August 23, 2018 / 8:48 AM / a month ago

UPDATE 1-Proton therapy company IBA disappoints with first-half loss

(Adds details, background, CEO interview)

By Piotr Lipinski

Aug 23 (Reuters) - Belgian proton therapy company Ion Beam Applications on Thursday reported a bigger than expected loss for the first half of the year, but said revenue from installations of proton therapy machines would help to boost its performance in the second half.

The company makes machines that deliver cancer-fighting proton beams, a super precise form of radiation, but it has been beset by delays in the construction of buildings to house its proton therapy systems by third party contractors.

IBA’s performance in the first half was held back by a reduced order intake from last year as well as lower revenue derived from recently signed projects.

The group made a loss before interest and taxes (REBIT) for the first half of 4.5 million euros ($5.2 million), compared with a profit of 1.9 million euros a year earlier.

It was, however, a 67-percent improvement over the REBIT for the second half of last year.

Revenue dropped 24.4 percent year-over-year to 114.7 million euros.

Analysts at ING said the results were below their expectations, while KBC Securities analysts said the results were disappointing with revenues heavily skewed to the second half.

IBA’s shares were down 7.2 percent at 0840 GMT.

“(Analysts) probably were expecting a very linear year ... (whereas) from the beginning, we knew H1 will a bit weaker than H2,” IBA’s Chief Executive Olivier Legrain, told Reuters.

The company reiterated forecasts for a positive REBIT and net result after tax in 2018, as more orders are scheduled to contribute to revenue over the second half and a further four recent PT machines projects are due to be installed.

“We expect to see much more activity on the closing front of our business versus H1,” Legrain said, expecting the recovery to accelerate over the second half.

“I know IBA can be profitable, competitive in whatever lumpy market we are going to face,” he said, highlighting the fact that the market was picking up on both sides of the Atlantic.

IBA has faced increased competition as well as delays in constructing facilities that house its PT systems. The company issued profit warnings for 2017 and reported a loss for the year.

In October, in a move to reduce the impact of the delays, it announced a partnership with Vinci Construction to offer design and construction support to its PT clients.

“Now we’re on track with our business plan assumption in terms of delivery,” the CEO said.

Legrain said the company was in negotiations with other construction companies but could not give further details.

IBA has also started to tackle the competition issues by signing alliances with rivals like Elekta or Philips to support sales and marketing of its products in the broader oncology market.

These partnerships aim to help IBA to compete with its main rival, Varian Medical System, which offers its PT machines as part of a bundle of services to health providers.

Legrain said he was certain of IBA’s ability to sustain profitability once it returns to profit at the end of the year, but that it was nevertheless too difficult to predict concrete numbers in this market. ($1 = 0.8744 euros) (Reporting by Piotr Lipinski in Gdynia; Editing by Sai Sachin Ravikumar and Jane Merriman)

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