SOURCE: Ericsson

January 20, 2011 03:01 ET

Sony Ericsson reports fourth quarter and full year 2010 results

STOCKHOLM, SWEDEN--(Marketwire - January 20, 2011) -



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™ 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.          -32       67       43     -854      202
restructuring
charges (Euro m.)

   Operating margin excl.          -2%       4%       3%     -13%       3%
restructuring
charges (%)

Income before taxes (IBT)
(Euro m.)                         -190       62       35   -1,043      147

   IBT excl. restructuring
    charges                        -40       66       39     -878      189
  (Euro m.)

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™ 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™ 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 -




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:



Fourth quarter and full year report 2010: http://hugin.info/1061/R/1480893/416284.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#1480893]

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
    Aldo Liguori
    (London)
    +44 20 8762 5860

    Gustaf Brusewitz
    (London)
    +44 7960 58 19 68