Ericsson

STKM : ERIC
NASDAQ : ERIC


July 15, 2011 02:48 ET

Sony Ericsson reports second quarter 2011 results

STOCKHOLM, SWEDEN--(Marketwire - Jul 15, 2011) -


Highlights:

* Supply chain constraints from the Japan earthquake significantly impact Q2 results

* Smartphones account for more than 70 percent of total sales

* Android-based Xperia™ volume up 150 percent year-on-year

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the second quarter ended June 30, 2011 is as follows:

                                                  Q2 2010 Q1 2011 Q2 2011

Number of units shipped (million)                    11.0     8.1     7.6
Average selling price (Euro)                          160     141     156

Sales (Euro m.)                                     1,757   1,145   1,193

Gross margin (%)                                      28%     33%     31%

Operating income (Euro m.)                             36      19     -37

Operating margin (%)                                   2%      2%     -3%

   Restructuring charges (Euro m.)                    -32       -       -

   Operating income excl.
    restructuring charges (Euro m.)                    68      19     -37

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

Income before taxes (IBT) (Euro m.)                    31      15     -42

   IBT excl. restructuring charges (Euro m.)           63      15     -42

Net income (Euro m.)                                   12      11     -50


Bert Nordberg, President and CEO of Sony Ericsson commented, "Sony Ericsson's second quarter profitability was affected by the March 11 earthquake in Japan. We estimate that the impact of earthquake-related supply chain constraints on our portfolio was close to 1.5 million units, with most of the effect in the early part of the quarter. Our shift to Android-based smartphones continues with smartphone sales accounting for more than 70 percent of our total sales during the quarter. We have shipped more than 16 million Xperia smartphones to date. We have introduced eight new Xperia smartphones this year and we continue to see strong consumer and operator demand across the Xperia smartphone portfolio."

Units shipped during the quarter were 7.6 million, a 31% decrease year- on-year and a 6% decrease sequentially, due to a decrease in volume caused by constrained supply of critical components and an anticipated decline in the number of feature phones shipped.

Average selling price (ASP) for the quarter was Euro 156, a 3% decrease year-on- year but an 11% increase sequentially. The year-on-year decrease is due to product and geographic mix and price erosion. The sequential increase in ASP is attributed to favorable product and geographic mix, more than offsetting price erosion and unfavorable foreign exchange rates.

Sales for the quarter were Euro 1,193 million, a 32% decrease year-on-year and a 4% increase sequentially.

The gross margin percentage for the quarter was 31% with an improvement of 3 percentage points year-on-year that included restructuring charges, and a decrease of 2 percentage points from the previous quarter, which included the benefit of some larger than normal items relating to royalty matters and warranty estimates.

Loss before taxes for the quarter was Euro 42 million, compared to an income before taxes of Euro 31 million for the same quarter in the previous year, due to lower volume. Income before taxes for the previous quarter was Euro 15 million. The sequential change was reflective of lower gross margin and higher operating expenses.

The quarter ended in a net loss of Euro 50 million, compared to a net income of Euro 12 million in the same quarter in the previous year, and Euro 11 million in the last quarter. Tax expenses in this quarter included the impact of tax adjustments and the distribution of profits and losses between various jurisdictions.

Cash flow from operating activities during the quarter was negative Euro 224 million, mainly due to increases in accounts receivables and inventories, negative net income and timing of certain payments. New external borrowings of Euro 165 million were made during the quarter to enhance liquidity and growth, resulting in total borrowings of Euro 769 million at the end of the quarter. Total cash balances at June 30, 2011 amounted to Euro 516 million.

Sony Ericsson estimates that its share in the global Android-based smartphone market during the quarter was approximately 11% in volume and 11% in value.

Sony Ericsson maintains its forecast for modest industry 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 operations 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

                                       Apr-Jun               Jan-Jun
                                --------------------- ---------------------
EUR million                        2010  2011 Change     2010   2011 Change
----------------------------------------------------- ---------------------




Net sales                         1,757 1,193   -32%    3,162  2,339   -26%

Cost of sales                    -1,266  -828   -35%   -2,241 -1,592   -29%
                                --------------        ---------------
Gross profit                        492   365   -26%      921    747   -19%

Gross margin %                      28%   31%    3pp      29%    32%   3 pp



Research and development
 expenses                          -191  -184    -4%     -376   -357    -5%

Selling and administrative
 expenses                          -272  -224   -18%     -510   -423   -17%
                               --------------        ---------------
Operating expenses                 -463  -408   -12%     -886   -780   -12%



Other operating income, net           7     6   -14%       21     16   -24%
                               --------------        ---------------
Operating income                     36   -37              57    -17

Operating margin %                   2%   -3%   -5pp       2%    -1%   -3pp



Financial income                      2     5   150%        9      8   -11%

Financial expenses                   -7   -10    43%      -16    -18    13%
                                --------------        ---------------
Income before taxes                  31   -42              50    -27



Taxes                               -16    -3   -81%      -10     -9   -10%

Minority interest                    -4    -5    25%       -7     -4   -43%
                               --------------        ---------------
Net income                           12   -50              33    -40


----------------------------------------------        ---------------
Number of units shipped (million)  11.0   7.6   -31%     21.5   15.8   -27%

ASP (EUR)                           160   156    -3%      147    148     1%
----------------------------------------------        ---------------




EUR million                             Apr-Jun                Jan-Jun
---------------------------------------------------        ---------------
Restructuring charges                   2010  2011            2010   2011
---------------------------------------------------        ---------------
  Cost of sales                          -33  -                -31   -

  Research and development expenses       -1  -                 -3   -

  Selling and administrative expenses      2  -                 -1   -
---------------------------------------------------        ---------------
Total                                    -32  -                -35   -





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




Net sales                          1,405  1,757  1,603  1,528   1,145 1,193

Cost of sales                       -975 -1,266 -1,130 -1,069    -763  -828
                                  ---------------------------- ------------
Gross profit                         429    492    473    459     382   365

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



Research and development
 expenses                           -185   -191   -179   -191    -173  -184

Selling and administrative
 expenses                           -238   -272   -241   -236    -199  -224
                                  ---------------------------- ------------
Operating expenses                  -423   -463   -420   -427    -372  -408



Other operating income, net           14      7     10      7      10     6
                                  ---------------------------- ------------
Operating income                      20     36     63     39      19   -37

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



Financial income                       7      2      7      2       3     5

Financial expenses                    -9     -7     -8     -6      -8   -10
                                  ---------------------------- ------------
Income before taxes                   18     31     62     35      15   -42



Taxes                                  6    -16    -12    -27      -5    -3

Minority interest                     -3     -4     -2      0       1    -5
                                  ---------------------------- ------------
Net income                            21     12     49      8      11   -50


-------------------------------------------------------------- ------------
Number of units shipped (million)   10.5   11.0   10.4   11.2     8.1   7.6

ASP (EUR)                            134    160    154    136     141   156
-------------------------------------------------------------- ------------




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



                                Jun 30   Dec 31   Mar 31             Jun 30

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


ASSETS



Total fixed and financial
assets                             836      803      791                819



Current assets

Inventories                        467      460      510                570

Accounts receivable              1,063      836      755                872

Other assets                       412      295      304                330

Other short-term cash
investments                        477      276      417                329

Cash and bank                      562      329      182                188
                               -------- -------- -------- -----------------
Total current assets             2,981    2,196    2,168              2,289




---------------------------------------------------------------------------
Total assets                    3, 817    2,999    2,959              3,108
---------------------------------------------------------------------------


SHAREHOLDERS' EQUITY AND
LIABILITIES



Shareholders' equity               510      532      496                451

Minority interest                   66       42       38                 43
                               -------- -------- -------- -----------------
Total equity                       575      574      534                494



Borrowing, Non Current             101      100        0                  0

Other long-term liabilities         40       32       30                 31
                               -------- -------- -------- -----------------
Total long-term liabilities        141      132       30                 31



Accounts payable                   973      769      701                716

Borrowing, Current                 329      130      604                769

Other current liabilities        1,798    1,394    1,090              1,098
                               -------- -------- -------- -----------------
Total current liabilities        3,101    2,293    2,394              2,583


---------------------------------------------------------------------------
Total shareholders' equity
and liabilities                  3,817    2,999    2,959              3,108
---------------------------------------------------------------------------


Net cash*                          609      375       -5               -252



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




Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS

                                             Apr-Jun      Jan-Jun
                                           ------------ -----------
EUR million                                  2010 2011    2010 2011
------------------------------------------------------- -----------


OPERATING

Net income                                     12  -50      33  -40

Adjustments to reconcile net income to cash     4  -29     -40 -166
                                           ------------ -----------
                                               16  -79      -6 -206



Changes in operating net assets                13 -145     -58 -371
                                           ------------ -----------
Cash flow from operating activities            29 -224     -65 -577



INVESTING

Investing activities                          -15  -21      12  -36
                                           ------------ -----------
Cash flow from investing activities           -15  -21      12  -36



FINANCING

Financing activities                            0  165     150  541
                                           ------------ -----------
Cash flow from financing activities             0  165     150  541



Net change in cash                             15  -80      97  -72

Cash, beginning of period                     980  599     878  605

Translation difference in Cash                 45   -3      64  -17
                                           ------------ -----------
Cash, end of period                         1,039  516   1,039  516





Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

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


OPERATING

Net income                                  21    12    49    8     11  -50

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



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



INVESTING

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



FINANCING

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



Net change in cash                          83    15   -85 -324      8  -80

Cash, beginning of period                  878   980 1,039  921    605  599

Translation difference in Cash              19    45   -33    7    -14   -3
                                         ----------------------- ----------
Cash, end of period                        980 1,039   921  605    599  516





Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER

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

Americas                           201   223   222   205      151   193

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





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

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

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





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

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

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





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

Americas                           201   424   646   851      151   345

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





                                          2010                  2011
                                -------------------------   -----------
YTD year over year change (%)     1003  1006  1009  1012     1103  1106
-----------------------------------------------------------------------
Europe, Middle East & Africa *    -27%  -17%  -13%  -14%     -32%  -42%

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

Asia                              -12%    3%    4%    1%       3%   -7%
-----------------------------------------------------------------------
Total                             -19%   -8%   -5%   -7%     -19%  -26%
-----------------------------------------------------------------------
* of which Western Europe         -27%  -15%  -10%  -12%     -42%  -47%


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

Second quarter report 2011: http://hugin.info/1061/R/1531189/465969.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#1531189]

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