* Q4 loss reflects intense competition, price erosion and restructuring
charges
* 65% year-on-year increase in Android-based Xperia(TM) smartphone quarterly
sales
* 28 million Xperia smartphones shipped to date
The consolidated financial summary for Sony Ericsson Mobile Communications AB
(Sony Ericsson) for the fourth quarter and full year ended December 31, 2011 is
as follows*:
Q4 2010 Q3 2011 Q4 2011 FY 2010 FY 2011
Number of units shipped (million) 11.2 9.5 9.0 43.1 34.4
Average selling price (Euro) 136 166 143 146 152
Sales (Euro m.) 1,528 1,586 1,288 6,294 5,212
Gross margin (%) 30% 27% 24% 29% 28%
Operating income (Euro m.) 39 38 -227 159 -206
Operating margin (%) 3% 2% -18% 3% -4%
Restructuring charges (Euro m.) -3 - -93 -42 -93
Operating income excl. restructuring 43 38 -134 202 -113
charges (Euro m.)
Operating margin excl. restructuring 3% 2% -10% 3% -2%
charges (%)
Income before taxes (IBT) (Euro m.) 35 31 -247 147 -243
IBT excl. restructuring charges 39 31 -154 189 -150
(Euro m.)
Net income (Euro m.) 8 0 -207 90 -247
*All amounts are according to Swedish GAAP.
Bert Nordberg, President and CEO of Sony Ericsson commented: "Our fourth quarter
results reflected intense competition, unfavorable macroeconomic conditions and
the effects of a natural disaster in Thailand this quarter. We are aligning our
business to drive profitability and to meet customer needs. In spite of these
challenges, throughout 2011 we've shifted our business from feature phones to
smartphones, and our Android-based smartphone sales in the quarter increased by
65% year-on-year. The Xperia portfolio, including the recently announced Xperia
NXT series, will serve as a cornerstone of our smartphone lineup in 2012."
Units shipped during the quarter were 9 million, a 20% decrease year-on-year and
a 5% decrease compared to last quarter. The year-on-year and sequential declines
reflect a significantly lower number of feature phones shipped, partially offset
by an increase in smartphone shipments. Sony Ericsson has shipped 28 million
Xperia smartphones to date.
Average selling price (ASP) for the quarter was Euro 143, up 5% year-on-year but
down 14% sequentially. The year-on-year increase is due to the shift to
smartphones and geographic mix. The sequential decrease in ASP is attributed to
geographic and product mix, including declining prices of products launched
earlier in the year, and the absence of new products introduced in the fourth
quarter.
Sales for the quarter were approximately Euro 1.3 billion, down 16% year-on-year
and 19% quarter over quarter. The year-on-year decline reflects the decrease of
feature phone sales which was only partially offset by an increase in smartphone
sales. The sequential decline is due to geographic and product mix, resulting
in lower sales of both smartphones and feature phones. Fourth quarter sales were
negatively impacted by macroeconomic challenges in advanced economies
contributing to weaker holiday sales, and certain component shortages from the
flooding in Thailand in late October and early November 2011. Xperia smartphones
accounted for approximately 80% of total sales in the fourth quarter.
The gross margin for the quarter was 24%, a decrease of 6 percentage points
year-on-year and 3 percentage points from the previous quarter. The year-on-year
and sequential decreases are attributed to product and geographic mix. Fourth
quarter gross margin was also adversely affected by intense smartphone price
competition which more than offset the benefit of royalty and other items.
Loss before taxes, excluding restructuring charges, was Euro 154 million for the
quarter, compared to income of Euro 39 million for the same quarter last year
and of Euro 31 million in the previous quarter. The year-on-year and sequential
declines are due to lower gross margin and increased operational expenses,
including higher development and selling expenses.
In December 2011, Sony Ericsson launched a restructuring program including
global workforce reductions to reduce costs and drive competitiveness.
Restructuring charges for the quarter are Euro 93 million and the program is
estimated to be completed by the end of 2012.
The quarter ended in a net loss of Euro 207 million, compared to a net income of
Euro 8 million in the same quarter of the previous year, and essentially a break
even result in the previous quarter.
Cash flow from operating activities during the quarter was negative Euro 26
million. External borrowings were Euro 19 million during the quarter. Total
borrowings were Euro 742 million at the end of the quarter. Total cash balances
at December 31, 2011 were Euro 442 million.
Sony Ericsson estimates that its share of the global Android-based smartphone
market was 10% in volume and 7% in value during the quarter and 10% in volume
and 10% in value for the full year.
Sony Ericsson estimates that the global smartphone market for the full year
2011 increased by 60% in volume to 463 million units. Sony Ericsson estimates
strong growth in the smartphone market in 2012.
In October 2011 Sony Corporation ("Sony") and Telefonaktiebolaget LM Ericsson
("Ericsson") announced that Sony will acquire Ericsson's stake in Sony Ericsson
and that Sony Ericsson will become a wholly-owned subsidiary of Sony. The
transaction is expected to close in late January to February, subject to
customary closing conditions, including regulatory approvals.
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 is a 50:50 joint venture between Sony Corporation ("Sony") and
Telefonaktiebolaget LM Ericsson ("Ericsson"). In October 2011 it was announced
by Sony and Ericsson that Sony will acquire Ericsson's stake in the company and
that Sony Ericsson will become a wholly-owned subsidiary of Sony. The
transaction is expected to close in late January to February, subject to
customary closing conditions, including regulatory approvals. 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
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
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*
Oct-Dec Jan-Dec
----------------------- ---------------------
EUR million 2010 2011 Change 2010 2011 Change
---------------------------------------------------------- ---------------------
Net sales 1 528 1 288 -16% 6 294 5 212 -17%
Cost of sales -1 069 -985 -8% -4 440 -3 735 -16%
-------------- ---------------
Gross profit 459 303 -34% 1 853 1 477 -20%
Gross margin % 30% 24% -6pp 29% 28% -1pp
Research and development expenses -191 -268 40% -746 -815 9%
Selling and administrative expenses -236 -270 14% -986 -900 -9%
-------------- ---------------
Operating expenses** -427 -538 26% -1 732 -1 715 -1%
Other operating income, net 7 8 14% 38 32 -16%
-------------- ---------------
Operating income 39 -227 -682% 159 -206 -230%
Operating margin % 3% -18% -21pp 3% -4% -7pp
Financial income 2 4 100% 18 19 6%
Financial expenses -6 -24 300% -30 -56 87%
-------------- ---------------
Income before taxes 35 -247 -806% 147 -243 -265%
Taxes -27 46 -267% -48 19 -140%
Minority interest 0 -6 - -9 -23 156%
-------------- ---------------
Net income 8 -207 -2688% 90 -247 -374%
------------------------------------------------- ---------------
Number of units shipped (million) 11,2 9,0 -20% 43,1 34,4 -20%
ASP (EUR) 136 143 5% 146 152 4%
------------------------------------------------- ---------------
EUR million Oct-Dec Jan-Dec
------------------------------------------------- ---------------
Restructuring charges 2010 2011 2010 2011
------------------------------------------------- ---------------
Cost of sales 2 0 -32 0
Research and development expenses 0 -55 7 -55
Selling and administrative
expenses -5 -38 -17 -38
------------------------------------------------- ---------------
Total -3 -93 -42 -93
* All amounts are according to Swedish GAAP
**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 Q4
--------------------------------------------------- ----------------------------
Net sales 1 ,405 1 ,757 1 ,603 1 ,528 1, 145 1, 193 1, 586 1 ,288
Cost of sales -975 -1,266 -1,130 -1,069 -763 -828 -1,159 -985
----------------------------- ----------------------------
Gross profit 429 492 473 459 382 365 427 303
Gross margin % 31% 28% 30% 30% 33% 31% 27% 24%
Research and
development expenses -185 -191 -179 -191 -173 -184 -190 -268
Selling and
administrative
expenses -238 -272 -241 -236 -199 -224 -207 -270
