Sectra’s six-month interim report 2019/2020: Imaging IT Solutions’ order bookings exceed SEK 2 billion on a rolling 12-month basis

Press release – Linköping, November 29, 2019 – Demand for the international medical imaging IT and cybersecurity company Sectra’s (STO: SECT B) products increased and record-high order bookings were reported for the most recent 12-month period. A significant number of the orders pertain to long-term projects with new customers. In line with what has been previously stated, these projects had a negative impact on cash flow and earnings during the first half of 2019/2020. The projects’ earnings and cash flows will improve as the systems are gradually put into service during the coming six months and onwards.

Six-month period, May–October 2019

• Order bookings increased 4.3% to SEK 664.4 million (637.2).
• Net sales increased 14.1% to SEK 696.1 million (609.9). Adjusted for currency fluctuations, sales increased 11.3%.
• Operating profit totaled SEK 72.0 million (80.6), corresponding to an operating margin of 10.3% (13.2). Adjusted for currency fluctuations, operating profit decreased 14.9%.
• Profit before tax amounted to SEK 75.6 million (86.5). 
• Cash flow after changes in working capital amounted to SEK 81.2 million (100.4).

Second quarter, August–October 2019

• Order bookings increased 21.4% to SEK 425.7 million (350.7). Of the order bookings during the quarter, 25% were recognized as revenue during the quarter and 24% to 34% pertain to revenue within 12 months after the end of the quarter. 
• Net sales increased 14.9% to SEK 363.3 million (316.2). Adjusted for currency fluctuations, sales increased 12.0%.
• Operating profit totaled SEK 42.7 million (45.0), corresponding to an operating margin of 11.8% (14.2). Adjusted for currency fluctuations, operating profit decreased 8.2%.
• Profit before tax amounted to SEK 44.9 million (52.7). 
• Cash flow after changes in working capital amounted to SEK 109.2 million (84.5). Sectra distributed SEK 172.6 million (171.5) to shareholders through a redemption program.

Torbjörn Kronander, President and CEO of Sectra AB, comments

“To summarize the first half of 2019/2020, more and more customers around the world are choosing Sectra’s products and services. Our goal is to maintain this trust by helping customers give their patients better, more efficient care and increasing cybersecurity in critical social functions.

“The increase in order bookings during the period is primarily connected to Imaging IT Solutions, which for the first time exceeded SEK 2 billion on a rolling 12-month basis. Sectra’s medical imaging solutions are comprehensive, personnel-intensive installation projects, and the period involved a build-up of delivery capacity to manage the large number of order bookings over the last year. These projects initially entail major costs, and only a small portion can be recognized as revenue for work in progress during the installation phase. As they transition into the operational phase, however, they will generate multiyear revenue streams with healthy margins. As we have stated previously, the investment-heavy first half of the year was in line with our plans and the costs will gradually shift into revenue and positive cash flow during the second half of 2019/2020.

“We are continuing to invest in future areas with significant growth potential. One of these areas is digital pathology, where we are growing within the European market, which has started to gain momentum. In the US, customers can currently only use our pathology solution for secondary review, since we still don’t have FDA approval for primary review. For digital pathology, the FDA requires a complete chain consisting of scanner, IT system and monitor. To achieve this, we have initiated a collaboration with Leica Biosystems, a leading supplier of digital pathology scanners and other equipment, and in November Sectra submitted an application to the FDA based on Leica’s scanner.” 

For further CEO comments and information, see the attached interim report. 
 

Presentation of the interim report 
A presentation will be held by Torbjörn Kronander, President and CEO of Sectra AB, and Mats Franzén, CFO of Sectra AB. The presentation will be held in English. 

Time: November 29, 2019 at 10:00 a.m. (CET).
Follow online via investor.sectra.com/q2report2019 or call:
SE +46850558356 
UK +443333009261 
US +18338230586

A recorded version will also be available after the conference.

This information constitutes information that Sectra AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and/or the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 8:15 a.m. (CET) on November 29, 2019.
 

For further information, please contact:
Dr. Torbjörn Kronander, CEO and President Sectra AB, 46 (0) 705 23 52 27

About Sectra
Sectra assists hospitals throughout the world to enhance the efficiency of care, and authorities and defense forces in Europe to protect society’s most sensitive information. Thereby, Sectra contributes to a healthier and safer society. The company was founded in 1978, has its head office in Linköping, Sweden, with direct sales in 19 countries, and operates through partners worldwide. Sales in the 2018/2019 fiscal year totaled SEK 1,413 million. The Sectra share is quoted on the Nasdaq Stockholm exchange. For more information, visit https://sectra.com/.

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