Elos Medtech Interim Report January 1 - September 30, 2018
Strategic target of double-digit growth achieved
July – September 2018
• Net sales for the quarter increased and amounted to SEK 154.1 million (132.5), corresponding to organic growth of 16.3%. After currency adjustments, growth was 8.9%.
• Operating profit amounted to SEK 11.8 million (9.3). Operating margin for the third quarter of 2018 was 7.7%, compared to 7.0% for the same period last year.
• Operating profit amounted to SEK 11.8 million (9.3). Operating margin for the third quarter of 2018 was 7.7%, compared to 7.0% for the same period last year.
• Profit after financial items amounted to SEK 7.7 million (5.2). Net financial items were adversely affected by foreign exchange effects in the amount of SEK -0.9 million (-1.7).
• Profit after tax amounted to SEK 6.4 million (3.0), which corresponds to SEK 0.79 (0.50) per share.
• Cash flow from operations was SEK 18.4 million (10.4) and amounted to SEK -7.6 million (4.9) after investments.
Events during the quarter
We implemented our global strategic plan in the Dental Implant Systems business area during the quarter. This reorganization and associated efficiency measures will lead to annual savings of SEK 6 million.
Comments from the CEO, Jan Wahlström
During the third quarter of 2018, we continued to deliver growth in line with our strategic targets. We are pleased to say that all our business areas are developing positively. Growth in the quarter amounted to 16 per cent and it was the seventh consecutive quarter of growth. The business areas Orthopedics and Dental Implant Systems are the drivers of our growth. Accumulated sales after nine months is 11 per cent higher than last year. We are proud to have achieved our strategic growth target and we are intensifying our work to achieve other strategic targets.
So far in 2018, we have further consolidated our position as key partner in the global medical technology market. We are seeing a trend towards capacity and delivery reliability being the most important factors in choosing a partner. This trend benefits Elos Medtech, which represents quality, expertise and innovation. We have noticed an increased inflow of enquiries, and we are also seeing more interest from our global customers in giving projects to more than one of our units. This is clear confirmation of the value of our global offering. There is also continued consolidation in the industry, especially in the orthopedics area, where we have recently seen further acquisitions among our customers. Internally, we anticipate there being more opportunities for improvement in the future, primarily through increased specialization within our strategic focus areas.
Within Dental Implant Systems, we saw growth of 9 per cent in the third quarter, with a figure of 5 per cent growth for the first three quarters of the year. This is slightly lower than our ambitions but in line with how the dental implant market as whole is developing. We implemented our global strategic plan, which encompasses several of our units, in this quarter. This change in strategy entails a clearer focus, reorganization and associated efficiency measures that will lead to annual savings of SEK 6 million.
Orthopedics has undergone very positive development during the quarter, with growth of 25 per cent. The accumulated growth for the year is 16 per cent even though we do not yet have the capacity to accept all enquiries. We have now begun the expansion of production in Memphis to deal with the increased demand from American customers in trauma and robotic surgery. In October, our global Business Director for Orthopedics, Jodie Gilmore, was elected as an Advisory Council Member of the Herff College of Engineering at the University of Memphis, giving a clear signal of our position in the orthopedics segment in the most important market, namely the USA.
Within Diagnostics, we received a sales boost during the quarter with continued very good profitability for the entire business area. Sales during the first nine months of the year has increased by 17 per cent compared to last year.
2017 saw moderate recovery in Hearing Device & Vibration and we predicted stronger growth in 2018. Sales growth for the three quarters was 23 per cent. We expect the growth in Hearing Device & Vibration to level out in the future, because we will be focusing on raising the level of service for our existing customers.
Unlike other business areas, the market for Other Medical Areas is characterised by major price pressure. Despite a positive trend, it is not as high as in other business areas.
The quarter demonstrated improved profitability. Profit amounted to SEK 11.8 million with an operating margin of 7.7 per cent. With the exception of one unit, all units reported better profit than we had planned for. We are implementing a range of improvement measures that to a lesser extent we see the effects of in Q3; we do not expect to see the full effect on the profit until 2019.
In terms of the third quarter, we have continued to deliver performance in line with our plan for growth and expansion. We are continuing our journey towards specialization and our objective is for all business areas to increase their degree of specialization and offer products that are best-in-class. Our long-term and sustained improvement efforts are still a work in progress. We aim to achieve improved efficiency and thus higher profitability.
For further information, please contact:
Jan Wahlström, 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
For additional information about the Elos Medtech Group, visit www.elosmedtech.com
This information is information that Elos Medtech AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above on October 25, 2018, at 08:00 (CET).