MarketWire | 39 days 23 minutes ago
Sony Ericsson Reports Third Quarter Results
STOCKHOLM, SWEDEN -- (Marketwire) -- 10/16/09 --
Q3 highlights: * Decline in global handset market slowing down * Positive trend from continuing transformation programme * External financing arranged * Refreshed brand in time for Aino(TM) and Satio(TM) launch in Q4
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2009 is as follows:
Q3 2008 Q2 2009 Q3 2009
Number of units shipped (million) 25.7 13.8 14.1
Sales (Euro m.) 2,808 1,684 1,619
Gross margin (%) 22% 12% 16%
Operating income (Euro m.) -33 -274 -193
Operating margin (%) -1% -16% -12%
Restructuring charges (Euro m.) 35 1 2
Operating income excl. restructuring 2 -274 -191
charges (Euro m.)
Operating margin excl. restructuring 0% -16% -12%
charges (%)
Income before taxes (IBT) (Euro m.) -23 -283 -199
IBT excl. restructuring charges 12 -283 -198
(Euro m.)
Net income (Euro m.) -25 -213 -164
Average selling price (Euro) 109 122 114
Units shipped in the quarter were 14.1 million, an increase of 2% quarter-on-quarter and a decrease of 45% year-on-year. Sales for the quarter were Euro 1,619 million, a sequential decrease of 4% and a year-on-year decrease of 42%. The sequential decline in ASP (Average Selling Price) was due to product mix and continued challenging market conditions.
Gross margin improved sequentially but dropped year-on-year due to lower sales and foreign exchange fluctuations. The sequential improvement was seen in both percentage rate and volume, driven by cost savings actions and successful sales of the W995 Walkman® phone.
Income before taxes for the quarter, excluding restructuring charges, was a loss of Euro 198 million compared to a loss of Euro 283 million from the previous quarter. The reduced loss was due to better gross margin, as well as reduced operating expenses.
"Our business in the third quarter started to show the effects of our ongoing transformation programme. Having refreshed our brand we are now better positioned to support the launch of new products such as Aino(TM) and Satio(TM) in Q4 2009. We have cleared channel inventories, and have continued to realign internal resources and improve efficiency. We have also arranged external financing to strengthen the company's financial position," said Dick Komiyama, outgoing President, Sony Ericsson. "Transforming the business for future growth and returning Sony Ericsson to profitability is the focus of the senior management team and will continue under the new leadership."
As of September 30, 2009, Sony Ericsson had a net cash position of Euro 841 million.
Since the beginning of the quarter, facilities of Euro 455 million were signed to strengthen the balance sheet and improve liquidity. Euro 155 million were drawn by the end of September and Euro 100 million were drawn in the beginning of October. In addition, a two-year committed back-up facility of Euro 200 million is available but has not been utilized. The parent companies have guaranteed Euro 350 million of these facilities on a 50/50 basis.
Programmes started since mid 2008 to reduce annual operating expenses by Euro 880 million are continuing, with the full benefit expected during the second half of 2010. The total restructuring charges for these programmes are estimated to be well within the previously announced Euro 500 million.
As of October 15, 2009; Sir Howard Stringer, Chairman, CEO and President of Sony Corporation and a member of the Sony Ericsson board, became Chairman of the Sony Ericsson board succeeding Carl-Henric Svanberg. At the same time, Bert Nordberg became President of Sony Ericsson succeeding Dick Komiyama, who remains as Executive Advisor until the end of 2009.
Sony Ericsson forecasts that the global handset market for 2009 will contract by approximately 10% from around 1,190 million units in 2008. Sony Ericsson estimates that its market share in units was about 5% in the third quarter.
The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB.
Satio(TM) and Aino(TM) are trademarks or registered trademarks of Sony Ericsson Mobile Communications AB.
WALKMAN® is a trademark of Sony Corporation.
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. Subject to change without prior notice.
A live webcast of the conference call will be available on October
16, 2009 at the following times:
TIMING 14:00 UK time (BST) 15:00 Central European time (CET) 09:00 US Eastern time (EDT) 22:00 Japan time (JST) WEBCAST: A live webcast of the conference call will be available at: http://www.ericsson.com/ericsson/investors/ Or please click here to join the webcast directly: http://www.thomson-webcast.net/uk/dispatching/? event_id=191bc04e8408cb47571b7b46c700aca4& portal_id=ccec29148a44ec4b8077c845c5b4cbba The archived webcast will be available approximately one hour after the completion of the conference call. CALL-IN NUMBERS: UK and Europe: +44 20 7806 1951 Sweden: +46 8 5352 6408 US: +1 718 354 1385 Japan: +81 3 3570 8227 REPLAY: A replay of the conference call will be available approximately two hours after the completion of the conference call until 11:00 pm UK time on October 21, 2009. UK and Europe: +44 20 7111 1244 Sweden: +46 8 5051 3897 US: +1 347 366 9565 Japan: +81 3 5767 9615 Replay passcode: 2462154#
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. Our 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.
CONTACTS: Investors / analysts Ericsson investor relations Gary Pinkham (Stockholm) +46 10 719 0858 Susanne Andersson (Stockholm) +46 10 719 4631 Lars Jacobsson (Stockholm) +46 10 719 9489 Sony investor relations Gen Tsuchikawa (Tokyo) +81 3 6748 2180 Shinji Tomita (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. 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.
Sony Ericsson
CONSOLIDATED INCOME STATEMENT
Jul-Sep
EUR million 2009 2008 Change
Net sales 1,619 2,808 -42%
Cost of sales -1,367 -2,192 -38%
Gross profit 252 616 -59%
Gross margin % 15.5% 21.9% -6%
Research and development expenses -260 -337 -23%
Selling and administrative expenses -205 -303 -32%
Operating expenses -465 -640 -27%
Other operating income, net 21 -8 356%
Operating income -193 -33 488%
Operating margin % -11.9% -1.2% -11%
Financial income 3 25 -88%
Financial expenses -9 -15 -36%
Income after financial items -199 -23 776%
Taxes 42 6 549%
Minority interest -6 -8 -26%
Net income -164 -25 565%
Number of units shipped (million) 14.1 25.7 -45%
ASP (EUR) 114 109 5%
EUR Million Jul-Sep Jul-Sep
Restructuring charges 2009 2008
Cost of sales 0 0
Research and development expenses 1 26
Sales and administrative expenses 1 3
Other operating income, net 0 6
Total 2 35
Sony Ericsson
CONSOLIDATED INCOME STATEMENT
Jan-Sep
EUR million 2009 2008 Change
Net sales 5,038 8,330 -40%
Cost of sales -4,441 -6,274 -29%
Gross profit 597 2,056 -71%
Gross margin % 11.9% 24.7% -13%
Research and development expenses -808 -1,020 -21%
Selling and administrative expenses -665 -883 -25%
Operating expenses -1,473 -1,903 -23%
Other operating income, net 39 -3 -1233%
Operating income -837 149 -661%
Operating margin % -16.6% 1.8% -18%
Financial income 18 73 -76%
Financial expenses -34 -44 -23%
Income after financial items -853 179 -577%
Taxes 200 -50 -499%
Minority interest -16 -14 15%
Net income -669 114 -685%
Number of units shipped (million) 42.5 72.5 -41%
ASP (EUR) 119 115 3%
EUR Million Jan-Sep Jan-Sep
Restructuring charges 2009 2008
Cost of sales -2 8
Research and development expenses 12 28
Sales and administrative expenses 4 4
Other operating income, net 0 6
Total 15 46
Sony Ericsson
CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS
2009 2008
EUR million Q3 Q2 Q1 Q4 Q3 Q2 Q1
Net sales 1,619 1,684 1,736 2,914 2,808 2,820 2,702
Cost of sales -1,367 -1,483 -1,591 -2,476 -2,192 -2,168 -1,914
Gross profit 252 200 145 438 616 653 788
Gross margin % 15.5% 11.9% 8.4% 15.0% 21.9% 23.1% 29.2%
Research and
development
expenses -260 -245 -303 -359 -337 -344 -339
Selling and
administrative
expenses -205 -235 -225 -366 -303 -310 -270
Operating expenses -465 -480 -528 -725 -640 -653 -610
Other operating
income, net 21 6 13 24 -8 -2 6
Operating income -193 -274 -369 -262 -33 -2 184
Operating margin % -11.9% -16.3% -21.3% -9.0% -1.2% -0.1% 6.8%
Financial income 3 6 9 28 25 25 24
Financial expenses -9 -15 -10 -27 -15 -14 -15
Income after
financial items -199 -283 -370 -261 -23 8 193
Taxes 42 74 84 81 6 0 -57
Minority interest -6 -4 -6 -7 -8 -3 -3
Net income -164 -213 -293 -187 -25 6 133
Number of units
shipped (million) 14.1 13.8 14.5 24.2 25.7 24.4 22.3
ASP (EUR) 114 122 120 121 109 116 121
EUR Million 2009 2008
Restructuring
charges Q3 Q2 Q1 Q4 Q3 Q2
Cost of sales 0 -9 7 67 0 8
Research and
development
expenses 1 9 2 35 26 2
Sales and
administrative
expenses 1 1 3 24 3 1
Other operating
income, net 0 0 0 3 6 0
Total 2 1 12 129 35 11
Sony Ericsson
CONSOLIDATED BALANCE SHEET
Sep 30 Jun 30 Dec 31 Sep 30
EUR million 2009 2009 2008 2008
ASSETS
Total fixed and financial assets 757 736 590 649
Current assets
Inventories 397 404 531 717
Accounts receivables 917 936 1,629 1,815
Other assets 416 379 585 527
Other short-term cash investments 464 456 707 918
Cash and bank 532 509 418 555
Total current assets 2,726 2,685 3,870 4,532
Total assets 3,482 3,421 4,460 5,180
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity 532 694 1,217 1,429
Minority interest 43 66 57 50
Total equity 575 760 1,274 1,480
Total long-term liabilities 81 30 30 39
Accounts payable 1,019 848 990 1,453
Other current liabilities 1,807 1,782 2,166 2,208
Total current liabilities 2,826 2,630 3,156 3,661
Total shareholders' equity and
liabilities 3,482 3,421 4,460 5,180
Net cash* 841 965 1,072 1,374
* Net cash is defined as cash and bank plus short-term cash
investments less interest bearing liabilities.
