STOCKHOLM, Sweden, Sept. 27, 2001 (PRIMEZONE) -- Elekta AB (SSE:EKTAB), interim report.
Operating profit was improved by SEK 50 M to SEK 33 M (loss: 17) and the operating margin increased to 6 percent (neg: 4).
-- Strong order bookings, up 105 percent to SEK 703 M (343). Order
backlog increased 11 percent during first quarter.
-- Net sales rose 38 percent to SEK 544 M (394).
-- The convertible debenture loan of SEK 233 M was 98 percent
converted.
-- Equity/assets ratio strengthened to 52 percent.
-- Full-year earnings for fiscal year 2001/02 are expected to show a
distinct improvement compared with 2000/01.
Elekta's strategy is to provide clinically effective and cost-efficient solutions and services for improved management of cancer and brain disorders - aimed at enhanced quality of life.
Market
Despite the worldwide economic downturn, the healthcare market continued to invest in clinically effective, cost-efficient and gentle treatment methods for cancer and brain disorders. This benefited Elekta, which offers a sophisticated, high technology precision radiation-based product range covering both of these treatment areas. The most important markets for Elekta during the first quarter (May-July, 2001) were Europe - particularly the UK and the Netherlands as regards radiation treatment of cancer - and the US in the area of non-invasive radiosurgery in the brain using Leksell Gamma Knifee.
Strategic Ventures
The development of therapies for cancer is focusing increasingly on high-precision radiation treatment. Elekta conducts long-term development efforts aimed at improving treatment methods and results in cancer care. Elekta is a leading innovator of solutions for precise radiation solutions, such as intensity modulated radiotherapy (IMRT).
As part of these efforts, Elekta entered into a cooperation agreement in July with ADAC, a company within Philips Medical Systems. ADAC contributes with its newly developed dose-planning system, ePinnacle, and Elekta with its state-of-the-art radiation treatment system for cancer, Elekta Precise Treatment System. This combination of newly developed, advanced systems makes it possible to perform radiation treatment of cancer using IMRT, resulting in greater treatment efficacy.
Elekta has received approval from the FDA in the US to distribute its system for image registration and tumor localization during radiation treatment of cancer, iViewGT, in the US. The system is a key component in the further development of IMRT.
In June, Elekta officially inaugurated its majority owned company in China, which creates new and improved opportunities to effectively cultivate and contribute to the rapidly growing Chinese medical-technology market - one of the world's largest.
Order Bookings and Order Backlog
Group order bookings showed a highly positive trend during the first quarter. On a rolling 12-month basis, order bookings amounted to SEK 2,763 M, up 48 percent.
Order bookings for the first quarter increased 105 percent to SEK 703 M (343). Neurosurgical products showed an increase of 142 percent, to SEK 223 M (92), while oncology products increased 91 percent to SEK 480 M (251).
The Group order backlog increased 11 percent and amounted to SEK 2,352 M at July 31, 2001, compared with SEK 2,112 M at April 30, 2001.
Favorable Order Bookings in the Oncology Area in Europe
Order bookings in Europe, the Middle East and Africa rose 55 percent to SEK 288 M (186). Upgrades and service displayed a strong trend during the quarter. Substantial investments are being made in cancer care in the UK and the Netherlands.
Strong Sales of Leksell Gamma Knife in US
As a result of strong order bookings, particularly for Leksell Gamma Knife during the first quarter, order bookings in North and South America increased by 112 percent to SEK 252 M (119).
Seasonally Weak Order Bookings in Japan
Order bookings in Japan were limited mainly for seasonal reasons and amounted to SEK 11 M (13).
Favorable Demand in Asia
A major need for healthcare and demand for more advanced cancer care in the region resulted in strong order bookings for oncology products, mainly in China and Taiwan. Order bookings in Asia increased to SEK 152 M (25).
Net Sales
The Group's net sales rose 38 percent to SEK 544 M (394). Exchange-rate movements - particularly the weakening of the Swedish krona against the US dollar, the Euro and the British pound - contributed to a 13 percent improvement in net sales. Net sales increased to SEK 184 M (137) for neurosurgical products and to SEK 360 M (257) for oncology products. Net sales of after-market products and services increased 19 percent to SEK 165 M (138).
Results
Operating profit improved by SEK 50 M to SEK 33 M (loss: 17). The improvement was mainly due to substantially higher utilization of capacity and favorable product mix during this quarter. The operating margin for the quarter improved to 6 percent (neg: 4). For the rolling 12-month period, the operating margin was 6 percent.
Investments in research and development amounted to SEK 30 M (25). These investments, which are expensed as incurred, corresponded to 6 percent (6) of net sales.
Net financial items amounted to income of SEK 2 M (expense 1), including net interest expenses of SEK 5 M (8), of which the convertible debenture loan accounted for SEK 5 M (6). Earnings from participations in associated companies amounted to SEK 3 M (2), and foreign exchange differences totaled SEK 4 M (5).
Profit after net financial items amounted to SEK 35 M (loss: 18). The profit after taxes was SEK 23 M (loss: 10).
Earnings per share amounted to SEK 0.80 (loss: 0.36).
Return on equity amounted to 8 percent and return on capital employed was 14 percent (3).
Investments and Depreciation
Investments in intangible and tangible fixed assets amounted to SEK 9 M (5).
Amortization/depreciation of intangible and tangible fixed assets totaled SEK 15 M (15).
Liquidity and Financial Position
Cash flow before investments amounted to SEK 53 M (16), as a result of the reported profit. Cash flow after investments and divestments amounted to SEK 46 M (10).
The Group's liquid assets amounted to SEK 469 M on July 31, 2001, compared with SEK 434 M on April 30, 2001. Of the bank balances held, SEK 169 M (SEK 130 M on April 30, 2001) is pledged, primarily as guarantees for customer advances received.
Convertible debenture loan in a nominal amount of SEK 229 M was converted. The outstanding SEK 4 M is due for repayment by December 31, 2001. The conversion resulted in 3,808,250 new Series B shares. The total number of shares is 31,661,867.
Other interest-bearing liabilities amounted to SEK 44 M.
The equity/assets ratio strengthened to 52 percent following the conversion of convertible debenture loan and the inclusion of deferred tax receivables in the balance sheet. See changed accounting principles page 9.
Employees
The average number of employees in the Group was 874 (778). The number of employees at the close of the period was 888, compared with 854 on April 30, 2001.
It is estimated that the increase in the number of employees for the full fiscal year will amount to circa 120 persons or 14 percent. The increase is occurring as a result of increased volumes and a focus on selected strategic areas where future profitable growth opportunities are considered to be favorable.
Parent Company
Parent Company operations comprise Group management, joint Group functions and financial management. The Parent Company's loss before net financial items amounted to SEK 5 M (loss: 6). The average number of employees was 13 (12).
Future Prospects
Despite the prevailing political and economic uncertainty in the world, the assessment remains that net sales and operating profit for fiscal year 2001/02 as a whole are expected to be substantially better than in 2000/01. Net sales during the second quarter are expected to be on a level with the first quarter. Investments in research and development and the strengthening of the marketing and service organization, particularly in the US and Asia, will continue.
Financial Information
A six-month interim report will be issued on December 12, 2001.
Elekta AB (publ) -- Laurent Leksell, President
The full report including tables can be downloaded from the enclosed link: http://reports.huginonline.com/835172/94848.pdf