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™ X10

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2009 is as 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

116

Bert Nordberg, President, Sony Ericsson comments; “The refreshed portfolio, coupled with the business transformation programme has started to positively impact our financial results. Continued cost saving activities and resource realignment are necessary in order to build a leaner, more efficient organisation capable of meeting the demands of the changing competitive landscape. We will continue to focus on returning the company to profitability by establishing Sony Ericsson as the communication entertainment brand based on an exciting portfolio of mid- and high-end products, such as our recently announced Android-based phone, the XPERIA™ X10. 2010 will still be challenging as the full benefit of cost improvements will not impact results until the second half of the year, however we are confident that our business is on the right track.”

Units shipped in the quarter were 14.6 million, a sequential increase of 3% and a year-on-year decrease of 40%. Sales for the quarter were Euro 1,750 million, a sequential increase of 8% and a year-on-year decrease of 40%. The sequential increase was driven by market seasonality and successful sales of Satio™ and Aino™ phones.   The year-on-year decrease in both units and sales was mainly due to a downturn in the global handset market and a faster than anticipated shift to touch screen phones in the mid-priced sector of the market. Average Selling Price (ASP) for the quarter rose sequentially by 5% to Euro 120 due to a more favourable product mix.

Gross margin percentage improved sequentially and year-on-year mainly driven by the successful sales of new, higher-margin phones as well as the positive impact of cost reduction activities.

Income before taxes for the quarter, excluding restructuring charges, was a loss of Euro 40 million compared to a loss of Euro 198 million in the previous quarter.  The reduced loss was due to the improved gross margin and the benefits of reduced operating expenses.  Excluding restructuring charges, Sony Ericsson made a loss for the full year 2009 of Euro 878 million compared with an income of Euro 92 million in 2008. The year-on-year deterioration was mainly attributable to the lower sales.

As of December 31, 2009, Sony Ericsson had a net cash position of Euro 620 million.

During 2009, Sony Ericsson secured external funding of Euro 455 million to strengthen the balance sheet and improve liquidity, out of which Euro 350 million has been guaranteed by the parent companies on a 50/50 basis. Euro 255 million was drawn by the end of 2009, but the remaining Euro 200 million, a two-year committed back-up facility, has not been utilised.

The programme started in mid-2008 to reduce annual operating expenses by Euro 880 million is continuing; with the full benefit expected during the second half of 2010. Since the start of the programme Sony Ericsson has reduced its global workforce by approximately 2,500 people to 9,100 by the end of 2009.  The total restructuring charges taken to date are Euro 339 million, and charges for the full programme are estimated to be well within the previously announced Euro 500 million.

Sony Ericsson estimates that the global handset market in units for the fourth quarter 2009 was flat year-on-year and that its market share was about 5% in the fourth quarter.  Sony Ericsson believes that the global handset market for the full year 2009 decreased in volume by around 8% year-on-year to around 1.1 billion units and that its market share in units for the full year 2009 was about 5%.

Sony Ericsson forecasts a slight growth in units in the global handset market in 2010.

The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB.
Aino™, Satio™ and XPERIA™ are trademarks or registered 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. Subject to change without prior notice.

EDITOR’S NOTES:

Financial statements:

Consolidated income statement
Consolidated income statement full year
Consolidated income statement isolated quarters
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of cash flows full year
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.

CONTACTS:

Investors / analysts
Ericsson investor relations                                        
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

A live webcast of the conference call discussing the company’s results for the fourth quarter and full year ended December 31, 2009 will be available on January 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, 2010

WEBCAST:
A live webcast of the conference call will be available at: www.ericsson.com/ericsson/investors
Or please click here to join the webcast directly: www.thomson-webcast.net/uk/dispatching/?event_id=55bbf43ecfabff7e6e911983a216b4b0&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 1956
Sweden +46 8 5352 6407
US:               +1 718 354 1389
Japan:           +81 3 3570 8228

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 28 January, 2010.

UK and Europe: +44 20 7111 1244
Sweden:             +46 8 5051 3897
US:                      +1 347 366 9565
Japan:                +81 3 5767 9615

Replay pass code: 8140934#

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.

For media information please contact:

Sony Mobile Communications, Global Communications & PR department
General Press: +44 208 762 5858