,778

1,903

977

 

5,947

4,306

2,879

1,494

Americas

 

850

627

395

200

 

2,566

1,930

1,226

486

Asia  

 

2,194

1,633

1,121

559

 

2,731

2,094

1,416

722

Total

 

6,788

5,038

3,419

1,736

 

11,244

8,330

5,522

2,702

* of which Western Europe

 

2,714

2,036

1,400

721

 

3,943

2,826

1,879

979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

2008

YTD year over year change (%)

 

0912

0909

0906

0903

 

0812

0809

0806

0803

Europe, Middle East & Africa *

 

-37%

-35%

-34%

-35%

 

-18%

-15%

-13%

-7%

Americas

 

-67%

-67%

-68%

-59%

 

24%

34%

42%

33%

Asia  

 

-20%

-22%

-21%

-23%

 

-23%

-21%

-23%

-25%

Total

 

-40%

-40%

-38%

-36%

 

-13%

-9%

-9%

-8%

* of which Western Europe

 

-31%

-28%

-26%

-26%

 

-19%

-14%

-14%

-9%

 

 

 

The full report (including tables) can be downloaded from the following link: