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(TM) 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(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 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 -
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
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:
[HUG#1531189]
