SOURCE: Ericsson

April 16, 2010 03:11 ET

Sony Ericsson reports first quarter 2010 results

STOCKHOLM, SWEDEN--(Marketwire - April 16, 2010) -


Q1 Highlights:

* Company returns to profitability in Q1 2010

* ASP rises to Euro 134 as Xperia™ X10 and Vivaz™ start shipping

* Improved cost structure generates better margins


The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the first quarter ended March 31, 2010 is as follows:

                                                Q1 2009   Q4 2009   Q1 2010

Number of units shipped (million)                  14.5      14.6      10.5

Sales (Euro m.)                                   1,736     1,750     1,405

Gross margin (%)                                     8%       23%       31%

Operating income (Euro m.)                         -369      -181        20

Operating margin (%)                               -21%      -10%        1%

   Restructuring charges (Euro m.)                   12       150         3

   Operating income excl. restructuring charges    -357       -32        23
(Euro m.)

   Operating margin excl. restructuring charges    -21%       -2%        2%
(%)

Income before taxes (IBT) (Euro m.)                -370      -190        18

   IBT excl. restructuring charges (Euro m.)       -358       -40        21

Net income (Euro m.)                               -293      -167        21


Average selling price (Euro)                        120       120       134

Bert Nordberg, President, Sony Ericsson commented, "We are pleased to see the positive impact of both the launch of new products and the business transformation programme improving the company's results. The Xperia™ X10, our first android-based Communication Entertainment device featuring signature Sony Ericsson applications Timescape and Mediascape™, and Vivaz™, a beautifully designed, touch-screen Symbian phone started shipping towards the end of the quarter. Both models have been well received by global customers." He added, "Increases in both gross and operating margins show that we are on the right track to build the correct cost structure for our business organization and strategy. We will continue to work through the transformation programme to ensure that we are competitive."

Units shipped in the quarter were 10.5 million, a decrease of 28% compared to the same period last year, reflecting the streamlining of the portfolio over the past 12 months to focus on higher-end phones. Sales for the quarter were Euro 1,405 million, a decrease of 19% year on year. Average selling price (ASP) increased 12% both sequentially and year-on-year to Euro 134 during the quarter due to good sell through of existing models, new flagship phones starting to ship at the end of the quarter and a positive currency effect.

Gross margin rose both sequentially and year-on-year, reflecting a more favourable product mix and the benefit of cost of sales improvements in the past year, including the resolution of certain royalty matters during the quarter.

Income before taxes for the quarter excluding restructuring was a profit of Euro 21 million, illustrating the positive impact of the cost reduction programme.

The transformation programme, which started in mid-2008, with the aim of reducing annual operating expenses by Euro 880 million is continuing with the full benefit expected during the second half of 2010. Since the start of the programme, Sony Ericsson has reduced its global workforce by approximately 3,150 people to reach a total of 8,450 by March 31, 2010. The total restructuring charges taken to date are Euro 342 million.

As of March 31, 2010, Sony Ericsson retained a net cash position of Euro 563 million.

During the first quarter of 2010, Sony Ericsson obtained additional external funding of Euro 150 million. The funding was guaranteed by the parent companies on a 50/50 basis.

Market share in unit base for the quarter decreased by one percentage point sequentially and is now estimated to be around 4%.

Sony Ericsson maintains a forecast of slight growth in units in the global handset market in 2010.

END

The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB.

Vivaz™, Mediascape™ and XPERIA™ are trademarks or registered 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

- ENDS -

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.

CONTACTS:

Investors / Analysts
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 2180
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


                                           Jan-Mar
                                   -----------------------
EUR million                            2010    2009 Change
----------------------------------------------------------


Net sales                             1,405   1,736   -19%

Cost of sales                          -975  -1,591   -39%
                                   -----------------
Gross profit                            429     145   196%

Gross margin %                        30.6%    8.4%    22%



Research and development expenses      -216    -303   -29%

Selling and administrative expenses    -207    -225    -8%
                                   -----------------
Operating expenses                     -423    -528   -20%



Other operating income, net              14      13     9%
                                   -----------------
Operating income                         20    -369      -

Operating margin %                     1.4%  -21.3%      -



Financial income                          7       9   -26%

Financial expenses                       -9     -10    -9%
                                   -----------------
Income after financial items             18    -370      -



