SOURCE: Ericsson

October 16, 2009 02:54 ET

Sony Ericsson Reports Third Quarter Results

STOCKHOLM, SWEDEN--(Marketwire - October 16, 2009) -


Q3 highlights:

  * Decline in global handset market slowing down
  * Positive trend from continuing transformation programme
  * External financing arranged
  * Refreshed brand in time for Aino™ and Satio™ launch in Q4

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2009 is as follows:


                                          Q3 2008   Q2 2009   Q3 2009
Number of units shipped (million)            25.7      13.8      14.1
Sales (Euro m.)                             2,808     1,684     1,619
Gross margin (%)                              22%       12%       16%
Operating income (Euro m.)                    -33      -274      -193
Operating margin (%)                          -1%      -16%      -12%
   Restructuring charges (Euro m.)             35         1         2
   Operating income excl. restructuring         2      -274      -191
charges (Euro m.)
   Operating margin excl. restructuring        0%      -16%      -12%
charges (%)
Income before taxes (IBT) (Euro m.)           -23      -283      -199
   IBT excl. restructuring charges             12      -283      -198
(Euro m.)
Net income (Euro m.)                          -25      -213      -164

Average selling price (Euro)                  109       122       114


Units shipped in the quarter were 14.1 million, an increase of 2% quarter-on-quarter and a decrease of 45% year-on-year. Sales for the quarter were Euro 1,619 million, a sequential decrease of 4% and a year-on-year decrease of 42%. The sequential decline in ASP (Average Selling Price) was due to product mix and continued challenging market conditions.

Gross margin improved sequentially but dropped year-on-year due to lower sales and foreign exchange fluctuations. The sequential improvement was seen in both percentage rate and volume, driven by cost savings actions and successful sales of the W995 Walkman® phone.

Income before taxes for the quarter, excluding restructuring charges, was a loss of Euro 198 million compared to a loss of Euro 283 million from the previous quarter. The reduced loss was due to better gross margin, as well as reduced operating expenses.

"Our business in the third quarter started to show the effects of our ongoing transformation programme. Having refreshed our brand we are now better positioned to support the launch of new products such as Aino™ and Satio™ in Q4 2009. We have cleared channel inventories, and have continued to realign internal resources and improve efficiency. We have also arranged external financing to strengthen the company's financial position," said Dick Komiyama, outgoing President, Sony Ericsson. "Transforming the business for future growth and returning Sony Ericsson to profitability is the focus of the senior management team and will continue under the new leadership."

As of September 30, 2009, Sony Ericsson had a net cash position of Euro 841 million.

Since the beginning of the quarter, facilities of Euro 455 million were signed to strengthen the balance sheet and improve liquidity. Euro 155 million were drawn by the end of September and Euro 100 million were drawn in the beginning of October. In addition, a two-year committed back-up facility of Euro 200 million is available but has not been utilized. The parent companies have guaranteed Euro 350 million of these facilities on a 50/50 basis.

Programmes started since mid 2008 to reduce annual operating expenses by Euro 880 million are continuing, with the full benefit expected during the second half of 2010. The total restructuring charges for these programmes are estimated to be well within the previously announced Euro 500 million.

As of October 15, 2009; Sir Howard Stringer, Chairman, CEO and President of Sony Corporation and a member of the Sony Ericsson board, became Chairman of the Sony Ericsson board succeeding Carl-Henric Svanberg. At the same time, Bert Nordberg became President of Sony Ericsson succeeding Dick Komiyama, who remains as Executive Advisor until the end of 2009.

Sony Ericsson forecasts that the global handset market for 2009 will contract by approximately 10% from around 1,190 million units in 2008. Sony Ericsson estimates that its market share in units was about 5% in the third quarter.

The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB.

Satio™ and Aino™ are trademarks or registered trademarks of Sony Ericsson Mobile Communications AB.

WALKMAN® is a trademark of Sony Corporation.

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. Subject to change without prior notice.


