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Q2 Highlights:

  • Income before taxes excl. restructuring charges increases to Euro 63 million
  • Positive cash flow generated from operating activities 
  • ASP rises to Euro 160


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: