Q1 Highlights: 

  • Company returns to profitability in Q1 2010
  • ASP rises to Euro 134 as Xperia(TM) X10 and Vivaz(TM) start shipping
  • Improved cost structure generates better margins

 

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the first quarter ended March 31, 2010 is as follows:

    Q1 2009   Q4 2009   Q1 2010
Number of units shipped (million) 14.5 14.6 10.5
Sales (Euro m.) 1,736 1,750 1,405
Gross margin (%) 8% 23% 31%
Operating income (Euro m.)  -369 -181 20
Operating margin (%) -21% -10% 1%
   Restructuring charges (Euro m.) 12 150 3
   Operating income excl. restructuring charges (Euro m.) -357 -32 23
   Operating margin excl. restructuring charges (%) -21% -2% 2%
Income before taxes (IBT) (Euro m.) -370 -190 18
   IBT excl. restructuring charges (Euro m.) -358 -40 21
Net income (Euro m.) -293 -167 21
       
Average selling price (Euro) 120 120 134

Bert Nordberg, President, Sony Ericsson commented, "We are pleased to see the positive impact of both the launch of new products and the business transformation programme improving the company's results. The Xperia(TM) X10, our first android-based Communication Entertainment device featuring signature Sony Ericsson applications Timescape and Mediascape(TM),  and Vivaz(TM), a beautifully designed, touch-screen Symbian phone started shipping towards the end of the quarter. Both models have been well received by global customers." He added, "Increases in both gross and operating margins show that we are on the right track to build the correct cost structure for our business organization and strategy. We will continue to work through the transformation programme to ensure that we are competitive." 

Units shipped in the quarter were 10.5 million, a decrease of 28% compared to the same period last year, reflecting the streamlining of the portfolio over the past 12 months to focus on higher-end phones. Sales for the quarter were Euro 1,405 million, a decrease of 19% year on year.  Average selling price (ASP) increased 12% both sequentially and year-on-year to Euro 134 during the quarter due to good sell through of existing models, new flagship phones starting to ship at the end of the quarter and a positive currency effect.

Gross margin rose both sequentially and year-on-year, reflecting a more favourable product mix and the benefit of cost of sales improvements in the past year, including the resolution of certain royalty matters during the quarter.

Income before taxes for the quarter excluding restructuring was a profit of Euro 21 million, illustrating the positive impact of the cost reduction programme. 

The transformation programme, which started in mid-2008, with the aim of reducing 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 3,150 people to reach a total of 8,450 by March 31, 2010. The total restructuring charges taken to date are Euro 342 million.

As of March 31, 2010, Sony Ericsson retained a net cash position of Euro 563 million.

During the first quarter of 2010, Sony Ericsson obtained additional external funding of Euro 150 million.  The funding was guaranteed by the parent companies on a 50/50 basis.

Market share in unit base for the quarter decreased by one percentage point sequentially and is now estimated to be around 4%.

Sony Ericsson maintains a forecast of 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.

Vivaz(TM), Mediascape(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 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

Additional information:

Net sales by market area by quarter

- ENDS -

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 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

Andreas Hedemyr (Stockholm) +46 10 714 3748

 

Sony investor relations

Gen Tsuchikawa (Tokyo) +81 3 6748 2180

Yas Hasegawa (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

 

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

  Jan-Mar
EUR million 2010 2009 Change
       
Net sales 1,405 1,736 -19%
Cost of sales -975 -1,591 -39%
Gross profit 429 145 196%
Gross margin % 30.6% 8.4% 22%
       
Research and development expenses -216 -303 -29%
Selling and administrative expenses -207 -225 -8%
Operating expenses -423 -528 -20%
       
Other operating income, net 14 13 9%
Operating income 20 -369 -
Operating margin % 1.4% -21.3% -
       
Financial income 7 9 -26%
Financial expenses -9 -10 -9%
Income after financial items 18 -370 -
       
Taxes 6 84 -93%
Minority interest -3 -6 -51%
Net income 21 -293 -
       
       
Number of units shipped (million) 10.5 14.5 -28%
ASP (EUR) 134 120 12%
       
       
       
       
EUR Million Jan-Mar Jan-Mar  
Restructuring charges 2010 2009  
  Cost of sales -2 7  
  Research and development expenses 2 2  
  Sales and administrative expenses 3 3  
  Other operating income, net 0 0  
Total 3 12  

 

Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

  2010   2009
EUR million Q1   Q4 Q3 Q2 Q1
             
Net sales 1,405   1,750 1,619 1,684 1,736
Cost of sales -975   -1,341 -1,367 -1,483 -1,591
Gross profit 429   409 252 200 145
Gross margin % 30.6%   23.4% 15.5% 11.9% 8.4%
             
Research and development expenses -216   -299 -260 -245 -303
Selling and administrative expenses -207   -299 -205 -235 -225
Operating expenses -423   -599 -465 -480 -528
             
Other operating income, net 14   8 21 6 13
Operating income 20   -181 -193 -274 -369
Operating margin % 1.4%   -10.4% -11.9% -16.3% -21.3%
             