A live webcast of the conference call will be available on October 16, 2009 at the following times:


TIMING
14:00 UK time (BST)
15:00 Central European time (CET)
09:00 US Eastern time (EDT)
22:00 Japan time (JST)

WEBCAST:
A live webcast of the conference call will be available at:
http://www.ericsson.com/ericsson/investors/

Or please click here to join the webcast directly:
http://www.thomson-webcast.net/uk/dispatching/?
event_id=191bc04e8408cb47571b7b46c700aca4&
portal_id=ccec29148a44ec4b8077c845c5b4cbba
The archived webcast will be available approximately one hour after
the completion of the conference call.

CALL-IN NUMBERS:

UK and Europe: +44 20 7806 1951
Sweden:        +46 8 5352 6408
US:            +1 718 354 1385
Japan:         +81 3 3570 8227


REPLAY:
A replay of the conference call will be available approximately two
hours after the completion of the conference call until 11:00 pm UK
time on October 21, 2009.


UK and Europe: +44 20 7111 1244
Sweden:        +46 8 5051 3897
US:            +1 347 366 9565
Japan:         +81 3 5767 9615

Replay passcode:  2462154#

EDITOR'S NOTES:

Financial statements and additional information:

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

Additional information:

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. Our 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.

CONTACTS:

Investors / analysts
Ericsson investor relations
Gary Pinkham (Stockholm)      +46 10 719 0858
Susanne Andersson (Stockholm) +46 10 719 4631
Lars Jacobsson (Stockholm)    +46 10 719 9489

Sony investor relations
Gen Tsuchikawa (Tokyo)  +81 3 6748 2180
Shinji Tomita (London)  +44 20 7426 8696

Press / media
Sony Ericsson global communications and PR
Aldo Liguori (London)     +44 20 8762 5860
Merran Wrigley (London)   +44 20 8762 5862

This press release contains forward-looking statements that involve inherent risks and uncertainties. We have 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
EUR million                            2009      2008   Change

Net sales                             1,619     2,808     -42%
Cost of sales                        -1,367    -2,192     -38%
Gross profit                            252       616     -59%
Gross margin %                        15.5%     21.9%      -6%

Research and development expenses      -260      -337     -23%
Selling and administrative expenses    -205      -303     -32%
Operating expenses                     -465      -640     -27%

Other operating income, net              21        -8     356%
Operating income                       -193       -33     488%
Operating margin %                   -11.9%     -1.2%     -11%

Financial income                          3        25     -88%
Financial expenses                       -9       -15     -36%
Income after financial items           -199       -23     776%

Taxes                                    42         6     549%
Minority interest                        -6        -8     -26%
Net income                             -164       -25     565%


Number of units shipped (million)      14.1      25.7     -45%
ASP (EUR)                               114       109       5%




EUR Million                         Jul-Sep   Jul-Sep
Restructuring charges                  2009      2008
  Cost of sales                           0         0
  Research and development expenses       1        26
  Sales and administrative expenses       1         3
  Other operating income, net             0         6
Total                                     2        35




Sony Ericsson
CONSOLIDATED INCOME STATEMENT


                                             Jan-Sep
EUR million                            2009      2008   Change

Net sales                             5,038     8,330     -40%
Cost of sales                        -4,441    -6,274     -29%
Gross profit                            597     2,056     -71%
Gross margin %                        11.9%     24.7%     -13%

Research and development expenses      -808    -1,020     -21%
Selling and administrative expenses    -665      -883     -25%
Operating expenses                   -1,473    -1,903     -23%

Other operating income, net              39        -3   -1233%
Operating income                       -837       149    -661%
Operating margin %                   -16.6%      1.8%     -18%

Financial income                         18        73     -76%
Financial expenses                      -34       -44     -23%
Income after financial items           -853       179    -577%

Taxes                                   200       -50    -499%
Minority interest                       -16       -14      15%
Net income                             -669       114    -685%


Number of units shipped (million)      42.5      72.5     -41%
ASP (EUR)                               119       115       3%




EUR Million                         Jan-Sep   Jan-Sep
Restructuring charges                  2009      2008
  Cost of sales                          -2         8
  Research and development expenses      12        28
  Sales and administrative expenses       4         4
  Other operating income, net             0         6
Total                                    15        46




