ELEKTA’S STRATEGY AND LONG-TERM FINANCIAL AMBITIONS are based on the growing fundamental demand for cancer care. The number of cancer cases is increasing every year and stems from megatrends such as changing demographic patterns, longer life expectancy and changing lifestyles. This is driving demand for cost-effective, high-quality cancer care. Elekta’s customer and patient-centered product development focuses on image-guided radiation therapy, services and software characterized by efficiency, high quality and precision.
Elekta’s more than 40-year history is permeated by leading innovation. The company’s core operations focus on developing advanced products and services for more efficient cancer treatment in order to save, improve and prolong patient lives. This provides a foundation for long-term, profitable growth and has made Elekta a leader in modern radiation therapy.
Elekta is investing heavily in research and development, while also prioritizing the development projects that generate the greatest value for its customers, their patients and the company’s shareholders. One of the company’s most interesting and high-priority projects, with the potential to change the future of cancer care, is the MRlinac, which combines radiation therapy with simultaneous magnetic resonance imaging. The system is being developed in cooperation with a consortium comprising seven world-leading cancer clinics. The commercial launch is planned for 2017.
The transformation program, launched in June 2015, serves as a platform to achieve operational excellence and strengthen the company’s competitiveness while generating profitable growth. The program focuses on improving profitability, cash flow and working capital and entails a transition for the company as a whole. An important aspect of the program involves creating a more efficient and streamlined functional organization in order to better respond to customers’ needs for integrated solutions. The program has a clear focus on areas with significant growth potential, such as service, software and image-guided radiation therapy. The company aims to achieve an EBITA margin of 20 percent (excluding currency effects) for the 2017/18 fiscal year by reducing its cost base, increasing the percentage of service sales and establishing more efficient processes. Elekta’s overall longterm financial ambitions are being reviewed, taking into account current challenging macro economic and market conditions, as well as the competitive environment. Elekta has also started implementing a production process based on customer- specific orders. While this will generate higher cash flow and lower tied-up working capital, the transition phase is also expected to generate a non-recurring negative effect of approximately SEK 500 million on revenues during the first half of the fiscal year 2016/17. Elekta already achieved its target of a net working capital to sales ratio of less than five percent in the fiscal year 2015/16.
Elekta’s installed base of approximately 3,650 treatment systems offers significant potential for an increase in stable, recurring revenues in the form of service and upgrades of software and hardware. Elekta’s growing service operations are contributing to higher profitability, while capital investments are limited. Emerging markets, most of which have experienced a weak financial trend in recent years, account for approximately one-third of Elekta’s sales. These markets share a need and aim to expand their cancer care, which means they will account for a significant portion of the future growth of radiation therapy.
Elekta’s previously communicated financial ambitions are:
The targets with Elekta’s transformation program are: