Sony Ericsson reports third quarter results
(Thomson Reuters ONE) - 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 Q4The consolidated financial summary for Sony Ericsson MobileCommunications AB (Sony Ericsson) for the third quarter endedSeptember 30, 2009 is as follows: Q3 2008 Q2 2009 Q3 2009Number of units shipped (million) 25.7 13.8 14.1Sales (Euro m.) 2,808 1,684 1,619Gross margin (%) 22% 12% 16%Operating income (Euro m.) -33 -274 -193Operating margin (%) -1% -16% -12% Restructuring charges (Euro m.) 35 1 2 Operating income excl. restructuring 2 -274 -191charges (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 -164Average selling price (Euro) 109 122 114Units 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 thequarter were Euro 1,619 million, a sequential decrease of 4% and ayear-on-year decrease of 42%. The sequential decline in ASP (AverageSelling Price) was due to product mix and continued challengingmarket conditions.Gross margin improved sequentially but dropped year-on-year due tolower sales and foreign exchange fluctuations. The sequentialimprovement was seen in both percentage rate and volume, driven bycost 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 millionfrom the previous quarter. The reduced loss was due to better grossmargin, as well as reduced operating expenses."Our business in the third quarter started to show the effects of ourongoing transformation programme. Having refreshed our brand we arenow better positioned to support the launch of new products such asAino(TM) and Satio(TM) in Q4 2009. We have cleared channelinventories, and have continued to realign internal resources andimprove efficiency. We have also arranged external financing tostrengthen the company's financial position," said Dick Komiyama,outgoing President, Sony Ericsson. "Transforming the business forfuture growth and returning Sony Ericsson to profitability is thefocus of the senior management team and will continue under the newleadership."As of September 30, 2009, Sony Ericsson had a net cash position ofEuro 841 million.Since the beginning of the quarter, facilities of Euro 455 millionwere signed to strengthen the balance sheet and improve liquidity.Euro 155 million were drawn by the end of September and Euro 100million were drawn in the beginning of October. In addition, atwo-year committed back-up facility of Euro 200 million is availablebut has not been utilized. The parent companies have guaranteed Euro350 million of these facilities on a 50/50 basis.Programmes started since mid 2008 to reduce annual operating expensesby Euro 880 million are continuing, with the full benefit expectedduring the second half of 2010. The total restructuring charges forthese programmes are estimated to be well within the previouslyannounced Euro 500 million.As of October 15, 2009; Sir Howard Stringer, Chairman, CEO andPresident of Sony Corporation and a member of the Sony Ericssonboard, became Chairman of the Sony Ericsson board succeedingCarl-Henric Svanberg. At the same time, Bert Nordberg becamePresident of Sony Ericsson succeeding Dick Komiyama, who remains asExecutive Advisor until the end of 2009.Sony Ericsson forecasts that the global handset market for 2009 willcontract by approximately 10% from around 1,190 million units in2008. Sony Ericsson estimates that its market share in units wasabout 5% in the third quarter.The liquid identity is a registered trademark of Sony Ericsson MobileCommunications AB.Satio(TM) and Aino(TM) are trademarks or registered trademarks ofSony Ericsson Mobile Communications AB.WALKMAN® is a trademark of Sony Corporation.Sony is a registered trademark of Sony Corporation. Ericsson is aregistered trademark of Telefonaktiebolaget LM Ericsson.Any rights not expressly granted herein are reserved. Subject tochange without prior notice.A live webcast of the conference call will be available on October16, 2009 at the following times:TIMING14:00 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=ccec29148a44ec4b8077c845c5b4cbbaThe archived webcast will be available approximately