Sony Ericsson reports second quarter 2010 results
Q2 Highlights:
- Income before taxes excl. restructuring charges increases to Euro 63 million
- Positive cash flow generated from operating activities
- ASP rises to Euro 160
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the second quarter ended June 30, 2010 is as follows:
| Q2 2009 | Q1 2010 | Q2 2010 | |
| Number of units shipped (million) | 13.8 | 10.5 | 11.0 |
| Sales (Euro m.) | 1,684 | 1,405 | 1,757 |
| Gross margin (%) | 12% | 31% | 28% |
| Operating income (Euro m.) | -274 | 20 | 36 |
| Operating margin (%) | -16% | 1% | 2% |
| Restructuring charges (Euro m.) | 1 | 3 | 32 |
| Operating income excl. restructuring charges (Euro m.) | -274 | 23 | 68 |
| Operating margin excl. restructuring charges (%) | -16% | 2% | 4% |
| Income before taxes (IBT) (Euro m.) | -283 | 18 | 31 |
| IBT excl. restructuring charges (Euro m.) | -283 | 21 | 63 |
| Net income (Euro m.) | -213 | 21 | 12 |
| Average selling price (Euro) | 122 | 134 | 160 |
Bert Nordberg, President, Sony Ericsson commented, "Our second quarter results show that the company continued the momentum seen in the first quarter as a result of our focus on the value market and the success of new smartphones; Xperia(TM) X10 and Vivaz(TM), launched during the first quarter. These models, along with the Xperia(TM) X10 mini and Xperia(TM) X10 mini pro which started shipping at the end of the second quarter, have been well received by operators and we are now well positioned for long term growth."
Sales for the quarter were Euro 1,757 million, a 25% increase sequentially and a 4% increase year-on-year. Units shipped in the quarter were 11 million, a 5% increase sequentially and a 20% decrease year-on- year due to the reduction in size of the product portfolio. Average selling price (ASP) increased 19% sequentially and 31% year-on-year to Euro 160 during the quarter due to improved product and geographical mix, as well as positive currency effects.
Income before taxes for the quarter excluding restructuring charges was a profit of Euro 63 million, illustrating the positive impact of the cost reduction programme and favourable product mix.
The transformation programme, which started in mid-2008 is now in its final stages and on target to reduce annual operating expenses by Euro 880 million by the end of the year. Since the start of the program Sony Ericsson has reduced its global workforce by approximately 4,000 people to reach a total workforce of approximately 7,800 by June 30, 2010. The total restructuring charges taken to date for the programme are Euro 374 million.
As of June 30, 2010 Sony Ericsson retained a net cash position of Euro 609 million, an increase of Euro 46 million sequentially mainly due to operating results, tight financial management of working capital, as well as positive currency effects.
Market share in unit base for the quarter remained flat and is estimated to be around 4%.
Sony Ericsson maintains a forecast of slight growth in units in the global handset market in 2010.
The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB.
Vivaz(TM) and XPERIA(TM) are trademarks 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 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. Sony Ericsson 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.
- ENDS -
CONTACTS:
Ericsson investor relations
Susanne Andersson (Stockholm) +46 10 719 4631
Andreas Hedemyr (Stockholm) +46 10 714 3748
Sony investor relations
Gen Tsuchikawa (Tokyo) +81 3 6748 2111
Yas Hasegawa (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. 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 | 2009 | 2010 | Change | 2009 | 2010 | Change | |
| Net sales | 1,684 | 1,757 | 4% | 3,419 | 3,162 | -8% | |
| Cost of sales | -1,483 | -1,266 | -15% | -3,074 | -2,241 | -27% | |
| Gross profit | 200 | 492 | 146% | 346 | 921 | 167% | |
| Gross margin % | 11.9% | 28.0% | 10.1% | 29.1% | |||
| Research and development expenses | -245 | -218 | -11% | -548 | -434 | -21% | |
| Selling and administrative expenses | -235 | -245 | 4% | -460 | -452 | -2% | |
| Operating expenses | -480 | -463 | -4% | -1,008 | -886 | -12% | |
| Other operating income, net | 6 | 7 | 25% | 19 | 21 | 14% | |
| Operating income | -274 | 36 | - | -644 | 57 | - | |
| Operating margin % | -16.3% | 2.1% | -18.8% | 1.8% | |||
| Financial income | 6 | 2 | -60% | 15 | 9 | -40% | |
| Financial expenses | -15 | -7 | -51% | -25 | -16 | -35% | |
| Income after financial items | -283 | 31 | - | -653 | 50 | - | |
| Taxes | 74 | -16 | - | 158 | -10 | - | |
| Minority interest | -4 | -4 | -2% | -10 | -7 | -32% | |
| Net income | -213 | 12 | - | -505 | 33 | - | |
| Number of units shipped (million) | 13.8 | 11.0 | -20% | 28.3 | 21.5 | -24% | |
| ASP (EUR) | 122 | 160 | 31% | 121 | 147 | 22% | |
| EUR Million | Apr-Jun | Jan-Jun | |||||
| Restructuring charges | 2009 | 2010 | 2009 | 2010 | |||
| Cost of sales | -9 | 33 | -2 | 31 | |||
| Research and development expenses | 9 | 1 | 11 | 3 | |||
| Sales and administrative expenses | 1 | -2 | 4 | 1 | |||
| Total | 1 | 32 | 13 | 35 | |||
Sony Ericsson
CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS
| 2009 | 2010 | ||||||
| EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |
| Net sales | 1,736 | 1,684 | 1,619 | 1,750 | 1,405 | 1,757 | |
| Cost of sales | -1,591 | -1,483 | -1,367 | -1,341 | -975 | -1,266 | |
| Gross profit | 145 | 200 | 252 | 409 | 429 | 492 | |
| Gross margin % | 8.4% | 11.9% | 15.5% | 23.4% | 30.6% | 28.0% | |
| Research and development expenses | -303 | -245 | -260 | -299 | -216 | -218 | |
| Selling and administrative expenses | -225 | -235 | -205 | -299 | -207 | -245 | |
| Operating expenses | -528 | -480 | -465 | -599 | -423 | -463 | |
| Other operating income, net | 13 | 6 | 21 | 8 | 14 | 7 | |
| Operating income | -369 | -274 | -193 | -181 | 20 | 36 | |
| Operating margin % | -21.3% | -16.3% | -11.9% | -10.4% | 1.4% | 2.1% | |
| Financial income | 9 | 6 | 3 | 4 | 7 | 2 | |
| Financial expenses | -10 | -15 | -9 | -12 | -9 | -7 | |
| Income after financial items | -370 | -283 | -199 | -190 | 18 | 31 | |
| Taxes | 84 | 74 | 42 | 36 | 6 | -16 | |
| Minority interest | -6 | -4 | -6 | -12 | -3 | -4 | |
| Net income | -293 | -213 | -164 | -167 | 21 | 12 | |
| Number of units shipped (million) | 14.5 | 13.8 | 14.1 | 14.6 | 10.5 | 11.0 | |
| ASP (EUR) | 120 | 122 | 114 | 120 | 134 | 160 | |
| EUR Million | 2009 | 2010 | |||||
| Restructuring charges | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |
| Cost of sales | 7 | -9 | 0 | 41 | -2 | 33 | |
| Research and development expenses | 2 | 9 | 1 | 72 | 2 | 1 | |
| Sales and administrative expenses | 3 | 1 | 1 | 37 | 3 | -2 | |
| Total | 12 | 1 | 2 | 150 | 3 | 32 | |
Sony Ericsson
CONSOLIDATED BALANCE SHEET
| Jun 30 | Dec 31 | Mar 31 | Jun 30 | |||||
| EUR million | 2009 | 2009 | 2010 | 2010 | ||||
| ASSETS | ||||||||
| Total fixed and financial assets | 736 | 779 | 791 | 836 | ||||
| Current assets | ||||||||
| Inventories | 404 | 358 | 384 | 467 | ||||
| Accounts receivable | 936 | 832 | 849 | 1,063 | ||||
| Other assets | 379 | 415 | 369 | 412 | ||||
| Other short-term cash investments | 456 | 489 | 537 | 477 | ||||
| Cash and bank | 509 | 389 | 443 | 562 | ||||
| Total current assets | 2,685 | 2,483 | 2,582 | 2,981 | ||||
| Total assets | 3,421 | 3,262 | 3,373 | 3,817 | ||||
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||||
| Shareholders' equity | 694 | 381 | 438 | 510 | ||||
| Minority interest | 66 | 47 | 54 | 66 | ||||
| Total equity | 760 | 428 | 492 | 575 | ||||
| Borrowing, Non Current | 0 | 0 | 100 | 101 | ||||
| Other long-term liabilities | 30 | 32 | 37 | 40 | ||||
| Total long-term liabilities | 30 | 32 | 137 | 141 | ||||
| Accounts payable | 848 | 852 | 829 | 973 | ||||
| Borrowing, Current | 0 | 258 | 316 | 329 | ||||
| Other current liabilities | 1,782 | 1,692 | 1,599 | 1,798 | ||||
| Total current liabilities | 2,630 | 2,802 | 2,744 | 3,101 | ||||
| Total shareholders' equity and liabilities | 3,421 | 3,262 | 3,373 | 3,817 | ||||
| Net cash* | 965 | 620 | 563 | 609 | ||||
* Net cash is defined as cash and bank plus short-term cash investments less interest-bearing liabilities.
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS
| Apr-Jun | Jan-Jun | ||||
| EUR million | 2009 | 2010 | 2009 | 2010 | |
| OPERATIONS | |||||
| Net income | -213 | 12 | -505 | 33 | |
| Adjustments to reconcile net income to cash | 37 | 4 | 66 | -40 | |
| -176 | 16 | -439 | -6 | ||
| Changes in operating net assets | 60 | 13 | 382 | -58 | |
| Cash flow from operating activities | -115 | 29 | -57 | -65 | |
| INVESTMENTS | |||||
| Investing activities | -13 | -15 | -32 | 12 | |
| Cash flow from investing activities | -13 | -15 | -32 | 12 | |
| FINANCING | |||||
| Financing activities | 0 | 0 | - 53 | 150 | |
| Cash flow from financing activities | 0 | 0 | -53 | 150 | |
| Net change in cash | -128 | 15 | -142 | 97 | |
| Cash, beginning of period | 1,116 | 980 | 1,125 | 878 | |
| Translation difference in Cash | -23 | 45 | -18 | 64 | |
| Cash, end of period | 965 | 1,039 | 965 | 1,039 | |
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS
| 2009 | 2010 | ||||||
| EUR million | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |
| OPERATIONS | |||||||
| Net income | -293 | -213 | -164 | -167 | 21 | 12 | |
| Adjustments to reconcile net income to cash | 29 | 37 | 20 | 48 | -44 | 4 | |
| -263 | -176 | -143 | -119 | -23 | 16 | ||
| Changes in operating net assets | 321 | 60 | 49 | -97 | -72 | 13 | |
| Cash flow from operating activities | 58 | -115 | -94 | -216 | -94 | 29 | |
| INVESTMENTS | |||||||
| Investing activities | -19 | -13 | -42 | -10 | 27 | -15 | |
| Cash flow from investing activities | -19 | -13 | -42 | -10 | 27 | -15 | |
| FINANCING | |||||||
| Financing activities | - 53 | 0 | 159 | 100 | 150 | 0 | |
| Cash flow from financing activities | -53 | 0 | 159 | 100 | 150 | 0 | |
| Net change in cash | -14 | -128 | 22 | -126 | 83 | 15 | |
| Cash, beginning of period | 1,125 | 1,116 | 965 | 996 | 878 | 980 | |
| Translation difference in Cash | 5 | -23 | 9 | 8 | 19 | 45 | |
| Cash, end of period | 1,116 | 965 | 996 | 878 | 980 | 1,039 | |
Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER
| EUR million | ||||||||
| 2009 | 2010 | |||||||
| Isolated quarters | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||
| Europe, Middle East & Africa * | 977 | 927 | 875 | 966 | 711 | 876 | ||
| Americas | 200 | 195 | 232 | 222 | 201 | 223 | ||
| Asia | 559 | 562 | 512 | 562 | 493 | 659 | ||
| Total | 1,736 | 1,684 | 1,619 | 1,750 | 1,405 | 1,757 | ||
| * of which Western Europe | 721 | 678 | 636 | 678 | 525 | 668 | ||
| 2009 | 2010 | |||||||
| Sequential change (%) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||
| Europe, Middle East & Africa * | -40% | -5% | -6% | 10% | -26% | 23% | ||
| Americas | -69% | -3% | 19% | -4% | -10% | 11% | ||
| Asia | -12% | 1% | -9% | 10% | -12% | 34% | ||
| Total | -40% | -3% | -4% | 8% | -20% | 25% | ||
| * of which Western Europe | -35% | -6% | -6% | 7% | -23% | 27% | ||
| 2009 | 2010 | |||||||
| Year over year change (%) | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||
| Europe, Middle East & Africa * | -35% | -33% | -39% | -41% | -27% | -5% | ||
| Americas | -59% | -74% | -67% | -65% | 1% | 14% | ||
| Asia | -23% | -19% | -25% | -12% | -12% | 17% | ||
| Total | -36% | -40% | -42% | -40% | -19% | 4% | ||
| * of which Western Europe | -26% | -25% | -33% | -39% | -27% | -2% | ||
| 2009 | 2010 | |||||||
| Year to date | 0903 | 0906 | 0909 | 0912 | 1003 | 1006 | ||
| Europe, Middle East & Africa * | 977 | 1,903 | 2,778 | 3,744 | 711 | 1,587 | ||
| Americas | 200 | 395 | 627 | 850 | 201 | 424 | ||
| Asia | 559 | 1,121 | 1,633 | 2,194 | 493 | 1,152 | ||
| Total | 1,736 | 3,419 | 5,038 | 6,788 | 1,405 | 3,162 | ||
| * of which Western Europe | 721 | 1,400 | 2,036 | 2,714 | 525 | 1,193 | ||
| 2009 | 2010 | |||||||
| YTD year over year change (%) | 0903 | 0906 | 0909 | 0912 | 1003 | 1006 | ||
| Europe, Middle East & Africa * | -35% | -34% | -35% | -37% | -27% | -17% | ||
| Americas | -59% | -68% | -67% | -67% | 1% | 7% | ||
| Asia | -23% | -21% | -22% | -20% | -12% | 3% | ||
| Total | -36% | -38% | -40% | -40% | -19% | -8% | ||
| * of which Western Europe | -26% | -26% | -28% | -31% | -27% | -15% | ||
The full report (including tables) can be downloaded from the following link: