Ericsson



April 19, 2011 02:51 ET

Sony Ericsson reports first quarter 2011 results

STOCKHOLM, SWEDEN--(Marketwire - Apr 19, 2011) -



Highlights:

  * Shift to Android-based smartphone portfolio drives profitability
  * Smartphone share of total sales more than doubled year-on-year
  * Xperia™ arc, Xperia™ PLAY and Xperia™ neo began shipping
    towards the end of the quarter
  * Some supply chain disruption due to the Japan earthquake

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the first quarter ended March 31, 2011 is as follows:


                                                 Q1 2010  Q4 2010  Q1 2011

Number of units shipped (million)                   10.5     11.2      8.1
Average selling price (Euro)                         134      136      141

Sales (Euro m.)                                    1,405    1,528    1,145

Gross margin (%)                                      31%      30%      33%

Operating income (Euro m.)                            20       39       19

Operating margin (%)                                   1%       3%       2%

  Restructuring charges (Euro m.)                     -3       -3        -

  Operating income excl. restructuring charges        23       43       19
   (Euro m.)

  Operating margin excl. restructuring charges (%)     2%       3%       2%

Income before taxes (IBT) (Euro m.)                   18       35       15

  IBT excl. restructuring charges (Euro m.)           21       39       15

Net income (Euro m.)                                  21        8       11


Bert Nordberg, President & CEO of Sony Ericsson commented, "Sony Ericsson's profitability continues as we accelerate our shift towards an Android- based smartphone portfolio, with smartphones comprising over 60% of our total sales during the quarter. Towards the end of the quarter we introduced the highly anticipated Xperia™ arc and Xperia™ PLAY, which have been well received by both operators and consumers around the world. However, the Japan earthquake made it a challenging quarter operationally and we are experiencing some disruptions to our supply chain. We will continue to evaluate the situation."

Units shipped during the quarter were 8.1 million, a 23% decrease year- on-year and a 28% decrease sequentially, due to a decline in the number of feature phones shipped, introduction of new products towards the end of the quarter and seasonality.

Average selling price (ASP) for the quarter was Euro 141, a 5% increase year-on- year and a 4% increase sequentially, as a result of product and geographical mix more than offsetting price erosion.

Sales for the quarter were Euro 1,145 million, a 19% decrease year-on- year and 25% decrease sequentially.

The gross margin for the quarter was 33%, an increase of 2 percentage points year-on-year and an increase of 3 percentage points sequentially, which includes the impact from higher ASP and benefit of some larger than normal items relating to royalty matters and warranty estimates.

Income before taxes for the quarter was a profit of Euro 15 million, a decrease of Euro 3 million year-on-year and a decrease of Euro 20 million sequentially, with the impact of lower sales offset by higher gross margin percentage and lower operating expenses.

Net income for the quarter was Euro 11 million, a decrease of Euro 10 million compared to the same period previous year which included a tax benefit. Net income increased Euro 3 million sequentially, despite a decline in income before taxes of Euro 20 million, reflective of a lower effective tax rate.

Cash flow from operating activities during the quarter was negative Euro 353 million, mainly due to inventory investments, non cash items in the income statement and seasonality. New external borrowings of Euro 375 million were made during the quarter to enhance liquidity and growth, resulting in total borrowings of Euro 604 million at the end of the quarter. Total cash balances at March 31, 2011 amounted to Euro 599 million.

Sony Ericsson estimates that its market share for smartphones during the quarter was approximately 5% in units and approximately 3% in value.

Sony Ericsson forecasts modest 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™ 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™ 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 in China, and product development sites in China, Japan, Sweden and Silicon Valley, California. For more information, please visit:www.sonyericsson.com/press.

