· Gross order intake amounted to SEK 3,833 M (3,653), an increase of 9 percent based on constant exchange rates and 5 percent in SEK. Growth was strong in North America, China, Southeast Asia, Australia and Eastern Europe.
· Net sales was SEK 2,747 M (2,673), an increase of 7 percent based on constant exchange rates and 3 percent in SEK.
· Adjusted EBITA* amounted to SEK 502 M (325). Items affecting comparability was SEK 0 M (-58). Bad debt losses amounted to SEK -10 M (-1).
· The effect from changes in exchange rates compared with last year was approximately SEK 30 M (30) including hedges.
· Adjusted EBITA margin* was 18 percent (12).
· Operating result was SEK 366 M (144).
· Net income amounted to SEK 308 M (42). Earnings per share was SEK 0.81 (0.11) before and after dilution.
· Cash flow after continuous investments improved to SEK 479 M (223).
· Two new Elekta Unity orders were booked in the quarter.
· Elekta remains committed to reaching an EBITA margin* of >20 percent. However, for this fiscal year the company expects to reach an EBITA margin* of around 19 percent. The adjustment is due to less favorable currency effects and the impact from the previously communicated delay of the Elekta Unity launch.
· Gross order intake amounted to SEK 9,838 M (9,698), an increase of 3 percent based on constant exchange rates and 1 percent in SEK.
· Net sales was SEK 7,719 M (6,989), an increase of 13 percent based on constant exchange rates and 10 percent in SEK.
· Adjusted EBITA* amounted to SEK 1,197 M (882). Items affecting comparability was SEK 0 M (-264). Bad debt losses amounted to SEK -38 M (-30).
· The effect from changes in exchange rates compared with last year was approximately SEK 10 M (240) including hedges.
· Adjusted EBITA* margin was 16 percent (13).
· Operating result was SEK 769 M (250).
· Net income amounted to SEK 555 M (33). Earnings per share was SEK 1.45 (0.08) before and after dilution.
· Cash flow after continuous investments improved to SEK 610 M (28).
*Adjusted for items affecting comparability and bad debt losses
President and CEO comments
Our third quarter showed strong progress; both orders and net sales grew, while we continued to improve our cash flow and maintained a low level of working capital. Unity continued its positive momentum, adding three orders since the last report. We remain committed to reaching an EBITA margin of over 20 percent. However, for this fiscal year we expect to reach an EBITA margin of around 19 percent.
Order intake* increased 9 percent in the quarter and 3 percent in the first nine months. I’m happy to see that we are strengthening our leading position in the important Chinese market, while continuing to improve in North America. In addition, Eastern Europe, Southeast Asia and Australia showed strong growth. However, development in Europe was mixed, as expected, primarily due to a challenging comparison from the third quarter last year.
During the quarter, net sales* grew by 7 percent and 13 percent in the first nine months. We had strong delivery volumes for linear accelerators and a continued positive trend for Leksell Gamma Knife®. In total, our installed base of treatment systems has grown 6 percent compared to last year – a key driver for the services business, forming the foundation for stable and recurring revenues over time.
Furthermore, the gross margin in Q3 was 42.0 percent, a year-on-year increase of 2.3 percentage points, driven by higher volumes and COGS savings. At the same time, the adjusted EBITA margin in the quarter increased over 6 percentage points to 18.3 percent, compared to last year. We see a growing demand for advanced cancer care and will continue to improve our margins going forward. We remain committed to reaching an EBITA margin of over 20 percent, but for this fiscal year, the EBITA margin is expected to be around 19 percent. The adjustment is due to less favorable currency effects and the impact from the previously communicated delay of the Elekta Unity launch.
The commercialization of Unity is our main focus at the moment. The work to secure CE mark during the first half of 2018, and subsequent FDA approval, is progressing well and on schedule. On that note, we are pleased to see that interest in Unity is steadily growing. The three new customers added since the last report is a clear reflection of this: Townsville Cancer Center in Australia, and the Sun Yat-sen University Cancer Center in China during the quarter, and just after the end of the quarter, Memorial Sloan Kettering Cancer Center in New York acquired a research system. That means that, in total, we now have 21 customers. In the meanwhile, the focus of the MR-linac consortium is currently on imaging with volunteer patients. The results show very high image quality, which is entirely in line with the diagnostic standard for an MRI system of 1.5 Tesla. Our customers will have access to sophisticated imaging sequences at the time of CE mark, such as functional imaging opportunities.
Another important part of our current and future business is Elekta Digital. In this area, there is immense potential to develop and, simultaneously, enhance the efficiency and application of the way in which radiation therapy is administered. The partnership we commenced with IBM Watson Oncology in the quarter is a great example of this. One objective with the partnership is to largely automate the preparation of treatment plans using artificial intelligence to convert big data into customized cancer therapy for individual patients. We are excited about the opportunity this offers and are looking forward to being a pioneer in this field.
In summary, the third quarter shows that we are moving in the right direction, creating a stable platform for long-term growth for Elekta. With that said, we still have a lot to do and will continue to remain focused on the Unity project, improving our processes and business, keeping track of costs and raising our margins. I would also like to thank our employees for their continued commitment to our company and customers.
Richard Hausmann, President and CEO
* Compared to last fiscal year based on constant exchange rates
Elekta will host a telephone conference at 10:00-11:00 CET on March 2, 2018, 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) 8 566 426 91
UK dial-in number: +44 (0) 203 008 9808
US dial-in number: +1 855 753 2237
The webcast will be through the following link: