Highlights:
* Shift to Android-based smartphone portfolio drives profitability
* Smartphone share of total sales more than doubled year-on-year
* Xperia(TM) arc, Xperia(TM) PLAY and Xperia(TM) neo began shipping towards
the end of the quarter
* Some supply chain disruption due to the Japan earthquake
The consolidated financial summary for Sony Ericsson Mobile Communications AB
(Sony Ericsson) for the first quarter ended March 31, 2011 is as follows:
Q1 2010 Q4 2010 Q1 2011
Number of units shipped (million) 10.5 11.2 8.1
Average selling price (Euro) 134 136 141
Sales (Euro m.) 1,405 1,528 1,145
Gross margin (%) 31% 30% 33%
Operating income (Euro m.) 20 39 19
Operating margin (%) 1% 3% 2%
Restructuring charges (Euro m.) -3 -3 -
Operating income excl. restructuring charges (Euro 23 43 19
m.)
Operating margin excl. restructuring charges (%) 2% 3% 2%
Income before taxes (IBT) (Euro m.) 18 35 15
IBT excl. restructuring charges (Euro m.) 21 39 15
Net income (Euro m.) 21 8 11
Bert Nordberg, President & CEO of Sony Ericsson commented, "Sony Ericsson's
profitability continues as we accelerate our shift towards an Android-based
smartphone portfolio, with smartphones comprising over 60% of our total sales
during the quarter. Towards the end of the quarter we introduced the highly
anticipated Xperia(TM) arc and Xperia(TM) PLAY, which have been well received by
both operators and consumers around the world. However, the Japan earthquake
made it a challenging quarter operationally and we are experiencing some
disruptions to our supply chain. We will continue to evaluate the situation."
Units shipped during the quarter were 8.1 million, a 23% decrease year-on-year
and a 28% decrease sequentially, due to a decline in the number of feature
phones shipped, introduction of new products towards the end of the quarter and
seasonality.
Average selling price (ASP) for the quarter was Euro 141, a 5% increase year-on-
year and a 4% increase sequentially, as a result of product and geographical mix
more than offsetting price erosion.
Sales for the quarter were Euro 1,145 million, a 19% decrease year-on-year and
25% decrease sequentially.
The gross margin for the quarter was 33%, an increase of 2 percentage points
year-on-year and an increase of 3 percentage points sequentially, which includes
the impact from higher ASP and benefit of some larger than normal items relating
to royalty matters and warranty estimates.
Income before taxes for the quarter was a profit of Euro 15 million, a decrease
of Euro 3 million year-on-year and a decrease of Euro 20 million sequentially,
with the impact of lower sales offset by higher gross margin percentage and
lower operating expenses.
Net income for the quarter was Euro 11 million, a decrease of Euro 10 million
compared to the same period previous year which included a tax benefit. Net
income increased Euro 3 million sequentially, despite a decline in income before
taxes of Euro 20 million, reflective of a lower effective tax rate.
Cash flow from operating activities during the quarter was negative Euro 353
million, mainly due to inventory investments, non cash items in the income
statement and seasonality. New external borrowings of Euro 375 million were made
during the quarter to enhance liquidity and growth, resulting in total
borrowings of Euro 604 million at the end of the quarter. Total cash balances at
March 31, 2011 amounted to Euro 599 million.
Sony Ericsson estimates that its market share for smartphones during the quarter
was approximately 5% in units and approximately 3% in value.
Sony Ericsson forecasts modest 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(TM) 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(TM) 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.
- ENDS -
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
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
Jan-Mar
------------------------
EUR million 2010 2011 Change
-------------------------------------------------------------
Net sales 1,405 1,145 -19%
Cost of sales -975 -763 -22%
-----------------
Gross profit 429 382 -11%
Gross margin % 31% 33% 2%
Research and development expenses -185 -173 -6%
Selling and administrative expenses -238 -199 -16%
-----------------
Operating expenses* -423 -372 -12%
Other operating income, net 14 10 -29%
-----------------
Operating income 20 19 -5%
Operating margin % 1% 2% 1%
Financial income 7 3 -57%
Financial expenses -9 -8 -11%
-----------------
Income before taxes 18 15 -17%
Taxes 6 -5
Minority interest -3 1
-----------------
Net income 21 11 -48%
( ) ( ) ( ) ( )
------------------------------------------------------
Number of units shipped (million) 10.5 8.1 -23%
ASP (EUR) 134 141 5%
------------------------------------------------------
EUR million Jan-Mar Jan-Mar
------------------------------------------------------
Restructuring charges 2010 2011
------------------------------------------------------
Cost of sales 2 -
Research and development expenses -2 -
Selling and administrative expenses -3 -
------------------------------------------------------
Total -3 -
* 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
----------------------------------------------------------------- -------
Net sales 1,405 1,757 1,603 1,528 1,145
Cost of sales -975 -1,266 -1,130 -1,069 -763
---------------------------- -------
Gross profit 429 492 473 459 382
Gross margin % 31% 28% 30% 30% 33%
Research and development expenses -185 -191 -179 -191 -173
Selling and administrative expenses -238 -272 -241 -236 -199
---------------------------- -------
Operating expenses* -423 -463 -420 -427 -372
Other operating income, net 14 7 10 7 10
---------------------------- -------
Operating income 20 36 63 39 19
Operating margin % 1% 2% 4% 3% 2%
Financial income 7 2 7 2 3
Financial expenses -9 -7 -8 -6 -8
---------------------------- -------
Income before taxes 18 31 62 35 15
Taxes 6 -16 -12 -27 -5
Minority interest -3 -4 -2 0 1
---------------------------- -------
Net income 21 12 49 8 11
----------------------------------------------------------------- ---------
Number of units shipped (million) 10.5 11.0 10.4 11.2 8.1
ASP (EUR) 134 160 154 136 141
----------------------------------------------------------------- ---------
EUR million 2010 2011
----------------------------------------------------------------- -------
Restructuring charges Q1 Q2 Q3 Q4 Q1
----------------------------------------------------------------- -------
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
Mar 31 Dec 31 Mar 31
EUR million 2010 2010 2011
---------------------------------------------------------------------
ASSETS
Total fixed and financial assets 791 803 791
Current assets
Inventories 384 460 510
Accounts receivable 849 836 755
Other assets 369 295 304
Other short-term cash investments 537 276 417
Cash and bank 443 329 182
-------- -------- -------
Total current assets 2,582 2,196 2,168
---------------------------------------------------------------------
Total assets 3,373 2,999 2,959
---------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity 438 532 496
Minority interest 54 42 38
-------- -------- -------
Total equity 492 574 534
Borrowing, Non Current 100 100 0
Other long-term liabilities 37 32 30
-------- -------- -------
Total long-term liabilities 137 132 30
Accounts payable 829 769 701
Borrowing, Current 316 130 604
Other current liabilities 1,599 1,394 1,090
-------- -------- -------
Total current liabilities 2,744 2,293 2,394
---------------------------------------------------------------------
Total shareholders' equity and liabilities 3,373 2,999 2,959
---------------------------------------------------------------------
Net cash* 563 375 -5
* Net cash is defined as cash and bank plus short-term cash investments less
interest-bearing liabilities.
