Sony Ericsson reports second quarter 2010 results

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the second quarter ended June 30, 2010 is as follows:

 

	Q2 2009	Q1 2010	Q2 2010
Number of units shipped (million)	13.8	10.5	11.0
Sales (Euro m.)	1,684	1,405	1,757
Gross margin (%)	12%	31%	28%
Operating income (Euro m.)	-274	20	36
Operating margin (%)	-16%	1%	2%
Restructuring charges (Euro m.)	1	3	32
Operating income excl. restructuring charges (Euro m.)	-274	23	68
Operating margin excl. restructuring charges (%)	-16%	2%	4%
Income before taxes (IBT) (Euro m.)	-283	18	31
IBT excl. restructuring charges (Euro m.)	-283	21	63
Net income (Euro m.)	-213	21	12
Average selling price (Euro)	122	134	160

 

 

Bert Nordberg, President, Sony Ericsson commented, "Our second quarter results show that the company continued the momentum seen in the first quarter as a result of our focus on the value market and the success of new smartphones; Xperia(TM) X10 and Vivaz(TM), launched during the first quarter. These models, along with the Xperia(TM) X10 mini and Xperia(TM) X10 mini pro which started shipping at the end of the second quarter, have been well received  by operators and we are now well positioned for long term growth."

 

Sales for the quarter were Euro 1,757 million, a 25% increase sequentially and a 4% increase year-on-year.  Units shipped in the quarter were 11 million, a 5% increase sequentially and a 20% decrease year-on- year due to the reduction in size of the product portfolio. Average selling price (ASP) increased 19% sequentially and 31% year-on-year to Euro 160 during the quarter due to improved product and geographical mix, as well as positive currency effects.

 

Income before taxes for the quarter excluding restructuring charges was a profit of Euro 63 million, illustrating the positive impact of the cost reduction programme and favourable product mix. 

 

The transformation programme, which started in mid-2008 is now in its final stages and on target to reduce annual operating expenses by Euro 880 million by the end of the year.  Since the start of the program Sony Ericsson has reduced its global workforce by approximately 4,000 people to reach a total workforce of approximately 7,800 by June 30, 2010. The total restructuring charges taken to date for the programme are Euro 374 million.

 

As of June 30, 2010 Sony Ericsson retained a net cash position of Euro 609 million, an increase of Euro 46 million sequentially mainly due to operating results, tight financial management of working capital, as well as positive currency effects.

 

Market share in unit base for the quarter remained flat and is estimated to be around 4%.

 

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.
Vivaz(TM) and XPERIA(TM) are 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

 

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.

 

- 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
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

 

	Apr-Jun				Jan-Jun
EUR million	2009	2010	Change		2009	2010	Change
Net sales	1,684	1,757	4%		3,419	3,162	-8%
Cost of sales	-1,483	-1,266	-15%		-3,074	-2,241	-27%
Gross profit	200	492	146%		346	921	167%
Gross margin %	11.9%	28.0%			10.1%	29.1%
Research and development expenses	-245	-218	-11%		-548	-434	-21%
Selling and administrative expenses	-235	-245	4%		-460	-452	-2%
Operating expenses	-480	-463	-4%		-1,008	-886	-12%
Other operating income, net	6	7	25%		19	21	14%
Operating income	-274	36	-		-644	57	-
Operating margin %	-16.3%	2.1%			-18.8%	1.8%
Financial income	6	2	-60%		15	9	-40%
Financial expenses	-15	-7	-51%		-25	-16	-35%
Income after financial items	-283	31	-		-653	50	-
Taxes	74	-16	-		158	-10	-
Minority interest	-4	-4	-2%		-10	-7	-32%
Net income	-213	12	-		-505	33	-
Number of units shipped (million)	13.8	11.0	-20%		28.3	21.5	-24%
ASP (EUR)	122	160	31%		121	147	22%
EUR Million	Apr-Jun				Jan-Jun
Restructuring charges	2009	2010			2009	2010
Cost of sales	-9	33			-2	31
Research and development expenses	9	1			11	3
Sales and administrative expenses	1	-2			4	1
Total	1	32			13	35

 

 

Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

	2009					2010
EUR million	Q1	Q2	Q3	Q4		Q1	Q2
Net sales	1,736	1,684	1,619	1,750		1,405	1,757
Cost of sales	-1,591	-1,483	-1,367	-1,341		-975	-1,266
Gross profit	145	200	252	409		429	492
Gross margin %	8.4%	11.9%	15.5%	23.4%		30.6%	28.0%
Research and development expenses	-303	-245	-260	-299		-216	-218
Selling and administrative expenses	-225	-235	-205	-299		-207	-245
Operating expenses	-528	-480	-465	-599		-423	-463
Other operating income, net	13	6	21	8		14	7
Operating income	-369	-274	-193	-181		20	36
Operating margin %	-21.3%	-16.3%	-11.9%	-10.4%		1.4%	2.1%
Financial income	9	6	3	4		7	2
Financial expenses	-10	-15	-9	-12		-9	-7
Income after financial items	-370	-283	-199	-190		18	31
Taxes	84	74	42	36		6	-16
Minority interest	-6	-4	-6	-12		-3	-4
Net income	-293	-213	-164	-167		21	12
Number of units shipped (million)	14.5	13.8	14.1	14.6		10.5	11.0
ASP (EUR)	120	122	114	120		134	160
EUR Million	2009					2010
Restructuring charges	Q1	Q2	Q3	Q4		Q1	Q2
Cost of sales	7	-9	0	41		-2	33
Research and development expenses	2	9	1	72		2	1
Sales and administrative expenses	3	1	1	37		3	-2
Total	12	1	2	150		3	32