Taxes                                     6      84   -93%

Minority interest                        -3      -6   -51%
                                   -----------------
Net income                               21    -293      -





Number of units shipped (million)      10.5    14.5   -28%

ASP (EUR)                               134     120    12%









EUR Million                         Jan-Mar Jan-Mar
----------------------------------------------------
Restructuring charges                  2010    2009
----------------------------------------------------
  Cost of sales                          -2       7

  Research and development expenses       2       2

  Sales and administrative expenses       3       3

  Other operating income, net             0       0
----------------------------------------------------
Total                                     3      12


Sony Ericsson
CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

                                    2010               2009
                                   ------- ----------------------------
EUR million                            Q1       Q4     Q3     Q2     Q1
------------------------------------------ ----------------------------


Net sales                           1,405    1,750  1,619  1,684  1,736

Cost of sales                        -975   -1,341 -1,367 -1,483 -1,591
                                   ------- ----------------------------
Gross profit                          429      409    252    200    145

Gross margin %                      30.6%    23.4%  15.5%  11.9%   8.4%



Research and development expenses    -216     -299   -260   -245   -303

Selling and administrative expenses  -207     -299   -205   -235   -225
                                   ------- ----------------------------
Operating expenses                   -423     -599   -465   -480   -528



Other operating income, net            14        8     21      6     13
                                   ------- ----------------------------
Operating income                       20     -181   -193   -274   -369

Operating margin %                   1.4%   -10.4% -11.9% -16.3% -21.3%



Financial income                        7        4      3      6      9

Financial expenses                     -9      -12     -9    -15    -10
                                   ------- ----------------------------
Income after financial items           18     -190   -199   -283   -370



Taxes                                   6       36     42     74     84

Minority interest                      -3      -12     -6     -4     -6
                                   ------- ----------------------------
Net income                             21     -167   -164   -213   -293





Number of units shipped (million)    10.5     14.6   14.1   13.8   14.5

ASP (EUR)                             134      120    114    122    120









EUR Million                         2009               2009
------------------------------------------ ----------------------------
Restructuring charges                  Q1       Q4     Q3     Q2     Q1
------------------------------------------ ----------------------------
  Cost of sales                        -2       41      0     -9      7

  Research and development expenses     2       72      1      9      2

  Sales and administrative expenses     3       37      1      1      3

  Other operating income, net           0        0      0      0      0
------------------------------------------ ----------------------------
Total                                   3      150      2      1     12


Sony Ericsson
CONSOLIDATED BALANCE SHEET

                                             Mar 31   Dec 31   Mar 31

EUR million                                    2010     2009     2009
---------------------------------------------------------------------


ASSETS



Total fixed and financial assets                791      779      658



Current assets

Inventories                                     384      358      477

Accounts receivable                             849      832    1,193

Other assets                                    369      415      463

Other short-term cash investments               537      489      574

Cash and bank                                   443      389      542
                                            -------- -------- -------
Total current assets                          2,582    2,483    3,249




---------------------------------------------------------------------
Total assets                                  3,373    3,262    3,908
---------------------------------------------------------------------


SHAREHOLDERS' EQUITY AND LIABILITIES



Shareholders' equity                            438      381      930

Minority interest                                54       47       65
                                            -------- -------- -------
Total equity                                    492      428      995



Borrowing, Non Current                          100        0        0

Other long-term liabilities                      37       32       30
                                            -------- -------- -------
Total long-term liabilities                     137       32       30



Accounts payable                                829      852      965

Borrowing, Current                              316      258        0

Other current liabilities                     1,599    1,692    1,918
                                            -------- -------- -------
Total current liabilities                     2,744    2,802    2,882


---------------------------------------------------------------------
Total shareholders' equity and liabilities    3,373    3,262    3,908
---------------------------------------------------------------------


Net cash*                                       563      620    1,116



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


Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS

                                             Jan-Mar
                                           -----------
EUR million                                 2010  2009
------------------------------------------------------


OPERATIONS

Net income                                    21  -293

Adjustments to reconcile net income to cash  -44    29
                                           -----------
                                             -23  -263



Changes in operating net assets              -72   321
                                           -----------
Cash flow from operating activities          -94    58



