Good morning, everyone, and welcome to Elekta's Q1 for the fiscal year of 26/27. With me here in the studio in Stockholm, I have our CEO, Jakob Just-Bomholt, and our CFO, Klara Eiritz.

As usual, we will start off with Jakob bringing the highlights from the quarter and some strategic updates, and then Klara will bring you more details around the financials. After the presentation, we will, as usual, have time for Q&A.

Before we start, I want to remind you that some of the information discussed in this call contains forward-looking statements. These can include projections regarding revenue, operating result, cash flow, as well as products and products developments.

These statements involve risks and uncertainties that may cause actual results to differ materially from those set out in the statements. With that said, I would like to hand over to you, Jakob.

Please, Jakob.

Thank you very much, Peter, and welcome to all of you. Let me start by giving and sharing some key reflections on Q1.

We have been very clear, I believe. Elekta is not trading at full potential.

We want to action that, and to that end, we have established a three-phase turnaround plan. This year is really about improving the underlying profitability of the company.

Q1 is a step in the right direction, and we expect to see continued progress and execution. Let me just share with you a few highlights.

We have now completed the change in operating model. The savings we indicated a few quarters ago has materialized above expectation, more than 500 million SEK.

Most importantly, we did it to really enable faster execution. Klara, you will unfold our now five regional P&Ls, part of that pushing P&L responsibility further down in the organization.

We see significantly improved EBIT margin. Yes, part of that uplift related to tariffs, but keep in mind, we also on reported EBIT have a headwind of 109 basis points linked to a more prudent way of accounting for R&D expenses.

The underlying improvement is significant. That, of course, translate into cash flow that improves year-on-year despite an inventory build-up that we're also going to address.

If we turn to sales, yeah, sales decline of 2% is below our guidance for the year. We reiterate that guidance.

That also implies that we expect positive sales growth in Q2, and I'm sure we'll come back to that in the Q&A. Just to flag here initially, China did start out weak in the quarter, I have to say, pretty much in line with our own internal forecast, and it really relates to poor order intake a year ago, linked to poor market circumstances.

Our market share, give and take, is unchanged. That also means that we'll guide for solid growth in Q2 as we are now having an order backlog that supports revenue growth going forward, but I'm sure we will also come back to that.

We are on plan. Focus is on improving profitability, but of course we also have focus on delivering on the top-line guide at fixed currency of 2% to 4%.

Let me share some financial results, and then you'll give more color, Klara, on it. Book-to-bill of 1.11, order growth of 3%.

We did see Elekta Evo, particular in the US, develop as we planned and hoped for. I just gave color on the negative net sales growth.

Keep in mind, Q1 is by far the smallest quarter of the year, and as I said, we expect positive growth in Q2. We see Americas and Europe growing, APJ, China, TIMEA declining.

I'll come back to that. Then gross margin significantly up, and it's been some time ago since we had above 40% in Q1 at 42.6%, but obviously 150 basis points one-off related to tariff refund, and we'll get a bit more, we expect, in Q2, but underlying improvement.

That translates into an EBIT margin of 11.2%. EBIT cash margin is actually 11.4%, and an even bigger improvement year-on-year when you look at the tailwind we had from a more aggressive accounting practice a year ago.

I think we are quite pleased with that EBIT margin improvement, and then the fact that it translates into cash flow. The trend we are on in reducing our net debt continues, and we expect that also in the period ahead.

That's on the financial outlook. If I then just give you commercial flavor, overall, radiotherapy market, when we look at it at a global level, it continues to grow roughly 6%.

That also implies, back to our revenue guide of 2% to 4%, we are still not growing with the market. That's highly unsatisfactory.

We are going to do something about it, but as I said, at this stage, focus is on improving profitability. On order intake, a little bit lower than 6%, but still healthy.

We start to see slight impact on some NPIs in the market, and also various impact on orders around the world, but underlying market growth of 6%, which I consider very healthy. If we look at Americas, very importantly, we are getting back to growth, and we expect that to continue for a period to come.

We did get the Elekta Evo approved, as you all know, in January, and that starts to translate into orders. Not going to share specific order numbers for the US, but it's good.

We are happy with progress so far, and we have our online adaptive for pelvis pending FDA. That will be further tailwind for the US organization.

Many more things to be achieved, but the momentum is what we hoped for. On US reimbursement, still early days, but it actually looks favorable, both for freestanding and hospital systems with a 3% to 5% reimbursement uplift.

Let's see where that lands, but so far so good. If we move on APJ, we actually expected to come in stronger.

The fundamentals of that region is strong. It's a underserved market.

It's very varied from Australia to Vietnam, to Indonesia, to Japan, but we have just seen specific macro and impacting healthcare spend. The market is down quite a bit.

We don't expect that to be sustainable, and we are holding on to share, but we have now seen that for a period of time. If we then focus on China, I was there last week reviewing commercial, reviewing outlook, obviously also centralized procurement.

As I said, we have seen weak order intake a year to two years ago. That has obviously depleted the order backlog, and that impacted Q1 in particular with a low number of installations.

We have guided that we have now had three consecutive quarters of good order intake, and that also is the reason why we say that we expect solid revenue growth coming into Q2. A few words on centralized procurement.

I think it's important for you to understand. Clearly, it's a change.

It will lead to more price transparency in the market, but we have had centralized procurement in the past. Last year, our fiscal year, roughly 25% of the market was through centralized bidding, and Elekta had a win rate of more than 50%.

We are used to it, and would say we are also ready for it. Obviously, it is a bit of choppy waters.

Is that going to delay certain order intake our second half of the year? Maybe, but not necessarily.

On the other hand, we see a push from Chinese government to advance CapEx to stimulate the economy and serve the healthcare system. There are pros and cons, and all in all, when we look at our market share, we are in the mid-30s, slightly down from last year, but we maintain our competitiveness.

On Europe, increasing revenue by 5%. Growth in most countries, so that's good.

We are piloting some very important NPI, integrated console, really a new workflow on our Harmony platform, and it goes well. Just keep in mind, when we come to second quarter, last year was a high-growth quarter, the comp is tough.

Then on TIMEA, we saw a decrease of 4%. We expected growth here, I have to say, and it's delays.

It's not cancellations, very important. We expect quite a good growth for TIMEA for the full year.

That will start also come Q2, is our expectation, but we had some specific installations in neighboring countries of Iran that, actually not due to Elekta, but other suppliers, they stalled the final installation, and hence we couldn't recognize the revenue, but the outlook actually looks surprisingly solid for TIMEA, both in terms of orders and revenue. That's overall on the commercial side, and if we then go to where we are in our turnaround, the way we think about it is that we have now concluded phase 1.

We really had to change a lot of things at Elekta, we said it's a reset. Then once you reset, you also need to stabilize, and we're happy with where we are.

Here 1st of August, we appointed a new COO of the company, Rodolfo Vasquez, to really drive operational excellence within the company, and we can see that there's quite a lot of potential ahead of us. I'm very happy to see we have a complete Executive Committee to drive the performance.

Then this year or this quarter, we provide additional transparency. It's also how we want to operate the company, we align internal with external, and then improve quality of earnings with a more prudent accounting.

I'm happy about that. Then focus is really on improving profitability this year.

We've been optimizing our portfolio. We are more focused in how we invest.

We still invest more than 10%, roughly 10% of revenue in R&D, have a laser focus on releasing new products to the market, strengthening commercial execution, also through delegating responsibility and accountability to regions. We have good pricing guidelines now in place that will support us in the period ahead, and then we are laser-focused on COGS reduction program, and you also see some of it translating into improved gross margin.

For us, it's about expanding margins, it's about productivity initiatives, and then importantly, at this phase, is making the required steps towards us translating innovation in market share gains going forward so we can soon get into phase 3, and that is growing at or above the market, because that is the future of Elekta bringing innovation to the market. That's a high-level perspective of where we are.

We feel good about it, but we know we have a lot of work ahead of us, and with that, Klara, I'll leave the word to you.

Thank you, Jakob. All right, let's look into the numbers for Q1 in a bit more detail.

Net sales decreased by 2% in constant exchange rates. Solution sales decreased by 9%, and we saw growth in both Europe and Americas, however, offset by lower sales in APJ, China, and TIMEA.

Service sales grew by 5%, with growth in all regions. The adjusted gross margin amounted to 42.6%, a considerable improvement from last year's 37%.

The improvement is related to growth in software and service, price increases, but also lower cost levels, largely related to the change of operating model implemented over the last two quarters. We had refunds of US tariffs imposed under the US International Emergency Economic Powers Act, which had a positive impact of 53 million SEK in the quarter, corresponding to about 150 basis points.

As we anticipated when reporting our Q4 numbers, we had a negative FX impact impacting the gross margin negatively by 20 basis points. The adjusted EBIT margin amounted to 11.2%, and the year-on-year improvement was primarily driven by earlier mentioned improvements in gross margin, of course, but also lower selling and administration costs driven by the change in operating model.

Year-over-year, we had a negative impact of about 190 basis points from lower capitalization of R&D and increased amortization of R&D, and that's why we see a larger improvement in EBITC than we see in EBIT. I should also mention that we have no items affecting comparability in the quarter, but we did have 16 million SEK in Q1 as IAC in Q1 last year, we have an adjusted EBIT for Q1 last year, but not for this year.

Net income amounted to 106 million SEK, and adjusted earnings per share amounted to 0.31 SEK. If we move to the next slide here, as of now, our external reporting structure is aligned with how we manage and organize our business internally.

Internally, we are organized in five separate regions with full P&L responsibility. We have Americas, China, Europe, TIMEA, consisting of Turkey, India, Middle East, and Africa, and APJ, Asia Pacific and Japan.

Starting now in Q1 26/27, this is also the structure that we will present externally, and you all were introduced to this new structure also at the Capital Markets Day. The regions have a P&L with fully loaded costs, when you add the regions' EBIT and group common costs together, you get Elekta's P&L and Elekta's EBIT.

Group common costs consists of central costs associated with our central staff functions, and these costs will not be loaded into our regional P&Ls, but instead kept centrally. Previously, in the old external report structure, we only showed three regions with net sales and contribution margin.

Now we will report on net sales, gross income, and EBIT for each of the five regions. Let's look at the performance of our five regions.

To start with, the gross margin has improved in all five regions, and all regions, except TIMEA, are now above 40%. If we then take the regions one by one, we can see the following.

We start with Americas. The EBIT margin for Americas improved year-over-year driven by, of course, the launch of Elekta Evo and related price increases.

In addition, as I mentioned, the refund of US tariffs imposed under the US International Emergency Economic Powers Act had a positive impact of 53% or, sorry, 53 million SEK, corresponding to 490 basis points for the Americas region. For the next quarter, we expect around $3 million in a second and final tariff refund.

Also remember that we continue to pay tariffs in the US, so that continues, but the refund is for Q1 and Q2. APJ.

Despite lower sales driven by constraints in healthcare budgets and capital investments that Jakob also mentioned, the EBIT margin was almost in line with last year due to cost initiatives in both gross margin and OPEX, but we also see positive movements in terms of price and mix, service sales, to be precise, in APJ. Region China's EBIT margin declined as a consequence of the lower volumes, but even there, gross margin improved due to lower gross margin expenses, but we can see that we don't have full coverage of the OPEX in the Chinese region here, we see a drop in EBIT.

We need slightly higher volumes in China for EBIT to come up. Europe.

The EBIT margin in Europe improved compared to last year supported by a favorable development for Neuro and Brachy solutions. Finally, the EBIT margin in TIMEA was negative in the first quarter, however, it was an improvement compared to last year, and normally, we see seasonal pattern of gradual improvements towards the end of the year for TIMEA, and they have a better starting point this year than last year's, we expect that to improve over the course of the year.

All right, let's talk about currency impact. We see a negative currency impact on net sales, mainly due to the strengthening of the Swedish krona against the main revenue currencies, the US dollar and the euro.

This impact is, then, partly offset by the group's significant cost base in US dollars, British pound, and Europe, limiting the effect on bottom-line profitability. Changes in FX had a negative impact on both gross margin and EBIT margin by 20 and 30 basis points, respectively.

Then a few words on cash flow. Free cash flow before dividends and M&A improved by 154 million, reaching a negative 266 million SEK in the first quarter.

The year-on-year improvement was primarily driven by an improved EBIT of 176 million, reflecting an underlying improvement in the business. We had a negative impact from more unfavorable changes in working capital of 318 million, driven by a seasonal build-up of inventory.

We, of course, had that last year also, but it was higher this year. Also, as planned, we had lower R&D-related investments in the second quarter compared to last year, and lower costs for interests and tax compared to last year, driven by tax refund paid in Q1 this year, and positive FX impacts.

Let's look at the historic development on a rolling 12-month basis starting off in Q1 last year. If we start with the graph on the left-hand side, we can see that the EBITC margin is up considerably compared to the same period last year, from 9.1% to 12.6%.

We can also see a gradual improvement in gross margin, with a 12-month rolling gross margin very close to 40%. Finally, on the right-hand side, we see solid development in free cash flow before dividend and M&A.

I also want to mention that Elekta, on August the 24th, signed a €100 million credit facility with European Investment Bank, and this facility is dedicated for R&D project funding and has a six-year maturity. All right, before I hand back to Jakob, I want to conclude by reconfirming our previously communicated outlook for the fiscal year of 26/27.

This slide is the exact same one that we presented on our Capital Markets Day on June 17th. For 26/27, we continue to expect net sales growth of 2% to 4% in constant currency, and an adjusted EBIT margin of 12.5% to 13.5%.

By that, I hand back to you, Jakob.

