Helsinki/Stockholm: Mobile phone maker Sony Ericsson forecast an upturn in the second half when posting a quarterly loss due to component shortages stemming from the March 11 earthquake and tsunami in Japan.
Chief executive Bert Nordberg said yesterday most of the hit was felt in the early part of the quarter and the effect would be tiny in the third quarter.
"There might be some minor spillover. In our planning this is behind us," he said.
Supply problems
Sony Ericsson sold 7.6 million phones in the second quarter, compared with forecasts for 8-11 million, as earthquake-related supply chain constraints cut sales by 1.5 million phones.
"Volumes were even lower than we thought, and we were below consensus," said Hakan Wranne, analyst at Swedbank Markets.
"The product portfolio looks pretty good now ahead of the second half, and if they manage to increase volumes by a couple of million units, they should be back to making profits for the rest of the year — not large profits, but a bit above zero where we have thought they would be," Wranne said.
Sony Ericsson's forecast for the second half was based on new smartphone models and an easing supply chain shortage, and Nordberg said that despite a weak quarter his ambition was still to report better results for 2011.
To do that, second-half profit would have to grow 73 per cent to €176 million (Dh914.6 million).
Nordberg said demand for smartphones remained healthy.
Pre-tax loss
Sony Ericsson, owned 50-50 by Swedish company Ericsson and Japanese group Sony, made a pre-tax loss of €42 million after five consecutive quarterly profits, and in the low end of analysts estimates, which ranged from a €68 million loss to a €77 million profit.
The venture continued to bleed cash in the quarter and borrowed €165 million to balance its finances. Cash flow from operating activities was €577 million negative in the first half.
- 1.5m: cut in sales due to earthquake in Japan
- €42m: Sony Ericsson's latest quarter pre-tax loss
