Sony Ericsson reports First Quarter Results
| Q1 2004 | Q4 2004 | Q1 2005 | |
| Numbers of units shipped (million) | 8.8 | 12.6 | 9.4 |
| Sales (EURO m.) | 1338 | 2005 | 1289 |
| Income before taxes (EURO m.) | 97 | 140 | 70 |
| Net income (EURO m.) | 82 | 55 | 32 |
* Q4 2004 and Q1 2005 IBT includes consolidation of BMC and Net Income includes deduction of minority interest in BMC [1]
** Q4 2004 Net Income includes a negative effect of a valuation allowance on deferred tax assets of Euro 45 million
** Q4 2004 Net Income includes a negative effect of a valuation allowance on deferred tax assets of Euro 45 million
Units shipped in the quarter reached 9.4 million, a 7% increase compared to the same period last year. Sales for the quarter were Euro 1,289 million, representing a year on year decrease of 4%. Income before taxes was Euro 70 million and net income was Euro 32 million, which represent year on year decreases of Euro 27 million and Euro 50 million respectively.
In line with expectation, market growth was moderate during the quarter. As a result of more normal seasonality the market declined sequentially. The Western European market declined slightly and witnessed a shift to pre-paid products, while general inventory build up in the sales channels during Q4 spilling over into the first quarter created a more competitive market environment than a year ago.
Sony Ericsson's decrease in average selling price (ASP) was partly due to the general market conditions outlined above, but also because the product line-up was mature and few new products were launched during the period. The company continued investment in product portfolio and brand development, while maintaining gross margins.
"The exciting and innovative products we announced during the first quarter have been well received and will give us a stronger portfolio during the rest of the year," said Miles Flint, President of Sony Ericsson. "We believe there is good growth potential in the market, both from new subscribers and from consumers who are upgrading their mobile phones, so the increased investments we are making now will build our brand and strengthen our product portfolio so we can continue to excite consumers."
Sony Ericsson's decrease in average selling price (ASP) was partly due to the general market conditions outlined above, but also because the product line-up was mature and few new products were launched during the period. The company continued investment in product portfolio and brand development, while maintaining gross margins.
"The exciting and innovative products we announced during the first quarter have been well received and will give us a stronger portfolio during the rest of the year," said Miles Flint, President of Sony Ericsson. "We believe there is good growth potential in the market, both from new subscribers and from consumers who are upgrading their mobile phones, so the increased investments we are making now will build our brand and strengthen our product portfolio so we can continue to excite consumers."
During the quarter Sony Ericsson announced a large number of new products including two new 3G UMTS phones, the company's first 2 megapixel auto focus camera phones and a new Walkman® branded music phone as well as several other phones and accessories that will roll out during Q2 and Q3. Sony Ericsson started shipping the T290 and K300, the S710 in the United States plus the A1404S for KDDI and the NTT DoCoMo premini-II in Japan. The company also activated a major global sports sponsorship deal with the Women's Tennis Association Tour during the period, which was renamed the Sony Ericsson WTA Tour.
[1] On June 30 2004, Sony Ericsson announced it had increased its equity stake in a Chinese factory, Beijing Ericsson Putian Mobile Communications Co. Ltd. (BMC) to 51%, taking over majority ownership of the facility from Ericsson. BMC operations have been fully consolidated into Sony Ericsson from the second quarter 2004 which had a positive effect on the company results. The name of the factory has been changed to Beijing SE Putian Mobile Communications Co. Ltd (BMC).
Note:
Sony Ericsson Mobile Communications serves the global communications market with innovative and feature-rich mobile phones, accessories, PC-cards and M2M solutions. Established as a joint venture by Ericsson and Sony in 2001, with headquarters in London, the company employs approximately 5,000 people worldwide, including R&D sites in Europe, Japan, China and America. For more information, please visit www.SonyEricsson.com
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CONTACTS:
Investors/Analysts
Ericsson Investor Relations
Gary Pinkham, Vice President +46 8 719 0000
Sony Investor Relations
Yukio Ozawa, Vice President (Tokyo) +81 3 5448 2180
Yukio Ozawa, Vice President (Tokyo) +81 3 5448 2180
Chris Hohman, Senior Manager (London) +44 20 7444 9711
Press/Media
Ericsson External Relations
Pia Gideon, Vice President +46 8 719 2864
Pia Gideon, Vice President +46 8 719 2864
Sony Corporate Communications
Koji Kurata (Tokyo) +81 3 5448 2200
Sony Ericsson Corporate Communications
Aldo Liguori, Corporate Vice President (London) +44 208 762 5860
Merran Wrigley, Manager (London) +44 208 762 5862
Peter Bodor, Manager, (Sweden) +46 702 484372
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.