INVESTMENTS

Investing activities                          27   -19
                                           -----------
Cash flow from investing activities           27   -19



FINANCING

Financing activities                         150   -53
                                           -----------
Cash flow from financing activities          150   -53



Net change in cash                            83   -14

Cash, beginning of period                    878 1,125

Translation difference in Cash                19     5
                                           -----------
Cash, end of period                          980 1,116



Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

                                            2010           2009
                                           ------ ----------------------
EUR million                                   Q1     Q4   Q3    Q2    Q1
------------------------------------------------- ----------------------


OPERATIONS

Net income                                    21   -167 -164  -213  -293

Adjustments to reconcile net income to cash  -44     48   20    37    29
                                           ------ ----------------------
                                             -23   -119 -143  -176  -263



Changes in operating net assets              -72    -97   49    60   321
                                           ------ ----------------------
Cash flow from operating activities          -94   -216  -94  -115    58



INVESTMENTS

Investing activities                          27    -10  -42   -13   -19
                                           ------ ----------------------
Cash flow from investing activities           27    -10  -42   -13   -19



FINANCING

Financing activities                         150    100  159     0   -53
                                           ------ ----------------------
Cash flow from financing activities          150    100  159     0   -53



Net change in cash                            83   -126   22  -128   -14

Cash, beginning of period                    878    996  965 1,116 1,125

Translation difference in Cash                19      8    9   -23     5
                                           ------ ----------------------
Cash, end of period                          980    878  996   965 1,116



Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER
EUR million

                                 2010             2009
                                ------- ------------------------
Isolated quarters                   Q1      Q4    Q3    Q2    Q1
----------------------------------------------------------------
Europe, Middle East & Africa *     711     966   875   927   977

Americas                           201     222   232   195   200

Asia                               493     562   512   562   559
----------------------------------------------------------------
Total                            1,405   1,750 1,619 1,684 1,736
----------------------------------------------------------------
* of which Western Europe          525     678   636   678   721





                                 2010             2009
                                ------- ------------------------
Sequential change (%)               Q1      Q4    Q3    Q2    Q1
----------------------------------------------------------------
Europe, Middle East & Africa *    -26%     10%   -6%   -5%  -40%

Americas                          -10%     -4%   19%   -3%  -69%

Asia                              -12%     10%   -9%    1%  -12%
----------------------------------------------------------------
Total                             -20%      8%   -4%   -3%  -40%
----------------------------------------------------------------
* of which Western Europe         -23%      7%   -6%   -6%  -35%





                                 2010             2009
                                ------- ------------------------
Year over year change (%)           Q1      Q4    Q3    Q2    Q1
----------------------------------------------------------------
Europe, Middle East & Africa *    -27%    -41%  -39%  -33%  -35%

Americas                            1%    -65%  -67%  -74%  -59%

Asia                              -12%    -12%  -25%  -19%  -23%
----------------------------------------------------------------
Total                             -19%    -40%  -42%  -40%  -36%
----------------------------------------------------------------
* of which Western Europe         -27%    -39%  -33%  -25%  -26%





                                 2010             2009
                                ------- ------------------------
Year to date                      1003    0912  0909  0906  0903
----------------------------------------------------------------
Europe, Middle East & Africa *     711   3,744 2,778 1,903   977

Americas                           201     850   627   395   200

Asia                               493   2,194 1,633 1,121   559
----------------------------------------------------------------
Total                            1,405   6,788 5,038 3,419 1,736
----------------------------------------------------------------
* of which Western Europe          525   2,714 2,036 1,400   721





                                 2010             2009
                                ------- ------------------------
YTD year over year change (%)     1003    0912  0909  0906  0903
----------------------------------------------------------------
Europe, Middle East & Africa *    -27%    -37%  -35%  -34%  -35%

Americas                            1%    -67%  -67%  -68%  -59%

Asia                              -12%    -20%  -22%  -21%  -23%
----------------------------------------------------------------
Total                             -19%    -40%  -40%  -38%  -36%
----------------------------------------------------------------
* of which Western Europe         -27%    -31%  -28%  -26%  -26%

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


[HUG#1404377]

First quarter report 2010: http://hugin.info/1061/R/1404377/358499.pdf

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