Sony Ericsson posts profit increase

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Sony Ericsson reports rises in profit, sales and shipments, thanks to strong sales of its X10 and Vivaz phones

Sony Ericsson has reported its second consecutive quarterly profit, helped by strong global sales of its Xperia X10 and Vivaz handset.

In Q2 2010, the handset manufacturer reported a pre-tax profit of €31 million compared to the loss of 283 million it made a year earlier.

Sales for the quarter were €1.757 million, up 25 per cent from Q1 2010 and a four per cent increase year-on-year. Sony Ericsson shipped 11 million units, a five per cent increase sequentially and a 20 per cent year-in-year increase, which it said was due to the reduction in size of its portfolio.

Average selling price in Q2 was €160, an increase of 19 per cent from the previous quarter and a 31 per cent rise compared to the same period a year ago. Sony Ericsson said this was due to improved product and geographical mix, as well as positive currency effects.

It added that its cost-cutting programme, which began in mid-2008, is now in its final stages and on target to reduce annual operating expenses by €880 million by the end of the year. Since the start of the programme the company has reduced its global workforce by around 4,000 people to reach a total workforce of around 7,800 by June 30, 2010. The total restructuring charges taken to date for the programme are 374 million.

As of June 30, 2010 Sony Ericsson retained a net cash position of €609 million, an increase of €467 million sequentially, which it said was mainly due to operating results, tight financial management of working capital, as well as positive currency results.

Sony Ericsson president Bert Nordberg said: “Our second quarter results show that the company continued the momentum seen in the first quarter as a result of our focus on the value market and the success of new smartphones; Xperia X10 and Vivaz, launched during the first quarter. These models, along with the Xperia X10 mini and Xperia X10 mini pro, which started shipping at the end of the second quarter, have been well received by operators and we are now well positioned for long term growth.”