Highlights:

  • Four consecutive quarters of profitability during 2010  

  • Improvement of Euro 1.1 billion of income before taxes, excluding restructuring charges, for the full year  

  • Over 9 million Android-based Xperia(TM) phones shipped since launch    


The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2010 is as follows: 

   Q4 2009  Q3 2010  Q4 2010  FY 2009  FY 2010
Number of units shipped (million) 14.6 10.4 11.2 57.1 43.1
Sales (Euro m.) 1,750 1,603 1,528 6,788 6,294
Gross margin (%) 23% 30% 30% 15% 29%
Operating income (Euro m.)   -181 63 39 -1,018 159
Operating margin (%)    -10% 4% 3% -15% 3%
   Restructuring charges (Euro m.) -150 -4 -3 -164 -42
   Operating income excl. restructuring
charges (Euro m.)
-32 67 43 -854 202
   Operating margin excl. restructuring
charges (%)
-2% 4% 3% -13% 3%
Income before taxes (IBT) (Euro m.) -190 62 35 -1,043 147
   IBT excl. restructuring charges (Euro m.) -40 66 39 -878 189
Net income (Euro m.) -167 49 8 -836 90
           
Average selling price (Euro) 120 154 136 119 146



Bert Nordberg, President & CEO of Sony Ericsson commented, "2010 was a turnaround year for Sony Ericsson. Our four consecutive quarters of profit reflect the success of our shift towards an Android-based smartphone portfolio. We will celebrate the 10th anniversary of the creation of Sony Ericsson in 2011, and as shown by the recently announced Xperia(TM) arc, we will continue to focus on delivering the most entertaining smartphones worldwide."

Income before taxes, excluding restructuring charges, was Euro 189 million for the full year 2010, compared with a loss of Euro 878 million in 2009. The improvement of approximately Euro 1.1 billion was driven by the success of a streamlined product portfolio focused on higher-end smartphones and an improved cost structure. Sales for the full year 2010 were Euro 6,294 million, a decrease of 7% from 2009, while gross margin improved from 15% in 2009 to 29%, in 2010.  

During 2010 Sony Ericsson completed its company-wide transformation programme, improving its cost of sales ratio, reducing its global workforce by approximately 4,000 people in total, consolidating its facilities worldwide and decreasing annual operating expenses by more than Euro 880 million. The total restructuring charges for the transformation programme were Euro 381 million.

Units shipped during the fourth quarter were 11.2 million, a year-on-year decrease of 23%, consistent with the streamlining of the portfolio to focus on higher-end smartphones. The sequential increase of 8%, related to seasonal factors, was somewhat constrained by a lack of new product launches during the quarter. Average selling price (ASP) for the quarter was Euro 136, a 13% increase year-on-year. ASP decreased 12% sequentially, mainly due to price erosion, foreign exchange and product mix. Sales for the quarter were Euro 1,528 million, a decrease of 13% year-on-year and a decrease of 5% sequentially.  

The gross margin for the fourth quarter was 30%, an increase of 7 percentage points year-on-year and essentially flat sequentially, including the benefit of some one-time items, relating to certain royalty matters and warranty estimates.      

Income before taxes for the fourth quarter, excluding restructuring charges, was a profit of Euro 39 million, an increase of Euro 79 million year-on-year and a decrease of Euro 27 million sequentially, mainly due to lower sales.

Sony Ericsson's net cash position as of December 31, 2010 was Euro 375 million. The negative cash flow from operating activities for the quarter was Euro 128 million, mainly due to increases in inventory due to seasonal factors as well as payments related to the transformation programme.  

During the quarter term loan facilities of Euro 150 million matured and were repaid in full.

Sony Ericsson estimates that the global handset market for the full year 2010 increased slightly in volume to almost 1.2 billion units. The company estimates that the global handset market for the fourth quarter was essentially flat year-on-year and its market share for the fourth quarter was approximately 3% in units and approximately 5% in value. Sony Ericsson estimates that its market share for the full year 2010 was approximately 4% in units and approximately 6% in value.

Sony Ericsson forecasts modest growth in units in the global handset market for 2011.  


