TIDMSON
October 15, 2010
Sony Ericsson reports third quarter 2010 results
Q3 Highlights:
-- Turnaround continues with third consecutive quarter of profits
-- Continued success of smartphone portfolio keeps ASP at high level
-- Launch of Xperiatm models in new markets, including China and the
U.S.
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2010 is as follows:
Q3 2009 Q2 2010 Q3 2010
Number of units shipped (million) 14.1 11.0 10.4
Sales (Euro m.) 1,619 1,757 1,603
Gross margin (%) 16 % 28 % 30 %
Operating income (Euro m.) -193 36 63
Operating margin (%) -12 % 2 % 4 %
Restructuring charges (Euro m.) 2 32 4
Operating income excl. restructuring -191 68 67
charges (Euro m.)
Operating margin excl. restructuring -12 % 4 % 4 %
charges (%)
Income before taxes (IBT) (Euro m.) -199 31 62
IBT excl. restructuring charges (Euro m.) -198 63 66
Net income (Euro m.) -164 12 49
Average selling price (Euro) 114 160 154
Bert Nordberg, President & CEO of Sony Ericsson commented, "Our third consecutive quarter of profitable results illustrates that Sony Ericsson's overall performance is stabilising. Our strategy to focus on the smartphone segment is succeeding and smartphones now comprise more than 50% of our total sales. During the quarter, we launched our Android-based Xperiatm models in new markets, such as China and the U.S., and it is our ambition to become the global number one handset provider on the Android platform."
Income before taxes for the quarter excluding restructuring charges was a profit of Euro 66 million following the positive effects of the transformation programme. Net income for the quarter was Euro 49 million, an increase of Euro 213 million year-on-year and of Euro 37 million sequentially.
The gross margin percentage was 30% and almost doubled year-on-year, reflective of the company turnaround.
Units shipped in the quarter were 10.4 million, a decrease of 26% year-on-year and down 5% sequentially. Average selling price (ASP) in the quarter remained at a high level of Euro 154, a 34% increase year-on-year and a decrease of 4% sequentially, due to product and geographical mix. As a result, sales for the quarter were Euro 1,603 million, essentially flat year-on-year and a 9% decrease sequentially.
Sony Ericsson's net cash position as of September 30, 2010 was Euro 538 million. The negative cash flow from operating activities was Euro 54 million, mainly due to payments during the quarter related to the transformation programme.
Market share in unit base for the quarter remained flat sequentially and is estimated to be approximately 4%. The value market share is estimated to be approximately 6%.
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. Xperiatm 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 and additional information:
Financial statements:Consolidated income statementConsolidated income statement - isolated quartersConsolidated balance sheetConsolidated statement of cash flowsConsolidated statement of cash flows - isolated quartersNet 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 relationsSusanne Andersson (Stockholm) +46 10 719 4631Andreas Hedemyr (Stockholm) +46 10 714 3748
Sony investor relationsGen Tsuchikawa (Tokyo) +81 3 6748 2111Yas Hasegawa (London) +44 20 7426 8696
Press / MediaSony Ericsson global communications and PRAldo Liguori (London) +44 20 8762 5860Gustaf 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 EricssonCONSOLIDATED INCOME STATEMENT