Sony Ericsson
CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS


                           2009                      2008
EUR million            Q3     Q2     Q1       Q4     Q3     Q2     Q1

Net sales           1,619  1,684  1,736    2,914  2,808  2,820  2,702
Cost of sales      -1,367 -1,483 -1,591   -2,476 -2,192 -2,168 -1,914
Gross profit          252    200    145      438    616    653    788
Gross margin %      15.5%  11.9%   8.4%    15.0%  21.9%  23.1%  29.2%

Research and
development
expenses             -260   -245   -303     -359   -337   -344   -339
Selling and
administrative
expenses             -205   -235   -225     -366   -303   -310   -270
Operating expenses   -465   -480   -528     -725   -640   -653   -610

Other operating
income, net            21      6     13       24     -8     -2      6
Operating income     -193   -274   -369     -262    -33     -2    184
Operating margin % -11.9% -16.3% -21.3%    -9.0%  -1.2%  -0.1%   6.8%

Financial income        3      6      9       28     25     25     24
Financial expenses     -9    -15    -10      -27    -15    -14    -15
Income after
financial items      -199   -283   -370     -261    -23      8    193

Taxes                  42     74     84       81      6      0    -57
Minority interest      -6     -4     -6       -7     -8     -3     -3
Net income           -164   -213   -293     -187    -25      6    133


Number of units
shipped (million)    14.1   13.8   14.5     24.2   25.7   24.4   22.3
ASP (EUR)             114    122    120      121    109    116    121




EUR Million                2009                      2008
Restructuring
charges                Q3     Q2     Q1       Q4     Q3     Q2
  Cost of sales         0     -9      7       67      0      8
  Research and
development
expenses                1      9      2       35     26      2
  Sales and
administrative
expenses                1      1      3       24      3      1
  Other operating
income, net             0      0      0        3      6      0
Total                   2      1     12      129     35     11




Sony Ericsson
CONSOLIDATED BALANCE SHEET


                                    Sep 30   Jun 30   Dec 31   Sep 30
EUR million                           2009     2009     2008     2008
ASSETS

Total fixed and financial assets       757      736      590      649

Current assets
Inventories                            397      404      531      717
Accounts receivables                   917      936    1,629    1,815
Other assets                           416      379      585      527
Other short-term cash investments      464      456      707      918
Cash and bank                          532      509      418      555
Total current assets                 2,726    2,685    3,870    4,532


Total assets                         3,482    3,421    4,460    5,180


SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity                   532      694    1,217    1,429
Minority interest                       43       66       57       50
Total equity                           575      760    1,274    1,480
Total long-term liabilities             81       30       30       39
Accounts payable                     1,019      848      990    1,453
Other current liabilities            1,807    1,782    2,166    2,208
Total current liabilities            2,826    2,630    3,156    3,661

Total shareholders' equity and
liabilities                          3,482    3,421    4,460    5,180

Net cash*                              841      965    1,072    1,374


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




Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS


                                               Jul-Sep
EUR million                                 2009     2008
OPERATIONS
Net income                                  -164      -25
Adjustments to reconcile net income to cash   20       39
                                            -143       15

Changes in operating net assets               49       88
Cash flow from operating activities          -94      102

INVESTMENTS
Investing activities                         -42      -55
Cash flow from investing activities          -42      -55
FINANCING
Financing activities                         159     -238
Cash flow from financing activities          159     -238

Net change in cash                            22     -191
Cash, beginning of period                    965    1,591
Translation difference in Cash                 9       74
Cash, end of period                          996    1,473




Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS


                                               Jan-Sep
EUR million                                  2009     2008
OPERATIONS
Net income                                   -669      114
Adjustments to reconcile net income to cash    87      108
                                             -583      223

Changes in operating net assets               431     -155
Cash flow from operating activities          -152       68

INVESTMENTS
Investing activities                          -74     -105
Cash flow from investing activities           -74     -105
FINANCING
Financing activities                          106     -708
Cash flow from financing activities           106     -708