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS
Jan-Mar
----------
EUR million 2010 2011
-----------------------------------------------------
OPERATING
Net income 21 11
Adjustments to reconcile net income to cash -44 -137
----------
-23 -127
Changes in operating net assets -72 -226
----------
Cash flow from operating activities -94 -353
INVESTING
Investing activities 27 -14
----------
Cash flow from investing activities 27 -14
FINANCING
Financing activities 150 375
----------
Cash flow from financing activities 150 375
Net change in cash 83 8
Cash, beginning of period 878 605
Translation difference in Cash 19 -14
----------
Cash, end of period 980 599
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS
2010 2011
------------------------ -----
EUR million Q1 Q2 Q3 Q4 Q1
------------------------------------------------------------------- -----
OPERATING
Net income 21 12 49 8 11
Adjustments to reconcile net income to cash -44 4 -66 -50 -137
------------------------ -----
-23 16 -17 -42 -127
Changes in operating net assets -72 13 -38 -86 -226
------------------------ -----
Cash flow from operating activities -94 29 -54 -128 -353
INVESTING
Investing activities 27 -15 2 -18 -14
------------------------ -----
Cash flow from investing activities 27 -15 2 -18 -14
FINANCING
Financing activities 150 0 - 32 - 178 375
------------------------ -----
Cash flow from financing activities 150 0 -32 -178 375
Net change in cash 83 15 -85 -324 8
Cash, beginning of period 878 980 1,039 921 605
Translation difference in Cash 19 45 -33 7 -14
------------------------ -----
Cash, end of period 980 1,039 921 605 599
Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER
EUR million 2010 2011
------------------------- ------
Isolated quarters Q1 Q2 Q3 Q4 Q1
----------------------------------------------------------------
Europe, Middle East & Africa * 711 876 837 795 485
Americas 201 223 222 205 151
Asia 493 659 544 528 509
----------------------------------------------------------------
Total 1,405 1,757 1,603 1,528 1,145
----------------------------------------------------------------
* of which Western Europe 525 668 632 569 307
2010 2011
------------------------- ------
Sequential change (%) Q1 Q2 Q3 Q4 Q1
----------------------------------------------------------------
Europe, Middle East & Africa * -26% 23% -4% -5% -39%
Americas -9% 11% 0% -8% -26%
Asia -12% 34% -17% -3% -4%
----------------------------------------------------------------
Total -20% 25% -9% -5% -25%
----------------------------------------------------------------
* of which Western Europe -23% 27% -5% -10% -46%
2010 2011
------------------------- ------
Year over year change (%) Q1 Q2 Q3 Q4 Q1
----------------------------------------------------------------
Europe, Middle East & Africa * -27% -6% -4% -18% -32%
Americas 1% 14% -4% -8% -25%
Asia -12% 17% 6% -6% 3%
----------------------------------------------------------------
Total -19% 4% -1% -13% -19%
----------------------------------------------------------------
* of which Western Europe -27% -1% -1% -16% -42%
2010 2011
------------------------- ------
Year to date 1003 1006 1009 1012 1103
----------------------------------------------------------------
Europe, Middle East & Africa * 711 1,587 2,424 3,219 485
Americas 201 424 646 851 151
Asia 493 1,152 1,695 2,224 509
----------------------------------------------------------------
Total 1,405 3,162 4,765 6,294 1,145
----------------------------------------------------------------
* of which Western Europe 525 1,193 1,825 2,393 307
2010 2011
------------------------- ------
YTD year over year change (%) 1003 1006 1009 1012 1103
----------------------------------------------------------------
Europe, Middle East & Africa * -27% -17% -13% -14% -32%
Americas 1% 7% 3% 0% -25%
Asia -12% 3% 4% 1% 3%
----------------------------------------------------------------
Total -19% -8% -5% -7% -19%
----------------------------------------------------------------
* of which Western Europe -27% -15% -10% -12% -42%
The full report (including tables) can be downloaded from the following link:
[HUG#1507532]