- ENDS -

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    2011 Change
-------------------------------------------------------------


Net sales                               1,405   1,145   -19%

Cost of sales                            -975    -763   -22%
                                     -----------------
Gross profit                              429     382   -11%

Gross margin %                            31%     33%     2%



Research and development expenses        -185    -173    -6%

Selling and administrative expenses      -238    -199   -16%
                                     -----------------
Operating expenses*                      -423    -372   -12%



Other operating income, net                14      10   -29%
                                     -----------------
Operating income                           20      19    -5%

Operating margin %                         1%      2%     1%



Financial income                            7       3   -57%

Financial expenses                         -9      -8   -11%
                                     -----------------
Income before taxes                        18      15   -17%



Taxes                                       6      -5

Minority interest                          -3       1
                                     -----------------
Net income                                 21      11   -48%



( )                                       ( )     ( ) ( )
------------------------------------------------------
Number of units shipped (million)        10.5     8.1   -23%

ASP (EUR)                                 134     141     5%
------------------------------------------------------


EUR million                           Jan-Mar Jan-Mar
------------------------------------------------------
Restructuring charges                    2010    2011
------------------------------------------------------
  Cost of sales                             2       -

  Research and development expenses        -2       -

  Selling and administrative expenses      -3       -
------------------------------------------------------
Total                                      -3       -


* 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
-----------------------------------------------------------------  -------


Net sales                             1,405  1,757  1,603  1,528    1,145

Cost of sales                          -975 -1,266 -1,130 -1,069     -763
                                     ----------------------------  -------
Gross profit                            429    492    473    459      382

Gross margin %                          31%    28%    30%    30%      33%



Research and development expenses      -185   -191   -179   -191     -173

Selling and administrative expenses    -238   -272   -241   -236     -199
                                     ----------------------------  -------
Operating expenses*                    -423   -463   -420   -427     -372



Other operating income, net              14      7     10      7       10
                                     ----------------------------  -------
Operating income                         20     36     63     39       19

Operating margin %                       1%     2%     4%     3%       2%



Financial income                          7      2      7      2        3

Financial expenses                       -9     -7     -8     -6       -8
                                     ----------------------------  -------
Income before taxes                      18     31     62     35       15



Taxes                                     6    -16    -12    -27       -5

Minority interest                        -3     -4     -2      0        1
                                     ----------------------------  -------
Net income                               21     12     49      8       11




----------------------------------------------------------------- ---------
Number of units shipped (million)      10.5   11.0   10.4   11.2        8.1

ASP (EUR)                               134    160    154    136        141
----------------------------------------------------------------- ---------





EUR million                                      2010               2011
-----------------------------------------------------------------  -------
Restructuring charges                    Q1     Q2     Q3     Q4       Q1
-----------------------------------------------------------------  -------
  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
                                             Mar 31   Dec 31   Mar 31

EUR million                                    2010     2010     2011
---------------------------------------------------------------------


ASSETS



Total fixed and financial assets                791      803      791



Current assets

Inventories                                     384      460      510

Accounts receivable                             849      836      755

Other assets                                    369      295      304

Other short-term cash investments               537      276      417

Cash and bank                                   443      329      182
                                            -------- -------- -------
Total current assets                          2,582    2,196    2,168




---------------------------------------------------------------------
Total assets                                  3,373    2,999    2,959
---------------------------------------------------------------------


SHAREHOLDERS' EQUITY AND LIABILITIES



Shareholders' equity                            438      532      496

Minority interest                                54       42       38
                                            -------- -------- -------
Total equity                                    492      574      534



Borrowing, Non Current                          100      100        0

Other long-term liabilities                      37       32       30
                                            -------- -------- -------
Total long-term liabilities                     137      132       30



Accounts payable                                829      769      701

Borrowing, Current                              316      130      604

Other current liabilities                     1,599    1,394    1,090
                                            -------- -------- -------
Total current liabilities                     2,744    2,293    2,394


---------------------------------------------------------------------
Total shareholders' equity and liabilities    3,373    2,999    2,959
---------------------------------------------------------------------


Net cash*                                       563      375       -5


*  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 2011
-----------------------------------------------------


OPERATING

Net income                                    21   11

Adjustments to reconcile net income to cash  -44 -137
                                           ----------
                                             -23 -127



Changes in operating net assets              -72 -226
                                           ----------
Cash flow from operating activities          -94 -353



INVESTING

Investing activities                          27  -14
                                           ----------
Cash flow from investing activities           27  -14



FINANCING

Financing activities                         150  375
                                           ----------
Cash flow from financing activities          150  375



