Elekta AB - Six-month interim report May – October 2007/08
• Net sales rose 9 percent to SEK 2,188 M (2,014). Based on unchanged exchange rates net sales rose 14 percent.
• Operating result rose by 23 percent to SEK 195 M (159) and operating margin was 9 percent (8).
• Profit after taxes was SEK 126 M (104). Profit per share after dilution was SEK 1.38 (1.11).
• Cash flow from operating activities improved by SEK 291 M to positive SEK 140 M (neg. 151). Cash flow after investments amounted to positive SEK 22 M (neg. 343). Acquisitions were in-cluded with SEK 95 M (144).
• For the full fiscal year 2007/08, Elekta expects a net sales growth exceeding 12 percent in local currency. The earlier outlook was exceeding 10 percent. Primarily as a consequence of changes in exchange rates, Elekta now expects an operating result growth of 25-30 percent. The earlier outlook was exceeding 30 percent.
President & CEO Tomas Puusepp comments:
”In the second quarter of fiscal year 2007/08, we saw a continued strong demand. Order in-take for the first 6 months increased by 12 percent in local currency, driven primarily by a continued success in radiation therapy in North America, a stronger interest in Leksell Gamma Knife® in Europe and a strong recovery on the Chinese market.
Order bookings for the North and South America region during the 6 months period improved by 10 percent in local currency. However, orders in the second quarter were significantly down compared to the same quarter last year, which was the first after FDA clearance for Leksell Gamma Knife® Perfexion™.
Today’s market situation differs significantly from the one only a few years ago. Technology development is accelerating, new suppliers have entered the market in specific niches, we see a convergence and increased cooperation between different treatment methods and the political pressure to address cancer care is mounting in many countries. All this opens up many oppor-tunities for Elekta.
The increased supply of different systems leads to more and more customers – particularly in the US – carrying out serious evaluations of different suppliers, which is positive for Elekta.
In the important US market, Elekta continues to gain market share within radiation therapy. The market for radiosurgical treatment of brain disorders is relatively well penetrated. After a successful launch of Leksell Gamma Knife Perfexion and improved volumes during last fiscal year, we now foresee Leksell Gamma Knife deliveries to North America to be flat this year, while volumes are up significantly in the rest of the world.
Thanks to the enhanced and unique capabilities of Leksell Gamma Knife Perfexion, we have the opportunity to address new clinical applications and position Gamma Knife surgery among other modalities also within conventional radiation oncology.
The operating result increased significantly during the second quarter. This is primarily ex-plained by improved gross margin and good cost control. The increase in cost compared to the same period last year, is primarily a result of the addition of new subsidiaries. For the 6 months period, operating result increased by 23 percent resulting in an operating margin of 9 percent. Adjusted for currency effects the operating profit improvement was 46 percent.
Cash flow was very strong during the quarter as a result of more efficient management of working capital.
With a record high order backlog and a strong pipeline, it is my expectation that Elekta will grow net sales this year by over 12 percent in local currency. The objective to grow operating profit by more than 30 percent must however be put into the context of continued changes in the foreign exchange market to the detriment of Elekta. To reach the stated target would now require an improvement given the negative development in the currency market, correspond-ing to over 40 percent, which I not consider to be achievable.
Accordingly, we now forecast an operating profit growth of 25-30 percent.”