Sony Ericsson reports fourth quarter and full year 2009 results
(Thomson Reuters ONE) - Q4 Highlights: * Improved quarterly financial results reflected success of refreshed portfolio * Transformation programme bearing fruit and to continue * Announced first Android-based phone, the XPERIA(TM) X10The consolidated financial summary for Sony Ericsson Mobile Communications AB(Sony Ericsson) for the fourth quarter and full year ended December 31, 2009 isas follows: Q4 2009 Q3 2009 Q4 2008 FY 2009 FY 2008 Number of units shipped (million) 14.6 14.1 24.2 57.1 96.6 Sales (Euro m.) 1,750 1,619 2,914 6,788 11,244 Gross margin (%) 23% 16% 15% 15% 22% Operating income (Euro m.) -181 -193 -262 -1,018 -113 Operating margin (%) -10% -12% -9% -15% -1% Restructuring charges (Euro m.) 150 2 129 164 175 Operating income excl. restructuring charges (Euro m.) -32 -191 -133 -854 61 Operating margin excl. restructuring charges (%) -2% -12% -5% -13% 1% Income before taxes (IBT) (Euro m.) -190 -199 -261 -1,043 -83 IBT excl. restructuring charges (Euro m.) -40 -198 -133 -878 92 Net income (Euro m.) -167 -164 -187 -836 -73 Average selling price (Euro) 120 114 121 119 116Bert Nordberg, President, Sony Ericsson comments; "The refreshed portfolio,coupled with the business transformation programme has started to positivelyimpact our financial results. Continued cost saving activities and resourcerealignment are necessary in order to build a leaner, more efficientorganisation capable of meeting the demands of the changing competitivelandscape. We will continue to focus on returning the company to profitabilityby establishing Sony Ericsson as the communication entertainment brand based onan exciting portfolio of mid- and high-end products, such as our recentlyannounced Android-based phone, the XPERIA(TM) X10. 2010 will still bechallenging as the full benefit of cost improvements will not impact resultsuntil the second half of the year, however we are confident that our business ison the right track."Units shipped in the quarter were 14.6 million, a sequential increase of 3% anda year-on-year decrease of 40%. Sales for the quarter were Euro 1,750 million, asequential increase of 8% and a year-on-year decrease of 40%. The sequentialincrease was driven by market seasonality and successful sales of Satio(TM) andAino(TM) phones. The year-on-year decrease in both units and sales was mainlydue to a downturn in the global handset market and a faster than anticipatedshift to touch screen phones in the mid-priced sector of the market. AverageSelling Price (ASP) for the quarter rose sequentially by 5% to Euro 120 due to amore favourable product mix.Gross margin percentage improved sequentially and year-on-year mainly driven bythe successful sales of new, higher-margin phones as well as the positive impactof cost reduction activities.Income before taxes for the quarter, excluding restructuring charges, was a lossof Euro 40 million compared to a loss of Euro 198 million in the previousquarter. The reduced loss was due to the improved gross margin and the benefitsof reduced operating expenses. Excluding restructuring charges, Sony Ericssonmade a loss for the full year 2009 of Euro 878 million compared with an incomeof Euro 92 million in 2008. The year-on-year deterioration was mainlyattributable to the lower sales.As of December 31, 2009, Sony Ericsson had a net cash position of Euro 620million.During 2009, Sony Ericsson secured external funding of Euro 455 million tostrengthen the balance sheet and improve liquidity, out of which Euro 350million has been guaranteed by the parent companies on a 50/50 basis. Euro 255million was drawn by the end of 2009, but the remaining Euro 200 million, atwo-year committed back-up facility, has not been utilised.The programme started in mid-2008 to reduce annual operating expenses by Euro880 million is continuing; with the full benefit expected during the second halfof 2010. Since the start of the programme Sony Ericsson has reduced its globalworkforce by approximately 2,500 people to 9,100 by the end of 2009. The totalrestructuring charges taken to date are Euro 339 million, and charges for thefull programme are estimated to be well within the previously announced Euro500 million.Sony Ericsson estimates that the global handset market in units for the fourthquarter 2009 was flat year-on-year and that its market share was about 5% in thefourth quarter. Sony Ericsson believes that the global handset market for thefull year 2009 decreased in volume by around 8% year-on-year to around 1.1billion units and that its market share in units for the full year 2009 wasabout 5%.Sony Ericsson forecasts a slight growth in units in the global handset market in2010.-END -The liquid identity is a registered trademark of Sony Ericsson MobileCommunications AB.Aino(TM), Satio(TM) and XPERIA(TM) are trademarks or registered trademarks ofSony Ericsson Mobile Communications AB.Sony is a registered trademark of Sony Corporation. Ericsson is a registeredtrademark of Telefonaktiebolaget LM Ericsson.Any rights not expressly granted herein are reserved. Subject to change withoutprior notice.EDITOR'S NOTES:Financial statements:Consolidated income statementConsolidated income statement full yearConsolidated income statement isolated quartersConsolidated balance sheetConsolidated statement of cash flowsConsolidated statement of cash flows full yearConsolidated statement of cash flows isolated quartersAdditional information:Net sales by market area, by quarterSony Ericsson is a 50:50 joint venture by Sony and Ericsson established inOctober 2001, with global corporate functions located in London and operationsin all major markets. Our vision is to become the industry leader inCommunication Entertainment; where new styles of communicating through theinternet and social media, become entertainment. Sony Ericsson offers excitingconsumer experiences through phones, accessories, content and applications. Formore information please visit,www.sonyericsson.com.CONTACTS:Investors / analystsEricsson investor relations Susanne Andersson (Stockholm) +46 10 719 4631 Lars Jacobsson (Stockholm) +46 10 719 9489Sony investor relations Gen Tsuchikawa (Tokyo) +81 3 6748 2180 Shinji Tomita (London) +44 20 7426 8696Press / mediaSony Ericsson global communications and PR Aldo Liguori (London) +44 20 8762 5860 Merran Wrigley (London) +44 20 8762 5862A live webcast of the conference call discussing the company's results for thefourth quarter and full year ended December 31, 2009 will be available onJanuary 22, 2010 at the following times:TIMING:15:30 UK time (GMT)16:30 Central European time (CET)10:30 US Eastern time (EST)00:30 Japan time (JST) January 23, 2010WEBCAST:A live webcast of the conference call will be availableat:www.ericsson.com/ericsson/investorsOr please click here to join the webcastdirectly:www.thomson-webcast.net/uk/dispatching/?event_id=55bbf43ecfabff7e6e911983a216b4b0&portal_id=ccec29148a44ec4b8077c845c5b4cbbaThe archived webcast will be available approximately one hour after thecompletion of the conference call.CALL-IN NUMBERS: UK and Europe +44 20 7806 1956 Sweden +46 8 5352 6407 US: +1 718 354 1389 Japan: +81 3 3570 8228REPLAY:A replay of the conference call will be available approximately two hours afterthe completion of the conference call until 11:00 pm UK time on 28 January,2010. UK and Europe: +44 20 7111 1244 Sweden: +46 8 5051 3897 US: +1 347 366 9565 Japan: +81 3 5767 9615Replay pass code: 8140934#This press release contains forward-looking statements that involve inherentrisks and uncertainties. We have identified certain important factors that maycause actual results to differ materially from those contained in suchforward-looking statements. For a detailed description of risk factors seeSony'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 EricssonCONSOLIDATED INCOME STATEMENT Oct-Dec EUR million 2009 2008 Change Net sales 1,750 2,914 -40% Cost of sales -1,341 -2,476 -46% Gross profit 409 438 -7% Gross margin % 23.4% 15.0% 8% Research and development expenses -299 -359 -17% Selling and administrative expenses -299 -366 -18% Operating expenses -599 -725 -17% Other operating income, net 8 24 -66% Operating income -181 -262 -31% Operating margin % -10.4% -9.0% -1% Financial income 4 28 -88% Financial expenses -12 -27 -55% Income after financial items -190 -261 -27% Taxes 36 81 -56% Minority interest -12 -7 75% Net income -167 -187 -11% Number of units shipped (million) 14.6 24.2 -40% ASP (EUR) 120 121 -1% EUR Million Oct-Dec Restructuring charges 2009 2008 Cost of sales 41 67 Research and development expenses 72 35 Sales and administrative expenses 37 24 Other operating income, net 0 3 Total 150 129Sony EricssonCONSOLIDATED INCOME STATEMENT Jan-Dec EUR million 2009 2008 Change Net sales 6,788 11,244 -40% Cost of sales -5,782 -8,750 -34% Gross profit 1,006 2,494 -60% Gross margin % 14.8% 22.2% -7% Research and development expenses -1,108 -1,379 -20% Selling and administrative expenses -964 -1,249 -23% Operating expenses -2,072 -2,628 -21% Other operating income, net 48 21 - Operating income -1,018 -113 - Operating margin % -15.0% -1.0% -14% Financial income 21 101 -79% Financial expenses -46 -71 -35% Income after financial items -1,043 -83 - Taxes 236 31 - Minority interest -29 -21 35% Net income -836 -73 - Number of units shipped (million) 57.1 96.6 -41% ASP (EUR) 119 116 2% EUR Million Jan-Dec Restructuring charges 2009 2008 Cost of sales 39 75 Research and development expenses 84 62 Sales and administrative expenses 41 29 Other operating income, net 0 9 Total 164 175Sony EricssonCONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS 2009 2008 EUR million Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net sales 1,750 1,619 1,684 1,736 2,914 2,808 2,820 2,702 Cost of sales -1,341 -1,367 -1,483 -1,591 -2,476 -2,192 -2,168 -1,914 Gross profit 409 252 200 145 438 616 653 788 Gross margin % 23.4% 15.5% 11.9% 8.4% 15.0% 21.9% 23.1% 29.2% Research and development expenses -299 -260 -245 -303 -359 -337 -344 -339 Selling and administrative expenses -299 -205 -235 -225 -366 -303 -310 -270 Operating expenses -599 -465 -480 -528 -725 -640 -653 -610 Other operating income, net 8 21 6 13 24 -8 -2 6 Operating income -181 -193 -274 -369 -262 -33 -2 184 Operating margin % -10.4% -11.9% -16.3% -21.3% -9.0% -1.2% -0.1% 6.8% Financial income 4 3 6 9 28 25 25 24 Financial expenses -12 -9 -15 -10 -27 -15 -14 -15 Income after financial items -190 -199 -283 -370 -261 -23 8 193 Taxes 36 42 74 84 81 6 0 -57 Minority interest -12 -6 -4 -6 -7 -8 -3 -3 Net income -167 -164 -213 -293 -187 -25 6 133 Number of units shipped (million) 14.6 14.1 13.8 14.5 24.2 25.7 24.4 22.3 ASP (EUR) 120 114 122 120 121 109 116 121 EUR Million 2009 2008 Restructuring charges Q4 Q3 Q2 Q1 Q4 Q3 Q2 Cost of sales 41 0 -9 7 67 0 8 Research and development expenses 72 1 9 2 35 26 2 Sales and administrative expenses 37 1 1 3 24 3 1 Other operating income, net 0 0 0 0 3 6 0 Total 150 2 1 12 129 35 11Sony EricssonCONSOLIDATED BALANCE SHEET Dec 31 Sep 30 Jun 30 Dec 31 EUR million 2009 2009 2009 2008 ASSETS Total fixed and financial assets 779 757 736 590 Current assets Inventories 358 397 404 531 Accounts receivable 832 917 936 1,629 Other assets 415 416 379 585 Other short-term cash investments 489 464 456 707 Cash and bank 389 532 509 418 Total current assets 2,483 2,726 2,685 3,870 Total assets 3,262 3,482 3,421 4,460 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity 381 532 694 1,217 Minority interest 47 43 66 57 Total equity 428 575 760 1,274 Borrowing, Non Current 0 50 0 0 Other long-term liabilities 32 31 30 30 Total long-term liabilities 32 81 30 30 Accounts payable 852 1,019 848 990 Borrowing, Current 258 105 0 53 Other current liabilities 1,692 1,702 1,782 2,113 Total current liabilities 2,802 2,826 2,630 3,156 Total shareholders' equity and liabilities 3,262 3,482 3,421 4,460 Net cash* 620 841 965 1,072* Net cash is defined as cash and bank plus short-term cash investments lessinterest-bearing liabilities.Sony EricssonCONSOLIDATED STATEMENT OF CASH FLOWS Oct-Dec EUR million 2009 2008 OPERATIONS Net income -167 -187 Adjustments to reconcile net income to cash 48 37 -119 -150 Changes in operating net assets -97 -168 Cash flow from operating activities -216 -318 INVESTMENTS Investing activities -10 41 Cash flow from investing activities -10 41 FINANCING Financing activities 100 - 46 Cash flow from financing activities 100 -46 Net change in cash -126 -323 Cash, beginning of period 996 1,473 Translation difference in Cash 8 -25 Cash, end of period 878 1,125Sony EricssonCONSOLIDATED STATEMENT OF CASH FLOWS Jan-Dec EUR million 2009 2008 OPERATIONS Net income -836 -73 Adjustments to reconcile net income to cash 135 146 -701 73 Changes in operating net assets 333 -323 Cash flow from operating activities -368 -250 INVESTMENTS Investing activities -84 -64 Cash flow from investing activities -84 -64 FINANCING Financing activities 205 -754 Cash flow from financing activities 205 -754 Net change in cash -247 -1,068 Cash, beginning of period 1,125 2,155 Translation difference in Cash -1 37 Cash, end of period 878 1,125 Sony EricssonCONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS 2009 2008 EUR million Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 OPERATIONS Net income -167 -164 -213 -293 -187 -25 6 133 Adjustments to reconcile net income to cash 48 20 37 29 37 39 40 31 -119 -143 -176 -263 -150 15 46 164 Changes in operating net assets -97 49 60 321 -168 88 -142 -101 Cash flow from operating activities -216 -94 -115 58 -318 102 -96 64 INVESTMENTS Investing activities -10 -42 -13 -19 41 -55 -29 -22 Cash flow from investing activities -10 -42 -13 -19 41 -55 -29 -22 FINANCING Financing activities 100 159 0 - 53 - 46 - 238 - 8 - 462 Cash flow from financing activities 100 159 0 -53 -46 -238 -8 -462 Net change in cash -126 22 -128 -14 -323 -191 -133 -421 Cash, beginning of period 996 965 1,116 1,125 1,473 1,591 1,711 2,155 Translation difference in Cash 8 9 -23 5 -25 74 13 -24 Cash, end of period 878 996 965 1,116 1,125 1,473 1,591 1,711Sony EricssonNET SALES BY MARKET AREA BY QUARTER EUR million 2009 2008 Isolated quarters Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Europe, Middle East & Africa * 966 875 927 977 1,642 1,427 1,386 1,494 Americas 222 232 195 200 636 703 740 486 Asia 562 512 562 559 636 678 694 722 Total 1,750 1,619 1,684 1,736 2,914 2,808 2,820 2,702 * of which Western Europe 678 636 678 721 1,117 947 900 979 2009 2008 Sequential change (%) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Europe, Middle East & Africa * 10% -6% -5% -40% 15% 3% -7% -34% Americas -4% 19% -3% -69% -10% -5% 52% -24% Asia 10% -9% 1% -12% -6% -2% -4% -18% Total 8% -4% -3% -40% 4% 0% 4% -28% * of which Western Europe 7% -6% -6% -35% 18% 5% -8% -38% 2009 2008 Year over year change (%) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Europe, Middle East & Africa * -41% -39% -33% -35% -27% -17% -20% -7% Americas -65% -67% -74% -59% 0% 23% 48% 33% Asia -12% -25% -19% -23% -28% -17% -21% -25% Total -40% -42% -40% -36% -23% -10% -9% -8% * of which Western Europe -39% -33% -25% -26% -29% -14% -18% -9% 2009 2008 Year to date 0912 0909 0906 0903 0812 0809 0806 0803 Europe, Middle East & Africa * 3,744 2,778 1,903 977 5,947 4,306 2,879 1,494 Americas 850 627 395 200 2,566 1,930 1,226 486 Asia 2,194 1,633 1,121 559 2,731 2,094 1,416 722 Total 6,788 5,038 3,419 1,736 11,244 8,330 5,522 2,702 * of which Western Europe 2,714 2,036 1,400 721 3,943 2,826 1,879 979 2009 2008 YTD year over year change (%) 0912 0909 0906 0903 0812 0809 0806 0803 Europe, Middle East & Africa * -37% -35% -34% -35% -18% -15% -13% -7% Americas -67% -67% -68% -59% 24% 34% 42% 33% Asia -20% -22% -21% -23% -23% -21% -23% -25% Total -40% -40% -38% -36% -13% -9% -9% -8% * of which Western Europe -31% -28% -26% -26% -19% -14% -14% -9%The full report (including tables) can be downloaded from the following link:[HUG#1375922] Fourth quarter and full year report 2009: http://hugin.info/133603/R/1375922/337725.pdf
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