Thank you very much. Let me conclude this call and look forward to Q&A.

We see Q1 with continued progress in strengthening our financial performance. Big improvement in terms of gross margin, EBITC margin, and then stronger cash generation.

On the top line, yes, sales decline in China as a result of weak markets in recent years, but important for you to take away that based on the order intake we have seen in recent quarters, we expect future growth, and certainly in Q2. US sales growth happening, order intake as expected and hoped for, with Elekta Evo, of course, as the main contributor, and that also means, based on those events, our sales guide of 2% to 4% stands.

Then focus is within Elekta to continue to improve the profitability. We are still below where we should be, and at the same time, we continue to invest in levers to accelerate our mid-term innovation-driven revenue growth.

With that, Peter, thanks, back to you.

Thanks, Jakob, and thanks, Klara. Before handing over to Q&A, just a short glimpse on the financial calendar.

We will have our next report, Q2, in November 25th, but before that, actually, we have our AGM coming up next week, Thursday. Operator, we are now ready for the Q&A, you can open the session, please.

Good morning, Ludwig. Yes,

good morning. Thank you for taking my questions.

I have two, please. Firstly, on orders in the US.

You were talking a little bit about it, but just wanted to follow up from the CMD in June. You told us that you, by that time, had taken double-digit Evo orders in the US, and I believe of which 25% were flips from competitors.

Would you be willing to give some more color on how US orders are progressing, and perhaps if you could update us on the things you told us at the CMD? My second question would be on top-line growth.

You leave the outlook unchanged, and we understand that Q1 is a small quarter. You told us that Q2, you expect to be back on positive growth territory, but would you be willing to give some more color on how you expect the trajectory of the organic growth to be throughout the year, please?

Yep, thanks, Ludwig. Nothing changed from CMD on US.

We did see double-digit growth, very solid double-digit growth in the US. I don't want to give the specific numbers here.

We are following the plan, and that also is the reason why we say that it will start to turn into revenue. The revenue growth outlook in US for this year is solid, right?

All in all, we are progressing as we hope for. On top-line growth, we stand by the guidance, and what we can say at this stage is we expect positive growth in Q2, also to an extent that we, as it looks now, will be positive for first half of the year.

That's as far as we will go at this stage. Of course, we wouldn't say it if we didn't have a funnel on orders to support us being within the guide of 2% to 4%.

Thanks, Jakob. Thanks, Ludwig.

We will move to the next question, Philip Ekengren from Nordea. Good morning, Philip.

Good morning to you all. First, and I'll do them one by one.

I also have two. Could you elaborate a bit on what you're seeing on the Chinese market?

What's driving the order growth, and what visibility do you have for order interest for the coming quarters, and also perhaps order conversion?

Chinese market, we guided a year ago we would see a recovery in the market, and that has happened, actually. There was, as you may recall, an anti-corruption campaign a couple of years ago that subdued market demand.

Everyone was nervous going in and entering bidding situations. Situation is now normalizing, which means that the market is coming back to more or less its long-term equilibrium, and there's still a very significant market potential because there are roughly 3,000 linacs installed.

There should be at least 5,000. The fundamental of the market growth is happening.

Then we have seen that market recovery translating into orders secured for Elekta, and we have seen order intake growth the last three quarters, and they are now turning into installations, and once they turn into installations, we'll recognize them as revenue, and that's why we say we have expectation of solid revenue growth in Q2. The outlook actually looks okay for us in China, I have to say.

Then in terms of market share, we estimate it was actually the Chinese Medical Device Association who put us at 35%, and I think that's give and take right. We are able to defend our market share to a large extent, at least.

You had a second question, Philip, was that right?

Yes. Trying to understand how sustainable the gross margin improvement is, could you rank the importance of pricing, software and service mix, and also the structural cost savings?

Yes. The service solution mix is considerably favorable this quarter.

The pricing aspect is also an important lever, both for services and solutions. The mix is definitely very positive this quarter.

Then, related to the new operating model, we are operating at a lower cost level than we have in the past. It is a mix of those three things.

Okay?

If I may just a follow-up, and how sustainable is that going forward?

As the mix goes up and down, right? That will be different from quarter to quarter.

The price increases are, we view, as sustainable, of course, but that also depends on the mix a little bit. Then we have an underlying lower cost level that we expect to maintain.

Okay. Thanks, Philip.

We'll move to Sten Gustafsson at ABG. Good morning, Sten.

Yes, good morning, everyone. Coming back to China, I was wondering if you could comment on what you think will happen to pricing and what you saw last year on I think you mentioned and thanks for that color 25% of the business you did in China last year was through centralized procurements.

Did that have any impact on price, and with this new increased level of centralized procurements out in the regions or provinces in China, do you think prices will come down significantly or what's your take on that?

Thanks for a great question. The truth is, we don't know for sure.

What we know is that there will be increased price transparency. I think that works both ways.

Essentially, the price we give in one province will be available to all 32. Price transparency will also discipline the market actors because once you give a price here, it commits you elsewhere.

That's the positive. You can say price transparency also means you can't get away with very high prices in one province and not in the other.

If we judge by history, then we actually don't have evidence to say that centralized bidding resulted in lower pricing than, you can say, the more curated, negotiated deals.

Thank you very much. I guess we'll just have to wait and see what happens there.

Then a question on your orders. If I remember correctly, in Q4, there were two specific orders that didn't qualify to be booked given your new stricter order acceptance criteria.

Were there any orders in Q1 that you didn't book given your new methodology?

Yes. It's almost a topic that we have stopped debating within Elekta because we just say follow the guidelines, and whatever escalations came our way, we declined because, for us, it's extremely important not just to deliver good order numbers in a given quarter, but to, over time, build the order backlog that is of sound quality.

Absolutely, there were deals here and there where there will be a degree of uncertainty, and then we on the side of being prudent.

Great. Thanks.

Great. Thank you very much.

Thanks, Sten.

We'll

move to Veronika Dubajova at Citi. Good morning, Veronika.

Good morning, and thank you for taking my questions. I hope you can hear me okay.

I kind of want to delve a little bit more into the order and revenue growth dynamic, if that's okay. Obviously, you guys are maintaining the guide, but if I look at the 12-month rolling order growth, it is still at -3%.

Can you maybe help us understand how you can go from that -3% order growth to that 2% to 4% revenue? I guess what are the regions that are most important as we think about that growth acceleration through the remainder of the year?

Maybe if you can kind of quantify some of your expectations around that, that would be super helpful. Then, apologies, I'm going to go back to the gross margin.

Again, just trying to separate out the pieces. I guess you did have a pretty significant inventory build-up, which obviously should have been a tailwind to the gross margin as well.

Trying to understand whether that was a contributor. I guess if you guys can give us any guidance for the gross margin for the year, or at least help us kind of anchor it relative to last year, whether you would expect that gross margin, on aggregate, to be flat, up, or down, that might be a good starting point as we think about modeling out the remainder of the year.

Then the final, third one I'm sorry, I know I said two, but I'm going to squeeze in a third one: why no change to the margin guidance if we are anticipating more tariff refunds? Thank you.

All right, I'll take the first,

and

then you take the last two. Of course, Veronika, when it's you, three questions is absolutely okay.

Keep in mind, we have a book-to-bill of 1.05. That's really how I think you should reflect on when you look at future revenue.

Because when you look at the comparison on order intake, rolling 12 months versus the previous, and we are applying stricter criteria, invariably, there's going to be a consequence of that change. The revenue guide stands.

If I would just give you a little bit of color of how we think and the visibility we have at the moment is likely TIMEA is going to be the fastest growing region. I would also expect region Americas would potentially come in second.

Then we, as it looks right now, have a good chance to see all regions growing. Then on gross margin and

Yeah. I think something to remember about the gross margin also is that we have a very positive geographic mix this quarter, right, with a lot of revenue in Americas and Europe.

That's something to consider. The inventory piece is not a huge part of what we see on the gross margin.

Your question about tariffs was more for the guidance, right? There,

Yes. The inventory build-up was not a big contributor to the gross margin this quarter?

No.

No.

Okay.

Maybe I can build on, Klara: We're actually starting to see a nice inflow on current orders on price uptick. I think it's good.

I think I shared with you, we have implemented new pricing frameworks, and we're starting to see that gradually flow into the gross margin. Then on our operating model, we've been quite positively surprised about our service and order fulfillment costs coming down, and it really links to now regions taking full ownership of their P&L, and that's very supportive.

Yeah.

Then on the full year Yeah, on the full-year guidance? Yeah.

We stick to the guidance that we have. When we did the guidance, the tariff refund situation was quite uncertain, but we stick to our guidance.

Things can go in the opposite direction also. We have the tungsten prices, we have FX, of course, we stick to this guidance, and it is a range, we expect to be within that range.

Great. Thanks.

All right,

thank you, guys, so much.

Thanks, Veronika. We'll move to Mattias Vadsten at SEB.

Good morning, Mattias.

Good morning. Can you hear me?

Yes, perfect.

Perfect. Thanks for taking my questions.

A first one. You said in the presentation that US, you're quite clear, it's performing in line with expectations.

I'm just trying to understand. Americas, +2% here, of course, only one quarter, but +1% in Q4, that's two quarters.

Is it then either that orders to sales in the US take more time than you thought, or are there other markets outside of US performing below expectations, because I presume this is not the growth rate that you are aiming for in Americas?

It's linked to two things. Hi, Mattias.

One is order intake that is developing as we hope for, and then our revenue outlook, because we are starting to see that orders that came from the FDA approval in January will start materializing into revenue from next quarter onwards.

The markets outside of the US in Americas are nothing to dwell on?

No, that's exactly right. The way I would suggest you think about it is that there is a timing issue.

Of course, every installation is different, but we really expect revenue growth to increase in Q2 versus Q1.

Thank you. Then, you made some helpful comments on reimbursement in regards to the US.

Maybe could you comment if, let's say, in the last 12 months period, if the reimbursement situation has been a headwind? We've seen some headlines regarding reimbursement to RT clinics lately.

Then if you would want to elaborate on the increase that you talked about going forward?

It's still very early days, it's not final codes, but the first proposal indicates a little bit more for freestanding, up to 5% reimbursement increase, and for hospital systems to the tune of 2.5%, 3%. Keep in mind, it's early, and we'll know more over the next 1 to 2 months.

Last year, it was obviously headwind. I think we also flagged that in a call that there are challenges on the reimbursement environment.

If that is now partially reversed, of course, it's going to be a tailwind in the market. Let's see how it plays out.

Then very importantly, it continues to support adaptive treatment, there is an incentive to drive more complex treatments, and that's good for Elekta.

Thanks, Jakob. Thank you, Mattias.

We'll move to Kavya Deshpande at UBS. Good morning, Kavya.

Good morning. Thank you for taking my questions.

My first one was on the revenue decline in China. If I understood correctly, I think you said this was a reflection of a weaker order backdrop in past.

Was wondering if you could give us some more color on what the order to installation period in China is today, because last year, I think you called out a China book-to-bill ratio of around 1.3 times in both Q1 and Q2, and we know orders grew in H2. Should we be looking at this revenue decline as a reflection of even older order weakness before that, or were there any installation delays impacting as well?

Then my second question was on COGS inflation and just what you're seeing around tungsten and memory chip pricing and what kind of headwinds you've got baked into your guidance for those elements for this year. Thank you.

Thanks. We start with you, Jakob.

Yeah. All right, okay.

The revenue decline in China, I would rather see it as quarterly choppiness, if you will, given that we will expect the number of installations to come back to a normalized level next quarter. Then it was a reflection of weak order intake.

If you go back on our numbers, you'll actually see the market, and thereby also our order intake, declined substantially. Our revenue declined significantly less.

That implied that we had a negative book-to-bill ratio for a period of time, and that just happened in Q1 to catch up with us. As I said, we expect solid growth for Q2, and we actually expect growth going forward in China.

Then I think the uncertainty is more plus/minus is what happens our second half on orders, but based on our commercial outlook, we still believe that the market will continue to recover in line with the expectations we have shared with you.

Great. COGS deflation, maybe, Klara?

Yes. We see COGS inflation of around 3%.

As we see this as a very key focus area for us going forward with our must-win battle for our COGS reduction program that will be driven in the capable hands of Rodolfo now going forward. We have more to do in that area.

We haven't seen really the effects come through from that yet, we have more to do there. When it comes to tungsten, I'm not going to give the exact levels that we assumed when we did the guidance, but tungsten prices have come down, but they're still higher than last year.

They could still go up and down for the remainder of the year, right? We don't speculate, I think, into that, but they have come down.

That we can all see. Still higher than last year.

Great. Thank you very much.

Thanks, Kavya. Let's move further in the queue.

Kristofer Liljeberg at DNB Carnegie. Good morning, Kristofer.

Good

morning. Three questions.

The first one, just wondered, the stricter criteria you have around the order bookings, was that still having a negative impact on the order growth here in Q1? If I remember correctly, you implemented the new stricter rules later in last quarter or last fiscal year.

From a nominal point of view, no, because we could say, yeah, we have certain orders based on the old criteria that would have taken in Q4 that slipped into Q1, but vice versa, based on the current criteria, slipped onwards. In terms of year-on-year impact, probably, we haven't quantified it, but I'll just want to leave you with we are very committed to having very tight order intake criteria, and we have also anchored that in certain incentives for top management, everyone are keenly aware of that order we take in should have a very, very high likelihood of turning into profitable revenue going forward.

Your second question, Kristofer?

Thank you for that. Going back to the gross margin.

The favorable mix you had here in Q1, does that mean that you won't have the same typical seasonal pattern as before with Q1 being the weakest for gross margin?

