Year-end report May–April 2024/25
Fourth quarter
- In constant exchange rates, net sales increased by 6 percent mainly driven by Europe and APAC. Reported sales increased by 3 percent amounting to SEK 5,156 M (5,023).
- Book-to-bill ratio of 1.12 (1.28) supported by continued strong order growth for Elekta Evo.
- Improved adjusted gross margin of 40.3 percent (36.6) supported by volumes, price increases and product mix.
- Non-cash impairment amounting to SEK 1,064 M was booked during the quarter due to discontinued R&D projects.
- Adjusted EBIT amounted to SEK 843 M (651), corresponding to margin of 16.3 percent (13.0).
- Delivered on Cost-reduction Initiative amounting to SEK 279 M in annual run rate savings.
- Net income was SEK -381 M (414) impacted by the non-cash impairment. EPS before and after dilution was SEK -1.01 (1.08).
- Strong cash flow of SEK 1,248 M (872) after continuous investments.
- Despite present market conditions and current political and macro-economic visibility, net sales are expected to grow YoY.
- Gustaf Salford left the position as President and CEO March 6 – external recruitment process proceeds as planned.
Full year
- In constant exchange rates, net sales increased by 1 percent mainly driven by Europe and APAC. Reported sales decreased by 1 percent amounting to SEK 18,016 M (18,119).
- Book-to-bill ratio of 1.09 (1.09) with positive impact from product launches in Europe and recovery in China.
- Improved adjusted gross margin of 37.8 percent (37.5) supported by price increases and product mix.
- Adjusted EBIT amounted to SEK 2,097 M (2,145), corresponding to a margin of 11.6 percent (11.8).
- Net income was SEK 240 M (1,302) impacted by the non-cash impairment. EPS before and after dilution was SEK 0.62 (3.41).
- Improved cash flow of SEK 1,056 M (815) after continuous investments.
- The Board of Directors proposes a dividend of SEK 2.40 (2.40) per share (paid in two installments) for FY2024/25.
| Group summary | Q4 | Full year | ||||||
| SEK M | 2024/25 | 2023/24 | Δ | 2024/25 | 2023/24 | Δ | ||
| Book-to-bill | 1,12 | 1,28 | -12% | 1,09 | 1,09 | 1% | ||
| Net sales | 5,156 | 5,023 | 3% | 18,016 | 18,119 | -1% | ||
| Net sales in constant exchange rates | 6% | 1 | 1% | 1 | ||||
| Adjusted gross margin 2 | 40.3% | 36.6% | 3.7 p.e. | 37.8% | 37.5% | 0.3 p.e. | ||
| Adjusted EBITDA 3 | 1,165 | 956 | 22% | 3,396 | 3,287 | 3% | ||
| Adjusted EBITDA margin 3 | 22,6% | 19,0% | 3.6 p.e. | 18,8% | 18,1% | 0.7 p.e. | ||
| Adjusted EBIT 4 | 843 | 651 | 29% | 2,097 | 2,145 | -2% | ||
| Adjusted EBIT margin 4 | 16,3% | 13,0% | 3.4 p.e. | 11,6% | 11,8% | -0.2 p.e. | ||
| Gross margin | 39.8% | 36.4% | 3.4 p.e. | 37.4% | 37.4% | 0 p.e. | ||
| EBITDA | 1,189 | 930 | 28% | 3,283 | 3,189 | 3% | ||
| EBITDA margin | 23,1% | 18,5% | 4.5 p.e. | 18,2% | 17,6% | 0.6 p.e. | ||
| EBIT | -197 | 617 | -132% | 890 | 2,039 | -56% | ||
| EBIT margin | -3,8% | 12,3% | -16.1 p.e. | 4,9% | 11,3% | -6.3 p.e. | ||
| Net income | -381 | 414 | -192% | 240 | 1,302 | -82% | ||
| Cash flow after continuous investments | 1,248 | 872 | 376 | 1,056 | 815 | 241 | ||
| Adjusted earnings per share before/after dilution, SEK 5 | 1.11 / 1.11 | 1.15 / 1.15 | -4% | 3.08 / 3.08 | 3.62 / 3.62 | -15% | ||
| Earnings per share before/after dilution, SEK | -1.01 / -1.01 | 1.08 / 1.08 | -193% | 0.62 / 0.62 | 3.41 / 3.41 | -82% | ||
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 and the R&D impairement cost, see page 28.
3 Adjusted EBITDA = EBITDA excluding items affecting comparability attributable to the Cost-reduction Initiative and the R&D impairement cost, see page 28.
4 Adjusted EBIT = Operating income (EBIT) excluding items affecting comparability and the R&D impairement cost, 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.
Earnings momentum
Strong growth in software and price increases contributed to the best Q4 gross margin in five years. Our latest linear accelerator, Elekta Evo, and the new additions to our software suite, Elekta ONE, continued to generate order and sales growth. A non-cash impairment amounting to SEK 1,064 M was booked in Q4 due to discontinued R&D projects.
In spite of a decline in orders in Q4, our book-to-bill ratio stands strong at 1.12 for Q4 and at 1.09 for the full year of 2024/25, mainly driven by our latest linear accelerator, Elekta Evo, and the new additions to our software suite, Elekta ONE. Net sales at constant exchange rates increased by 6 percent in Q4 and 1 percent for the full year, in line with our guidance.
I am pleased that we ended the year with a gross margin of 40.3 percent (36.6). This was the best Q4 gross margin in five years, an important step in our ambition to return to pre-pandemic levels. The EBIT margin ended at 16.3 percent (13.0) in Q4. Double-digit growth in our software business, price increases as well as product launches and a solid development for our specialty products contributed to the strong earnings momentum. Operating cash flow after continuous investments improved by SEK 241 M to SEK 1,056 M for the full year. The Board proposes a dividend of SEK 2.40 (2.40) per share to the AGM, underlining Elekta’s strong financial position.
Actions taken during Q4
During the quarter we completed a review of Elekta’s R&D assets on the balance sheet, which has resulted in a non-cash impairment amounting to SEK 1,064 M due to discontinued R&D projects. The impairment is mainly a consequence of a change of scope within software partly driven by moving from an internally developed cloud ware solution to an external supplier’s platform.
In consultation with the U.S. Food and Drug Administration (FDA), we changed our regulatory submission strategy in mid-May for Elekta Evo to better align with the FDA´s approval process with greater focus on cybersecurity. We expect that the impact of this delay on the overall project launch will be limited. Meanwhile, Elekta Evo and our software suite Elekta ONE are fully operational, currently in clinical use, and have received outstanding feedback from healthcare providers across Europe.
Customer wins
During the quarter, we delivered on several important commercial wins such as Elekta Evo, our software suite Elekta ONE, and a comprehensive deal comprising some of our most advanced solutions to the University of Texas Southwestern.
At the annual ESTRO congress in Vienna, there was great customer interest in our online adaptive treatment capabilities on Elekta Evo with Elekta ONE Planning, as well as Elekta Unity’s superiority in preserving healthy tissue, not least manifested by the ERECT trial in Utrecht showing astounding results in maintaining erectile function for prostate cancer patients.
Guidance
Despite present market conditions and current political and macro-economic visibility, net sales are expected to grow year-over-year. We expect Gross and EBIT margins to expand, driven by price increases, product launches and volumes, resulting in a stepwise improvement towards our midterm targets to move the gross margin to prepandemic levels and an EBIT margin of 14% and higher. For Q1 2025/26, we expect normal seasonal development with low sales volumes as well as negative FX-effects.
Jonas Bolander
President and CEO