Sony Ericsson reports third quarter 2010 results
Q3 Highlights:
- Turnaround continues with third consecutive quarter of profits
- Continued success of smartphone portfolio keeps ASP at high level
- Launch of Xperia(TM) models in new markets, including China and the U.S.
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2010 is as follows:
| Q3 2009 | Q2 2010 | Q3 2010 | |
| Number of units shipped (million) | 14.1 | 11.0 | 10.4 |
| Sales (Euro m.) | 1,619 | 1,757 | 1,603 |
| Gross margin (%) | 16% | 28% | 30% |
| Operating income (Euro m.) | -193 | 36 | 63 |
| Operating margin (%) | -12% | 2% | 4% |
| Restructuring charges (Euro m.) | 2 | 32 | 4 |
| Operating income excl. restructuring charges (Euro m.) | -191 | 68 | 67 |
| Operating margin excl. restructuring charges (%) | -12% | 4% | 4% |
| Income before taxes (IBT) (Euro m.) | -199 | 31 | 62 |
| IBT excl. restructuring charges (Euro m.) | -198 | 63 | 66 |
| Net income (Euro m.) | -164 | 12 | 49 |
| Average selling price (Euro) | 114 | 160 | 154 |
Bert Nordberg, President & CEO of Sony Ericsson commented, "Our third consecutive quarter of profitable results illustrates that Sony Ericsson's overall performance is stabilising. Our strategy to focus on the smartphone segment is succeeding and smartphones now comprise more than 50% of our total sales. During the quarter, we launched our Android-based Xperia(TM) models in new markets, such as China and the U.S., and it is our ambition to become the global number one handset provider on the Android platform."
Income before taxes for the quarter excluding restructuring charges was a profit of Euro 66 million following the positive effects of the transformation programme. Net income for the quarter was Euro 49 million, an increase of Euro 213 million year-on-year and of Euro 37 million sequentially.
The gross margin percentage was 30% and almost doubled year-on-year, reflective of the company turnaround.
Units shipped in the quarter were 10.4 million, a decrease of 26% year-on-year and down 5% sequentially. Average selling price (ASP) in the quarter remained at a high level of Euro 154, a 34% increase year-on-year and a decrease of 4% sequentially, due to product and geographical mix. As a result, sales for the quarter were Euro 1,603 million, essentially flat year-on-year and a 9% decrease sequentially.
Sony Ericsson's net cash position as of September 30, 2010 was Euro 538 million. The negative cash flow from operating activities was Euro 54 million, mainly due to payments during the quarter related to the transformation programme.
Market share in unit base for the quarter remained flat sequentially and is estimated to be approximately 4%. The value market share is estimated to be approximately 6%.
Sony Ericsson maintains a forecast of slight growth in units in the global handset market in 2010.
The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB. Xperia(TM) is a trademark 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 and subject to change without prior notice.
EDITOR'S NOTES:
Financial statements and additional information:
Financial statements:
Consolidated income statement
Consolidated income statement - isolated quarters
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of cash flows - isolated quarters
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. Sony Ericsson's 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.