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:
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

Sony investor relations                                                       
Yoshinori Hashitani (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

  Oct-Dec   Jan-Dec
EUR million 2009 2010 Change   2009 2010 Change
               
Net sales 1,750 1,528 -13%   6,788 6,294 -7%
Cost of sales -1,341 -1,069 -20%   -5,782 -4,440 -23%
Gross profit 409 459 12%   1,006 1,853 84%
Gross margin % 23% 30% 7%   15% 29% 14%
               
Research and development expenses -299 -214 -28%   -1,108 -840 -24%
Selling and administrative expenses -299 -212 -29%   -964 -893 -7%
Operating expenses -599 -427 -29%   -2,072 -1,732 -16%
               
Other operating income, net 8 7 -13%   48 38 -21%
Operating income -181 39     -1,018 159  
Operating margin % -10% 3%     -15% 3%  
               
Financial income 4 2 -50%   21 18 -14%
Financial expenses -12 -6 -50%   -46 -30 -35%
Income before taxes -190 35     -1,043 147  
               
Taxes 36 -27     236 -48  
Minority interest -12 0     -29 -9 -69%
Net income -167 8     -836 90  
               
               
Number of units shipped (million) 14.6 11.2 -23%   57.1 43.1 -25%
ASP (EUR) 120 136 13%   119 146 23%
               
               
               
EUR million Oct-Dec     Jan-Dec  
Restructuring charges 2009 2010     2009 2010  
  Cost of sales -41 2     -39 -32  
  Research and development expenses -72 0     -84 7  
  Sales and administrative expenses -37 -5     -41 -17  
Total -150 -3     -164 -42  



Sony Ericsson
CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

  2009   2010
EUR million Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4
                   
Net sales 1,736 1,684 1,619 1,750   1,405 1,757 1,603 1,528
Cost of sales -1,591 -1,483 -1,367 -1,341   -975 -1,266 -1,130 -1,069
Gross profit 145 200 252 409   429 492 473 459
Gross margin % 8% 12% 16% 23%   31% 28% 30% 30%
                   
Research and development expenses -303 -245 -260 -299   -216 -218 -191 -214
Selling and administrative expenses -225 -235 -205 -299   -207 -245 -228 -212
Operating expenses -528 -480 -465 -599   -423 -463 -420 -427
                   
Other operating income, net 13 6 21 8   14 7 10 7
Operating income -369 -274 -193 -181   20 36 63 39
Operating margin % -21% -16% -12% -10%   1% 2% 4% 3%
                   
Financial income 9 6 3 4   7 2 7 2
Financial expenses -10 -15 -9 -12   -9 -7 -8 -6
Income before taxes -370 -283 -199 -190   18 31 62 35
                   
Taxes 84 74 42 36   6 -16 -12 -27
Minority interest -6 -4 -6 -12   -3 -4 -2 0
Net income -293 -213 -164 -167   21 12 49 8
                   
                   
Number of units shipped (million) 14.5 13.8 14.1 14.6   10.5 11.0 10.4 11.2
ASP (EUR) 120 122 114 120   134 160 154 136
                   
                   
                   
                   
EUR million 2009   2010
Restructuring charges Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4
  Cost of sales -7 9 0 -41   2 -33 -3 2
  Research and development expenses -2 -9 -1 -72   -2 -1 10 0
  Sales and administrative expenses -3 -1 -1 -37   -3 2 -11 -5
Total -12 -1 -2 -150   -3 -32 -4 -3



Sony Ericsson
CONSOLIDATED BALANCE SHEET

    Dec 31   Jun 30   Sep 30   Dec 31
EUR million   2009   2010   2010   2010
                 
ASSETS                
                 
Total fixed and financial assets   779   836   813   803
                 
Current assets                
Inventories   358   467   457   460
Accounts receivable   832   1,063   986   836
Other assets   415   412   328   295
Other short-term cash investments   489   477   440   276
Cash and bank   389   562   482   329
Total current assets   2,483   2,981   2,692   2,196
                 
                 
Total assets   3,262   3,817   3,505   2,999
                 
SHAREHOLDERS' EQUITY AND LIABILITIES                
                 
Shareholders' equity   381   510   480   532
Minority interest   47   66   62   42
Total equity   428   575   541   574
                 
Borrowing, Non Current   0   101   100   100
Other long-term liabilities   32   40   30   32
Total long-term liabilities   32   141   130   132
                 
Accounts payable   852   973   922   769
Borrowing, Current   258   329   284   130
Other current liabilities   1,692   1,798   1,628   1,394
Total current liabilities   2,802   3,101   2,834   2,293
                 