We'll see about the product mix and the geographical mix going forward, but remember that the tariff reimbursement, that certainly helped Q1 when it comes to gross margin.

Of course, if you adjust for tariffs, you still have 41%, 41.1% gross margin. It's very high for being a first quarter.

It is.

Typically, Q1 is the weakest gross margin quarter for Elekta.

Depends on the product mix and the geographical mix going forward.

You could say, Kristofer, this particular quarter that we, back to the revenue guide, do not plan to repeat, we had growth in region Europe and region Americas, which are the highest gross margin, and then we also had a slightly higher service to solution ratio than what we normally have in a given quarter. On the other hand, you're absolutely right, we expect strong sequential growth, and that in itself is supportive of gross margin.

I think it's mixed bag, but we don't want to guide on gross margin. We stand by the EBIT margin guidance that we gave here, 12.5% to 13.5%, and when we gave that guidance, as you say, Klara, we didn't include tariff refund, so as we see it, that comes on top.

Okay. The final one, also on the gross margin, but TIMEA, why is the gross margin so much lower there?

Price pressure. It's Africa, we also see in India, highly, highly price-sensitive.

Historically, we have seen low gross margin. I would also say linked to very aggressive deal making, and it's probably the region that is feeling the biggest impact of more price discipline and operational rigor.

If I would guide you, it will very likely be the lowest gross margin region, whereas US and Europe, more mature, will be higher.

Do you think it would still be a 10 percentage point difference, or

I don't want to guide on that here.

Okay. Fine.

Thank you.

Thanks, Kristofer. We'll move to Julien Dormois at Jefferies.

Good morning, Julien.

Hello, good morning, Jakob. Good morning, Klara, and morning, Peter.

Thanks for taking my two questions. The first one relates to the savings program, which obviously has worked super well.

You made comments previously that it would significantly exceed the target of 500 million SEK. Just curious whether you would be willing to update that number and tell us what is the current run rate for this.

The second question and sorry for coming back to China, but I think you have said in this call that your market share is now probably around the mid-30s. If I'm right, you previously mentioned something more into the tune of 40%.

Just curious how the local competition is behaving there in the context of the local players being more and more vocal, and also obviously in the context of centralized procurement. How do you think you can defend your share in the coming years?

Thank you.

Yeah. On the savings part or the lower cost levels as a result of the new operating model, I'm not going to give a precise number, but we are well above the 500 million that we have communicated before, and we believe that we are at full run rate speed as of this quarter.

We're pretty close to plan when it comes to OPEX, but a little bit ahead of expectations, maybe, in gross margin expenses. That's maybe as far as I'll go.

Then you'll have to look in our P&L and compare year-over-year and see what you can find.

Maybe I can build on, Klara, that from a employee perspective,

That's right.

right, half a year ago, we were 4,500, and now we are 4,000,

Clara Iris (CFO): Even below 4,000, yeah.

Below,

right?

It's not a goal in itself, but of course, you can do the math in regards to cost savings, we exceeded that target. Keep in mind, we did it to really clarify accountability, become more business-savvy, less corporate, and that translate into many other things.

Then on China, no, you're absolutely right. We said historically we have been around 40%.

We also, in the strategy update, guided towards we would be in the mid-30s, and that's where we are. Is it intense rivalry in China?

Yeah. Are we still market leader?

Absolutely, we are. Have we built a localized product portfolio?

Yes. Can we do more?

I think so. Then coming back to centralized procurement, I'll just make the reference, which is factual, that of what used to be centralized bidding last year, we had a win rate of more than 50%.

Is that a predictor of the future? You have to make that judgment.

I think we feel pretty assured about the part. Then there are certain things on products, but that's our job.

We'll continue to evolve to maintain the competitiveness.

Thanks, Jakob. Thanks, Julien, for that.

Thank you.

Then we'll move to Danske Bank and Erik Cassel. Good morning, Erik.

Hello, good morning, everyone. I wanted to ask first on the order recognition potential effect.

I remember Klara saying in Q4 that the reported order intake would have been very different if you had the old recognition, and Q4 is a big order quarter. I guess, as you said, Jakob, then that you had some spillover from Q4 orders into Q1, but you said that could also affect Q1 into Q2, but since Q4 is such a much larger quarter, is it possible in some way to quantify the sort of effect that could have had on order intake now in Q1, assuming the Q4 phasing, basically saying what the Q4 phasing was, if that's possible?

I fully understand your point of view, but it would be flaky to do so. We applied the right order criteria with firmness in Q4, and we did the same in Q1.

We basically have a number of order intake criteria: is there prepayment, is there site readiness, is it going to be delivered within three years, and so forth. We did that in Q4, and we did that in Q1.

