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Munters Group — Interim / Quarterly Report 2008
Oct 24, 2008
2945_10-q_2008-10-24_710a98a3-3cf2-4ab5-8c2e-7f8beb720bca.pdf
Interim / Quarterly Report
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Interim Report January - September 2008
October 24, 2008
1
Third quarter
- □ Order intake amounted to SEK 1,582 M (1,674), - down 3% adjusted1
- □ Net sales amounted to SEK 1,597 M (1,597), - up 2% adjusted1
- □ EBIT before amortization and nonrecurring costs totaled SEK 119 M (152)
- □ Costs for the MEP2 program (Munters Efficiency Program phase 2) and other nonrecurring costs totaled SEK 35 M
- □ Net earnings after tax totaled SEK 40 M (87)
- □ Earnings per share amounted to SEK 0.53 kronor (1.16)
- □ Operating cash flow amounted to SEK 49 M (neg: 25)
| 2008 | 2007 | Change | Adjusted change1 |
|
|---|---|---|---|---|
| Order intake, SEK M | 1,582 | 1,674 | -5% | -3% |
| Net sales, SEK M | 1,597 | 1,597 | 0% | 2% |
| EBIT bef. amortization and nonrecurring costs, SEK M** |
119 | 152 | -22% | |
| EBIT, SEK M | 82 | 149 | -45% | |
| EBIT margin, percent | 5.1 | 9.3 | ||
| Net earnings, SEK M | 40 | 87 | -54% | |
| Earnings per share, SEK | 0.53 | 1.16 | -54% |
1 Pro forma, adjusted for currency fluctuations, acquisitions and divestment. ** Amortization of intangible assets relating to business acquisitions.
Interim-report period
- □ Order intake amounted to SEK 4,854 M (4,889), up 1% adjusted1
- □ Net sales increased to SEK 4,689 M (4,525), up 5% adjusted1
- □ Net earnings after tax totaled SEK 147 M (235)
- □ Earnings per share amounted to SEK 1.97 (3.15)
| Adjusted | ||||
|---|---|---|---|---|
| 2008 | 2007 | Change | change1 | |
| Order intake, SEK M | 4,854 | 4,889 | -1% | 1% |
| Net sales, SEK M | 4,689 | 4,525 | 4% | 5% |
| EBIT bef. amortization and nonrecurring costs, SEK M** |
367 | 400 | -8% | |
| EBIT, SEK M | 286 | 395 | -28% | |
| EBIT margin, percent | 6.1 | 8.7 | ||
| Net earnings, SEK M | 147 | 235 | -37% | |
| Earnings per share, SEK | 1.97 | 3.15 | -37% |
Pro forma, adjusted for currency fluctuations, acquisitions and divestment. ** Amortization of intangible assets relating to business acquisitions.
Munters is a global leader in energy-efficient air-treatment solutions and restoration services based on expertise in humidity and climate control technologies. Customers are served in a wide range of segments, the most important being the insurance, food, pharma and electronics industries.
Manufacturing and sales are carried out through the Group's own companies in more than 30 countries. The Group has slightly more than 4 000 employees and net sales of about SEK 6.3 billion. The Munters share is listed on the OMX Nordic Exchange Stockholm. For more information, see www.munters.com.
Third quarter
Order intake
During the third quarter, the order intake declined to SEK 1,582 M (1,674). Pro forma, adjusted for currency effects, acquisitions and disposals of operations, the decrease was 3%. Within the Dehumidification Division, order intake was strong in the industrial process-air segment. Order intake within comfortoriented climate control applications was also favorable, despite continuing low demand from WalMart. MCS enjoyed a healthy order intake due to weather-related events in the US. Order intake in HumiCool dropped sharply as a result of the continuing weak trend within Mist Elimination Americas and low demand for heaters from distributors due to concerns in the credit market.
The order backlog rose slightly compared with the year-earlier period and totaled SEK 1,377 M (1,365) at the end of the quarter.
Net sales
Consolidated net sales remained unchanged at SEK 1,597 M (1,597). Adjusted1 , the increase was 2%. The stronger SEK compared with the year-earlier period had a negative impact of approximately 2% on net sales in Swedish currency.
