Sony Ericsson declares loss for 2009

January 25, 2010 • Mobile and Telecoms

Mobile phone manufacturer Sony Ericsson has reported a slight increase in units shipped in the last quarter of 2009; they however saw overall losses on a year-on-year basis.

“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”, the company said in a statement to TechnoAfrica.

It said 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”, it added.

The company said as of December 31, 2009, Sony Ericsson had a net cash position of Euro 620 million.

Bert Nordberg, President Sony Ericsson, commented: “The refreshed portfolio, coupled with the business transformation program 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 organization 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.”

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 utilized.

The program 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 program, 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 program are estimated to be well within the previously announced Euro 500 million.

by Goodman Majola



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