----------------------------- ----------------------------
Operating expenses** -423 -463 -420 -427 -372 -408 -397 -538
Other operating
income, net 14 7 10 7 10 6 8 8
----------------------------- ----------------------------
Operating income 20 36 63 39 19 -37 38 -227
Operating margin % 1% 2% 4% 3% 2% -3% 2% -18%
Financial income 7 2 7 2 3 5 7 4
Financial expenses -9 -7 -8 -6 -8 -10 -14 -24
----------------------------- ----------------------------
Income before taxes 18 31 62 35 15 -42 31 -247
Taxes 6 -16 -12 -27 -5 -3 -17 46
Minority interest -3 -4 -2 0 1 -5 -14 -6
----------------------------- ----------------------------
Net income 21 12 49 8 11 -50 0 -207
--------------------------------------------------- ----------------------------
Number of units
shipped (million) 10.5 11.0 10.4 11.2 8.1 7.6 9.5 9.0
ASP (EUR) 134 160 154 136 141 156 166 143
--------------------------------------------------- ----------------------------
EUR million 2010 2011
--------------------------------------------------- ----------------------------
Restructuring charges Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
--------------------------------------------------- ----------------------------
Cost of sales 2 -33 -3 2 - - - 0
Research and
development -2 -1 5 0 - - - -55
expenses
Selling and
administrative
expenses -3 2 -6 -5 - - - -38
--------------------------------------------------- ----------------------------
Total -3 -32 -4 -3 - - - -93
* All amounts are according to Swedish GAAP.
** Operating expenses in 2010 have been restated to reflect certain
organizational changes.
Sony Ericsson
CONSOLIDATED BALANCE SHEET*
Dec 31 Jun 30 Sep 30 Dec 31
EUR million 2010 2011 2011 2011
------------------------------------------------------------------------------
ASSETS
Total fixed and financial assets 803 819 890 1,122
Current assets
Inventories 460 570 656 447
Accounts receivable 836 872 1,090 692
Other assets 295 330 408 380
Other short-term cash investments 276 329 301 270
Cash and bank 329 188 165 172
-------- -------- -------- -------
Total current assets 2,196 2, 289 2,620 1,961
------------------------------------------------------------------------------
Total assets 2,999 3 ,108 3,510 3,083
------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity 532 451 507 309
Minority interest 42 43 60 58
-------- -------- -------- -------
Total equity 574 494 567 367
Borrowing, Non Current 100 0 0 0
Other long-term liabilities 32 31 40 44
-------- -------- -------- -------
Total long-term liabilities 132 31 40 44
Accounts payable 769 716 1 050 676
Borrowing, Current 130 769 718 742
Other current liabilities 1, 394 1,098 1,135 1,254
-------- -------- -------- -------
Total current liabilities 2 ,293 2,583 2,903 2,672
------------------------------------------------------------------------------
Total shareholders' equity and liabilities 2, 999 3,108 3, 510 3 ,083
------------------------------------------------------------------------------
Net cash** 375 -252 -252 -300
* All amounts are according to Swedish GAAP.
** 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*
Oct-Dec Jan-Dec
------------ ----------
EUR million 2010 2011 2010 2011
------------------------------------------------------- ----------
OPERATING
Net income 8 -207 90 -247
Adjustments to reconcile net income to cash -50 112 -156 -27
------------ ----------
-42 -95 -65 -274
Changes in operating net assets -86 69 -183 -276
------------ ----------
Cash flow from operating activities -128 -26 -248 -550
INVESTING
Investing activities -18 -19 -4 -113
------------ ----------
Cash flow from investing activities -18 -19 -4 -113
FINANCING
Financing activities - 178 11 - 60 496
------------ ----------
Cash flow from financing activities -178 11 -60 496
Net change in cash -324 -34 -312 -167
Cash, beginning of period 921 466 878 605
Translation difference in Cash 7 10 38 4
------------ ----------
Cash, end of period 605 442 605 442
------------------------------------------------------- ----------
* All amounts are according to Swedish GAAP.
