Q2 Highlights:
* Break even results amid challenging market conditions and increased
competition
* Announcement of Open Mobile Software platform and Symbian
Foundation
* R&D investment continues
* Alignment of operations to help restore profitable growth
London, UK - The consolidated financial summary for Sony Ericsson
Mobile Communications AB (Sony Ericsson) for the second quarter ended
June 30, 2008 is as follows:
+-----------------------------------------------------------------+
| | Q2 2007 | Q1 2008 | Q2 2008 |
|-----------------------------------+---------+---------+---------|
| Number of units shipped (million) | 24.9 | 22.3 | 24.4 |
|-----------------------------------+---------+---------+---------|
| Sales (Euro m.) | 3,112 | 2,702 | 2,820 |
|-----------------------------------+---------+---------+---------|
| Gross margin (%) | 29.6% | 29.2% | 23.1% |
|-----------------------------------+---------+---------+---------|
| Operating income (Euro m.) | 315 | 184 | -2 |
|-----------------------------------+---------+---------+---------|
| Operating margin (%) | 10.1% | 6.8% | -0.1% |
|-----------------------------------+---------+---------+---------|
| Income before taxes (Euro m.) | 327 | 193 | 8 |
|-----------------------------------+---------+---------+---------|
| Net income (Euro m.) | 220 | 133 | 6 |
|-----------------------------------+---------+---------+---------|
| | | | |
|-----------------------------------+---------+---------+---------|
| Average selling price (Euro) | 125 | 121 | 116 |
+-----------------------------------------------------------------+
Units shipped in the quarter were 24.4 million, in line with our June
27, 2008 interim announcement of 24 million units. Sales for the
quarter were Euro 2,820 million, a decrease of 9% compared to the
second quarter of 2007 due to unfavourable exchange rate fluctuation,
continued slowing market growth in mid- to high-end phones and
increased competition. Gross margin also decreased compared with a
year ago reflecting a less favourable product mix, with particular
impact in Europe, and increased price competition in general. Income
before taxes for the quarter decreased compared to the second quarter
of 2007 for the same reasons, as well as due to higher R&D
investments as a percentage of sales.
Average selling price (ASP) for Sony Ericsson decreased both
sequentially and year-on-year due to the impact of a greater
proportion of lower priced phones in the product portfolio, as well
as increased price competition in the market for mid- to high-end
phones. Market share for the second quarter is estimated to be around
8%.
During the second quarter Sony Ericsson announced seven new phones,
including its first 8 Megapixel Cyber-shot(TM) model, the C905. In
addition the company started shipping 12 new phones, including a
number of mid- to high-end Cyber-shot(TM) and Walkman(TM) models
toward the end of the quarter."We are aligning our operations and resources worldwide to meet an
increasingly competitive business environment and to help restore our
capability for profitable growth. The measures we are taking are
aimed at becoming a faster, more agile and more cost efficient
organisation that can continue to create innovative products that
excite consumers," said Dick Komiyama, President, Sony Ericsson. "Our
target is to achieve a reduction in operating expenses of Euro 300
million annually, with the full effect expected to appear within a
year. We estimate that our restructuring charges will be of the same
magnitude as our reduction in operating expenses, and we will incur
such charges as our measures are implemented."
Sony Ericsson joined leading phone manufacturers, operators and
vendors in announcing its support for the establishment of the
Symbian Foundation, an initiative that will enable all members of the
foundation to use the Symbian operating software platform,
royalty-free. The Symbian Foundation is planned to be operational by
the end of 2008.
Sony Ericsson forecasts that the global handset market for 2008 will
grow at a rate of around 10% from more than 1.1 billion units in
2007, with continued decline in industry ASP. The majority of this
growth is expected to be in emerging markets where lower priced
phones dominate.
Challenging market conditions are expected to prevail for Sony
Ericsson for at least the rest of 2008, and in particular for the
third quarter.
Cyber-shot(TM) and WALKMAN(TM) are trademarks of Sony Corporation.
EDITOR'S NOTES:
Financial statements and additional information:
Financial statements:
Consolidated income statement (2)
Consolidated income statement - isolated quarters
Consolidated balance sheet
Consolidated statement of cash flows (2)
Consolidated statement of cash flows - isolated quarters
Additional information:
Net sales by market area by quarter
- ENDS -
Sony Ericsson is a top global industry player with sales of over 100
million phones in 2007. Diversity is one of the core strengths of the
company, with operations in over 80 countries including manufacturing
in China and R&D sites in China, Europe, India, Japan and North
America. Sony Ericsson was established as a 50:50 joint venture by
Sony and Ericsson in October 2001, with global corporate functions
located in London. For more information about Sony Ericsson please
visit www.sonyericsson.com
CONTACTS:
Investors / Analysts
Ericsson Investor Relations
Gary Pinkham (Stockholm) +46 8 719 0858
Susanne Andersson (Stockholm) + 46 8 719 4631
Sony Investor
Relations
Shinji Tomita (London) +44 20 7444 9713
Tatsuyuki Sonoda (Tokyo) +81 3 6748 2180
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.
The full report (including tables) can be downloaded from the
following link:
