Elos Medtech Interim Report January 1 - June 30, 2017

High sales growth within Dental Implant Systems and increased market investments

• Net sales for the first half of the year increased and amounted to SEK 296.5 M (292.0), corresponding to organic growth of 1.5%.

• Operating profit totalled SEK 26.8 M (28.0).

• Profit after net financial items amounted to SEK 15.5 M (21.3). Net financial items were negatively impacted by exchange rate differences of SEK - 6.7 M (-0.2).

• Profit after tax amounted to SEK 12.1 M (15.1), corresponding to SEK 2.00 (2.49) per share.

• Cash flow from operations was SEK 32.5 M (44.6) and after investments SEK 20.3 M (23.2).

CEO, Jan Wahlström, comments

During the year we have had a clear strategic focus on sales and growth.

Therefore it is pleasing to see that our strategy is starting to produce results, especially in Dental Implant Systems, but also within Diagnostics and Other Medical Areas. Sales for

the first half of the year amount to 296.5 (292.0). This constitutes growth of 2.6 percent in the second quarter. The value-adjusted growth was -0,1 percent.

The ambition to build up both the company and the brand is part of our strategy to create more business opportunities for all our market segments. Our internal improvement projects, aimed at strengthening synergies and efficiency, in combination with large market investments, pull down the profits somewhat to SEK 26.8 M compared with SEK 28.0 M previously. However we are convinced that these investments are necessary and that they will be effective in the long term.

As a result of the weakening of the USD during the first half of 2017, profit after financial items was negatively influenced by exchange-rate losses of SEK -6.7 M, of which SEK -5.3 M is unrealised changes in value.

During the second quarter we have continued to see strong development within Dental Implant Systems. Our position as a supplier is strong and we continue to win business while facing tough competition from other players. Sales to both key customers and smaller customers are increasing and amount to SEK 54.0 M (49.9). Our own products are also developing well. They now amount to 9.6 percent (9.2) of our net sales. Our investment within digital dentistry has been well received even although growth in sales is progressing somewhat slower than we expected. However, interest is growing and we are training our customers to facilitate the use of our unique solutions. With two new distributors in the UK, we hope to be able to increase the pace further.

Sales are now recovering in Orthopedics. We consider the orthopedics market to be positive. It is expected to grow faster within outsourcing than the market as a whole. At the same time, we are also experiencing higher demand for new technologies, not least within robotic surgery, which is also benefiting our operations.

We currently have a stronger market position due to our integration of Onyx in Elos Medtech. This is leading to new synergies and joint market activities have resulted in new customer projects. During the first half of the year, in our American operations, we have taken on more new projects than on previous occasions. In the long term, we expect these to replace a previously lost order from a contract customer.

Sales have increased again in Diagnostics. Our assessment is that this market has huge growth potential and consequently we have made ongoing investments in plastic production in Skara in order to create space for future capacity requirements.

After a turbulent year for several of our larger customers in Hearing Device & Vibration, the decline in sales has plateaued and stabilised at a lower level. The focus is now on strengthening our key account work with existing customers.

In Other Medical Areas, sales continued to increase, by 19 percent, from SEK 21.5 M to SEK 25.6 M. The increase is a result of our rapid growth with several new customers, but above all that sales in China are growing fast. It is worth noting that our business in China increased by 18 percent and we see that the previous drop in sales is now behind us.

During the first half of the year we continued our strategic and systematic work, focusing on clarifying the message of what the Group has to offer. At the same time, it is important that we are able to meet growing demand and we have therefore initiated a project, Elos Medtech Operational Excellence (EMOPEX). The aim of EMOPEX, which is estimated to be completed during 2018, is to increase efficiency and ensure improved capacity throughout the whole Group, in order to meet demand from the global medical technology industry.

Jan Wahlström

CEO and President

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 the type of information that Elos Medtech AB (publ) is obliged to publish in accordance with the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was issued for publication by the contact persons stated above on 25 August 2017, at 11:00 a.m. (CET).

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

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