Ericsson

NASDAQ : ERIC
STKM : ERIC


October 14, 2011 02:50 ET

Sony Ericsson reports third quarter 2011 results

STOCKHOLM, SWEDEN--(Marketwire - Oct 14, 2011) -


Highlights:

* Income before taxes was Euro 31 million

* 33 percent increase in sales quarter-on-quarter

* Smartphones account for more than 80 percent of total sales

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

                                                    Q3 2010 Q2 2011 Q3 2011

Number of units shipped (million)                      10.4     7.6     9.5

Average selling price (Euro)                            154     156     166

Sales (Euro m.)                                       1,603   1,193   1,586

Gross margin (%)                                        30%     31%     27%

Operating income (Euro m.)                               63     -37      38

Operating margin (%)                                     4%     -3%      2%

   Restructuring charges (Euro m.)                        4       -       -

   Operating income excl. restructuring
    charges (Euro m.)                                    67     -37      38


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

Income before taxes (IBT)  (Euro m.)                     62     -42      31

   IBT excl. restructuring charges (Euro m.)             66     -42      31

Net income (Euro m.)                                     49     -50       0

Bert Nordberg, President and CEO of Sony Ericsson commented, "We delivered a solid 73 million Euro improvement in income before taxes as we rebounded from the previous quarter with a 33 percent increase in sales. Android-based Xperia™ smartphone sales now account for more than 80 percent of sales and we have shipped 22 million Xperia smartphones to date. We will continue to invest in the smartphone market, shifting the entire portfolio to smartphones during 2012."

Units shipped during the quarter were 9.5 million, a 9% decrease year-on-year due to a decline in feature phone shipments, partially offset by an increase in smartphone shipments. The 25% quarter-on-quarter increase was due to the higher volume of smartphones shipped.

Average selling price (ASP) for the quarter was Euro 166, up 8% year-on-year and 6% sequentially. The year-on-year increase was due to the shift to smartphones and geographic mix despite a negative effect from foreign exchange rates. The sequential increase was due to product and geographic mix.

Sales for the quarter were approximately Euro 1.6 billion and essentially flat year-on-year.

The gross margin percentage for the quarter was 27%, a decrease of 3 percentage points year-on-year and 4 percentage points from the previous quarter. The year-on-year decrease in margin is attributed to product and geographic mix. The sequential decrease in margin was due to inventory-related adjustments and product and geographic mix.

Income before taxes for the quarter was Euro 31 million, compared to income before taxes of Euro 62 million for the same quarter in the previous year. Loss before taxes for the previous quarter was Euro 42 million. The sequential improvement was reflective of higher sales and lower operating expenses, while the year-on-year decline was due to lower gross margin percentage offset by lower operating expenses.

Net income during the quarter improved by Euro 50 million sequentially, while net income decreased by Euro 49 million year-on-year. Income taxes recorded during the quarter reflect the distribution of profits and losses between various jurisdictions and tax adjustments. Minority interest reflects higher net income at a majority-owned joint venture company.

Cash flow from operating activities during the quarter was Euro 53 million. External borrowings of Euro 51 million were repaid during the quarter, resulting in total borrowings of Euro 718 million at the end of the quarter. Total cash balances at September 30, 2011 amounted to Euro 466 million.

Sony Ericsson estimates that its share of the global Android-based smartphone market during the quarter was approximately 12% 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

                             Jul-Sep                          Jan-Sep
                 -------------------------------- -------------------------
EUR million         2010             2011 Change     2010       2011 Change
------------------------------------------------- -------------------------




Net sales          1,603            1,586    -1%    4,765      3,924   -18%

Cost of sales     -1,130           -1,159     3%   -3,371     -2,750   -18%
                 -------------------------        ------------------------
Gross profit         473              427   -10%    1,394      1,174   -16%

Gross margin %       30%              27%  -3 pp      29%        30%    1pp



Research and
development
expenses            -179             -190     6%     -555       -547    -1%

Selling and
administrative
expenses            -241             -207   -14%     -750       -630   -16%
                 -------------------------        ------------------------
Operating
expenses            -420             -397    -5%   -1,305     -1,177   -10%



Other operating
income, net           10                8   -20%       31         24   -23%
                 -------------------------        ------------------------
Operating income      63               38   -40%      120         21   -83%

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



Financial income       7                7     0%       16         15    -6%

Financial
expenses              -8              -14    75%      -24        -32    33%
                 -------------------------        ------------------------
Income before
taxes                 62               31   -50%      112          4   -96%



Taxes                -12              -17    42%      -21        -26    24%

Minority interest     -2              -14   600%       -8        -18   125%
                 -------------------------        ------------------------
Net income            49                0  -100%       82             -40


------------------------------------------        ------------------------
Number of units
shipped (million)   10.4              9.5    -9%     31.9       25.3   -21%

ASP (EUR)            154              166     8%      150        155     3%
------------------------------------------        ------------------------




EUR million               Jul-Sep                         Jan-Sep
------------------------------------------        ------------------------
Restructuring
charges             2010             2011            2010            2011
------------------------------------------        ------------------------

  Cost of sales       -3             -                -34            -

  Research and
development
expenses               5             -                  2            -

  Selling and
administrative
expenses              -6             -                 -7            -
------------------------------------------        ------------------------

Total                 -4             -                -39            -


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




Net sales                   1,405  1,757  1,603  1,528   1,145 1,193  1,586

Cost of sales                -975 -1,266 -1,130 -1,069    -763  -828 -1,159
                           ---------------------------- -------------------
Gross profit                  429    492    473    459     382   365    427

Gross margin %                31%    28%    30%    30%     33%   31%    27%



Research and development
expenses                     -185   -191   -179   -191    -173  -184   -190

Selling and administrative
expenses                     -238   -272   -241   -236    -199  -224   -207
                           ---------------------------- -------------------
Operating expenses           -423   -463   -420   -427    -372  -408   -397



Other operating income, net    14      7     10      7      10     6      8
                           ---------------------------- -------------------
Operating income               20     36     63     39      19   -37     38

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



Financial income                7      2      7      2       3     5      7

Financial expenses             -9     -7     -8     -6      -8   -10    -14
                           ---------------------------- -------------------
Income before taxes            18     31     62     35      15   -42     31



Taxes                           6    -16    -12    -27      -5    -3    -17

Minority interest              -3     -4     -2      0       1    -5    -14
                           ---------------------------- -------------------
Net income                     21     12     49      8      11   -50      0


------------------------------------------------------- -------------------
Number of units shipped
(million)                    10.5   11.0   10.4   11.2     8.1   7.6    9.5

ASP (EUR)                     134    160    154    136     141   156    166
------------------------------------------------------- -------------------


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

  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


                                        Sep 30   Dec 31   Jun 30   Sep 30

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

ASSETS



Total fixed and financial assets           813      803      819      890



Current assets

Inventories                                457      460      570      656

Accounts receivable                        986      836      872    1,090

Other assets                               328      295      330      408

Other short-term cash investments          440      276      329      301

Cash and bank                              482      329      188      165
                                       -------- -------- -------- -------
Total current assets                     2,692    2,196    2,289    2,620




-------------------------------------------------------------------------
Total assets                             3,505    2,999    3,108    3,510
-------------------------------------------------------------------------


SHAREHOLDERS' EQUITY AND LIABILITIES



Shareholders' equity                       480      532      451      507

Minority interest                           62       42       43       60
                                       -------- -------- -------- -------
Total equity                               541      574      494      567



Borrowing, Non Current                     100      100        0        0

Other long-term liabilities                 30       32       31       40
                                       -------- -------- -------- -------
Total long-term liabilities                130      132       31       40



Accounts payable                           922      769      716    1,050

Borrowing, Current                         284      130      769      718

Other current liabilities                1,628    1,394    1,098    1,135
                                       -------- -------- -------- -------
Total current liabilities                2,834    2,293    2,583    2,903


--------------------------------------------------------------------------
Total shareholders' equity and liabilities 3,505    2,999    3,108    3,510
---------------------------------------------------------------------------


Net cash*                                  538      375     -252     -252

* 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

                                             Jul-Sep      Jan-Sep
                                           ------------ ----------
EUR million                                  2010 2011   2010 2011
------------------------------------------------------- ----------

OPERATING

Net income                                     49    0     82  -40

Adjustments to reconcile net income to cash   -66   27   -105 -139
                                           ------------ ----------
                                              -17   27    -23 -179



Changes in operating net assets               -38   26    -96 -345
                                           ------------ ----------
Cash flow from operating activities           -54   53   -119 -524



INVESTING

Investing activities                            2  -58     14  -94
                                           ------------ ----------
Cash flow from investing activities             2  -58     14  -94


FINANCING

Financing activities                          -32  -56    118  485
                                           ------------ ----------
Cash flow from financing activities           -32  -56    118  485



Net change in cash                            -85  -61     12 -133

Cash, beginning of period                   1,039  516    878  605

Translation difference in Cash                -33   11     31   -6
                                           ------------ ----------
Cash, end of period                           921  466    921  466
------------------------------------------------------- ----------


Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

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


OPERATING

Net income                              21    12    49    8     11  -50   0

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



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



INVESTING

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



FINANCING

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



Net change in cash                      83    15   -85 -324      8  -80 -61

Cash, beginning of period              878   980 1,039  921    605  599 516

Translation difference in Cash          19    45   -33    7    -14   -3  11
                                     ----------------------- --------------
Cash, end of period                    980 1,039   921  605    599  516 466
------------------------------------------------------------ --------------

Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER

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

Americas                          201   223   222   205     151   193   121

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


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

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

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



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

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

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



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

Americas                          201   424   646   851     151   345   466

Asia                              493 1,152 1,695 2,224     509 1,075 2,060
-------------------------------------------------------- ------------------
Total                           1,405 3,162 4,765 6,294   1,145 2,339 3,925
-------------------------------------------------------- ------------------
* of which Western Europe         525 1,193 1,825 2,393     307   630   943



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

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

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

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

Third quarter 2011 financial results: http://hugin.info/1061/R/1554854/479397.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#1554854]

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