Sony Ericsson returns to profit

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Sony Ericsson has reported a return to profitability during the first quarter of this year, despite a fall in sales during the period.

The handset manufacturer reported a pre-tax profit of 18 million (£15.8 million) during Q1 2010, compared to the 190 million loss it made in the final quarter of last year and the loss of 370 million it made in the same quarter last year.

However sales did fall 19 per cent during the period to 1.4 billion, and units shipped decreased 28 per cent to 10.5 million but Sony Ericsson said the latter reflected the streamlining of the portfolio over the past year to focus on higher-end phones.

Average selling price increased 12 per cent both sequentially and year-on-year to 134 during the the quarter due to “good sell through of existing models, new flagship phones starting to ship at the end of the quarter and a positive currency effect”.

Sony Ericsson said that the transformation programme that began in mid-2008, with the aim of reducing annual operating expenses by 880 million is continuing with the full benefit expected during the second half of 2010. Since the start of the programme the company has reduced its global workforce by around 3,150 people to reach a total of 8,450 by March 31, 2010. The total restructuring charges taken to date are 342 million.

In recent weeks Sony Ericsson has started shipping its X10 handset, the company’s first to run off the Android operating system, and the Vivaz, a touchscreen phone based on the Symbian platform.

Sony Ericsson president Bert Nordberg said: “We are pleased to see the positive impact of both the launch of new products and the business transformation programme improving the company’s results. Increases in both gross and operating margins show we are on the right track to build the correct cost structure for our business organisation and strategy. We will continue to work through the transformation programme to ensure that we are competitive.”

 

 

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