Elekta (EKTA) Q1 24/25 earnings summary

Executive summary

• Net sales grew 1% in constant currencies, driven by strong installations in the U.S. and growth in the Americas, with a major $64 million order in Mexico; EMEA declined and China remained challenging due to anti-corruption measures.

• Adjusted gross margin was 37.8%, down year-over-year due to inflation and reduced inventory revaluation, but improved sequentially by 120 basis points.

• Adjusted EBIT margin declined to 7.4% year-over-year, mainly due to gross margin pressure and higher expenses; cost reduction initiatives have been launched.

• Book-to-bill ratio improved to 1.10, supported by double-digit order growth and major wins.

• Cost-reduction initiatives and new product launches are underway to improve profitability, targeting SEK 250 million annual savings by year-end.

Financial highlights

• Group sales reached SEK 3,825M in Q1, with Americas up 16%, APAC up 3% (excluding China up 29%), and EMEA down 12%.

• Service business grew 5% year-over-year; solution sales declined by 3% due to Europe and China.

• Net income was SEK 71M; EPS at SEK 0.18 (0.62 last year); adjusted EPS SEK 0.41 (0.65 last year).

• Cash flow after investments was negative SEK 891M, similar to last year; working capital as % of sales improved to -5% to -6%.

• Rolling 12-month cash flow from operations was SEK 2.5B, up SEK 900M year-over-year; cash conversion at 83%.

Outlook and guidance

• First half of 2024/25 expected to be weaker than last year; sales and profitability to pick up in the second half due to new product launches and productivity measures.

• Full-year net sales expected to grow by mid-single digits with improved EBIT margin.

• Long-term EBIT margin target set at 14% or higher, with margin expansion expected beyond 2024/25.