Highlights:

  • Income before taxes was Euro 31 million
  • 33 percent increase in sales quarter-on-quarter
  • Smartphones account for more than 80 percent of total sales 
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2011 is as follows:

  Q3 2010 Q2 2011 Q3 2011
Number of units shipped (million) 10.4 7.6 9.5
Average selling price (Euro) 154 156 166
Sales (Euro m.) 1,603 1,193 1,586
Gross margin (%) 30% 31% 27%
Operating income (Euro m.) 63 -37 38
Operating margin (%) 4% -3% 2%
   Restructuring charges (Euro m.) 4 - -
   Operating income excl. restructuring charges (Euro m.) 67 -37 38
   Operating margin excl. restructuring charges (%) 4% -3% 2%
Income before taxes (IBT)  (Euro m.) 62 -42 31
   IBT excl. restructuring charges (Euro m.) 66 -42 31
Net income (Euro m.) 49 -50 0
 

Bert Nordberg, President and CEO of Sony Ericsson commented, "We delivered a solid 73 million Euro improvement in income before taxes as we rebounded from the previous quarter with a 33 percent increase in sales. Android-based Xperia(TM) smartphone sales now account for more than 80 percent of sales and we have shipped 22 million Xperia smartphones to date.  We will continue to invest in the smartphone market, shifting the entire portfolio to smartphones during 2012." 

Units shipped during the quarter were 9.5 million, a 9% decrease year-on-year due to a decline in feature phone shipments, partially offset by an increase in smartphone shipments. The 25% quarter-on-quarter increase was due to the higher volume of smartphones shipped.

Average selling price (ASP) for the quarter was Euro 166, up 8% year-on-year and 6% sequentially. The year-on-year increase was due to the shift to smartphones and geographic mix despite a negative effect from foreign exchange rates. The sequential increase was due to product and geographic mix.

Sales for the quarter were approximately Euro 1.6 billion and essentially flat year-on-year.

The gross margin percentage for the quarter was 27%, a decrease of 3 percentage points year-on-year and 4 percentage points from the previous quarter.  The year-on-year decrease in margin is attributed to product and geographic mix.  The sequential decrease in margin was due to inventory-related adjustments and product and geographic mix. 

Income before taxes for the quarter was Euro 31 million, compared to income before taxes of Euro 62 million for the same quarter in the previous year.  Loss before taxes for the previous quarter was Euro 42 million. The sequential improvement was reflective of higher sales and lower operating expenses, while the year-on-year decline was due to lower gross margin percentage offset by lower operating expenses.

Net income during the quarter improved by Euro 50 million sequentially, while net income decreased by Euro 49 million year-on-year. Income taxes recorded during the quarter reflect the distribution of profits and losses between various jurisdictions and tax adjustments. Minority interest reflects higher net income at a majority-owned joint venture company.

Cash flow from operating activities during the quarter was Euro 53 million. External borrowings of Euro 51 million were repaid during the quarter, resulting in total borrowings of Euro 718 million at the end of the quarter. Total cash balances at September 30, 2011 amounted to Euro 466 million.      

Sony Ericsson estimates that its share of the global Android-based smartphone market during the quarter was approximately 12% in volume and 11% in value.

Sony Ericsson maintains its forecast for modest industry growth in total 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

About Sony Ericsson
Sony Ericsson celebrates its 10th year as a joint venture between Sony Corporation and Ericsson in October 2011. Over the years Sony Ericsson has brought together the best communication technologies with superior entertainment user experiences to create its Xperia(TM) line of the 'most entertaining smartphones' in the mobile handset industry. With its global corporate functions in London, Sony Ericsson has sales and marketing operations in all major regions of the world, as well as manufacturing operations in China, and product development sites in China, Japan, Sweden and Silicon Valley, California. For more information, please visit: www.sonyericsson.com/press.

