- Financial Improvements: Gross margin improved to 37.9% (up 220 bps YoY), adjusted EBIT margin at 10.1%, and net debt reduced by SEK 700M YoY.
- Order Backlog Review: SEK 2.2B in orders canceled due to stricter criteria, with no revenue impact in 2025-26 or cash flow effects.
- Restructuring Impact: 10% workforce reduction (450 roles), targeting SEK 500M+ annual cost savings, with 30% affecting COGS and 70% OpEx.
- Regional Performance: Europe grew 11% in Q2, driven by Elekta Evo adoption, while China saw double-digit revenue declines but positive order growth (book-to-bill 1.3Q).
- Strategic Goals: Aim to exceed market growth long-term, restore gross margin to pre-pandemic levels, and achieve EBIT margin above 14% (details at Capital Markets Day).
Restructuring and Cost Savings
Elekta has initiated a comprehensive review of its operations, resulting in a new operating model aimed at increasing velocity, agility, and customer intimacy. This involves a simplified organizational structure with a decentralized model, featuring regional-based P&L. The restructuring is expected to yield targeted cost savings of no less than SEK 500 million, with a full impact on Q1 '26-'27. The company has cut around 450 roles, mainly in managerial positions, to increase speed, execution, and accountability.
Regional Performance and Product Updates
Elekta's software backlog and deliveries in Europe have contributed to the region's improved margins. The software book-to-bill remains positive in EMEA. The company has seen a significant impact from its Elekta Evo product, with a notable increase in units sold. The US is expected to bounce back once the Evo platform receives FDA approval. Elekta has already received domestic approval for Evo in China and plans to roll out Evo globally.
Valuation and Outlook
With a P/E Ratio of 73.63 and an EV/EBITDA of 12.73, the market seems to be pricing in significant growth prospects. However, analysts estimate next year's revenue growth at -4.0%. The company's ROIC is 2.87%, and ROE is 3.15%, indicating room for improvement. Elekta reiterates its full-year '25-'26 outlook, expecting net sales growth in constant currency. The company aims to grow at or above the market rate in the mid to long term.
Tariffs and FX Impact
Elekta has seen some impact on gross margin due to tariffs, but the company is working to mitigate this through pricing and productivity measures. FX had a negative impact of 50 basis points on the adjusted gross margin and 60 basis points on the adjusted EBIT margin. Most orders in the backlog have some prepayment attached, particularly those from the private sector.