- ENDS -
CONTACTS:
Ericsson investor relations
Susanne Andersson (Stockholm) +46 10 719 4631
Andreas Hedemyr (Stockholm) +46 10 714 3748
Sony investor relations
Gen Tsuchikawa (Tokyo) +81 3 6748 2111
Yas Hasegawa (London) +44 20 7426 8696
Press / Media
Sony Ericsson global communications and PR
Aldo Liguori (London) +44 20 8762 5860
Gustaf Brusewitz (London) +44 7960 58 19 68
This press release contains forward-looking statements that involve inherent risks and uncertainties. Sony Ericsson has 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
| Jul-Sep | Jan-Sep | ||||||
| EUR million | 2009 | 2010 | Change | 2009 | 2010 | Change | |
| Net sales | 1,619 | 1,603 | -1% | 5,038 | 4,765 | -5% | |
| Cost of sales | -1,367 | -1,130 | -17% | -4,441 | -3,371 | -24% | |
| Gross profit | 252 | 473 | 88% | 597 | 1,394 | 134% | |
| Gross margin % | 15.5% | 29.5% | 14% | 11.9% | 29.3% | 17% | |
| Research and development expenses | -260 | -191 | -27% | -808 | -625 | -23% | |
| Selling and administrative expenses | -205 | -228 | 12% | -665 | -680 | 2% | |
| Operating expenses | -465 | -420 | -10% | -1,473 | -1,305 | -11% | |
| Other operating income, net | 21 | 10 | -51% | 39 | 31 | -20% | |
| Operating income | -193 | 63 | -837 | 120 | |||
| Operating margin % | -11.9% | 4.0% | -16.6% | 2.5% | |||
| Financial income | 3 | 7 | 124% | 18 | 16 | -12% | |
| Financial expenses | -9 | -8 | -15% | -34 | -24 | -29% | |
| Income after financial items | -199 | 62 | -853 | 112 | |||
| Taxes | 42 | -12 | 200 | -21 | |||
| Minority interest | -6 | -2 | -75% | -16 | -8 | -48% | |
| Net income | -164 | 49 | -669 | 82 | |||
| Number of units shipped (million) | 14.1 | 10.4 | -26% | 42.5 | 31.9 | -25% | |
| ASP (EUR) | 114 | 154 | 34% | 119 | 150 | 26% | |
| EUR million | Jul-Sep | Jan-Sep | |||||
| Restructuring charges | 2009 | 2010 | 2009 | 2010 | |||
| Cost of sales | 0 | 3 | -2 | 34 | |||
| Research and development expenses | 1 | -10 | 12 | -6 | |||
| Sales and administrative expenses | 1 | 11 | 4 | 12 | |||
| Total | 2 | 4 | 15 | 39 | |||
Sony Ericsson
CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS
| 2009 | 2010 | |||||||
| EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |
| Net sales | 1,736 | 1,684 | 1,619 | 1,750 | 1,405 | 1,757 | 1,603 | |
| Cost of sales | -1,591 | -1,483 | -1,367 | -1,341 | -975 | -1,266 | -1,130 | |
| Gross profit | 145 | 200 | 252 | 409 | 429 | 492 | 473 | |
| Gross margin % | 8.4% | 11.9% | 15.5% | 23.4% | 30.6% | 28.0% | 29.5% | |
| Research and development expenses | -303 | -245 | -260 | -299 | -216 | -218 | -191 | |
| Selling and administrative expenses | -225 | -235 | -205 | -299 | -207 | -245 | -228 | |
| Operating expenses | -528 | -480 | -465 | -599 | -423 | -463 | -420 | |
| Other operating income, net | 13 | 6 | 21 | 8 | 14 | 7 | 10 | |
| Operating income | -369 | -274 | -193 | -181 | 20 | 36 | 63 | |
| Operating margin % | -21.3% | -16.3% | -11.9% | -10.4% | 1.4% | 2.1% | 4.0% | |
| Financial income | 9 | 6 | 3 | 4 | 7 | 2 | 7 | |
| Financial expenses | -10 | -15 | -9 | -12 | -9 | -7 | -8 | |
| Income after financial items | -370 | -283 | -199 | -190 | 18 | 31 | 62 | |
| Taxes | 84 | 74 | 42 | 36 | 6 | -16 | -12 | |
| Minority interest | -6 | -4 | -6 | -12 | -3 | -4 | -2 | |