- ENDS -

CONTACTS:

Ericsson investor relations
Stefan Jelvin (Stockholm) +46 10 714 2039

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
Cathy Davies (London) +44 208 762 5879
Holly Rossetti (London) + 44 208 762 5851
Gustaf Brusewitz (London) +44 208 762 5805

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 2010 2011 Change   2010 2011 Change
               
               
Net sales 1,603 1,586 -1%   4,765 3,924 -18%
Cost of sales -1,130 -1,159 3%   -3,371 -2,750 -18%
Gross profit 473 427 -10%   1,394 1,174 -16%
Gross margin % 30% 27%  -3 pp   29% 30% 1pp
               
Research and development expenses -179 -190 6%   -555 -547 -1%
Selling and administrative expenses -241 -207 -14%   -750 -630 -16%
Operating expenses -420 -397 -5%   -1,305 -1,177 -10%
               
Other operating income, net 10 8 -20%   31 24 -23%
Operating income 63 38 -40%   120 21 -83%
Operating margin % 4% 2% -2pp   3% 1% -2pp
               
Financial income 7 7 0%   16 15 -6%
Financial expenses -8 -14 75%   -24 -32 33%
Income before taxes 62 31 -50%   112 4 -96%
               
Taxes -12 -17 42%   -21 -26 24%
Minority interest -2 -14 600%   -8 -18 125%
Net income 49 0 -100%   82 -40
               
Number of units shipped (million) 10.4 9.5 -9%   31.9 25.3 -21%
ASP (EUR) 154 166 8%   150 155 3%
               
               
EUR million Jul-Sep     Jan-Sep  
Restructuring charges 2010 2011     2010 2011  
  Cost of sales -3                -        -34               -     
  Research and development expenses 5                -        2               -     
  Selling and administrative expenses -6                -        -7               -     
Total -4                -        -39               -     

* Operating expenses in 2010 have been restated to reflect certain organizational changes.

Sony Ericsson
CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

  2010   2011
EUR million Q1 Q2 Q3 Q4   Q1 Q2 Q3
 
       
   
     
       
Net sales 1,405 1,757 1,603 1,528   1,145 1,193 1,586
Cost of sales -975 -1,266 -1,130 -1,069   -763 -828 -1,159
Gross profit 429 492 473 459   382 365 427
Gross margin % 31% 28% 30% 30%   33% 31% 27%
                 
Research and development expenses -185 -191 -179 -191   -173 -184 -190
Selling and administrative expenses -238 -272 -241 -236   -199 -224 -207
Operating expenses -423 -463 -420 -427   -372 -408 -397
                 
Other operating income, net 14 7 10 7   10 6 8
Operating income 20 36 63 39   19 -37 38
Operating margin % 1% 2% 4% 3%   2% -3% 2%
                 
Financial income 7 2 7 2   3 5 7
Financial expenses -9 -7 -8 -6   -8 -10 -14
Income before taxes 18 31 62 35   15 -42 31
                 
Taxes 6 -16 -12 -27   -5 -3 -17
Minority interest -3 -4 -2 0   1 -5 -14
Net income 21 12 49 8   11 -50 0
                 
Number of units shipped (million) 10.5 11.0 10.4 11.2   8.1 7.6 9.5
ASP (EUR) 134 160 154 136   141 156 166
       
       
     

     
EUR million 2010   2011
Restructuring charges Q1 Q2 Q3 Q4   Q1 Q2 Q3

  Cost of sales
2 -33 -3 2    -     -     -   

  Research and development expenses
-2 -1 5 0    -     -     -   

  Selling and administrative expenses
-3 2 -6 -5    -     -     -   

Total
-3 -32 -4 -3    -     -     -   

* Operating expenses in 2010 have been restated to reflect certain organizational changes.

Sony Ericsson
CONSOLIDATED BALANCE SHEET



Sep 30
Dec 31   Jun 30
Sep 30
EUR million   2010   2010   2011   2011









ASSETS
 
     
 


 
     
 
Total fixed and financial assets
813
803   819
890


 
     
 
Current assets
 
     
 
Inventories
457
460   570
656
Accounts receivable
986
836   872
1,090
Other assets
328
295   330
408
Other short-term cash investments
440
276   329
301
Cash and bank
482
329   188
165
Total current assets
2,692
2,196   2,289
2,620


 
     
 
                 
Total assets   3,505   2,999   3,108   3,510






 

SHAREHOLDERS' EQUITY AND LIABILITIES




 







 

Shareholders' equity
480
532
451
507
Minority interest
62
42
43
60
Total equity
541
574
494
567






 

Borrowing, Non Current
100
100
0
0
Other long-term liabilities
30
32
31
40
Total long-term liabilities
130
132
31
40






 

Accounts payable
922
769
716
1,050
Borrowing, Current
284
130
769
718
Other current liabilities
1,628
1,394
1,098
1,135
Total current liabilities
2,834
2,293
2,583
2,903
   
 

   
Total shareholders' equity and liabilities   3,505   2,999   3,108   3,510


 
     
 
Net cash*
538
375
-252
-252

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

Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS


Jul-Sep   Jan-Sep
EUR million 2010 2011   2010 2011






OPERATING
 


Net income 49 0
82 -40
Adjustments to reconcile net income to cash -66 27
-105 -139

-17 27
-23 -179

   
   
Changes in operating net assets -38 26
-96 -345
Cash flow from operating activities -54 53
-119 -524

   
   
INVESTING    
   
Investing activities 2 -58   14 -94
Cash flow from investing activities 2 -58
14 -94






FINANCING




Financing activities -32 -56
 118  485
Cash flow from financing activities -32 -56
118 485

   
   
Net change in cash -85 -61
12 -133
Cash, beginning of period 1,039 516
878 605
Translation difference in Cash -33 11
31 -6
Cash, end of period 921 466
921 466

Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

  2010   2011
EUR million Q1 Q2 Q3 Q4   Q1 Q2 Q3
                 
OPERATING                
Net income 21 12 49 8   11 -50 0
Adjustments to reconcile net income to cash -44 4 -66 -50   -137 -29 27
  -23 16 -17 -42   -127 -79 27
                 
Changes in operating net assets -72 13 -38 -86   -226 -145 26
Cash flow from operating activities -94 29 -54 -128   -353 -224 53
                 
INVESTING                
Investing activities 27 -15 2 -18   -14 -21 -58
Cash flow from investing activities 27 -15 2 -18   -14 -21 -58
                 
FINANCING                
Financing activities  150  0 -32 -178    375  165 -56
Cash flow from financing activities 150 0 -32 -178   375 165 -56
                 
Net change in cash 83 15 -85 -324   8 -80 -61
Cash, beginning of period 878 980 1,039 921   605 599 516
Translation difference in Cash 19 45 -33 7   -14 -3 11
Cash, end of period 980 1,039 921 605   599 516 466

Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER

EUR million
2010
2011
Isolated quarters   Q1 Q2 Q3 Q4   Q1 Q2 Q3
Europe, Middle East & Africa *
711 876 837 795
485 435 480
Americas
201 223 222 205
151 193 121
Asia 
493 659 544 528
509 565 985
Total   1,405 1,757 1,603 1,528   1,145 1,193 1,586
* of which Western Europe
525 668 632 569
307 323 313



 



 


2010
2011
Sequential change (%)   Q1 Q2 Q3 Q4   Q1 Q2 Q3
Europe, Middle East & Africa *
-26% 23% -4% -5%
-39% -10% 10%
Americas
-9% 11% 0% -8%
-26% 28% -37%
Asia 
-12% 34% -17% -3%
-4% 11% 74%
Total   -20% 25% -9% -5%   -25% 4% 33%
* of which Western Europe
-23% 27% -5% -10%
-46% 5% -3%



 



 


2010
2011
Year over year change (%)   Q1 Q2 Q3 Q4   Q1 Q2 Q3
Europe, Middle East & Africa *
-27% -6% -4% -18%
-32% -50% -43%
Americas
1% 14% -4% -8%
-25% -13% -45%
Asia 
-12% 17% 6% -6%
3% -14% 81%
Total   -19% 4% -1% -13%   -19% -32% -1%
* of which Western Europe
-27% -1% -1% -16%
-42% -52% -50%



 



 


2010
2011
Year to date   1003 1006 1009 1012   1103 1106 1109
Europe, Middle East & Africa *
711 1,587 2,424 3,219
485 919 1,399
Americas
201 424 646 851
151 345 466
Asia 
493 1,152 1,695 2,224
509 1,075 2,060
Total   1,405 3,162 4,765 6,294   1,145 2,339 3,925
* of which Western Europe
525 1,193 1,825 2,393
307 630 943



 



 


2010
2011
YTD year over year change (%)   1003 1006 1009 1012   1103 1106 1109
Europe, Middle East & Africa *
-27% -17% -13% -14%
-32% -42% -42%
Americas
1% 7% 3% 0%
-25% -19% -28%
Asia 
-12% 3% 4% 1%
3% -7% 22%
Total   -19% -8% -5% -7%   -19% -26% -18%
* of which Western Europe
-27% -15% -10% -12%
-42% -47% -48%


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