 

 

Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

		Jun 30		Dec 31		Mar 31		Jun 30
EUR million		2009		2009		2010		2010
ASSETS
Total fixed and financial assets		736		779		791		836
Current assets
Inventories		404		358		384		467
Accounts receivable		936		832		849		1,063
Other assets		379		415		369		412
Other short-term cash investments		456		489		537		477
Cash and bank		509		389		443		562
Total current assets		2,685		2,483		2,582		2,981
Total assets		3,421		3,262		3,373		3,817
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity		694		381		438		510
Minority interest		66		47		54		66
Total equity		760		428		492		575
Borrowing, Non Current		0		0		100		101
Other long-term liabilities		30		32		37		40
Total long-term liabilities		30		32		137		141
Accounts payable		848		852		829		973
Borrowing, Current		0		258		316		329
Other current liabilities		1,782		1,692		1,599		1,798
Total current liabilities		2,630		2,802		2,744		3,101
Total shareholders' equity and liabilities		3,421		3,262		3,373		3,817
Net cash*		965		620		563		609

 

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

 

 

Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

	Apr-Jun			Jan-Jun
EUR million	2009	2010		2009	2010
OPERATIONS
Net income	-213	12		-505	33
Adjustments to reconcile net income to cash	37	4		66	-40
	-176	16		-439	-6
Changes in operating net assets	60	13		382	-58
Cash flow from operating activities	-115	29		-57	-65
INVESTMENTS
Investing activities	-13	-15		-32	12
Cash flow from investing activities	-13	-15		-32	12
FINANCING
Financing activities	0	0		- 53	150
Cash flow from financing activities	0	0		-53	150
Net change in cash	-128	15		-142	97
Cash, beginning of period	1,116	980		1,125	878
Translation difference in Cash	-23	45		-18	64
Cash, end of period	965	1,039		965	1,039

 

 

Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

	2009					2010
EUR million	Q1	Q2	Q3	Q4		Q1	Q2
OPERATIONS
Net income	-293	-213	-164	-167		21	12
Adjustments to reconcile net income to cash	29	37	20	48		-44	4
	-263	-176	-143	-119		-23	16
Changes in operating net assets	321	60	49	-97		-72	13
Cash flow from operating activities	58	-115	-94	-216		-94	29
INVESTMENTS
Investing activities	-19	-13	-42	-10		27	-15
Cash flow from investing activities	-19	-13	-42	-10		27	-15
FINANCING
Financing activities	- 53	0	159	100		150	0
Cash flow from financing activities	-53	0	159	100		150	0
Net change in cash	-14	-128	22	-126		83	15
Cash, beginning of period	1,125	1,116	965	996		878	980
Translation difference in Cash	5	-23	9	8		19	45
Cash, end of period	1,116	965	996	878		980	1,039

 

 

Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER

 

EUR million
		2009					2010
Isolated quarters		Q1	Q2	Q3	Q4		Q1	Q2
Europe, Middle East & Africa *		977	927	875	966		711	876
Americas		200	195	232	222		201	223
Asia		559	562	512	562		493	659
Total		1,736	1,684	1,619	1,750		1,405	1,757
* of which Western Europe		721	678	636	678		525	668
		2009					2010
Sequential change (%)		Q1	Q2	Q3	Q4		Q1	Q2
Europe, Middle East & Africa *		-40%	-5%	-6%	10%		-26%	23%
Americas		-69%	-3%	19%	-4%		-10%	11%
Asia		-12%	1%	-9%	10%		-12%	34%
Total		-40%	-3%	-4%	8%		-20%	25%
* of which Western Europe		-35%	-6%	-6%	7%		-23%	27%
		2009					2010
Year over year change (%)		Q1	Q2	Q3	Q4		Q1	Q2
Europe, Middle East & Africa *		-35%	-33%	-39%	-41%		-27%	-5%
Americas		-59%	-74%	-67%	-65%		1%	14%
Asia		-23%	-19%	-25%	-12%		-12%	17%
Total		-36%	-40%	-42%	-40%		-19%	4%
* of which Western Europe		-26%	-25%	-33%	-39%		-27%	-2%
		2009					2010
Year to date		0903	0906	0909	0912		1003	1006
Europe, Middle East & Africa *		977	1,903	2,778	3,744		711	1,587
Americas		200	395	627	850		201	424
Asia		559	1,121	1,633	2,194		493	1,152
Total		1,736	3,419	5,038	6,788		1,405	3,162
* of which Western Europe		721	1,400	2,036	2,714		525	1,193
		2009					2010
YTD year over year change (%)		0903	0906	0909	0912		1003	1006
Europe, Middle East & Africa *		-35%	-34%	-35%	-37%		-27%	-17%
Americas		-59%	-68%	-67%	-67%		1%	7%
Asia		-23%	-21%	-22%	-20%		-12%	3%
Total		-36%	-38%	-40%	-40%		-19%	-8%
* of which Western Europe		-26%	-26%	-28%	-31%		-27%	-15%

 

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