Jul-Sep Jan-Sep
EUR 2009 2010 Change 2009 2010 Change
million
Net sales 1,619 1,603 -1 % 5,038 4,765 -5 %
Cost of -1,367 -1,130 -17 % -4,441 -3,371 -24 %
sales
Gross 252 473 88 % 597 1,394 134 %
profit
Gross 15.5 % 29.5 % 14 % 11.9 % 29.3 % 17 %
margin
%
Research -260 -191 -27 % -808 -625 -23 %
and
development
expenses
Selling -205 -228 12 % -665 -680 2 %
and
administrative
expenses
Operating -465 -420 -10 % -1,473 -1,305 -11 %
expenses
Other 21 10 -51 % 39 31 -20 %
operating
income,
net
Operating -193 63 -837 120
income
Operating -11.9 % 4.0 % -16.6 % 2.5 %
margin %
Financial 3 7 124 % 18 16 -12 %
income
Financial -9 -8 -15 % -34 -24 -29 %
expenses
Income -199 62 -853 112
after
financial
items
Taxes 42 -12 200 -21
Minority -6 -2 -75 % -16 -8 -48 %
interest
Net -164 49 -669 82
income
Number of 14.1 10.4 -26 % 42.5 31.9 -25 %
units
shipped
(million)
ASP (EUR) 114 154 34 % 119 150 26 %
EUR Jul-Sep Jan-Sep
million
Restructuring 2009 2010 2009 2010
charges
Cost of 0 3 -2 34
sales
Research 1 -10 12 -6
and
development
expenses
Sales 1 11 4 12
and
administrative
expenses
Total 2 4 15 39
Sony EricssonCONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS
2009 2010
EUR Q1 Q2 Q3 Q4 Q1 Q2 Q3
million
Net sales 1,736 1,684 1,619 1,750 1,405 1,757 1,603
Cost of -1,591 -1,483 -1,367 -1,341 -975 -1,266 -1,130
sales
Gross 145 200 252 409 429 492 473
profit
Gross 8.4 % 11.9 % 15.5 % 23.4 % 30.6 % 28.0 % 29.5 %
margin
%
Research -303 -245 -260 -299 -216 -218 -191
and
development
expenses
Selling -225 -235 -205 -299 -207 -245 -228
and
administrative
expenses
Operating -528 -480 -465 -599 -423 -463 -420
expenses
Other 13 6 21 8 14 7 10
operating
income,
net
Operating -369 -274 -193 -181 20 36 63
income
Operating -21.3 % -16.3 % -11.9 % -10.4 % 1.4 % 2.1 % 4.0 %
margin %
Financial 9 6 3 4 7 2 7
income
Financial -10 -15 -9 -12 -9 -7 -8
expenses
Income -370 -283 -199 -190 18 31 62
after
financial
items
Taxes 84 74 42 36 6 -16 -12
Minority -6 -4 -6 -12 -3 -4 -2
interest
Net -293 -213 -164 -167 21 12 49
income
Number of 14.5 13.8 14.1 14.6 10.5 11.0 10.4
units
shipped
(million)
ASP (EUR) 120 122 114 120 134 160 154
EUR 2009 2010
million
Restructuring Q1 Q2 Q3 Q4 Q1 Q2 Q3
charges
Cost of 7 -9 0 41 -2 33 3
sales
Research 2 9 1 72 2 1 -10
and
development
expenses
Sales 3 1 1 37 3 -2 11
and
administrative
expenses
Total 12 1 2 150 3 32 4
Sony EricssonCONSOLIDATED BALANCE SHEET
Sep 30 Dec 31 Jun 30 Sep 30
EUR million 2009 2009 2010 2010
ASSETS
Total fixed and financial assets 757 779 836 813
Current assets
Inventories 397 358 467 457
Accounts receivable 917 832 1,063 986
Other assets 416 415 412 328
Other short-term cash investments 464 489 477 440
Cash and bank 532 389 562 482
Total current assets 2,726 2,483 2,981 2,692
Total assets 3,482 3,262 3,817 3,505
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity 532 381 510 480
Minority interest 43 47 66 62
Total equity 575 428 575 541
Borrowing, Non Current 50 0 101 100
Other long-term liabilities 31 32 40 30
Total long-term liabilities 81 32 141 130
Accounts payable 1,019 852 973 922
Borrowing, Current 105 258 329 284
Other current liabilities 1,702 1,692 1,798 1,628
Total current liabilities 2,826 2,802 3,101 2,834
Total shareholders' equity and liabilities 3,482 3,262 3,817 3,505
Net cash* 841 620 609 538
* Net cash is defined as cash and bank plus short-term cash investments less interest-bearing liabilities.
