Elos Medtech Interim report, 1 January - 31 March , 2017

The global market for medical technology products is growing in a number of
our business areas and we see favourable growth opportunities.

       •   Net sales amounted to SEK 140.9 M (140.4), corresponding to organic growth of 0.4%.

• Operating profit totalled SEK 13.3 M (12.0). 

• Profit after net financial items amounted to SEK 9.6 M (6.8). Net financial items were negatively impacted by exchange-rate differences of SEK 1.4 M (neg: 1.7).

• Profit after tax amounted to SEK 7.2 M (4.9), corresponding to SEK 1.19 (0.80) per share.

• Cash flow was SEK 11.9 M (20.5) from operating activities and SEK 6.6 M (7.0) after investments.

CEO Jan Wahlström, comments

"The objective of last year’s change efforts was to strengthen Elos Medtech’s position in the market. We already noted in the first quarter that the over haul of the operations, in which we focused on improving our internal processes, had had an impact. The strong earnings trend of 2016 has continued and operating profit increased by 11% to SEK 13.3 M.

Sales in the first quarter of 2017 exceeded sales in both the third and the fourth quarter of 2016 and are in line with the first quarter 2016, at SEK 140.9 M (140.4). On a rolling 12-month basis, sales totalled SEK 553 M 

As a result of the overhaul, we are changing the way we report sales figures to the following markets: Dental Implant Systems, Orthopedics (replaces Trauma & Spine), Diagnostics, Hearing Device & Vibration and Other Medical Areas. This division more accurately describes the customers with whom   we work.

The strong performance in Dental Implant Systems has continued. This was the fourth consecutive quarter of growth in this segment. Sales during the quarter amounted to SEK 51.5   M (36.2), an increase of a full 42%. On a rolling 12-month   basis, the growth rate is now 26%. The growth mainly derives from our largest key accounts, at the same time as a number of our smaller accounts have developed well. It is gratifying to   note that our own products showed favourable growth of 37%   in the first quarter. Our own products are mainly proprietarily developed solutions that we sell to our key accounts, as well as our recently launched range, Elos Accurate.

Within Orthopedics, the focus during the quarter was on selling-in new projects. This applies to both our new US operations and collaboration projects between several units, such as Timmersdala and Tianjin. Sales in the first quarter were weak, amounting to SEK 39.0 M (50.8). The year-on-year decline was largely due to the previous loss of an order from a contract customer. However, our positive view of the business trend in the second half of 2017 stands firm.

Within Diagnostics, sales declined during the quarter to SEK 6.4 M (8.2). The main reason for this was the high sales level noted at the end of 2016, which was also reflected in the strong figures for the final quarter. The rate of investment in our production in Skara remains high. Demand is growing in the diagnostics segment and we are noting a positive trend for the new factory.  During  the  first  quarter,  we  developed  joint projects between Microplast and other Elos Medtech units, in response to customer demand for products based on a combination of  plastic  and  metal.  Products  for  complex medical technical applications often require solutions including both plastic and metal parts. We are convinced that a lot can happen in both Orthopedics and Other Medical Areas in the   near future.

Hearing Device & Vibration started the year somewhat weaker than in 2016, with sales of SEK 18.4 M (21.8). We started to see a decline as early as the second half of 2016, and demand has now stabilised at a lower level. We are now focusing on working together with our customers to develop new solutions for their products and are returning to more normal inventory levels in preparation for renewed growth.

Finally, we have Other Medical Systems, where most of our sales in China are concentrated, which increased its sales by 9% to SEK 25.4 M (23.3). As a result of a number of changes here, we now have stability in the operation and, thanks to new customer relationships, we have a positive view of our future business trend.

Investments during the first quarter amounted to SEK 5.3 M (13.3). We implemented large-scale investments towards the end of 2016, such as for increased capacity at Microplast and improvements in Pinol. The investment requirements for 2017 are in line with 2016 and largely focus on increasing capacity through new production equipment, a reduced environmental impact and lower running costs, aided by, for example, a modernisation of  refrigeration equipment.

As I previously emphasised, our global production is one of our competitive advantages. As a result of cooperation within the Group, we can safeguard both quality and performance. Accordingly, we have focused on identifying and developing synergism between our units, especially in cases where we have a number of joint products and projects. In this context, we have a number of products that are on their way into production. We are also working to strengthen the flexibility of our offering to be able to more rapidly adapt to our customers’ needs by, for example, combining our cutting-edge competencies in plastic and metal processing.

Our internal journey of change has yielded results. We see distinct progress in various areas, such as the new products that  have  been  added  in  both  orthopedics  and  diagnostics. We have a number of projects together with customers for the joint development of future products. Furthermore, we are now working in a more focused manner on clarifying the offering of the entire Group and the new customer division is a feature of this process. This is part of an important formula for generating results  moving forward."

Jan Wahlström

President and CEO

For further information, contact:
Jan Wahlström, President and CEO, +46 70-212 18 89, e-mail: jan.wahlstrom@elosmedtech.com
Christian Bergaust, CFO, +46 70-293 50 40, e-mail: christian.bergaust@elosmedtech.com

This is information that is such information that Elos Medtech AB (publ) is obliged to published in accordansce with the EU Market Abuse Regulation and the Securities Market Act. The information was issued for publication by the contact person stated above, on 26 April 2017 at 18:00(CET).

For additional information about the Elos Medtech Group, visit www.elosmedtech.com

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