Sectra’s six-month interim report 2021/2022: Increased recurring revenue and profit

Press release – Linköping, December 10, 2021 – International medical imaging IT and cybersecurity company Sectra (STO: SECT B) noted sales growth and increased operating profit for the six-month period. Strategic investments to increase sales of cloud-based services are a top priority and recurring revenue has grown. Imaging IT Solutions continued to increase its sales after an unusually strong start to the year with early deliveries in the US, which are not expected to impact the outcome for the full fiscal year. The Group’s other operating areas were impacted by the pandemic to a greater extent, with significant variations between quarters and a limited ability to carry out certain product deliveries.

Six-month period in figures, May–October 2021

• Order bookings amounted to SEK 863.2 million (1,364.4), down 36.7% from the comparative period. Order bookings did not reach the record-high levels of the comparative period, but certain customer contracts are very extensive, which leads to major fluctuations.
• Net sales increased 15.7% to SEK 823.9 million (712.1). Based on unadjusted exchange rates, the increase was 17.4%. Recurring revenue accounted for SEK 525.4 million (470.0) of sales for the period, up 11.8%. Based on unadjusted exchange rates, the increase was 12.6%. 
• Operating profit rose 48.5% to SEK 173.8 million (117.0), corresponding to an operating margin of 21.1% (16.4). Based on unadjusted exchange rates, operating profit increased 52.6%. 
• Profit after financial items amounted to SEK 176.0 million (113.9). 
• Cash flow from operations amounted to SEK 49.4 million (121.8). 

Second quarter in figures, August–October 2021 

• Order bookings amounted to SEK 470.0 million (752.1), down 37.5% from the comparative quarter. Of the order bookings during the quarter, 16% were recognized during the quarter and a further estimated 27% to 37% pertains to revenue within 12 months after the end of the quarter.
• Net sales increased 1.2% to SEK 418.2 million (413.2). Based on unadjusted exchange rates, the increase was 1.8%. Recurring revenue accounted for SEK 272.4 million (249.4) of sales for the quarter, up 9.2%. Based on unadjusted exchange rates, the increase was 9.4%. 
• Operating profit declined 6.6% to SEK 83.7 million (89.6), corresponding to an operating margin of 20.0% (21.7). Based on unadjusted exchange rates, operating profit decreased 5.6%. 
• Profit after financial items amounted to SEK 83.9 million (92.5). 
• Cash flow from operations amounted to SEK 39.6 million (36.3). 

Comments from Torbjörn Kronander, President and CEO of Sectra AB

“During the second quarter, we began to adjust to the new normal. In Sweden, Sectra’s office is once again our primary workplace, which is important for our corporate culture and thereby our ability to deliver customer value. Travel also resumed, and I’ve just returned from the major radiology trade fair RSNA in Chicago, which was back to being held in person. We met with healthcare providers from several different countries and presented how Sectra can help customers manage growing workloads and increased complexity.

“The pandemic has accelerated the sale of software as a service (SaaS) and cloud-based solutions, which is contributing to increased recurring revenue. We expect to increasingly deliver our software as cloud-based solutions and are therefore making investments in digitization and organizational development. Modern IT solutions consist of many components and suppliers, and we partner with others to deliver more customer value and improve our competitive strength. During the most recent quarter, for example, we deepened our partnership with Microsoft, which will provide the infrastructure to go with our specialist expertise and applications in medical imaging. Together we can deliver scalable, secure and more sustainable cloud-based solutions for healthcare providers around the world. 

“The Group’s operating profit rose nearly 50% from the comparative period, due in part to the strong outcome in the first quarter, which included a number of early deliveries. We delivered several medical IT systems, which contributed to the positive earnings trend for the Group and stable growth for our largest operating area, Imaging IT Solutions. At the same time, the effects of the pandemic remain evident in Business Innovation and Secure Communications, which is reflected in their financial outcomes and significant variations between quarters.

“Within Sectra Communications, we will be starting a bit of a new chapter, since the current operating area manager, Simo Pykälistö, has announced that he has decided to step down. Cybersecurity is one of the IT world’s fastest growing areas, and I’m convinced that Sectra has the potential to develop with a good financial position in the security area.”

Read the attached interim report for further CEO comments and information. 

Presentation of the interim report 

Torbjörn Kronander, President and CEO of Sectra AB, and Mats Franzén, CFO of Sectra AB, will present the financial report and answer questions. The presentation will be held in English.

Time: December 10, 2021 at 10:00 a.m. (CET)

Follow live or listen to the recording afterward: https://investor.sectra.com/Q2report2122

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 December 10, 2021.

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 2020/2021 fiscal year totaled SEK 1,632 million. The Sectra share is quoted on the Nasdaq Stockholm exchange. For more information, visit Sectra's website.

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

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