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS
Jul-Sep
EUR million 2009 2008
OPERATIONS
Net income -164 -25
Adjustments to reconcile net income to cash 20 39
-143 15
Changes in operating net assets 49 88
Cash flow from operating activities -94 102
INVESTMENTS
Investing activities -42 -55
Cash flow from investing activities -42 -55
FINANCING
Financing activities 159 -238
Cash flow from financing activities 159 -238
Net change in cash 22 -191
Cash, beginning of period 965 1,591
Translation difference in Cash 9 74
Cash, end of period 996 1,473
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS
Jan-Sep
EUR million 2009 2008
OPERATIONS
Net income -669 114
Adjustments to reconcile net income to cash 87 108
-583 223
Changes in operating net assets 431 -155
Cash flow from operating activities -152 68
INVESTMENTS
Investing activities -74 -105
Cash flow from investing activities -74 -105
FINANCING
Financing activities 106 -708
Cash flow from financing activities 106 -708
Net change in cash -120 -745
Cash, beginning of period 1,125 2,155
Translation difference in Cash -9 62
Cash, end of period 996 1,473
Sony Ericsson
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS
2009 2008
EUR million Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar
OPERATIONS
Net income -164 -213 -293 -187 -25 6 133
Adjustments
to reconcile
net income to
cash 20 37 29 37 39 40 31
-143 -176 -263 -150 15 46 164
Changes in
operating net
assets 49 60 321 -168 88 -142 -101
Cash flow
from
operating
activities -94 -115 58 -318 102 -96 64
INVESTMENTS
Investing
activities -42 -13 -19 41 -55 -29 -22
Cash flow
from
investing
activities -42 -13 -19 41 -55 -29 -22
FINANCING
Financing
activities 159 0 -53 -46 -238 -8 -462
Cash flow
from
financing
activities 159 0 -53 -46 -238 -8 -462
Net change in
cash 22 -128 -14 -323 -191 -133 -421
Cash,
beginning of
period 965 1,116 1,125 1,473 1,591 1,711 2,155
Translation
difference in
Cash 9 -23 5 -25 74 13 -24
Cash, end of
period 996 965 1,116 1,125 1,473 1,591 1,711
Sony Ericsson
NET SALES BY MARKET AREA BY QUARTER
EUR million
2009 2008
Isolated quarters Q3 Q2 Q1 Q4 Q3 Q2 Q1
Europe, Middle
East & Africa * 875 927 977 1,642 1,427 1,386 1,494
Americas 232 195 200 636 703 740 486
Asia 512 562 559 636 678 694 722
Total 1,619 1,684 1,736 2,914 2,808 2,820 2,702
* of which Western
Europe 636 678 721 1,117 947 900 979
2009 2008
Sequential change
(%) Q3 Q2 Q1 Q4 Q3 Q2 Q1
Europe, Middle
East & Africa * -6% -5% -40% 15% 3% -7% -34%
Americas 19% -3% -69% -10% -5% 52% -24%
Asia -9% 1% -12% -6% -2% -4% -18%
Total -4% -3% -40% 4% 0% 4% -28%
* of which Western
Europe -6% -6% -35% 18% 5% -8% -38%
2009 2008
Year over year
change (%) Q3 Q2 Q1 Q4 Q3 Q2 Q1
Europe, Middle
East & Africa * -39% -33% -35% -27% -17% -20% -7%
Americas -67% -74% -59% 0% 23% 48% 33%
Asia -25% -19% -23% -28% -17% -21% -25%
Total -42% -40% -36% -23% -10% -9% -8%
* of which Western
Europe -33% -25% -26% -29% -14% -18% -9%
2009 2008
Year to date 0909 0906 0903 0812 0809 0806 0803
Europe, Middle
East & Africa * 2,778 1,903 977 5,947 4,306 2,879 1,494
Americas 627 395 200 2,566 1,930 1,226 486
Asia 1,633 1,121 559 2,731 2,094 1,416 722
Total 5,038 3,419 1,736 11,244 8,330 5,522 2,702
* of which Western
Europe 2,036 1,400 721 3,943 2,826 1,879 979
2009 2008
YTD year over year
change (%) 0909 0906 0903 0812 0809 0806 0803
Europe, Middle
East & Africa * -35% -34% -35% -18% -15% -13% -7%
Americas -67% -68% -59% 24% 34% 42% 33%
Asia -22% -21% -23% -23% -21% -23% -25%
Total -40% -38% -36% -13% -9% -9% -8%
* of which Western
Europe -28% -26% -26% -19% -14% -14% -9%
The full report (including tables) can be downloaded from the following link: http://hugin.info/1061/R/1347926/324245.pdf
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