Interim report May – July 2016/17

First quarter

• Gross order intake increased by 4 percent to SEK 2,662 M (2,569) and 4 percent based on constant exchange rates.
• Net sales decreased 16 percent to SEK 1,882 M (2,239) and 15 percent based on constant exchange rates.
• EBITA* amounted to SEK 166 M (68). Items affecting comparability was SEK -89 M (-30) and bad debt losses was SEK -6 M (-27). The effect from changes in exchange rates was SEK 115 M (-20) including hedges.
• Operating result was SEK -34 M (-93).
• Net income amounted to SEK -64 M (-129). Earnings per share was SEK -0.17 (-0.34) before and after dilution.
• Cash flow after continuous investments improved by SEK 256 M to SEK -308 M (-564).
• The Board of Directors appointed Richard Hausmann as new President and CEO effective June 10, 2016.

* Adjusted for items affecting comparability and bad debt losses.

   
President and CEO comments

As outlined during the capital markets day in June, we are making progress on our way to excellence, reducing costs and capitalizing on our innovation leadership in best-in-class treatment solutions and oncology information software.

Our gross order intake increased by 4* percent in the quarter. We had a number of major strategic wins, including the Vienna Hospital Association in Austria and gross orders in region Europe, Middle East and Africa grew by 14* percent. Overall, we had strong performance in our emerging markets and I am particularly pleased with China, where we reported order growth of 30* percent. Order intake in North and South America declined 16* percent. This was from a challenging comparison last year, but it was also below our expectations and we have taken measures for improved performance.

The new produce-to-order process has now been implemented. As previously announced, this will improve cash flow and lower working capital, but have a negative one-off impact of some SEK 500 M on net sales in the first half of this year. In line with this, we saw lower net sales in the quarter. However, on the positive side we have improved the underlying cash flow** by over SEK 400 M and maintained the net working capital to sales ratio at 5 percent.

Efficiency improvements and cost reductions are being realized as planned. Our target is to reduce the cost base with SEK 700 M compared with 2014/15 and we are half way through the process. We are lowering administrative spending and increasing efficiency in marketing, sales and product development. This, in combination with an improved product mix and favorable currency movements, improved our gross margins and EBITA margins in the first quarter.

Elekta is truly an outstanding company, which I feel proud and privileged to lead. Every year, our treatment solutions and oncology information software improve or save the lives of over one million cancer patients. They allow therapy departments to perform better – this has enabled our historical growth and will allow us to create value going forward. For future growth and improved profitability, I have outlined a number of priorities for the coming years:

We will continue to strengthen our position as the industry’s innovation leader and prioritize our investments in R&D both in treatment solutions and oncology information software. This will help us to improve cancer care and strengthen our future growth. We have been committed to enhanced imaging and adaptive treatment for many years, which is why we are focusing on the development of our MR-linac. The system is attracting considerable attention ahead of its launch in the second half of calendar year 2017. In addition, I am convinced that our leading oncology information software platform, MOSAIQ®, is a unique asset. We will further capitalize on and invest in it in order to support our customers in a treatment and vendor-agnostic way. Enhancements include big data and analytics as modules.

While visiting cancer centers around the world, I have realized how close and strong our customer relationships are. It’s essential that we work continuously to strengthen the customer experience and our commercial activities. It is also clear that there are a number of areas where we can improve by working more efficiently, setting the right priorities and by creating the optimal conditions for our employees to shape the future of cancer care. In short – we shall pursue our drive towards excellence in all we do as one company.

We will complete our transformation program and deliver on our margin target. Thereafter, continuous productivity improvements will become part of our daily business. I am confident that we will continue to be the leader and pioneer in radiation therapy and brain diseases and help our customers to improve or save the lives of their patients.

Richard Hausmann, President and CEO

*Based on constant exchange rates
**Adjusted for one-off cash outflow related to legal processes, including HumediQ, and the transformation program, totaling SEK 170 M (see page 5). 

 
Shareholder information

Conference call

Elekta will host a telephone conference at 10:00-11:00 CET on September 1, with president and CEO Richard Hausmann and CFO Håkan Bergström.

To take part in the conference call, please dial in about five minutes in advance.

Swedish dial-in number: +46 (0)8 566 427 01
UK dial-in number: +44 (0) 203 428 14 02
US dial-in number: +1 866 388 19 25

The telephone conference will also be broadcasted over the internet (listen only). Please use the link:
event.onlineseminarsolutions.com/r.htm?e=1223067&s=1&k=81A32C0632664A47038D55D25DD31548  

  The above information is such that Elekta AB (publ) shall make public in accordance with the Securities Market Act and/or the Financial Instruments Trading Act. The information was published at 07:30 CET on September 1, 2016.

 
For further information, please contact:

Håkan Bergström
CFO, Elekta AB (publ)
+46 8 587 25 547
[email protected]

Johan Andersson
Director Investor Relations, Elekta AB (publ)
+46 8 587 25 415
[email protected]

Tobias Bülow
Director Financial Communication, Elekta AB (publ)
+46 8 587 25 734
[email protected]