| Net income | -293 | -213 | -164 | -167 | 21 | 12 | 49 | |
| Number of units shipped (million) | 14.5 | 13.8 | 14.1 | 14.6 | 10.5 | 11.0 | 10.4 | |
| ASP (EUR) | 120 | 122 | 114 | 120 | 134 | 160 | 154 | |
| EUR million | 2009 | 2010 | ||||||
| Restructuring charges | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |
| Cost of sales | 7 | -9 | 0 | 41 | -2 | 33 | 3 | |
| Research and development expenses | 2 | 9 | 1 | 72 | 2 | 1 | -10 | |
| Sales and administrative expenses | 3 | 1 | 1 | 37 | 3 | -2 | 11 | |
| Total | 12 | 1 | 2 | 150 | 3 | 32 | 4 | |
Sony Ericsson
CONSOLIDATED BALANCE SHEET
| Sep 30 | Dec 31 | Jun 30 | Sep 30 | |||||
| EUR million | 2009 | 2009 | 2010 | 2010 | ||||
| ASSETS | ||||||||
| Total fixed and financial assets | 757 | 779 | 836 | 813 | ||||
| Current assets | ||||||||
| Inventories | 397 | 358 | 467 | 457 | ||||
| Accounts receivable | 917 | 832 | 1,063 | 986 | ||||
| Other assets | 416 | 415 | 412 | 328 | ||||
| Other short-term cash investments | 464 | 489 | 477 | 440 | ||||
| Cash and bank | 532 | 389 | 562 | 482 | ||||
| Total current assets | 2,726 | 2,483 | 2,981 | 2,692 | ||||
| Total assets | 3,482 | 3,262 | 3,817 | 3,505 | ||||
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||||
| Shareholders' equity | 532 | 381 | 510 | 480 | ||||
| Minority interest | 43 | 47 | 66 | 62 | ||||
| Total equity | 575 | 428 | 575 | 541 | ||||
| Borrowing, Non Current | 50 | 0 | 101 | 100 | ||||
| Other long-term liabilities | 31 | 32 | 40 | 30 | ||||
| Total long-term liabilities | 81 | 32 | 141 | 130 | ||||
| Accounts payable | 1,019 | 852 | 973 | 922 | ||||
| Borrowing, Current | 105 | 258 | 329 | 284 | ||||
| Other current liabilities | 1,702 | 1,692 | 1,798 | 1,628 | ||||
| Total current liabilities | 2,826 | 2,802 | 3,101 | 2,834 | ||||
| Total shareholders' equity and liabilities | 3,482 | 3,262 | 3,817 | 3,505 | ||||
| Net cash* | 841 | 620 | 609 | 538 |
* Net cash is defined as cash and bank plus short-term cash investments less interest-bearing liabilities.
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS
| Jul-Sep | Jan-Sep | ||||
| EUR million | 2009 | 2010 | 2009 | 2010 | |
| OPERATING | |||||
| Net income | -164 | 49 | -669 | 82 | |
| Adjustments to reconcile net income to cash | 20 | -66 | 87 | -105 | |
| -143 | -17 | -583 | -23 | ||
| Changes in operating net assets | 49 | -38 | 431 | -96 | |
| Cash flow from operating activities | -94 | -54 | -152 | -119 | |
| INVESTING | |||||
| Investing activities | -42 | 2 | -74 | 14 | |
| Cash flow from investing activities | -42 | 2 | -74 | 14 | |
| FINANCING | |||||
| Financing activities | 159 | - 32 | 106 | 118 | |
| Cash flow from financing activities | 159 | -32 | 106 | 118 | |
| Net change in cash | 22 | -85 | -120 | 12 | |
| Cash, beginning of period | 965 | 1,039 | 1,125 | 878 | |
| Translation difference in Cash | 9 | -33 | -9 | 31 | |
| Cash, end of period | 996 | 921 | 996 | 921 | |
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS
| 2009 | 2010 | |||||||
| EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |
| OPERATING | ||||||||
| Net income | -293 | -213 | -164 | -167 | 21 | 12 | 49 | |
| Adjustments to reconcile net income to cash | 29 | 37 | 20 | 48 | -44 | 4 | -66 | |
