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: