Sony Ericsson profit nearly halves

Michael Carroll
20 Apr 2011

Sony Ericsson remained profitable in 1Q11, but its income fell by almost 50% due to supply chain disruptions and a decline in shipments caused by its focus on high-end handsets.

Profits fell 48% year-on-year to €11 million as device shipments declined 2.4 million to 8.1 million units on lower sales of feature phones. The knock-on effect was a €260 million fall in revenues to €1.1 billion, though the firm grew its gross margin from 31% in 1Q10 to 33% in the recent quarter.

The higher margins reflect Sony Ericsson’s focus on Android smartphones during the quarter, which chief Bert Nordberg says accounted for 60% of all shipments in 1Q11. While that focus contributed to the lower overall shipment figures, Nordberg conceded the firm is already “experiencing some disruptions to our supply chain” following the recent Japanese earthquake and tsunami.

Those problems look set to have a bigger impact during the second quarter, though Nordberg’s only comment on the matter is that the vendor “will continue to evaluate the situation.”

While the focus on smartphones hurt overall shipments, it did have the benefit of raising the firm’s average selling price 5% over 1Q10 to €141. The firm estimates its smartphone shipments gave it a 5% share of the overall market, and predicts modest growth in total market volumes for the remainder of 2011.

The firm’s net profit for the quarter came in higher than the €27.1 million loss predicted by ten analysts polled by Bloomberg. However, revenues fell short of the €1.26 billion analysts expected.

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