Sectra’s three-month interim report 2019/2020: Successful initiatives in the US, now Sectra’s largest market

First quarter in figures

• Order bookings amounted to SEK 238.7 million (286.5). Of the order bookings during the quarter, 28% were recognized as revenue during the quarter and 26% to 36% pertain to revenue within 12 months after the end of the quarter.
• Net sales rose 13.3% to SEK 332.8 million (293.7). Adjusted for currency fluctuations, sales increased 10.6%.
• Operating profit totaled SEK 29.4 million (35.6), corresponding to an operating margin of 8.8% (12.1). Adjusted for currency fluctuations, operating profit decreased 23.3%.
• Profit before tax amounted to SEK 30.6 million (33.7).
• Cash flow after changes in working capital amounted to a negative SEK 28.0 million (15.9).

Torbjörn Kronander, President and CEO of Sectra AB, comments

“After a year of record-high order bookings, we are reporting a more cautious beginning to 2019/2020. All operating areas are growing, we are making major investments for the future and we are following our plans. The orders from last year are now moving into the product delivery and customer deployment stage, which affected profit and cash flow for the period. This is particularly true as we needed to increase our costs (primarily on the personnel side) to manage these major deployments, yet the orders will not generate revenue until a later stage. Comprehensive and long-term customer contracts provide long-term stability, but they also lead to negative cash flows and major costs during the installation phase. The increased costs for deployment also meant that we, for the first time in a long time, did not achieve one of our financial goals during the quarter. Five-year growth in EBIT per share ended the quarter at 44% (the goal is 50%). When the installation phase is over, the costs will be replaced by revenue and positive cash flows for a long time to come.

“Within the Imaging IT Solutions operating area, the US is currently one of our fastest-growing markets. During the quarter, we received orders from new customers, including the Vanderbilt Medical Center, one of the most famous hospitals in the US. We also completed the installation at Stanford Health Care, a prestigious order that we received one year ago. Sectra’s high levels of customer satisfaction and long-term work are strengthening our position, and the US has now outgrown Sweden as the Group’s largest market in terms of sales.

“As for our security operations, we acquired the assets of the Swedish IT security company Columbitech AB and shares in its US subsidiary during the quarter. The acquisition is in line with our strategy to expand primarily through organic growth, supplemented by acquisitions that strengthen this organic growth. The acquisition will establish Secure Communications in the US, while also strengthening our expertise and complementing the operating area’s cybersecurity products.”

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: September 3, 2019 at at 10:00 a.m. (CET).
Follow online via sectra.com/q1report2019 or call:
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A recorded version after the conference will also be available via this link 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 September 3, 2019.

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/.