November 29, 2018 / 8:27 AM / 9 months ago

UPDATE 1-Elekta shares drop as profit, orders miss forecasts

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STOCKHOLM, Nov 29 (Reuters) - Swedish radiation therapy gear maker Elekta on Thursday reported an unexpected drop in operating profit for a second straight quarter but stood by its full-year sales and profitability forecast.

Operating profit in August-October fell to 393 million crowns ($43.5 million) from a year-ago 440 million, against a mean forecast in a Reuters poll of analysts for an increase to 449 million.

Elekta did not book any new orders in the quarter for its new radiation therapy system Unity, which is seen as an important future growth driver for the company.

Unity won approval in Europe in June and Chief Executive Richard Hausmann told Reuters he still expects U.S. approval by the end of the year.

Elekta, whose main rival is U.S. company Varian Medical Systems, said its gross margin shrank in the first half of the year due mainly to “unfavorable geographic and project mix”.

Gross order intake was up 2 percent based on constant exchange rates to 3.67 million crowns, slightly short of expectations.

Elekta has forecast 7 percent sales growth based on constant exchange rates and a profit margin before interest, tax and amortisation of around 20 percent for the full fiscal year.

In the first half of the year, they were 7 percent and 16 percent, respectively.

“We typically in the second half have stronger revenue and also a better mix so we are positive we are hitting this (outlook),” CEO Hausmann said.

Shares in Elekta, which has restructured after three years of falling profits, climbed more than 80 percent earlier this year, but have lost some of those gains since it announced new financial targets in September.

The shares opened 4 percent down on Thursday, taking the year-to-date increase to 50 percent.

$1 = 9.0256 Swedish crowns Reporting by Anna Ringstrom, editing by Helena Soderpalm/Johannes Hellstrom and Jane Merriman

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