Ericsson
NASDAQ : ERIC
OMX : ERIC

January 19, 2012 04:52 ET

Sony Ericsson reports fourth quarter and full year 2011 results

STOCKHOLM, SWEDEN--(Marketwire - Jan 19, 2012) -


* Q4 loss reflects intense competition, price erosion and restructuring Charges

* 65% year-on-year increase in Android-based Xperia™ smartphone quarterly sales

* 28 million Xperia smartphones shipped to date

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2011 is as follows*:

                                Q4 2010  Q3 2011  Q4 2011  FY 2010  FY 2011
                                -------  -------  -------  -------  -------
Number of units shipped
 (million)                         11.2      9.5      9.0     43.1     34.4
Average selling price (Euro)        136      166      143      146      152
Sales (Euro m.)                   1,528    1,586    1,288    6,294    5,212
Gross margin (%)                    30%      27%      24%      29%      28%
Operating income (Euro m.)           39       38     -227      159     -206
Operating margin (%)                 3%       2%     -18%       3%      -4%
   Restructuring charges
    (Euro m.)                        -3        -      -93      -42      -93
Operating income excl.
 restructuring charges
 (Euro m.)                           43       38     -134      202     -113
   Operating margin excl.
    restructuring charges (%)        3%       2%     -10%       3%      -2%
Income before taxes (IBT)
 (Euro m.)                           35       31     -247      147     -243
   IBT excl. restructuring
    charges (Euro m.)                39       31     -154      189     -150
Net income (Euro m.)                  8        0     -207       90     -247


* All amounts are according to Swedish GAAP.

Bert Nordberg, President and CEO of Sony Ericsson commented: "Our fourth quarter results reflected intense competition, unfavorable macroeconomic conditions and the effects of a natural disaster in Thailand this quarter. We are aligning our business to drive profitability and to meet customer needs. In spite of these challenges, throughout 2011 we've shifted our business from feature phones to smartphones, and our Android-based smartphone sales in the quarter increased by 65% year-on-year. The Xperia portfolio, including the recently announced Xperia NXT series, will serve as a cornerstone of our smartphone lineup in 2012."

Units shipped during the quarter were 9 million, a 20% decrease year-on-year and a 5% decrease compared to last quarter. The year-on-year and sequential declines reflect a significantly lower number of feature phones shipped, partially offset by an increase in smartphone shipments. Sony Ericsson has shipped 28 million Xperia smartphones to date.

Average selling price (ASP) for the quarter was Euro 143, up 5% year-on-year but down 14% sequentially. The year-on-year increase is due to the shift to smartphones and geographic mix. The sequential decrease in ASP is attributed to geographic and product mix, including declining prices of products launched earlier in the year, and the absence of new products introduced in the fourth quarter.

Sales for the quarter were approximately Euro 1.3 billion, down 16% year-on-year and 19% quarter over quarter. The year-on-year decline reflects the decrease of feature phone sales which was only partially offset by an increase in smartphone sales. The sequential decline is due to geographic and product mix, resulting in lower sales of both smartphones and feature phones. Fourth quarter sales were negatively impacted by macroeconomic challenges in advanced economies contributing to weaker holiday sales, and certain component shortages from the flooding in Thailand in late October and early November 2011. Xperia smartphones accounted for approximately 80% of total sales in the fourth quarter.

The gross margin for the quarter was 24%, a decrease of 6 percentage points year-on-year and 3 percentage points from the previous quarter. The year-on-year and sequential decreases are attributed to product and geographic mix. Fourth quarter gross margin was also adversely affected by intense smartphone price competition which more than offset the benefit of royalty and other items.

Loss before taxes, excluding restructuring charges, was Euro 154 million for the quarter, compared to income of Euro 39 million for the same quarter last year and of Euro 31 million in the previous quarter. The year-on-year and sequential declines are due to lower gross margin and increased operational expenses, including higher development and selling expenses.

In December 2011, Sony Ericsson launched a restructuring program including global workforce reductions to reduce costs and drive competitiveness. Restructuring charges for the quarter are Euro 93 million and the program is estimated to be completed by the end of 2012.

The quarter ended in a net loss of Euro 207 million, compared to a net income of Euro 8 million in the same quarter of the previous year, and essentially a break even result in the previous quarter.

Cash flow from operating activities during the quarter was negative Euro 26 million. External borrowings were Euro 19 million during the quarter. Total borrowings were Euro 742 million at the end of the quarter. Total cash balances at December 31, 2011 were Euro 442 million.