| -263 | -176 | -143 | -119 | -23 | 16 | -17 | ||
| Changes in operating net assets | 321 | 60 | 49 | -97 | -72 | 13 | -38 | |
| Cash flow from operating activities | 58 | -115 | -94 | -216 | -94 | 29 | -54 | |
| INVESTING | ||||||||
| Investing activities | -19 | -13 | -42 | -10 | 27 | -15 | 2 | |
| Cash flow from investing activities | -19 | -13 | -42 | -10 | 27 | -15 | 2 | |
| FINANCING | ||||||||
| Financing activities | - 53 | 0 | 159 | 100 | 150 | 0 | - 32 | |
| Cash flow from financing activities | -53 | 0 | 159 | 100 | 150 | 0 | -32 | |
| Net change in cash | -14 | -128 | 22 | -126 | 83 | 15 | -85 | |
| Cash, beginning of period | 1,125 | 1,116 | 965 | 996 | 878 | 980 | 1,039 | |
| Translation difference in Cash | 5 | -23 | 9 | 8 | 19 | 45 | -33 | |
| Cash, end of period | 1,116 | 965 | 996 | 878 | 980 | 1,039 | 921 | |
Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER
| EUR million | |||||||||
| 2009 | 2010 | ||||||||
| Isolated quarters | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||
| Europe, Middle East & Africa * | 977 | 927 | 875 | 966 | 711 | 876 | 837 | ||
| Americas | 200 | 195 | 232 | 222 | 201 | 223 | 222 | ||
| Asia | 559 | 562 | 512 | 562 | 493 | 659 | 544 | ||
| Total | 1,736 | 1,684 | 1,619 | 1,750 | 1,405 | 1,757 | 1,603 | ||
| * of which Western Europe | 721 | 678 | 636 | 678 | 525 | 668 | 632 | ||
| 2009 | 2010 | ||||||||
| Sequential change (%) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||
| Europe, Middle East & Africa * | -40% | -5% | -6% | 10% | -26% | 23% | -4% | ||
| Americas | -69% | -3% | 19% | -4% | -10% | 11% | 0% | ||
| Asia | -12% | 1% | -9% | 10% | -12% | 34% | -18% | ||
| Total | -40% | -3% | -4% | 8% | -20% | 25% | -9% | ||
| * of which Western Europe | -35% | -6% | -6% | 7% | -23% | 27% | -5% | ||
| 2009 | 2010 | ||||||||
| Year over year change (%) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||
| Europe, Middle East & Africa * | -35% | -33% | -39% | -41% | -27% | -5% | -4% | ||
| Americas | -59% | -74% | -67% | -65% | 1% | 14% | -4% | ||
| Asia | -23% | -19% | -25% | -12% | -12% | 17% | 6% | ||
| Total | -36% | -40% | -42% | -40% | -19% | 4% | -1% | ||
| * of which Western Europe | -26% | -25% | -33% | -39% | -27% | -2% | -1% | ||
| 2009 | 2010 | ||||||||
| Year to date | 0903 | 0906 | 0909 | 0912 | 1003 | 1006 | 1009 | ||
| Europe, Middle East & Africa * | 977 | 1,903 | 2,778 | 3,744 | 711 | 1,587 | 2,424 | ||
| Americas | 200 | 395 | 627 | 850 | 201 | 424 | 646 | ||
| Asia | 559 | 1,121 | 1,633 | 2,194 | 493 | 1,152 | 1,695 | ||
| Total | 1,736 | 3,419 | 5,038 | 6,788 | 1,405 | 3,162 | 4,765 | ||
| * of which Western Europe | 721 | 1,400 | 2,036 | 2,714 | 525 | 1,193 | 1,825 | ||
| 2009 | 2010 | ||||||||
| YTD year over year change (%) | 0903 | 0906 | 0909 | 0912 | 1003 | 1006 | 1009 | ||
| Europe, Middle East & Africa * | -35% | -34% | -35% | -37% | -27% | -17% | -13% | ||
| Americas | -59% | -68% | -67% | -67% | 1% | 7% | 3% | ||
| Asia | -23% | -21% | -22% | -20% | -12% | 3% | 4% | ||
| Total | -36% | -38% | -40% | -40% | -19% | -8% | -5% | ||
| * of which Western Europe | -26% | -26% | -28% | -31% | -27% | -15% | -10% | ||
The full report (including tables) can be downloaded from the following link: