Sony Ericsson reports fourth quarter and full year 2010 results
Highlights:
- Four consecutive quarters of profitability during 2010
- Improvement of Euro 1.1 billion of income before taxes, excluding restructuring charges, for the full year
- Over 9 million Android-based Xperia™ phones shipped since launch
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2010 is as follows:
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2010 is as follows:
Q4 2009 Q4 2009 Q3 2010
Q4 2010
FY 2009
FY 2010Number of units shipped (million)14.6
10.4
11.2
57.1
43.1
Sales (Euro m.)
1,750
1,603
1,528
6,788
6,294
Gross margin (%)
23%
30%
30%
15%
29%
Operating income (Euro m.)
-181
63
39
-1,018
159
Operating margin (%)
-10%
4%
3%
-15%
3%
Restructuring charges (Euro m.)
-150
-4
-3
-164
-42
Operating income excl. restructuring charges (Euro m.)
-32
67
43
-854
202
Operating margin excl. restructuring charges (%)
-2%
4%
3%
-13%
3%
Income before taxes (IBT) (Euro m.)
-190
62
35
-1,043
147
IBT excl. restructuring charges (Euro m.)
-40
66
39
-878
189
Net income (Euro m.)
-167
49
8
-836
90
Average selling price (Euro)
120
154
136
119
146
Bert Nordberg, President & CEO of Sony Ericsson commented, “2010 was a turnaround year for Sony Ericsson. Our four consecutive quarters of profit reflect the success of our shift towards an Android-based smartphone portfolio. We will celebrate the 10th anniversary of the creation of Sony Ericsson in 2011, and as shown by the recently announced Xperia™ arc, we will continue to focus on delivering the most entertaining smartphones worldwide.”
Income before taxes, excluding restructuring charges, was Euro 189 million for the full year 2010, compared with a loss of Euro 878 million in 2009. The improvement of approximately Euro 1.1 billion was driven by the success of a streamlined product portfolio focused on higher-end smartphones and an improved cost structure. Sales for the full year 2010 were Euro 6,294 million, a decrease of 7% from 2009, while gross margin improved from 15% in 2009 to 29%, in 2010.
During 2010 Sony Ericsson completed its company-wide transformation programme, improving its cost of sales ratio, reducing its global workforce by approximately 4,000 people in total, consolidating its facilities worldwide and decreasing annual operating expenses by more than Euro 880 million. The total restructuring charges for the transformation programme were Euro 381 million.
Units shipped during the fourth quarter were 11.2 million, a year-on-year decrease of 23%, consistent with the streamlining of the portfolio to focus on higher-end smartphones. The sequential increase of 8%, related to seasonal factors, was somewhat constrained by a lack of new product launches during the quarter. Average selling price (ASP) for the quarter was Euro 136, a 13% increase year-on-year. ASP decreased 12% sequentially, mainly due to price erosion, foreign exchange and product mix. Sales for the quarter were Euro 1,528 million, a decrease of 13% year-on-year and a decrease of 5% sequentially.
The gross margin for the fourth quarter was 30%, an increase of 7 percentage points year-on-year and essentially flat sequentially, including the benefit of some one-time items, relating to certain royalty matters and warranty estimates.
Income before taxes for the fourth quarter, excluding restructuring charges, was a profit of Euro 39 million, an increase of Euro 79 million year-on-year and a decrease of Euro 27 million sequentially, mainly due to lower sales.
Sony Ericsson’s net cash position as of December 31, 2010 was Euro 375 million. The negative cash flow from operating activities for the quarter was Euro 128 million, mainly due to increases in inventory due to seasonal factors as well as payments related to the transformation programme.
During the quarter term loan facilities of Euro 150 million matured and were repaid in full.
Sony Ericsson estimates that the global handset market for the full year 2010 increased slightly in volume to almost 1.2 billion units. The company estimates that the global handset market for the fourth quarter was essentially flat year-on-year and its market share for the fourth quarter was approximately 3% in units and approximately 5% in value. Sony Ericsson estimates that its market share for the full year 2010 was approximately 4% in units and approximately 6% in value.
Sony Ericsson forecasts modest growth in units in the global handset market for 2011.
- Four consecutive quarters of profitability during 2010
- Improvement of Euro 1.1 billion of income before taxes, excluding restructuring charges, for the full year
- Over 9 million Android-based Xperia™ phones shipped since launch
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2010 is as follows:
The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2010 is as follows:
Q4 2009 Q4 2009 Q3 2010
Q4 2010
FY 2009
FY 2010Number of units shipped (million)14.6
10.4
11.2
57.1
43.1
Sales (Euro m.)
1,750
1,603
1,528
6,788
6,294
Gross margin (%)
23%
30%
30%
15%
29%
Operating income (Euro m.)
-181
63
39
-1,018
159
Operating margin (%)
-10%
4%
3%
-15%
3%
Restructuring charges (Euro m.)
-150
-4
-3
-164
-42
Operating income excl. restructuring charges (Euro m.)
-32
67
43
-854
202
Operating margin excl. restructuring charges (%)
-2%
4%
3%
-13%
3%
Income before taxes (IBT) (Euro m.)
-190
62
35
-1,043
147
IBT excl. restructuring charges (Euro m.)
-40
66
39
-878
189
Net income (Euro m.)
-167
49
8
-836
90
Average selling price (Euro)
120
154
136
119
146
Bert Nordberg, President & CEO of Sony Ericsson commented, “2010 was a turnaround year for Sony Ericsson. Our four consecutive quarters of profit reflect the success of our shift towards an Android-based smartphone portfolio. We will celebrate the 10th anniversary of the creation of Sony Ericsson in 2011, and as shown by the recently announced Xperia™ arc, we will continue to focus on delivering the most entertaining smartphones worldwide.”
Income before taxes, excluding restructuring charges, was Euro 189 million for the full year 2010, compared with a loss of Euro 878 million in 2009. The improvement of approximately Euro 1.1 billion was driven by the success of a streamlined product portfolio focused on higher-end smartphones and an improved cost structure. Sales for the full year 2010 were Euro 6,294 million, a decrease of 7% from 2009, while gross margin improved from 15% in 2009 to 29%, in 2010.
During 2010 Sony Ericsson completed its company-wide transformation programme, improving its cost of sales ratio, reducing its global workforce by approximately 4,000 people in total, consolidating its facilities worldwide and decreasing annual operating expenses by more than Euro 880 million. The total restructuring charges for the transformation programme were Euro 381 million.
Units shipped during the fourth quarter were 11.2 million, a year-on-year decrease of 23%, consistent with the streamlining of the portfolio to focus on higher-end smartphones. The sequential increase of 8%, related to seasonal factors, was somewhat constrained by a lack of new product launches during the quarter. Average selling price (ASP) for the quarter was Euro 136, a 13% increase year-on-year. ASP decreased 12% sequentially, mainly due to price erosion, foreign exchange and product mix. Sales for the quarter were Euro 1,528 million, a decrease of 13% year-on-year and a decrease of 5% sequentially.
The gross margin for the fourth quarter was 30%, an increase of 7 percentage points year-on-year and essentially flat sequentially, including the benefit of some one-time items, relating to certain royalty matters and warranty estimates.
Income before taxes for the fourth quarter, excluding restructuring charges, was a profit of Euro 39 million, an increase of Euro 79 million year-on-year and a decrease of Euro 27 million sequentially, mainly due to lower sales.
Sony Ericsson’s net cash position as of December 31, 2010 was Euro 375 million. The negative cash flow from operating activities for the quarter was Euro 128 million, mainly due to increases in inventory due to seasonal factors as well as payments related to the transformation programme.
During the quarter term loan facilities of Euro 150 million matured and were repaid in full.
Sony Ericsson estimates that the global handset market for the full year 2010 increased slightly in volume to almost 1.2 billion units. The company estimates that the global handset market for the fourth quarter was essentially flat year-on-year and its market share for the fourth quarter was approximately 3% in units and approximately 5% in value. Sony Ericsson estimates that its market share for the full year 2010 was approximately 4% in units and approximately 6% in value.
Sony Ericsson forecasts modest growth in units in the global handset market for 2011.