Net change in cash                           -120     -745
Cash, beginning of period                   1,125    2,155
Translation difference in Cash                 -9       62
Cash, end of period                           996    1,473




Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS


                     2009                          2008
EUR million   Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar

OPERATIONS
Net income       -164    -213    -293    -187     -25       6     133
Adjustments
to reconcile
net income to
cash               20      37      29      37      39      40      31
                 -143    -176    -263    -150      15      46     164

Changes in
operating net
assets             49      60     321    -168      88    -142    -101
Cash flow
from
operating
activities        -94    -115      58    -318     102     -96      64

INVESTMENTS
Investing
activities        -42     -13     -19      41     -55     -29     -22
Cash flow
from
investing
activities        -42     -13     -19      41     -55     -29     -22

FINANCING
Financing
activities        159       0     -53     -46    -238      -8    -462
Cash flow
from
financing
activities        159       0     -53     -46    -238      -8    -462

Net change in
cash               22    -128     -14    -323    -191    -133    -421
Cash,
beginning of
period            965   1,116   1,125   1,473   1,591   1,711   2,155
Translation
difference in
Cash                9     -23       5     -25      74      13     -24
Cash, end of
period            996     965   1,116   1,125   1,473   1,591   1,711




Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER

EUR million
                             2009                      2008
Isolated quarters       Q3      Q2      Q1       Q4    Q3    Q2    Q1
Europe, Middle
East & Africa *        875     927     977    1,642 1,427 1,386 1,494
Americas               232     195     200      636   703   740   486
Asia                   512     562     559      636   678   694   722

Total                1,619   1,684   1,736    2,914 2,808 2,820 2,702
* of which Western
Europe                 636     678     721    1,117   947   900   979


                             2009                      2008
Sequential change
(%)                     Q3      Q2      Q1       Q4    Q3    Q2    Q1
Europe, Middle
East & Africa *        -6%     -5%    -40%      15%    3%   -7%  -34%
Americas               19%     -3%    -69%     -10%   -5%   52%  -24%
Asia                   -9%      1%    -12%      -6%   -2%   -4%  -18%
Total                  -4%     -3%    -40%       4%    0%    4%  -28%
* of which Western
Europe                 -6%     -6%    -35%      18%    5%   -8%  -38%


                             2009                      2008
Year over year
change (%)              Q3      Q2      Q1       Q4    Q3    Q2    Q1
Europe, Middle
East & Africa *       -39%    -33%    -35%     -27%  -17%  -20%   -7%
Americas              -67%    -74%    -59%       0%   23%   48%   33%
Asia                  -25%    -19%    -23%     -28%  -17%  -21%  -25%
Total                 -42%    -40%    -36%     -23%  -10%   -9%   -8%
* of which Western
Europe                -33%    -25%    -26%     -29%  -14%  -18%   -9%


                             2009                      2008
Year to date          0909    0906    0903     0812  0809  0806  0803
Europe, Middle
East & Africa *      2,778   1,903     977    5,947 4,306 2,879 1,494
Americas               627     395     200    2,566 1,930 1,226   486
Asia                 1,633   1,121     559    2,731 2,094 1,416   722
Total                5,038   3,419   1,736   11,244 8,330 5,522 2,702
* of which Western
Europe               2,036   1,400     721    3,943 2,826 1,879   979


                             2009                      2008
YTD year over year
change (%)            0909    0906    0903     0812  0809  0806  0803
Europe, Middle
East & Africa *       -35%    -34%    -35%     -18%  -15%  -13%   -7%
Americas              -67%    -68%    -59%      24%   34%   42%   33%
Asia                  -22%    -21%    -23%     -23%  -21%  -23%  -25%
Total                 -40%    -38%    -36%     -13%   -9%   -9%   -8%
* of which Western
Europe                -28%    -26%    -26%     -19%  -14%  -14%   -9%

The full report (including tables) can be downloaded from the following link: http://hugin.info/1061/R/1347926/324245.pdf


This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.



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