Sony EricssonCONSOLIDATED STATEMENT OF CASH FLOWS
Jul-Sep Jan-Sep
EUR million 2009 2010 2009 2010
OPERATING
Net income -164 49 -669 82
Adjustments to reconcile net income to cash 20 -66 87 -105
-143 -17 -583 -23
Changes in operating net assets 49 -38 431 -96
Cash flow from operating activities -94 -54 -152 -119
INVESTING
Investing activities -42 2 -74 14
Cash flow from investing activities -42 2 -74 14
FINANCING
Financing activities 159 - 32 106 118
Cash flow from financing activities 159 -32 106 118
Net change in cash 22 -85 -120 12
Cash, beginning of period 965 1,039 1,125 878
Translation difference in Cash 9 -33 -9 31
Cash, end of period 996 921 996 921
Sony EricssonCONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS
2009 2010
EUR million Q1 Q2 Q3 Q4 Q1 Q2 Q3
OPERATING
Net income -293 -213 -164 -167 21 12 49
Adjustments to reconcile 29 37 20 48 -44 4 -66
net income to cash
-263 -176 -143 -119 -23 16 -17
Changes in operating 321 60 49 -97 -72 13 -38
net assets
Cash flow from operating 58 -115 -94 -216 -94 29 -54
activities
INVESTING
Investing activities -19 -13 -42 -10 27 -15 2
Cash flow from investing -19 -13 -42 -10 27 -15 2
activities
FINANCING
Financing activities - 53 0 159 100 150 0 - 32
Cash flow from financing -53 0 159 100 150 0 -32
activities
Net change in cash -14 -128 22 -126 83 15 -85
Cash, beginning of period 1,125 1,116 965 996 878 980 1,039
Translation difference 5 -23 9 8 19 45 -33
in Cash
Cash, end of period 1,116 965 996 878 980 1,039 921
Sony EricssonNET SALES BY MARKET AREA BY QUARTER
EUR million
2009 2010
Isolated quarters Q1 Q2 Q3 Q4 Q1 Q2 Q3
Europe, Middle East 977 927 875 966 711 876 837
& Africa *
Americas 200 195 232 222 201 223 222
Asia 559 562 512 562 493 659 544
Total 1,736 1,684 1,619 1,750 1,405 1,757 1,603
* of which Western 721 678 636 678 525 668 632
Europe
2009 2010
Sequential Q1 Q2 Q3 Q4 Q1 Q2 Q3
change (%)
Europe, Middle East -40% -5% -6% 10% -26% 23% -4%
& Africa *
Americas -69% -3% 19% -4% -10% 11% 0%
Asia -12% 1% -9% 10% -12% 34% -18%
Total -40% -3% -4% 8% -20% 25% -9%
* of which Western -35% -6% -6% 7% -23% 27% -5%
Europe
2009 2010
Year over year Q1 Q2 Q3 Q4 Q1 Q2 Q3
change (%)
Europe, Middle East -35% -33% -39% -41% -27% -5% -4%
& Africa *
Americas -59% -74% -67% -65% 1% 14% -4%
Asia -23% -19% -25% -12% -12% 17% 6%
Total -36% -40% -42% -40% -19% 4% -1%
* of which Western -26% -25% -33% -39% -27% -2% -1%
Europe
2009 2010
Year to date 0903 0906 0909 0912 1003 1006 1009
Europe, Middle East 977 1,903 2,778 3,744 711 1,587 2,424
& Africa *
Americas 200 395 627 850 201 424 646
Asia 559 1,121 1,633 2,194 493 1,152 1,695
Total 1,736 3,419 5,038 6,788 1,405 3,162 4,765
* of which Western 721 1,400 2,036 2,714 525 1,193 1,825
Europe
2009 2010
YTD year over year 0903 0906 0909 0912 1003 1006 1009
change (%)
Europe, Middle East -35% -34% -35% -37% -27% -17% -13%
& Africa *
Americas -59% -68% -67% -67% 1% 7% 3%
Asia -23% -21% -22% -20% -12% 3% 4%
Total -36% -38% -40% -40% -19% -8% -5%
* of which Western -26% -26% -28% -31% -27% -15% -10%
Europe
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