one hour afterthe completion of the conference call.CALL-IN NUMBERS:UK and Europe: +44 20 7806 1951Sweden: +46 8 5352 6408US: +1 718 354 1385Japan: +81 3 3570 8227REPLAY:A replay of the conference call will be available approximately twohours after the completion of the conference call until 11:00 pm UKtime on October 21, 2009.UK and Europe: +44 20 7111 1244Sweden: +46 8 5051 3897US: +1 347 366 9565Japan: +81 3 5767 9615Replay passcode: 2462154#EDITOR'S NOTES:Financial statements and additional information:Financial statements:Consolidated income statementConsolidated income statement - isolated quartersConsolidated balance sheetConsolidated statement of cash flowsConsolidated statement of cash flows - isolated quartersAdditional information:Net sales by market area by quarter- ENDS -Sony Ericsson is a 50:50 joint venture by Sony and Ericssonestablished in October 2001, with global corporate functions locatedin London and operations in all major markets. Our vision is tobecome the industry leader in Communication Entertainment; where newstyles of communicating through the internet and social media, becomeentertainment. Sony Ericsson offers exciting consumer experiencesthrough phones, accessories, content and applications. For moreinformation please visit: www.sonyericsson.com.CONTACTS:Investors / analystsEricsson investor relationsGary Pinkham (Stockholm) +46 10 719 0858Susanne Andersson (Stockholm) +46 10 719 4631Lars Jacobsson (Stockholm) +46 10 719 9489Sony investor relationsGen Tsuchikawa (Tokyo) +81 3 6748 2180Shinji Tomita (London) +44 20 7426 8696Press / mediaSony Ericsson global communications and PRAldo Liguori (London) +44 20 8762 5860Merran Wrigley (London) +44 20 8762 5862This press release contains forward-looking statements that involveinherent risks and uncertainties. We have identified certainimportant factors that may cause actual results to differ materiallyfrom those contained in such forward-looking statements. For adetailed description of risk factors see Sony's and Ericsson'sfilings with the US Securities and Exchange Commission, particularlyeach company's latest published Annual Report on Form 20-F.Sony EricssonCONSOLIDATED INCOME STATEMENT Jul-SepEUR million 2009 2008 ChangeNet 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-SepRestructuring 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 6Total 2 35Sony EricssonCONSOLIDATED INCOME STATEMENT Jan-SepEUR million 2009 2008 ChangeNet 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-SepRestructuring 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 6Total 15 46Sony EricssonCONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS 2009 2008EUR million Q3 Q2 Q1 Q4 Q3 Q2 Q1Net sales 1,619 1,684 1,736 2,914 2,808 2,820 2,702Cost of sales -1,367 -1,483 -1,591 -2,476 -2,192 -2,168 -1,914Gross profit 252 200 145 438 616 653 788Gross margin % 15.5% 11.9% 8.4% 15.0% 21.9% 23.1% 29.2%Research anddevelopmentexpenses -260 -245 -303 -359 -337 -344 -339Selling andadministrativeexpenses -205 -235 -225 -366 -303 -310 -270Operating expenses -465 -480 -528 -725 -640 -653 -610Other operatingincome, net 21 6 13 24 -8 -2 6Operating income -193 -274 -369 -262 -33 -2 184Operating margin % -11.9% -16.3% -21.3% -9.0% -1.2% -0.1% 6.8%Financial income 3 6 9 28 25 25 24Financial expenses -9 -15 -10 -27 -15 -14 -15Income afterfinancial items -199 -283 -370 -261 -23 8 193Taxes 42 74 84 81 6 0 -57Minority interest -6 -4 -6 -7 -8 -3 -3Net income -164 -213 -293 -187 -25 6 133Number of unitsshipped (million) 14.1 13.8 14.5 24.2 25.7 24.4 22.3ASP (EUR) 114 122 120 121 109 116 121EUR Million 2009 2008Restructuringcharges Q3 Q2 Q1 Q4 Q3 Q2 Cost of sales 0 -9 7 67 0 8 Research anddevelopmentexpenses 1 9 2 35 26 2 Sales andadministrativeexpenses 1 1 3 24 3 1 Other operatingincome, net 0 0 0 3 6 0Total 2 1 12 129 35 11Sony EricssonCONSOLIDATED BALANCE SHEET Sep 30 Jun 30 Dec 31 Sep 30EUR million 2009 2009 2008 2008ASSETSTotal fixed and financial assets 757 736 590 649Current assetsInventories 397 404 531 717Accounts receivables 917 936 1,629 1,815Other assets 416 379 585 527Other short-term cash investments 464 456 707 918Cash and bank 532 509 418 555Total current assets 2,726 2,685 3,870 4,532Total assets 3,482 3,421 4,460 5,180SHAREHOLDERS' EQUITY AND LIABILITIESShareholders' equity 532 694 1,217 1,429Minority interest 43 66 57 50Total equity 575 760 1,274 1,480Total long-term liabilities 81 30 30 39Accounts payable 1,019 848 990 1,453Other current liabilities 1,807 1,782 2,166 2,208Total current liabilities 2,826 2,630 3,156 3,661Total shareholders' equity andliabilities 3,482 3,421 4,460 5,180Net cash* 841 965 1,072 1,374* Net cash is defined as cash and bank plus short-term cashinvestments less interest bearing liabilities.Sony EricssonCONSOLIDATED STATEMENT OF CASH FLOWS Jul-SepEUR million 2009 2008OPERATIONSNet income -164 -25Adjustments to reconcile net income to cash 20 39 -143 15Changes in operating net assets 49 88Cash flow from operating activities -94 102INVESTMENTSInvesting activities -42 -55Cash flow from investing activities -42 -55FINANCINGFinancing activities 159 - 238Cash flow from financing activities 159 -238Net change in cash 22 -191Cash, beginning of period 965 1,591Translation difference in Cash 9 74Cash, end of period 996 1,473Sony EricssonCONSOLIDATED STATEMENT OF CASH FLOWS Jan-SepEUR million 2009 2008OPERATIONSNet income -669 114Adjustments to reconcile net income to cash 87 108 -583 223Changes in operating net assets 431 -155Cash flow from operating activities -152 68INVESTMENTSInvesting activities -74 -105Cash flow from investing activities -74 -105FINANCINGFinancing activities 106 -708Cash flow from financing activities 106 -708Net change in cash -120 -745Cash, beginning of period 1,125 2,155Translation difference in Cash -9 62Cash, end of period 996 1,473 Sony EricssonCONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS 2009 2008EUR million Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-MarOPERATIONSNet income -164 -213 -293 -187 -25 6 133Adjustmentsto reconcilenet income tocash 20 37 29 37 39 40 31 -143 -176 -263 -150 15 46 164Changes inoperating netassets 49 60 321 -168 88 -142 -101Cash flowfromoperatingactivities -94 -115 58 -318 102 -96 64INVESTMENTSInvestingactivities -42 -13 -19 41 -55 -29 -22Cash flowfrominvestingactivities -42 -13 -19 41 -55 -29 -22FINANCINGFinancingactivities 159 0 - 53 - 46 - 238 - 8 - 462Cash flowfromfinancingactivities 159 0 -53 -46 -238 -8 -462Net change incash 22 -128 -14 -323 -191 -133 -421Cash,beginning ofperiod 965 1,116 1,125 1,473 1,591 1,711 2,155Translationdifference inCash 9 -23 5 -25 74 13 -24Cash, end ofperiod 996 965 1,116 1,125 1,473 1,591 1,711Sony EricssonNET SALES BY MARKET AREA BY QUARTEREUR million 2009 2008Isolated quarters Q3 Q2 Q1 Q4 Q3 Q2 Q1Europe, MiddleEast & Africa * 875 927 977 1,642 1,427 1,386 1,494Americas 232 195 200 636 703 740 486Asia 512 562 559 636 678 694 722Total 1,619 1,684 1,736 2,914 2,808 2,820 2,702* of which WesternEurope 636 678 721 1,117 947 900 979 2009 2008Sequential change(%) Q3 Q2 Q1 Q4 Q3 Q2 Q1Europe, MiddleEast & 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 WesternEurope -6% -6% -35% 18% 5% -8% -38% 2009 2008Year over yearchange (%) Q3 Q2 Q1 Q4 Q3 Q2 Q1Europe, MiddleEast & 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 WesternEurope -33% -25% -26% -29% -14% -18% -9% 2009 2008Year to date 0909 0906 0903 0812 0809 0806 0803Europe, MiddleEast & Africa * 2,778 1,903 977 5,947 4,306 2,879 1,494Americas 627 395 200 2,566 1,930 1,226 486Asia 1,633 1,121 559 2,731 2,094 1,416 722Total 5,038 3,419 1,736 11,244 8,330 5,522 2,702* of which WesternEurope 2,036 1,400 721 3,943 2,826 1,879 979 2009 2008YTD year over yearchange (%) 0909 0906 0903 0812 0809 0806 0803Europe, MiddleEast & 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 WesternEurope -28% -26% -26% -19% -14% -14% -9%The full report (including tables) can be downloaded from thefollowing link:http://hugin.info/1061/R/1347926/324245.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 16.10.2009 - 08:31 Uhr
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