Q3 Report, November–January 2024/25
Third quarter
- In constant exchange rates, net sales increased by 2 percent mainly driven by Europe and APAC. Reported sales increased by 3 percent amounting to SEK 4,695 M (4,537).
- Net sales were negatively impacted by lower volumes in U.S. and China.
- Book-to-bill ratio 1.15 (0.98), rolling twelve months 1.14 (1.09). Order growth in all regions and business lines.
- Elekta Evo and Elekta ONE well received by customers and had a positive impact on order and sales growth.
- Improved adjusted gross margin of 37.1 percent (36.9) was supported by price increases and product mix
- Adjusted EBIT amounted to SEK 548 M (525), corresponding to a margin of 11.7 percent (11.6).
- Cost-reduction Initiative amounting to SEK 264 M in annual run rate savings was achieved by the end of Q3, ahead of plan and above target of SEK 250 M.
- Net income was SEK 336 M (306) and earnings per share before and after dilution was SEK 0.89 (0.80).
- Cash flow after continuous investments amounted to SEK 730 M (631).
- Updated FY guidance – net sales to be broadly stable and the EBIT margin lower, compared to FY 2023/24.
| Group summary | Q3 | First nine months | ||||||
| SEK M | 2024/25 | 2023/24 | Δ | 2024/25 | 2023/24 | Δ | ||
| Book-to-bill | 1,15 | 0.98 | 18% | 1,08 | 1,01 | 7% | ||
| Net sales | 4,695 | 4,537 | 3% | 12,860 | 13,097 | -2% | ||
| Net sales in constant exchange rates | 2% | 1 | -1% | 1 | ||||
| Adjusted gross margin 2 | 37.1% | 36.9% | 0.2 ppts | 36.8% | 37.9% | -1.1 ppts | ||
| Adjusted EBITDA 3 | 886 | 807 | 10% | 2,231 | 2,331 | -4% | ||
| Adjusted EBITDA margin 3 | 18,9% | 17,8% | 1.1 ppts | 17,3% | 17,8% | -0.5 ppts | ||
| Adjusted EBIT 4 | 548 | 525 | 4% | 1,254 | 1,494 | -16% | ||
| Adjusted EBIT margin 4 | 11,7% | 11,6% | 0.1 ppts | 9,8% | 11,4% | -1.7 ppts | ||
| Gross margin | 36.9% | 36.7% | 0.3 ppts | 36.5% | 37.8% | -1.3 ppts | ||
| EBITDA | 866 | 767 | 13% | 2,094 | 2,259 | -7% | ||
| EBITDA margin | 18,4% | 16,9% | 1.5 ppts | 16,3% | 17,3% | -1 ppts | ||
| EBIT | 525 | 485 | 8% | 1,087 | 1,422 | -24% | ||
| EBIT margin | 11,2% | 10,7% | 0.5 ppts | 8,5% | 10,9% | -2.4 ppts | ||
| Net income | 336 | 306 | 10% | 621 | 888 | -30% | ||
| Cash flow after continuous investments | 730 | 631 | 98 | -192 | -57 | -135 | ||
| Adjusted earnings per share before/after dilution, SEK 5 | 0.94 / 0.94 | 0.88 / 0.88 | 6% | 1.97 / 1.97 | 2.47 / 2.47 | -20% | ||
| Earnings per share before/after dilution, SEK | 0.89 / 0.89 | 0.80 / 0.80 | 12% | 1.63 / 1.63 | 2.32 / 2.32 | -30% | ||
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 28.
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 29.
Launches are driving order growth
Orders improved significantly during Q3 with all regions contributing. The growth was supported by new product launches of Elekta Evo and Elekta ONE. We delivered a record high cash flow in the quarter. Net sales and profitability were negatively impacted by lower volumes in the U.S. and China and as a consequence, we are adjusting our full year guidance.
Strong order momentum
Our book-to-bill ratio stands at 1.15, driven by an order growth of 21% in constant exchange rates with all regions and business lines contributing. Our latest linear accelerator, Elekta Evo, and our new software suite Elekta ONE, have been well received by customers and had a positive impact on the order and sales growth in the markets where it is regulatory cleared, with Europe contributing most. We are staying cautious in our near-term outlook for the Chinese market, however, during the third quarter we saw continued order improvement supporting installations and sales recovery in the coming quarters.
Record cash flow, despite weak sales
Net sales in constant exchange rates increased by 2 percent in Q3, with the gross margin improving to 37.1 percent (36.9). Net sales were impacted by lower volumes in China due to continued weak market conditions, and in the U.S. where we saw lower installations as customers are awaiting the Evo regulatory clearance. In the face of these challenges, our ongoing activities, including executing on price increases, cost control, and new product launches, are expected to drive growth and improve profitability going forward. The cash flow after continuous investments was strong, amounting to SEK 730 million (631), driven by improved EBITDA and reduction of working capital. This resulted in a record high Q3 cash flow.
Customer wins, and Evo and Elekta ONE installations
During the quarter, we have secured significant commercial wins, including a major deal in Mexico and Unity wins from competition in the U.S. and Europe. The installation and treatment capabilities of Elekta Evo are progressing well. The new system went clinical during the quarter with very positive customer feedback. The first patient on the Elekta Evo was a curative treatment enabled by the superior image quality provided by the new CT technology, Iris.
Additionally, the oncology informatics system in our software offering, Elekta ONE, has once again been recognized as “Best in KLAS”, an independent award based on feedback from hundreds of users, reaffirming its strength and reliability.
Adjusting our full year guidance
As uncertainty in the world increases, and near-term we expect lower sales in China and the U.S., we are adjusting our full year guidance. In the full year of 2024/25, we expect net sales to be broadly stable and the EBIT margin to be lower, compared to full year 2023/24. Beyond this fiscal year, we are targeting an EBIT margin of 14 percent or higher, driven by strong customer interest in our industry-leading product portfolio and the increasing demand for world-class cancer care solutions.
Gustaf Salford
President and CEO