A RAPID CONVERSION AND EFFICIENCY MEASURES DELIVER RESULTS
CEO JAN WAHLSTRÖM COMMENTS ON Q2
Our long-term strategy and work with cost-efficiency measures in combination with our vigorous action to seek and receive government support means that we overall stand strong and report a good result even during a time of upheaval, to say the least. We have during the last 12 months reduced our costs among other things by reducing the workforce by 10% and by working with improvements in production. As predicted earlier, Covid-19 has had a negative impact on the quarter in terms of sales. We see the biggest market downturn in the Dental business area followed by Orthopedics and Life Science. Being able to quickly switch some of our production in Life Science to injection molding and the assembly of parts for ventilators is our way of contributing to the global crisis. However, in the long run we see no change in our business areas but anticipate a continued long-term, steadily growing market.
The market in Orthopedics looks as if it will recover faster than previously predicted. Orthopedic departments, mainly in the United States, which have been converted to Covid departments in hospitals, are now beginning to return to normal operations. Emergency surgeries have priority before elective surgeries and since our operations are primarily within trauma, we see not only less impact but also a faster rate of recovery.
Polymer operations in Life Science is continuing to do well and to meet this demand, the expansion of our site in Skara is in full swing. Everything is going according to plan and stage one is expected to be ready for occupancy at the beginning of the fourth quarter. The biggest decline in Life Science is related to hearing implants, i.e. operations that have not been prioritized during the pandemic.
We are seeing a recovery in the Dental business area, even though the level of activity in dental clinics is still very low. Recession, unemployment and increased safety practices are likely to have a negative impact on the implant market even in the longer term. Even now, however, we are seeing positive signals. From an almost total stop (20% of the previous volume), we are now up to 55%. It is gratifying that Elos Accurate's entire digital portfolio is now available in the US. After having been on the European market for many years, we have now gone through the rigorous process of 510(k) and have now received clearance by FDA to market Elos Accurate® on the American market. We have observed a lot of interest in the launch and will focus on this during the fall.
I don't want to conceal the fact that times are tough - and want to take this opportunity to pay tribute to the loyal organization I have the privilege of working together with. A rapid conversion and ongoing efficiency measures deliver results but it requires both the understanding and commitment of our employees, something we at Elos Medtech have really displayed during the past months.
The recovery will take time but with a solid foundation from 2019, the measures we have implemented and no current underlying long term changes in the markets in which we are active, we are equipped to build an even stronger company. We have positive signals from most of our key customers and will gradually return to full workforce employment. Our order of priority will also continue to focus on our employees and minimized financial risk for the company. Teamwork and efficiency are especially important in crisis situations and through an agile approach and the redistribution of human resources, we stand ready to quickly meet customer needs as demand increases.
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