Q2 Report, August–October 2024/25

• In constant exchange rates, net sales decreased by 4 percent mainly due to Europe and Latin America. Reported sales decreased by 8 percent amounting to SEK 4,341 M (4,732).
• Elekta Evo has been well received by customers, now also submitted for FDA approval for the U.S. market
• Book-to-bill ratio was 0.99 (1.05), rolling twelve months 1.09 (1.09). Improved order growth in China.
• Adjusted gross margin amounted to 35.7 percent (36.0). The decline was mainly attributed to reduced sales, change in market mix and changes in foreign exchange rates.
• Adjusted EBIT amounted to SEK 423 M (542), corresponding to a margin of 9.8 percent (11.5) driven by a lower gross margin and higher amortization costs following recent product launches.
• At the end of October 31, 2024, annual run rate savings of SEK 150 M were achieved related to the ongoing cost-reduction initiative with a target of SEK 250 M for the fiscal year 2024/25.
• Net income was SEK 215 M (344) and earnings per share before and after dilution was SEK 0.55 (0.90).
• Cash flow after continuous investments amounted to SEK -31 M (211) impacted by lower EBITDA, higher net working capital and continued investments.

Group summary	Q2				First six months
SEK M	2024/25	2023/24	Δ		2024/25	2023/24	Δ
Book-to-bill	0.99	1.05	-6%		1.04	1.03	1%
Net sales	4,341	4,732	-8%		8,165	8,560	-5%
Net sales in constant exchange rates			-4%	1			-2%	1
Adjusted gross margin 2	35.7%	36.0%	-0.3 ppts		36.7%	38.5%	-1.8 ppts
Adjusted EBITDA 3	745	817	-9%		1,345	1,524	-12%
Adjusted EBITDA margin 3	17.2%	17.3%	-0.1 ppts		16.5%	17.8%	-1.3 p. e.
Adjusted EBIT 4	423	542	-22%		706	969	-27%
Adjusted EBIT margin 4	9.8%	11.5%	-1.7 ppts		8.7%	11.3%	-2.7 ppts
Gross margin	35.5%	35.8%	-0.3 ppts		36.2%	38.4%	-2.1 ppts
EBITDA	706	800	-12%		1,228	1,493	-18%
EBITDA margin	16.3%	16.9%	-0.6 ppts		15.0%	17.4%	-2.4 p.e.
EBIT	388	525	-26%		562	937	-40%
EBIT margin	8.9%	11.1%	-2.1 ppts		6.9%	10.9%	-4.1 ppts
Net income	215	344	-38%		285	583	-51%
Cash flow after continuous investments	-31	211	-242		-921	-688	-233
Adjusted earnings per share before/after dilution, SEK 5	0.63 / 0.63	0.94 / 0.94	-33%		1.03 / 1.03	1.59 / 1.59	-35%
Earnings per share before/after dilution, SEK	0.55 / 0.55	0.90 / 0.90	-38%		0.74 / 0.74	1.52 / 1.52	-52%

1 Compared to last fiscal year based on constant exchange rates.
2 Adjusted gross margin = Gross margin excluding items affecting comparability attributable to the Cost-reduction Initiative, see page 28.
3 Adjusted EBITDA = EBITDA excluding items affecting comparability attributable to the Cost-reduction Initiative, see page 28.
4 Adjusted EBIT = Operating income (EBIT) excluding items affecting comparability, see page 29.
5 Adjusted earnings per share = Net income excluding items affecting comparability, attributable to Parent Company shareholders, in relation to the weighted average number of shares (excluding treasury shares), see page 30.

Focus on profitability

As anticipated, our first half of this year was weaker compared to the same period last year with sales in constant exchange rates declining by 2 percent. Actions are in place to further improve profitability, and after a period of strong decline we saw orders improving in China. We have reached our target of providing access to 300 million people in underserved markets.

Successful product launches
As anticipated, we faced a challenging first half of the year with reduced sales and lower earnings. Our top priority remains to enhance our profitability. We have implemented price increases and are actively pursuing cost reductions, which are beginning to show results, with further improvements expected. Our latest linear accelerator, Elekta Evo, now also CE-marked and submitted for FDA approval, has been well received by customers and is projected to positively impact margins and sales by the end of this the fiscal year.

Ongoing activities to improve the gross margin
Net sales in constant exchange rates declined by 4 percent in Q2, driven by weak performance in Europe and Latin America. However, after a period of strong decline, we saw orders improving in China, and even if we remain cautious in our near-term outlook for the Chinese market, we are confident in returning to previous growth. The adjusted gross margin declined to 35.7 percent (36.0) mainly driven by changed market mix, with increased volumes in Ukraine, where we have delivered on our commitment to support Ukrainian cancer patients. Our equipment will improve access to radiation therapy for the almost one million people in Ukraine living with cancer. In addition, increased material and salary costs impacted the gross margin negatively. With our ongoing activities, involving price increases, cost reductions and launching new products, I am convinced that we will be able to improve the gross margin.

Most comprehensive product portfolio in the industry
During ASTRO in Washington DC, we introduced Elekta Evo alongside the additions to our software suite, Elekta ONE, to the American market. The customer feedback on our new products has been very encouraging, and we are now installing the first Evo linacs and Elekta ONE. I am just back from the MR-Linac Consortium meeting in Singapore, which further underlined the importance of a full range adaptive portfolio, presenting the most recent advances on MR-guided adaptive treatments and how it is continuously pushing the boundaries of cancer care. We have continued to make significant investments in R&D, and all our solutions are now fully image guided and adaptive. We have the industry's most competitive and comprehensive product portfolio, which we will leverage to drive profitable growth moving forward. Furthermore, I am pleased to announce that we have reached our target of providing access to 300 million people in underserved markets.

Grow and expand margins
As previously communicated, we expect sales and profitability to pick up during the second half of the year as a result of new product launches and productivity measures. Net sales for Elekta are expected to grow by mid-single digits for the full year of 2024/25 with an improved EBIT margin. Beyond this fiscal year, we are driving for an EBIT margin of 14 percent or higher as we are experiencing strong customer interest in our industry-leading offerings and a long-term underlying demand for world-leading cancer care solutions.

Gustaf Salford
President and CEO