· Order bookings increased 12* percent to SEK 2,341 M (2,027).
· Net sales decreased 4* percent to SEK 1,865 M (1,912).
· EBITA amounted to SEK -38 M (148) before non-recurring items. Currency effects were neutral.
· Net income amounted to SEK -137 M (-8). Earnings per share amounted to SEK -0.36 (-0.01) before dilution and SEK -0.36 (-0.01) after dilution.
· Cash flow after continuous investments amounted to SEK -670 M (-584). Cash conversion is targeted to return to around 70 percent for the fiscal year.
· There are strong drivers for growth in radiation therapy. Elekta’s ambition is to continue to grow faster than the market. The financial objective is an annual net sales growth exceeding 10 percent in local currency.
· Due to temporary lower growth and higher execution risks in some emerging markets and a focus on tighter management of working capital, net sales is expected to grow by 7-9 percent in local currency for the fiscal year 2014/15. Currently 2014/15 is expected to finish in the lower range of the interval.
· EBITA is expected to grow by approximately 10 percent (changed from “10 percent or more”) in local currency for the fiscal year 2014/15, compared with last year. Exchange rate movements are expected to have a neutral impact on EBITA growth in SEK.
President and CEO comments
During the first quarter of the fiscal year 2014/15 we continued to see mixed development in our markets. We are pleased that order momentum recovered and order bookings grew by 12* percent compared to the first quarter last year. Net sales and cash flow were weak. Based on current market conditions and our order backlog we reiterate our net sales guidance for the year with a growth of 7-9 percent in local currency, but we currently expect the result to be in the lower range of the interval. EBITA is expected to grow approximately 10 percent.
Mixed market environment
We estimate that demand in the first quarter grew by low single-digits over the previous year. In the first quarter we saw a mixed market environment across our geographic areas. There was slower than expected growth in mature markets, especially in the US. In Asia, and other emerging markets, the market development was mixed in the first quarter but we are expecting a return to growth for the full year. Due to macroeconomic and geopolitical circumstances there are increased risks in the full year plan. We remain cautiously optimistic, but are monitoring the situation closely.
Strong order bookings
Elekta’s order bookings increased by 12* percent in the first quarter, reflecting good demand for Elekta’s leading portfolio of cancer care solutions. Performance was good in Europe and North America. In Asia, the trend was mixed. India showed good growth. In Japan, orders were unchanged while the market and orders in China were seasonally lower than last year but full-year prospects are good.
After the relatively weak order intake last year, our global order volumes for Leksell Gamma Knife® continue to improve according to plan.
Weak delivery volumes
The first quarter is normally Elekta’s weakest. Net sales decreased by 4* percent. Deliveries in region EMEA were strong and we noticed a slight increase in Asia. North America had a weak quarter mainly due to delays in planned software installations. Software revenues are expected to recover during this fiscal year. Gross margin decreased to 34 percent (42). The decline is due to low software revenues and unfavorable project mix effects in the first quarter. EBITA before non-recurring items amounted to SEK -38 M (148). The lower result is an effect of the lower gross profit combined with cost increases according to plan.
Cash flow after continuous investments for the first quarter amounted to SEK -670 M (-584). Cash flow was impacted by the result from operations and inventory build-up for scheduled deliveries for the quarter and the remainder of the year. Compared with the fourth quarter, accounts receivable declined according to plan. Actions are in place to gradually improve cash flow during the year, with the ambition to return to a cash generation of around 70 percent for the year.
Supporting future growth
In the fourth quarter, and in line with the strategic agenda, we announced measures to enhance the efficiency of the organization to support continued growth. The activities in the program have, to a large extent, been executed and the related cash outflow amounted to SEK 33 M in the first quarter. The total program amounted to SEK 100 M. We have completed efficiency measures leading to staff reductions in our North American and Asian regional organizations. In addition, we announced our intent to close our office in Freiburg, Germany, and transfer the functions to Crawley, UK.
Continued progress in product development
We are in a high-investment phase within research and development. Our MRI-guided radiation therapy project is our largest research and development project to date. Recently, the Christie Hospital in the UK joined our research consortium for MRI-guided radiation therapy and Uppsala University Hospital has announced that it will be conducting research with MRI-guided radiation therapy via a bilateral research agreement with Elekta.
The long-term underlying market growth remains strong. However, for this fiscal year, we see continued mixed development in our markets including higher execution risks in certain emerging markets. We reiterate our outlook for the full fiscal year of a net sales growth of 7-9 percent, in local currency, where we currently see 2014/15 finishing in the lower range of the interval.
EBITA is expected to increase approximately 10 percent in local currency compared with last year. Exchange rate movements are expected to have a neutral impact on EBITA growth in SEK.
Niklas Savander - President and CEO
* Compared with last fiscal year, based on unchanged exchange rates.
Elekta will host a telephone conference at 13:45 – 14:30 CET on August 28, with President and CEO Niklas Savander and CFO Håkan Bergström.
To take part in the conference call, please dial in about 5-10 minutes in advance.
Swedish dial-in number: +46 (0)8 519 993 50, UK dial-in number: +44 (0)20 319 405 47, US dial-in number: +1 877 788 90 23.
The telephone conference will also be broadcasted over the internet (listen only). Please use the link:
Interim report May – October 2014/15
November 27, 2014
Interim report May – January 2014/15
March 4, 2015
Year-end report May – April 2014/15
June 2, 2015