Interim report May-January 2018/19

Third quarter

• Gross order intake amounted to SEK 4,551 M (3,833), an increase of 19 percent in SEK and 12 percent based on constant exchange rates.
• Net sales were SEK 3,320 M (2,756), an increase of 20 percent in SEK and 14 percent based on constant exchange rates.
• EBITA amounted to SEK 505 M (534).
• EBITA margin was 15.2 percent (19.4).
• Operating result was SEK 311 M (409).
• Net income amounted to SEK 212 M (342). Earnings per share was SEK 0.55 (0.90) before/after dilution.
• Cash flow after continuous investments was SEK -222 M (479).
• Seven Elekta Unity orders booked in the quarter.
• Strengthened sales funnel for Elekta Unity.

May - January

• Gross order intake amounted to SEK 11,395 M (9,837), an increase of 16 percent in SEK and 9 percent based on constant exchange rates.
• Net sales were SEK 9,468 M (8,164), an increase by 16 percent in SEK and 10 percent based on constant exchange rates.
• EBITA amounted to SEK 1,492 M (1,521), including a positive effect of SEK 70 M related to a divestment in current period.
• EBITA margin was 15.8 percent (18.6).
• Operating result was SEK 941 M (1,131).
• Net income amounted to SEK 662 M (846). Earnings per share was SEK 1.73 (2.21) before/after dilution.
• Cash flow after continuous investments was SEK -397 M (610).
• Net debt amounted to SEK 1,521 M (1,450).
• Eleven Elekta Unity orders were added to the order backlog.

*Compared to last fiscal year based on constant exchange rates.

Outlook for fiscal year 2018/19 updated

• Net sales growth of around 8 percent, based on constant exchange rates.
• EBITA margin of around 18 percent.

CEO comment 

Strengthened innovation leadership and accelerated growth across our markets

The third quarter results showed double-digit order and net sales growth, demonstrating the growing need for effective cancer care globally and the competitiveness of our product portfolio. I am happy about the seven Elekta Unity orders in the quarter. However, margins were lower than expected mainly due to project mix and price. We have ongoing measures to address these issues and I see significant further improvement potential. The sales funnel for Unity is growing and feedback from customers who are treating patients is very positive. Unity is clearly delivering on the promise to enable precision radiation therapy in new clinical application fields.

Since announcing our strategic focus on thought leadership in Precision Radiation Medicine in September, we have already made clear progress. Proof points during the quarter of how Elekta is driving access to innovative cancer care include: FDA 510(k) clearance for Elekta Unity and the first patients treated in the U.S. at MD Anderson Cancer Center; our first Unity order signed in the Middle East; awards to Unity and MOSAIQ® for design and “best technology” respectively and the inauguration of our Elekta RT Academy in China.

We also announced the launch of the global MOMENTUM program, which will scientifically guide the use of the MR-linac to improve cancer treatment. I’m looking forward to seeing the clinical evidence for what I’m already hearing from customers - that Unity will have an impact on additional treatments and potential better outcomes for patients.

We saw strong order growth resulting in an increase of 12 percent for the quarter in constant currencies, and 9 percent year to date. This growth is underlined by the feedback from our customers, oncologists, politicians and others about the continued growing need for cost-effective cancer care, where precision radiation medicine plays an essential part.

I’m pleased to see increasing interest in Unity – the seven systems added during the quarter is a clear reflection of this – and we see the sales funnel strengthening. In addition to the order in the Middle East, we booked four orders in the EU, one in China, and one in Australia. We are now at 39 orders, on track to reaching the target of 75 orders by mid-2020.

Revenue came in at 14 percent for the quarter in constant currencies and 10 percent year to date, driven by an increased number of installations across our markets. On the back of this and what we foresee for the fourth quarter, we have decided to raise our net sales growth outlook from around 7 percent, to around 8 percent for the year.

Gross margin declined due to an unfavorable project
mix and price in mature markets. This together with our ongoing ramp-up of the commercialization of Unity and continued investment in China has led to an EBITA margin of 15.2 percent in the quarter and 18.2 percent on a 12-month rolling basis. I’m not satisfied with this margin level, and we have ongoing measures to improve this, such as a COGS reduction program. I also see significant further improvement potential in our ongoing process excellence efforts.

Despite an expected strong Q4, we will not be able to compensate for this shortfall in EBITA margin for the full year. Consequently, we have lowered our margin outlook for the year 2018/19 from 20 percent to around 18 percent.

We have now had five consecutive quarters with order growth and Elekta continues to move in the right direction and according to the strategy we have set out. I’m happy about Unity’s clinical acceptance and the strong interest we see in our solutions overall. With this in mind, I remain very confident about the continued positive development of our business.

Richard Hausmann
President and CEO 

Shareholder information

Conference call

Elekta will host a telephone conference at 10:00-11:00 CET on February 22, with president and CEO Richard Hausmann, and CFO Gustaf Salford.

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

Swedish dial-in number: +46 (0) 8 505 583 50
UK dial-in number: +44 (0) 333 300 9265
US dial-in number: +1 646 722 4902

The webcast will be through the following link: http://event.on24.com/wcc/r/1919136-1/CA7E707987FE9817758D6C8899341F6F 

This is information is such that Elekta AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication by the below mentioned contact persons at 07:30 CET on February 22, 2019. (REGMAR)

For further information, please contact:
Gustaf Salford, CFO, Elekta AB (publ)
+46 8 587 25 487
[email protected]

Gunilla Öhman, Director Investor Relations (Interim), Elekta AB (publ)
+46 70 7638125
[email protected]

About Elekta
For almost five decades, Elekta has been a leader in precision radiation medicine. Our nearly 4,000 employees worldwide are committed to ensuring everyone in the world with cancer has access to – and benefits from – more precise, personalized radiotherapy treatments. Headquartered in Stockholm, Sweden, Elekta is listed on NASDAQ Stockholm Exchange. Visit elekta.com or follow @Elekta on Twitter.