Financial income 7   4 3 6 9
Financial expenses -9   -12 -9 -15 -10
Income after financial items 18   -190 -199 -283 -370
             
Taxes 6   36 42 74 84
Minority interest -3   -12 -6 -4 -6
Net income 21   -167 -164 -213 -293
             
             
Number of units shipped (million) 10.5   14.6 14.1 13.8 14.5
ASP (EUR) 134   120 114 122 120
             
             
           
             
EUR Million 2009   2009
Restructuring charges Q1   Q4 Q3 Q2 Q1
  Cost of sales -2   41 0 -9 7
  Research and development expenses 2   72 1 9 2
  Sales and administrative expenses 3   37 1 1 3
  Other operating income, net 0   0 0 0 0
Total 3   150 2 1 12

 

Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

    Mar 31   Dec 31   Mar 31
EUR million   2010   2009   2009
             
ASSETS            
             
Total fixed and financial assets   791   779   658
             
Current assets            
Inventories   384   358   477
Accounts receivable   849   832   1,193
Other assets   369   415   463
Other short-term cash investments   537   489   574
Cash and bank   443   389   542
Total current assets   2,582   2,483   3,249
             
             
Total assets   3,373   3,262   3,908
             
SHAREHOLDERS' EQUITY AND LIABILITIES            
             
Shareholders' equity   438   381   930
Minority interest   54   47   65
Total equity   492   428   995
             
Borrowing, Non Current   100   0   0
Other long-term liabilities   37   32   30
Total long-term liabilities   137   32   30
             
Accounts payable   829   852   965
Borrowing, Current   316   258   0
Other current liabilities   1,599   1,692   1,918
Total current liabilities   2,744   2,802   2,882
             
Total shareholders' equity and liabilities   3,373   3,262   3,908
             
Net cash*   563   620   1,116
             

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

 

 

Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

  Jan-Mar
EUR million 2010 2009
     
OPERATIONS    
Net income 21 -293
Adjustments to reconcile net income to cash -44 29
  -23 -263
     
Changes in operating net assets -72 321
Cash flow from operating activities -94 58
     
INVESTMENTS    
Investing activities 27 -19
Cash flow from investing activities 27 -19
     
FINANCING    
Financing activities  150 -53
Cash flow from financing activities 150 -53
     
Net change in cash 83 -14
Cash, beginning of period 878 1,125
Translation difference in Cash 19 5
Cash, end of period 980 1,116

 

 

Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

  2010     2009  
EUR million Q1   Q4 Q3 Q2 Q1
             
OPERATIONS            
Net income 21   -167 -164 -213 -293
Adjustments to reconcile net income to cash -44   48 20 37 29
  -23   -119 -143 -176 -263
             
Changes in operating net assets -72   -97 49 60 321
Cash flow from operating activities -94   -216 -94 -115 58
             
INVESTMENTS            
Investing activities 27   -10 -42 -13 -19
Cash flow from investing activities 27   -10 -42 -13 -19
             
FINANCING            
Financing activities  150    100  159  0 -53
Cash flow from financing activities 150   100 159 0 -53
             
Net change in cash 83   -126 22 -128 -14
Cash, beginning of period 878   996 965 1,116 1,125
Translation difference in Cash 19   8 9 -23 5
Cash, end of period 980   878 996 965 1,116

 

 

Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER

EUR million              
    2010   2009
Isolated quarters   Q1   Q4 Q3 Q2 Q1
Europe, Middle East & Africa *   711   966 875 927 977
Americas   201   222 232 195 200
Asia    493   562 512 562 559
Total   1,405   1,750 1,619 1,684 1,736
* of which Western Europe   525   678 636 678 721
               
               
    2010   2009
Sequential change (%)   Q1   Q4 Q3 Q2 Q1
Europe, Middle East & Africa *   -26%   10% -6% -5% -40%
Americas   -10%   -4% 19% -3% -69%
Asia    -12%   10% -9% 1% -12%
Total   -20%   8% -4% -3% -40%
* of which Western Europe   -23%   7% -6% -6% -35%
               
               
    2010   2009
Year over year change (%)   Q1   Q4 Q3 Q2 Q1
Europe, Middle East & Africa *   -27%   -41% -39% -33% -35%
Americas   1%   -65% -67% -74% -59%
Asia    -12%   -12% -25% -19% -23%
Total   -19%   -40% -42% -40% -36%
* of which Western Europe   -27%   -39% -33% -25% -26%
               
               
    2010   2009
Year to date   1003   0912 0909 0906 0903
Europe, Middle East & Africa *   711   3,744 2,778 1,903 977
Americas   201   850 627 395 200
Asia    493   2,194 1,633 1,121 559
Total   1,405   6,788 5,038 3,419 1,736
* of which Western Europe   525   2,714 2,036 1,400 721
               
               
    2010   2009
YTD year over year change (%)   1003   0912 0909 0906 0903
Europe, Middle East & Africa *   -27%   -37% -35% -34% -35%
Americas   1%   -67% -67% -68% -59%
Asia    -12%   -20% -22% -21% -23%
Total   -19%   -40% -40% -38% -36%
* of which Western Europe   -27%   -31% -28% -26% -26%

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