· Results for the fourth quarter and the full year were significantly below expectations. A comprehensive action program has been initiated with the objectives to return to growth, improve profitability, reduce costs and continue to focus on cash flow. · Order bookings decreased 3 percent to SEK 11,907 M (12,253), equivalent to a decrease of 13 percent based on constant exchange rates. This was primarily due to weak performance in the US. · Net sales increased 1 percent to SEK 10,839 M (10,694), equivalent to a decrease of 8 percent based on constant exchange rates. · EBITA before non-recurring items amounted to SEK 1,306 M (2,183) and SEK 1,472 M adjusted for realized and anticipated bad debt losses of SEK 166 M. Currency effects were neutral. · Net income amounted to SEK 558 M (1,152). Earnings per share amounted to SEK 1.45 (3.01) before dilution and SEK 1.45 (3.00) after dilution. · Cash flow after continuous investments amounted to SEK 867 M (494), representing a cash conversion of 81 percent (32). · In accordance with the dividend policy, the Board of Directors proposes a dividend of SEK 0.50 (2.00) per share for 2014/15. · Niklas Savander stepped down as CEO on May 13. Tomas Puusepp was appointed as new CEO on the same date. · A new organization and changes in the Executive Management team were announced on June 2.
A comprehensive action program has been initiated with the objectives to return to growth, improve profitability, reduce costs and continue to focus on cash flow. We expect negative growth in net sales to continue during the first half of 2015/16, while growth is expected to return during the second half of 2015/16.
President and CEO comments
Our financial performance in fiscal year 2014/15 was significantly below expectations. We have initiated a comprehensive action program with the objectives to return to growth, improve profitability, reduce costs and continue to focus on cash flow. Our performance in the US was weak and actions have been initiated to address both growth and profitability. Results were also below expectations in some emerging markets due to weak market conditions, political developments, war and civil unrest.
The overall demand and underlying medical need for radiation therapy remain healthy, although market growth has been lower the last couple of years, compared to historical levels. Business risks have increased in some emerging markets, particularly the Middle East and North Africa, where Elekta has a significant footprint. The current global market growth is at low- to mid-single digit levels.
In 2014/15 order bookings declined 3 percent in SEK and 13 percent based on constant exchange rates. This includes one-off cancellations of SEK 700 M. Adjusted for these cancellations, order bookings decreased by 8 percent based on constant exchange rates.
Regional development in order bookings was mixed and the overall share of large orders declined compared with last year. In the US order bookings declined 25 percent based on constant exchange rates. In Western Europe order bookings in most countries showed growth in low- to mid-single digits, except in the UK. In the Middle East and Northern Africa order bookings declined due to civil unrest and war. Asia Pacific ended the year with strong order bookings, mainly driven by very strong performance in China and Australia. The Japanese market as a whole declined. Our order bookings in Japan were stable, with increased market share as a result. Our global service and support organization showed good development.
Net sales and EBITA
Net sales increased 1 percent in SEK but declined 8 percent based on constant exchange rates. EBITA before non-recurring items amounted to SEK 1,306 M (2,183). EBITA was SEK 1,472 M adjusted for realized bad debt losses and higher bad debt provisions primarily from projects in Iraq and Libya.
Cash flow after continuous investments improved significantly compared with last year and amounted to SEK 867 M (494). The improvement is primarily driven by reduced net working capital. Net working capital in relation to net sales improved to 8 (14) percent. Our efforts to reduce working capital and focus on cash flow will continue. Cash conversion was 81 percent (32).
New organization and comprehensive action program
We have initiated a comprehensive action program with the objectives to return to growth, improve profitability, reduce costs and continue to focus on cash flow. As part of this program, we are making the following changes to the organization:
Our global sales, marketing, service and customer support activities will be brought together under Ian Alexander as Chief Commercial Officer (CCO). The new commercial organization will focus on improving customer service and support activities as well as strengthen Elekta’s global reach and brand.
All products and solutions will be managed by our Chief Operating Officer (COO), Johan Sedihn, who will be responsible for competitiveness of products and solutions, for research and development, manufacturing and supply chain management, as well as for improving effectiveness and cost efficiency in our operations.
In addition to these changes we have also speeded up the implementation of our strategic agenda. We will announce further details of our cost reduction program during our Capital Markets Day.
One of our major strategic development projects has successfully been completed with the launch of Leksell Gamma Knife® Icon™. Icon is the most precise radiosurgery device on the market and the only one with ultra-precise micro-radiosurgery capabilities. The system introduces a number of new innovations, such as integrated imaging and software to continuously control the dose delivery. It also makes it possible to treat patients with or without a frame, while assuring the highest level of precision. Addressing the growing radiosurgery market, Icon makes Gamma Knife radiosurgery more flexible with unparalleled throughput, allowing more clinics to implement a cranial radiosurgery program. The introduction of Icon completes Elekta’s industry-leading offering of the most advanced and effective solutions for stereotactic radiosurgery and radiation therapy.
Long-term fundamentals remain
While markets currently are growing at a lower rate than historic average, the long-term market fundamentals, with an underlying medical need for cancer care and radiation therapy, offer favorable long-term growth prospects. We remain confident that our substantial investments in R&D will bring improved clinical outcomes to patients, as well as improved growth and profitability for the company.
President and CEO
* Compared with last fiscal year, based on constant exchange rates.
Elekta will host a telephone conference at 10:00-11:00 CET with Tomas Puusepp, President and CEO and Håkan Bergström, CFO.
To take part in the conference call, please dial in about five minutes in advance.
UK dial-in number: +44 (0)20 342 814 08
US dial-in number: +1 855 831 59 45
Swedish dial-in number: +46 (0)8 566 427 00
The telephone conference will also be broadcasted live online, through the following link (however, please call in also in order to ask questions): http://event.onlineseminarsolutions.com/r.htm?e=994449&s=1&k=6F73AE6166C5244401C9930352E38734
Annual report 2014/15 August 11, 2015
Interim report May – July 2015/16 September 1, 2015
Annual General Meeting 2015 September 1, 2015
Interim report May – October 2015/16 December 4, 2015