Sony Ericsson returns to profitability in Q1 2010

Handset maker Sony Ericsson climbed back into profitability in the first quarter of 2010, posting a net profit of EUR 21 million (US$28.3 million), compared to losses of EUR 167 million in Q409 and EUR 293 million in the first quarter of last year.

Although revenues declined 19.7 per cent to EUR 1,405 million quarter-on-quarter from EUR 1,750, profitability was met through an aggressive cost reduction programme. The transformation programme commenced in mid-2008 with the aim of reducing annual operating expenses by EUR 880 million. To date the firm has reduced its global workforce by 3,150 employees to reach a total of 8,450 by the end of March 2010. Total restructuring charges came to EUR 342 million.

“Increases in both gross and operating margins show that we are on the right track to build the correct cost structure for our business organisation and strategy,” stated Bert Nordberg, president of Sony Ericsson. “We will continue to work through the transformation programme to ensure that we are competitive.”

The number of units shipped dropped from 14.5 million in Q1 2009 to 10.5 million a year later. However, a shift to higher-end handsets resulted in a higher average selling price of EUR 134 (US$181) compared to EUR 120 in the previous quarter. New devices shipped include the Xperia X10, the manufacturer’s first Android-based smartphone.