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS*
2010 2011
------------------------- --------------------
EUR million Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
----------------------------------------------------------- --------------------
OPERATING
Net income 21 12 49 8 11 -50 0 -207
Adjustments to reconcile net
income to cash -44 4 -66 -50 -137 -29 27 112
------------------------- --------------------
-23 16 -17 -42 -127 -79 27 -95
Changes in operating net assets -72 13 -38 -86 -226 -145 26 69
------------------------- --------------------
Cash flow from operating
activities -94 29 -54 -128 -353 -224 53 -26
INVESTING
Investing activities 27 -15 2 -18 -14 -21 -58 -19
------------------------- --------------------
Cash flow from investing
activities 27 -15 2 -18 -14 -21 -58 -19
FINANCING
Financing activities 150 0 - 32 - 178 375 165 - 56 11
------------------------- --------------------
Cash flow from financing
activities 150 0 -32 -178 375 165 -56 11
Net change in cash 83 15 -85 -324 8 -80 -61 -34
Cash, beginning of period 878 980 1 039 921 605 599 516 466
Translation difference in Cash 19 45 -33 7 -14 -3 11 10
------------------------- --------------------
Cash, end of period 980 1, 039 921 605 599 516 466 442
----------------------------------------------------------- --------------------
* All amounts are according to Swedish GAAP.
Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER*
EUR million 2010 2011
----------------------------- ----------------------------
Isolated quarters Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
--------------------------------------------------------------------------------
Europe, Middle East
& Africa ** 711 876 837 795 485 435 480 571
Americas 201 223 222 205 151 193 121 199
Asia 493 659 544 528 509 565 985 518
--------------------------------------------------------------------------------
Total 1,405 1, 757 1, 603 1, 528 1, 145 1, 193 1,586 1, 288
--------------------------------------------------------------------------------
** of which Western
Europe 525 668 632 569 307 323 313 355
2010 2011
----------------------------- ----------------------------
Sequential change
(%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
--------------------------------------------------------------------------------
Europe, Middle East
& Africa ** -26% 23% -4% -5% -39% -10% 10% 19%
Americas -9% 11% 0% -8% -26% 28% -37% 64%
Asia -12% 34% -17% -3% -4% 11% 74% -47%
--------------------------------------------------------------------------------
Total -20% 25% -9% -5% -25% 4% 33% -19%
--------------------------------------------------------------------------------
** of which Western
Europe -23% 27% -5% -10% -46% 5% -3% 13%
2010 2011
----------------------------- ----------------------------
Year over year
change (%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
--------------------------------------------------------------------------------
Europe, Middle East
& Africa ** -27% -6% -4% -18% -32% -50% -43% -28%
Americas 1% 14% -4% -8% -25% -13% -45% -3%
Asia -12% 17% 6% -6% 3% -14% 81% -2%
--------------------------------------------------------------------------------
Total -19% 4% -1% -13% -19% -32% -1% -16%
--------------------------------------------------------------------------------
** of which Western
Europe -27% -1% -1% -16% -42% -52% -50% -38%
2010 2011
----------------------------- ----------------------------
Year to date 1003 1006 1009 1012 1103 1106 1109 1112
--------------------------------------------------------------------------------
Europe, Middle East
& Africa ** 711 1 ,587 2 ,424 3 ,219 485 919 1, 399 1,970
Americas 201 424 646 851 151 345 466 664
Asia 493 1, 152 1, 695 2, 224 509 1,075 2,060 2,577
--------------------------------------------------------------------------------
Total 1 ,405 3 ,162 4, 765 6 ,294 1, 145 2 ,339 3 925 5, 211
--------------------------------------------------------------------------------
** of which Western
Europe 525 1,193 1 ,825 2 ,393 307 630 944 1 ,298
2010 2011
----------------------------- ----------------------------
YTD year over year
change (%) 1003 1006 1009 1012 1103 1106 1109 1112
--------------------------------------------------------------------------------
Europe, Middle East
& Africa ** -27% -17% -13% -14% -32% -42% -42% -39%
Americas 1% 7% 3% 0% -25% -19% -28% -22%
Asia -12% 3% 4% 1% 3% -7% 22% 16%
--------------------------------------------------------------------------------
Total -19% -8% -5% -7% -19% -26% -18% -17%
--------------------------------------------------------------------------------
** of which Western
Europe -27% -15% -10% -12% -42% -47% -48% -46%
*All amounts are according to Swedish GAAP.
The full report (including tables) can be downloaded from the following link:
[HUG#1578626]