Sony Ericsson estimates that its share of the global Android-based smartphone market was 10% in volume and 7% in value during the quarter and 10% in volume and 10% in value for the full year.

Sony Ericsson estimates that the global smartphone market for the full year 2011 increased by 60% in volume to 463 million units. Sony Ericsson estimates strong growth in the smartphone market in 2012.

In October 2011 Sony Corporation ("Sony") and Telefonaktiebolaget LM Ericsson ("Ericsson") announced that Sony will acquire Ericsson's stake in Sony Ericsson and that Sony Ericsson will become a wholly-owned subsidiary of Sony. The transaction is expected to close in late January to February, subject to customary closing conditions, including regulatory approvals.

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 is a 50:50 joint venture between Sony Corporation ("Sony") and Telefonaktiebolaget LM Ericsson ("Ericsson"). In October 2011 it was announced by Sony and Ericsson that Sony will acquire Ericsson's stake in the company and that Sony Ericsson will become a wholly-owned subsidiary of Sony. The transaction is expected to close in late January to February, subject to customary closing conditions, including regulatory approvals. 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.

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                    2010   2011  Change     2010    2011  Change
--------------------------------------------------- -----------------------

Net sales                     1 528  1 288    -16%    6 294   5 212    -17%
Cost of sales                -1 069   -985     -8%   -4 440  -3 735    -16%
                            ---------------         ----------------
Gross profit                    459    303    -34%    1 853   1 477    -20%
Gross margin %                  30%    24%    -6pp      29%     28%    -1pp


Research and development
 expenses                      -191   -268     40%     -746    -815      9%
Selling and administrative
 expenses                      -236   -270     14%     -986    -900     -9%
                            ---------------         ----------------
Operating expenses**           -427   -538     26%   -1 732  -1 715     -1%


Other operating income, net       7      8     14%       38      32    -16%
                            ---------------         ----------------
Operating income                 39   -227   -682%      159    -206   -230%
Operating margin %               3%   -18%   -21pp       3%     -4%    -7pp


Financial income                  2      4    100%       18      19      6%
Financial expenses               -6    -24    300%      -30     -56     87%
                            ---------------         ----------------
Income before taxes              35   -247   -806%      147    -243   -265%


Taxes                           -27     46   -267%      -48      19   -140%
Minority interest                 0     -6       -       -9     -23    156%
                            ---------------         ----------------
Net income                        8   -207  -2688%       90    -247   -374%

-------------------------------------------         ----------------
Number of units shipped
 (million)                     11,2    9,0    -20%     43,1    34,4    -20%

ASP (EUR)                       136    143      5%      146     152      4%
-------------------------------------------         ----------------

                                 Oct-Dec                 Jan-Dec
                             --------------         ----------------
Restructuring charges          2010   2011             2010    2011
-------------------------------------------         ----------------
  Cost of sales                   2      0              -32       0
  Research and development
   expenses                       0    -55                7     -55
  Selling and administrative
   expenses                      -5    -38              -17     -38
-------------------------------------------         ----------------
Total                            -3    -93              -42     -93


*  All amounts are according to Swedish GAAP
** 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     Q4
--------------------------------------------  -----------------------------

Net sales    1 ,405  1 ,757  1 ,603  1 ,528   1, 145  1, 193  1, 586  1,288
Cost of
 sales         -975  -1,266  -1,130  -1,069     -763    -828  -1,159   -985
--------------------------------------------  -----------------------------
Gross
 profit         429     492     473     459      382     365     427    303
Gross
 margin %       31%     28%     30%     30%      33%     31%     27%    24%

Research
 and
 development
 expenses      -185    -191    -179    -191     -173    -184    -190   -268
Selling and
 admini-
 strative
 expenses      -238    -272    -241    -236     -199    -224    -207   -270
--------------------------------------------  -----------------------------
Operating
 expenses**    -423    -463    -420    -427     -372    -408    -397   -538

Other
 operating
 income, net     14       7      10       7       10       6       8      8
--------------------------------------------  -----------------------------
Operating
 income          20      36      63      39       19     -37      38   -227
Operating
 margin %        1%      2%      4%      3%       2%     -3%      2%   -18%

Financial
 income           7       2       7       2        3       5       7      4
Financial
 expenses        -9      -7      -8      -6       -8     -10     -14    -24
--------------------------------------------  -----------------------------
Income before
 taxes           18      31      62      35       15     -42      31   -247