No, I wouldn't want you to think that we've had a big flow into Q1 and a small outflow from Q1 to Q2. It's not how we think about it.

It's just clean orders coming into Q1.

Thank you. Then I have a question to Klara.

I appreciate that you gave some color on the inventory build effect on gross margins, but I also wanted to ask, since I guess we're seeing broadly higher costs now as well, did the sort of standard quarter-end update of standard costs that you do increase the sort of carrying value of the inventory now at end of Q1, and did that have some sort of positive effect on gross margins as well?

No.

Short answer: no.

Okay. Good.

Then I just wanted to ask to sort of assess the underlying gross margin improvements that we're seeing, if we assume that we now, for the rest of the year, see a more normalized service to solutions mix and geographical mix, do you still think that the gross margin improvement is going to be noticeable, to say?

Like Jakob said, we don't guide on gross margin, but like we've also said, the new operating model has had effects not only in OPEX, but also in the gross margin, and there's a sustainability aspect to that, right? That we don't expect to go away.

Great. Thanks, Erik.

We'll

move to the next question, Johan Unnérus at SB1 Markets. Good morning, Johan.

Yes, good morning. Thanks for taking my questions.

Two, then, follow-up there on China. You said you had a local offer.

Is it possible to give a flavor of in the central procurement channel process, is the solution mix different versus private? I'm thinking in terms of proportion of premium versus mid versus lower-end solutions.

No,

I would say we have adapted our product portfolio, not least on the software, to fit to Chinese demand. The biggest difference between China and rest of the world is on service attachment rate, which is lower in China.

It's an upside for us when we get it fixed, but it's also a little bit difficult in the short term. It's roughly around 30% service attachment rate.

It's much higher, close to 100% in the more mature markets. Other than that, it's the global portfolio, but really catered in with local software.

Then we see that adaptive is taking off in China.

I'm thinking, to be more precise, then, the 70% that's outside central procurements is not distinctly different from the linacs you're selling, offering, or winning in central procurement deals?

No, that's correct.

Good.

You had a second question,

yeah? Yeah.

The other question is, then, you're moving into the third stage when you zooming out, to speak, in your strategy, and you're pointing at, you think, the higher growth already Q2. Are you prepared to say that you're moving into the third stage already this year, or is this something for your next year?

Of course, we continuously take stock, but I would say this year, it's about improving profitability, we do not become a one-hit wonder, and we can just see that there are so many things, fortunately, we can operationalize and become better at executing. We are in phase 2 this year, and then I refer to our guide.

That is 2% to 4% revenue growth this year, and then our mid-term guidance, and we have no reason to believe that those guidances will not be fulfilled.

Thanks, Johan. We'll move in to the last question of today's call.

That is from Richard Felton at Goldman Sachs. Good morning, Richard.

Thank you. Good morning.

Thanks for squeezing me in. Two, please.

The first one, just wanted to follow up on the APJ region, which was softer in the quarter. I know you call out constraints in healthcare budgets and capital investment.

Are there any markets specifically in that region where those pressures are more acute? Then how should we think about that trending through the rest of the year?

Is there any easing of those constraints, or do you still see sort of subdued trends for the APJ markets for the rest of fiscal '27? Then the second one, it's a follow-up on inventory.

Could you say what was driving the step-up in inventory in Q1? Was that sort of raw material inflation pressure or a build-up of finished goods?

Thank you.

Let me do double-click on three countries. Indonesia, we have a big government tender, and that subdues the market a bit, and let's see what is going to be the outcome.

Then we saw anti-corruption clampdown in Vietnam, so that, as you saw also in China, makes a market a bit cautious. Then the recovery in Japan, I have to say, came a bit slower than we expected Q1.

Checking in, we still believe that the market will recover from roughly 40 units to 60 units this year, but as I said, we started Q1 slower. The way I would encourage you to think about it, I still think we will be soft Q2, and then we will continue to see some acceleration.

I have to say, personally, I think Elekta has every reason to be fairly bullish on the long-term outlook for APJ because it's a hugely underserved market, and radiotherapy is highly cost-efficient. In terms of share, we have held on to a very respectable market share.

It's just a market that has been down temporarily, but we don't believe it's a permanent reduction in demand.

Thanks, Jakob. Then, I guess, the profile of the inventory, finished goods or

It's both, I would say. It's volume-driven, but there's also a bit of raw material cost in there as well, or component cost.

Great.

Thank you very much.

Thanks, Richard. With that last question, we are then concluding this call for the first quarter of the fiscal year 26/27, and thank you all for participating and asking these questions.

Goodbye.