Net change in cash                            83    8

Cash, beginning of period                    878  605

Translation difference in Cash                19  -14
                                           ----------
Cash, end of period                          980  599




Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

                                                     2010            2011
                                           ------------------------ -----
EUR million                                   Q1    Q2    Q3    Q4     Q1
------------------------------------------------------------------- -----


OPERATING

Net income                                    21    12    49     8     11

Adjustments to reconcile net income to cash  -44     4   -66   -50   -137
                                           ------------------------ -----
                                             -23    16   -17   -42   -127



Changes in operating net assets              -72    13   -38   -86   -226
                                           ------------------------ -----
Cash flow from operating activities          -94    29   -54  -128   -353



INVESTING

Investing activities                          27   -15     2   -18    -14
                                           ------------------------ -----
Cash flow from investing activities           27   -15     2   -18    -14



FINANCING

Financing activities                         150     0  - 32 - 178    375
                                           ------------------------ -----
Cash flow from financing activities          150     0   -32  -178    375



Net change in cash                            83    15   -85  -324      8

Cash, beginning of period                    878   980 1,039   921    605

Translation difference in Cash                19    45   -33     7    -14
                                           ------------------------ -----
Cash, end of period                          980 1,039   921   605    599




Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER
EUR million                               2010             2011
                                ------------------------- ------
Isolated quarters                   Q1    Q2    Q3    Q4      Q1
----------------------------------------------------------------
Europe, Middle East & Africa *     711   876   837   795     485

Americas                           201   223   222   205     151

Asia                               493   659   544   528     509
----------------------------------------------------------------
Total                            1,405 1,757 1,603 1,528   1,145
----------------------------------------------------------------
* of which Western Europe          525   668   632   569     307





                                          2010             2011
                                ------------------------- ------
Sequential change (%)               Q1    Q2    Q3    Q4      Q1
----------------------------------------------------------------
Europe, Middle East & Africa *    -26%   23%   -4%   -5%    -39%

Americas                           -9%   11%    0%   -8%    -26%

Asia                              -12%   34%  -17%   -3%     -4%
----------------------------------------------------------------
Total                             -20%   25%   -9%   -5%    -25%
----------------------------------------------------------------
* of which Western Europe         -23%   27%   -5%  -10%    -46%





                                          2010             2011
                                ------------------------- ------
Year over year change (%)           Q1    Q2    Q3    Q4      Q1
----------------------------------------------------------------
Europe, Middle East & Africa *    -27%   -6%   -4%  -18%    -32%

Americas                            1%   14%   -4%   -8%    -25%

Asia                              -12%   17%    6%   -6%      3%
----------------------------------------------------------------
Total                             -19%    4%   -1%  -13%    -19%
----------------------------------------------------------------
* of which Western Europe         -27%   -1%   -1%  -16%    -42%





                                          2010             2011
                                ------------------------- ------
Year to date                      1003  1006  1009  1012    1103
----------------------------------------------------------------
Europe, Middle East & Africa *     711 1,587 2,424 3,219     485

Americas                           201   424   646   851     151

Asia                               493 1,152 1,695 2,224     509
----------------------------------------------------------------
Total                            1,405 3,162 4,765 6,294   1,145
----------------------------------------------------------------
* of which Western Europe          525 1,193 1,825 2,393     307





                                          2010             2011
                                ------------------------- ------
YTD year over year change (%)     1003  1006  1009  1012    1103
----------------------------------------------------------------
Europe, Middle East & Africa *    -27%  -17%  -13%  -14%    -32%

Americas                            1%    7%    3%    0%    -25%

Asia                              -12%    3%    4%    1%      3%
----------------------------------------------------------------
Total                             -19%   -8%   -5%   -7%    -19%
----------------------------------------------------------------
* of which Western Europe         -27%  -15%  -10%  -12%    -42%


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

First quarter report 2011: http://hugin.info/1061/R/1507532/442430.pdf


This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Ericsson via Thomson Reuters ONE

[HUG#1507532]

Contact Information

  • 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
    Cathy Davies
    (London)
    +44 208 762 5879

    Holly Rossetti
    (London)
    + 44 208 762 5851

    Gustaf Brusewitz
    (London)
    +44 208 762 5805