Sony Ericsson reports drop in first quarter net profits on slumping sales

Mobile phone manufacturer Sony Ericsson yesterday reported a 48 per cent drop in net profits in the first quarter on slumping sales, saying its results had been hit by the devastating earthquake in Japan.

The Japanese-Swedish group, the sixth-biggest player in the global market, reported a net profit of €11 million, down from the €21 million a year earlier.

The company meanwhile re-ported a sales slump of 18.5 per cent, to €1.15 billion, as the number of units shipped during the quarter plunged 23 per cent to 8.1 million.

Sony Ericsson attributed that drop to a “decline in the number of feature phones shipped, introduction of new products towards the end of the quarter and seasonality”.

Company chief executive Bert Nordberg also explained that “the Japan earthquake made it a challenging quarter operationally and we are experiencing some disruptions to our supply chain”.

“We will continue to evaluate the situation,” he said in the earnings statement.

Despite the downward trend, Mr Nordberg emphasised that the company, which returned to profit last year after a 2009 deep in the red, had seen its “profitability continue as we accelerate our shift towards an Android-based smartphone portfolio.”

During the first quarter, smartphones accounted for more than 60 per cent of total sales for the company, which holds a five per cent share of the global market for such devices in terms of units sold and a three per cent market share in terms of value. Going forward, the company said it expected to see “modest growth in total units in the global handset market for 2011”.

Following yesterday’s announcement, Sweden’s Ericsson’s shares were flat on a Stockholm stock exchange up 1.08 per cent.