Total shareholders' equity and liabilities   3,262   3,817   3,505   2,999
                 
Net cash*   620   609   538   375



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


Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS

  Oct-Dec   Jan-Dec
EUR million 2009 2010   2009 2010
           
OPERATING          
Net income -167 8   -836 90
Adjustments to reconcile net income to cash 48 -50   135 -156
  -119 -42   -701 -65
           
Changes in operating net assets -97 -86   333 -183
Cash flow from operating activities -216 -128   -368 -248
           
INVESTING          
Investing activities -10 -18   -84 -4
Cash flow from investing activities -10 -18   -84 -4
           
FINANCING          
Financing activities  100 - 178    205 - 60
Cash flow from financing activities 100 -178   205 -60
           
Net change in cash -126 -324   -247 -312
Cash, beginning of period 996 921   1,125 878
Translation difference in Cash 8 7   -1 38
Cash, end of period 878 605   878 605



Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

  2009   2010
EUR million Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4
                   
OPERATING                  
Net income -293 -213 -164 -167   21 12 49 8
Adjustments to reconcile net income to cash 29 37 20 48   -44 4 -66 -50
  -263 -176 -143 -119   -23 16 -17 -42
                   
Changes in operating net assets 321 60 49 -97   -72 13 -38 -86
Cash flow from operating activities 58 -115 -94 -216   -94 29 -54 -128
                   
INVESTING                  
Investing activities -19 -13 -42 -10   27 -15 2 -18
Cash flow from investing activities -19 -13 -42 -10   27 -15 2 -18
                   
FINANCING                  
Financing activities - 53  0  159  100    150  0 - 32 - 178
Cash flow from financing activities -53 0 159 100   150 0 -32 -178
                   
Net change in cash -14 -128 22 -126   83 15 -85 -324
Cash, beginning of period 1,125 1,116 965 996   878 980 1,039 921
Translation difference in Cash 5 -23 9 8   19 45 -33 7
Cash, end of period 1,116 965 996 878   980 1,039 921 605



Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER

EUR million                    
    2009   2010
Isolated quarters   Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4
Europe, Middle East & Africa *   977 927 875 966   711 876 837 795
Americas   200 195 232 222   201 223 222 205
Asia     559 562 512 562   493 659 544 528
Total   1,736 1,684 1,619 1,750   1,405 1,757 1,603 1,528
* of which Western Europe   721 678 636 678   525 668 632 569
                     
    2009   2010
Sequential change (%)   Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4
Europe, Middle East & Africa *   -40% -5% -6% 10%   -26% 23% -4% -5%
Americas   -69% -3% 19% -4%   -9% 11% 0% -8%
Asia     -12% 1% -9% 10%   -12% 34% -17% -3%
Total   -40% -3% -4% 8%   -20% 25% -9% -5%
* of which Western Europe   -35% -6% -6% 7%   -23% 27% -5% -10%
                     
    2009   2010
Year over year change (%)   Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4
Europe, Middle East & Africa *   -35% -33% -39% -41%   -27% -6% -4% -18%
Americas   -59% -74% -67% -65%   1% 14% -4% -8%
Asia     -23% -19% -24% -12%   -12% 17% 6% -6%
Total   -36% -40% -42% -40%   -19% 4% -1% -13%
* of which Western Europe   -26% -25% -33% -39%   -27% -1% -1% -16%
                     
    2009   2010
Year to date   0903 0906 0909 0912   1003 1006 1009 1012
Europe, Middle East & Africa *   977 1,903 2,778 3,744   711 1,587 2,424 3,219
Americas   200 395 627 850   201 424 646 851
Asia     559 1,121 1,633 2,194   493 1,152 1,695 2,224
Total   1,736 3,419 5,038 6,788   1,405 3,162 4,765 6,294
* of which Western Europe   721 1,400 2,036 2,714   525 1,193 1,825 2,393
                     
    2009   2010
YTD year over year change (%)   0903 0906 0909 0912   1003 1006 1009 1012
Europe, Middle East & Africa *   -35% -34% -35% -37%   -27% -17% -13% -14%
Americas   -59% -68% -68% -67%   1% 7% 3% 0%
Asia     -23% -21% -22% -20%   -12% 3% 4% 1%
Total   -36% -38% -40% -40%   -19% -8% -5% -7%
* of which Western Europe   -26% -25% -28% -31%   -27% -15% -10% -12%

 

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