Sony Ericsson continues profitable growth and market share gains

Sony Ericsson announced continued strong year-on-year volume growth of 59% in the second quarter. It said income before tax grew 55% year-on-year to €327 million, Walkman phone sales reached 9 mln in the quarter to sustain leadership in music phones and its expanded portfolio continues to generate market share gains.

Units shipped in the quarter reached 24.9 mln, a 59% increase compared to the same period last year, generating both year-on-year and sequential market share gains. Sales for the quarter were EUR 3,112 mln, representing a year-on-year increase of 37%. Income before taxes for the quarter was EUR 327 mln, representing a year-on-year increase of 55%. Net income for the quarter was EUR 220 mln.

In line with Sony Ericsson expectations, the increase in Q2 in low and mid-tier priced phones in the product portfolio resulted in a decline in ASP to EUR 125.

“Sony Ericsson has continued to capture market share in a more competitive market place with a product offering that addresses a wider consumer audience than ever before. Our financial results for Q2 2007 reflect our direction to build our brand in key imaging, music and multimedia categories with a portfolio that includes more competitively priced phones,” said Miles Flint, President of Sony Ericsson.

“We expect the market in 2007 to remain competitive, but with recently announced products such as the flag-ship Walkman and Cyber-shot models we aim to continue to grow faster than the market.”

During the quarter Sony Ericsson continued to capture market share in Latin America, Western Europe and CEEMEA (Central and Eastern Europe, Middle East, Africa) due to low and mid-tier feature phones such as the W300 and W200 Walkman phones and the K310 and Z310 phones. At the same time, the company continued to strengthen its product line up by announcing a large number of new products across a variety of price points, including the K850, an HSDPA, 5 mega-pixel flag-ship Cyber-shot phone, and the W960, a high-end Walkman phone with 8GB of on-board storage. 

Following an announcement in January that Sony Ericsson would start the local manufacture of phones in India through its global manufacturing partners Flextronics and Foxconn, in Q2 the company extended its commitment to this important and rapidly growing market by announcing plans to establish its own research and development unit in Chennai later in the year.

In Q2 new trademark royalty fees were agreed with the parent companies, and these additional expenses were recorded for the first time in the second quarter.

Sony Ericsson forecasts that the 2007 global handset market will be above 1.1 bln units. The company grew market share in Q2 2007 around 3 percentage points to well over 9% compared with the same period last year.