1 Pro forma, adjusted for currency effects, acquisitions and divestment.
Earnings
EBIT amounted to SEK 82 M (149) for the Group, corresponding to an operating margin of 5.1% (9.3). Costs relating to the MEP2 program was higher than previously planned, and amounted to SEK 25 M (of which SEK 10 M was previously announced). The higher costs pertain to the project aimed at enhancing processes and reducing accounts receivables within MCS, where it is estimated that the possibility of recovering certain outstanding accounts receivables has changed, and a more rapid pace of program implementation. In addition, earnings were negatively impacted by nonrecurring costs of SEK 10 M in the HumiCool Division as a result of a major customer in the US filing for bankruptcy. The Group's EBIT before amortization of intangible assets relating to business acquisitions and nonrecurring costs amounted to SEK 119 M (152). The Dehumidification Division was negatively impacted by low sales volumes at WalMart and the relatively high indirect costs during the quarter. Earnings of the MCS Division continue to be affected by weakening gross margins. The poor trend within Mist Elimination and HVAC resulted in a significantly lower EBIT margin for the HumiCool Division. However, rising raw material prices within product divisions were offset by price increases and productivity improvements.
2004 and later in accordance with IFRS.
Consolidated earnings after financial items amounted to SEK 62 M (136) for the third quarter. Net earnings for the quarter totaled SEK 40 M (87). Earnings per share amounted to SEK 0.53 (1.16).
Cash flow
Operating cash flow increased to SEK 49 M (neg: 25) as an effect of reduced outstanding accounts receivables.
Fourth-quarter prospects
Apart from certain follow-on investments, the MEP2 program is largely expected to be completed during the fourth quarter. During the fourth quarter, it is anticipated that the program will entail costs of approximately SEK 10 M. Order intake and, to a certain extent, sales are expected to be influenced by the developments in global credit markets. Measures to improve profitability are discussed in the divisional section.
Interim-report period
Order intake
During the period, the Group's order intake decreased by 1% to SEK 4,854 M (4,889). Adjusted1 , the increase was 1%.
Net sales
Consolidated net sales rose 4% to SEK 4,689 M (4,525). Adjusted1 , the increase was 5%.
Earnings
EBIT for the Group declined by 28% to SEK 286 M (395), corresponding to an EBIT margin of 6.1% (8.7). Earnings for the quarter were impacted by an expense of SEK 65 M for the MEP2 program, and SEK 23 M in nonrecurring costs for actual loan losses and extraordinary guarantee commitments.
EBIT before amortization of intangible assets relating to business acquisitions and nonrecurring costs totaled SEK 367 M (400).
Consolidated earnings after financial items totaled SEK 230 M (367) during the period. Net earnings for the period totaled SEK 147 M (235), after a tax charge of 36% (36). Earnings per share amounted to SEK 1.97 (3.15).
Investments
The Group's investments in tangible fixed assets during the period amounted to SEK 113 M (143), of which SEK 35 M (63) pertained to investments in MCS equipment. Depreciation and impairment amounted to SEK 120 M (115).
Financial position
The equity ratio decreased slightly to 30% at the end of the period (31 at the start of the year). Interest-bearing assets totaled SEK 251 M (276 at the start of the year) and interest-bearing provisions and liabilities amounted to SEK 1,562 M (1,344 at the start of the year). Net debt during the year rose by SEK 243 M to SEK 1,311 M. The Group has unutilized loan facilities of SEK 812 M.
Personnel
At the end of the period, the number of permanent employees was 4,044, a decrease of 59 since year-end, adjusted for acquisitions. During the third quarter, the net number of permanent employees declined by 39 as a result of efficiency enhancements under the MEP2 program. Additional personnel reductions are planned during the fourth quarter.
1 Pro forma, adjusted for currency effects, acquisitions and divestment.
Divisional performance
Dehumidification Division
The Dehumidification Division is a function-based organization divided into three market areas: Americas, Europe and Asia & Pacific.
| Third quarter | Jan-Sep | |||||
|---|---|---|---|---|---|---|
| SEK M | 2008 | 2007 | 2008 | 2007 | ||
| Order intake | 511 | 541 | 1,525 | 1,541 | ||
| Change | -6% | -1% | ||||
| Adjusted change1 | -2% | 2% | ||||
| Net sales | 495 | 504 | 1,406 | 1,402 | ||
| Change | -2% | 0% | ||||
| Adjusted change1 | 2% | 2% | ||||
| Operating earnings before | ||||||
| one time costs | 48 | 55 | 146 | 162 | ||
| Operating margin | 9.6% | 11.0% | 10.4% | 11.5% | ||
| Operating earnings | 48 | 55 | 126 | 162 | ||
| Operating margin | 9.6% | 11.0% | 9.0% | 11.5% |
□ Continued favorable order intake in industrial processed air treatment
□ Region Americas negatively impacted by WalMart
Third quarter
The market for industrial dehumidifiers remained strong during the quarter based on favorable global demand. Growth in Asia continued to rise during the quarter. Order intake in the Americas Region was favorable in both the processed air and comfort segments, but similar to the second quarter was negatively impacted by weak demand from WalMart. The Europe Region experienced a weaker demand for standard products due to a weaker market. Net sales increased by 2% adjusted for currency effects and acquisitions.
The underlying margin trend remained positive during the quarter. Rising prices of raw materials could be offset by raising prices. However, indirect costs during the quarter were slightly higher than the trend due to staff reductions.
Fourth-quarter prospects
Continued relatively strong trend anticipated within most segments. The division has a healthy order backlog, which is expected to support sales. However, the trend in the credit market amplifies the uncertainty in prospects.
The acquisition of Toussaint Nyssanne is estimated to be completed during the fourth quarter.
1 Pro forma, adjusted for currency effects, acquisitions and divestment.
Moisture Control Services (MCS) Division
The MCS Division has a country-based organization divided into three market areas: Northern Europe, Central Europe and US & Asia.
| Third quarter | Jan-Sep | ||||
|---|---|---|---|---|---|
| SEK M | 2008 | 2007 | 2008 | 2007 | |
| Order intake | 710 | 690 | 2,025 | 1,957 | |
| Change | 3% | 4% | |||
| Adjusted change1 | 4% | 5% | |||
| Net sales | 686 | 666 | 2,000 | 1,885 | |
| Change | 3% | 6% | |||
| Adjusted change1 | 5% | 8% | |||
| Operating earnings before | |||||
| one time costs | 32 | 42 | 93 | 100 | |
| Operating margin | 4.7% | 6.3% | 4.7% | 5.3% | |
| Operating earnings | 7 | 42 | 57 | 90 | |
| Operating margin | 1.0% | 6.3% | 2.8% | 4.8% |
- □ Favorable demand as a result of hurricanes in the US
- □ Unfavorable sales mix and inflation pressure on costs
- □ Major framework agreement signed in the US
- □ One time costs of SEK 25 M in MEP2 program
Third quarter
Demand during the third quarter was relatively favorable; particularly in the US market as a result of weather-related events. In terms of size, the events matched the extent of those in the UK in the preceding year. A new framework agreement was signed with a global insurance company during the third quarter. The agreement pertains to the US market. Adjusted1 , sales increased by 5%.
Costs relating to the MEP2 program were higher than previously planned and amounted to SEK 25 M (of which SEK 10 M was previously announced). The higher costs pertain to the project aimed at enhancing processes and reducing accounts receivables, where it is estimated that the possibility of recovering certain outstanding accounts receivables has changed, and a more rapid pace of program implementation.
Operating earnings before MEP2 costs were impaired as a result of continuing inflationary pressure on salaries and fuel. Measures to raise prices have had a limited impact, but are still given priority to.
For some time a major restructuring has been in process within the division in order to address the declining trend of margins on the market, and to adapt the organization to the new industry structure. This will lead to a partly new business model, among other things built on the mobile IT platform Field.Link. The implementation of the IT system has entered an intense phase and 368 employees used the application in their daily work at the end of the quarter.