Taxes             6     -16     -12     -27       -5      -3     -17     46
Minority
 interest        -3      -4      -2       0        1      -5     -14     -6
--------------------------------------------  -----------------------------
Net income       21      12      49       8       11     -50       0   -207

--------------------------------------------  -----------------------------
Number of
 units
 shipped
 (million)     10.5    11.0    10.4    11.2      8.1     7.6     9.5    9.0
ASP (EUR)       134     160     154     136      141     156     166    143
--------------------------------------------  -----------------------------

EUR million                 2010                           2011
--------------------------------------------  -----------------------------
Restructuring
charges          Q1      Q2      Q3      Q4       Q1      Q2      Q3     Q4
--------------------------------------------  -----------------------------
Cost of
 sales            2     -33      -3       2        -       -       -      0
Research and
 development
 expenses        -2      -1       5       0        -       -       -    -55

Selling and
 administra-
 tive expenses   -3       2      -6      -5        -       -       -    -38
--------------------------------------------  -----------------------------
Total            -3     -32      -4      -3        -       -       -    -93


*  All amounts are according to Swedish GAAP.
** Operating expenses in 2010 have been restated to reflect certain
   organizational changes.




Sony Ericsson
CONSOLIDATED BALANCE SHEET*

                                          Dec 31   Jun 30   Sep 30   Dec 31

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

ASSETS

Total fixed and financial assets             803      819      890    1,122

Current assets
Inventories                                  460      570      656      447
Accounts receivable                          836      872    1,090      692
Other assets                                 295      330      408      380
Other short-term cash investments            276      329      301      270
Cash and bank                                329      188      165      172
                                         -------- -------- -------- -------
Total current assets                       2,196   2, 289    2,620    1,961

---------------------------------------------------------------------------
Total assets                               2,999   3 ,108    3,510    3,083
---------------------------------------------------------------------------

SHAREHOLDERS' EQUITY AND LIABILITIES

Shareholders' equity                         532      451      507      309
Minority interest                             42       43       60       58
                                         -------- -------- -------- -------
Total equity                                 574      494      567      367

Borrowing, Non Current                       100        0        0        0
Other long-term liabilities                   32       31       40       44
                                         -------- -------- -------- -------
Total long-term liabilities                  132       31       40       44


Accounts payable                             769      716    1 050      676
Borrowing, Current                           130      769      718      742
Other current liabilities                 1, 394    1,098    1,135    1,254
                                         -------- -------- -------- -------
Total current liabilities                 2 ,293    2,583    2,903    2,672

                                         -------- -------- -------- -------
Total shareholders' equity and
 liabilities                              2, 999    3,108   3, 510    3,083
                                         -------- -------- -------- -------
Net cash**                                   375     -252     -252     -300


*  All amounts are according to Swedish GAAP.
** 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*

                                              Oct-Dec       Jan-Dec
                                           ------------  -------------
EUR million                                 2010  2011    2010   2011
-------------------------------------------------------  -------------

OPERATING

Net income                                     8  -207      90   -247
Adjustments to reconcile net income to
cash                                         -50   112    -156    -27
                                           ------------  -------------
                                             -42   -95     -65   -274


Changes in operating net assets              -86    69    -183   -276
                                           ------------  -------------
Cash flow from operating activities         -128   -26    -248   -550


INVESTING

Investing activities                         -18   -19      -4   -113
                                           ------------  -------------
Cash flow from investing activities          -18   -19      -4   -113


FINANCING

Financing activities                       - 178    11    - 60    496
                                           ------------  -------------
Cash flow from financing activities         -178    11     -60    496


Net change in cash                          -324   -34    -312   -167
Cash, beginning of period                    921   466     878    605
Translation difference in Cash                 7    10      38      4
                                           ------------  -------------
Cash, end of period                          605   442     605    442
-------------------------------------------------------  -------------


* All amounts are according to Swedish GAAP.




Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS*

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

OPERATING

Net income               21     12      49       8      11   -50    0  -207

Adjustments to
 reconcile net income
 to cash                -44      4     -66     -50    -137   -29   27   112
                        --------------------------   ----------------------
                        -23     16     -17     -42    -127   -79   27   -95


Changes in operating
 net assets             -72     13     -38     -86    -226  -145   26    69
                        --------------------------   ----------------------
Cash flow from
 operating activities   -94     29     -54    -128    -353  -224   53   -26


INVESTING

Investing activities     27    -15       2     -18     -14   -21  -58   -19
                        --------------------------   ----------------------
Cash flow from
 investing activities    27    -15       2     -18     -14   -21  -58   -19


FINANCING

Financing activities    150      0     -32    -178     375   165  -56    11
                        --------------------------   ----------------------
Cash flow from
 financing activities   150      0     -32    -178     375   165  -56    11


Net change in cash       83     15     -85    -324       8   -80  -61   -34
Cash, beginning of
 period                 878    980   1 039     921     605   599  516   466
Translation difference
 in Cash                 19     45     -33       7     -14    -3   11    10
                        --------------------------   ----------------------
Cash, end of period     980  1,039     921     605     599   516  466   442
---------------------------------------------------------------------------


* All amounts are according to Swedish GAAP.




Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER*

EUR million                      2010                        2011
                     --------------------------  --------------------------
Isolated quarters
                       Q1     Q2     Q3     Q4      Q1     Q2     Q3     Q4
---------------------------------------------------------------------------
Europe, Middle East
 & Africa **          711    876    837    795     485    435    480    571

Americas              201    223    222    205     151    193    121    199

Asia                  493    659    544    528     509    565    985    518
---------------------------------------------------------------------------
Total               1,405  1,757  1,603  1,528   1,145  1,193  1,586  1,288
---------------------------------------------------------------------------
** of which
 Western Europe       525    668    632    569     307    323    313    355


                                 2010                        2011
                     --------------------------  --------------------------
Sequential
 change (%)            Q1     Q2     Q3     Q4      Q1     Q2     Q3     Q4
---------------------------------------------------------------------------
Europe, Middle East
 & Africa **         -26%    23%    -4%    -5%    -39%   -10%    10%    19%

Americas              -9%    11%     0%    -8%    -26%    28%   -37%    64%

Asia                 -12%    34%   -17%    -3%     -4%    11%    74%   -47%
---------------------------------------------------------------------------
Total                -20%    25%    -9%    -5%    -25%     4%    33%   -19%
---------------------------------------------------------------------------
** of which
 Western Europe      -23%    27%    -5%   -10%    -46%     5%    -3%    13%


                                 2010                        2011
                     --------------------------  --------------------------
Year over year
 change (%)            Q1     Q2     Q3     Q4      Q1     Q2     Q3     Q4
---------------------------------------------------------------------------
Europe, Middle East
 & Africa **         -27%    -6%    -4%   -18%    -32%   -50%   -43%   -28%

Americas               1%    14%    -4%    -8%    -25%   -13%   -45%    -3%

Asia                 -12%    17%     6%    -6%      3%   -14%    81%    -2%
---------------------------------------------------------------------------
Total                -19%     4%    -1%   -13%    -19%   -32%    -1%   -16%
---------------------------------------------------------------------------
** of which
 Western Europe      -27%    -1%    -1%   -16%    -42%   -52%   -50%   -38%


                                 2010                        2011
                     --------------------------  --------------------------
Year to date         1003   1006   1009   1012    1103   1106   1109   1112
---------------------------------------------------------------------------
Europe, Middle East
 & Africa **          711  1,587  2,424  3,219     485    919  1,399  1,970

Americas              201    424    646    851     151    345    466    664

Asia                  493  1,152  1,695  2,224     509  1,075  2,060  2,577
---------------------------------------------------------------------------
Total               1,405  3,162  4,765  6,294   1,145  2,339  3 925  5,211
---------------------------------------------------------------------------
** of which Western
 Europe               525  1,193  1,825  2,393     307    630    944  1,298


                                 2010                        2011
                     --------------------------  --------------------------
Year over year
 change              1003   1006   1009   1012    1103   1106   1109   1112
---------------------------------------------------------------------------
Europe, Middle East
 & Africa **         -27%   -17%   -13%   -14%    -32%   -42%   -42%   -39%

Americas               1%     7%     3%     0%    -25%   -19%   -28%   -22%

Asia                 -12%     3%     4%     1%      3%    -7%    22%    16%
---------------------------------------------------------------------------
Total                -19%    -8%    -5%    -7%    -19%   -26%   -18%   -17%
---------------------------------------------------------------------------
** of which
 Western Europe      -27%   -15%   -10%   -12%    -42%   -47%   -48%   -46%


*All amounts are according to Swedish GAAP.



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

Fourth quarter and full year report 2011: http://hugin.info/1061/R/1578626/492442.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#1578626]

Contact Information

  • 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