The new business model will, apart from increase in efficiency, also lead to lower overhead costs. Some markets and services, in which the new model is not assessed to give enough improvements, will be winded up.
Fourth-quarter prospects
The trend with relatively favorable demand, but somewhat weaker sales mix and margin pressure is expected to continue. The order backlog is at a strong level as a result of the hurricane season in the US. However, this should be compared with the preceding year, when tremendous flooding in the UK strengthened sales and profits.
HumiCool Division
The HumiCool Division is divided into four business areas: AgHort, Mist Elimination, HVAC and PreCooler.
| Third quarter | Jan-Sep | ||||
|---|---|---|---|---|---|
| SEK M | 2008 | 2007 | 2008 | 2007 | |
| Order intake | 369 | 460 | 1,330 | 1,443 | |
| Change | -20% | -8% | |||
| Adjusted change1 | -19% | -8% | |||
| Net sales | 425 | 446 | 1,309 | 1,289 | |
| Change | -5% | 2% | |||
| Adjusted change1 | -4% | 1% | |||
| Operating earnings | |||||
| before one time costs | 46 | 64 | 164 | 178 | |
| Operating margin | 10.8% | 14.3% | 12.5% | 13.8% | |
| Operating earnings | 36 | 64 | 132 | 178 | |
| Operating margin | 8.5% | 14.3% | 10.1% | 13.8% |
□ Continued favorable trend within Aghort
- □ Weak order intake and invoicing within Mist Elimination continued during the quarter
- □ The trend within HVAC Heaters was significantly influenced by the restraint in the credit market
□ SEK 10 M in bad debt loss due to bankruptcy in US
Third quarter
Adjusted1 , order intake during the quarter was down by 19%. The order intake at Mist Elimination in the US remained extremely weak. During previous quarters, this was due to delays in major power projects. Investment willingness within the coal-fired power industry has now decreased due to increased political uncertainty relating to emission rights. This means that order intake and sales are expected to remain at a low level for a prolonged period.
Demand for heaters within HVAC was low during the period as a result of the unwillingness of distributors to construct warehouses during the prevailing credit-market turmoil. The underlying market demand for AgHort products remained relatively strong. Net sales declined by 4% adjusted for currency effects and acquisitions.
Low invoicing levels for Mist Elimination in the US and HVAC Heaters resulted in the under absorption of costs in the respective plants and negative earnings mix effects. Operating earnings were also influenced by nonrecurring costs of SEK 10 M due to the largest cooling-medium customer in the US filing for bankruptcy.
The lower market activity within some segments will be addressed with reductions in personnel and other costs, together with changes in the production structure.
Fourth-quarter prospects
Order intake within Mist Elimination has decreased to a level where sales are expected to be significantly affected during the quarters ahead, and measures have been taken to adjust the cost level. For HVAC Heaters, the trend is also expected to be weak during the fourth quarter. A continued positive trend is anticipated within AgHort.
1 Pro forma, adjusted for currency effects, acquisitions and divestment.
SIGNIFICANT RISKS AND UNCERTAINTIES
Munters' exposure to risk can be divided primarily into two categories: operational risks, such as those due to weather, dependence on key personnel and key customers, and geographically dispersed operations involving small operational units; and financial risks, consisting mainly of currency, interest and financing risks.
Munters' acquisition frequency has increased, which could result in integration-related risks. In addition, it is estimated that the financial risks, primarily interest-rate risks and currency risks, have increased somewhat in the current and past year due to increased external borrowing as a result of acquisitions and share redemptions. A more detailed description of the Group's and Parent Company's risk exposure and risk management activities is available in the "Risk management" section on pages 30-31 of the Munters Annual Report for 2007, at www.munters.com.
FORWARD-LOOKING STATEMENTS
Some statements in this report are forward-looking, and the actual outcomes may be materially different. In addition to the factors explicitly discussed, other factors could have a material impact on actual outcomes. Such factors include general business conditions, fluctuations in exchange rates and interest rates, political risks, the impact of competing products and their pricing, product development, commercialization and technological difficulties, interruptions in supply and major customer-related bad debts.
TRANSACTIONS WITH RELATED PARTIES
There are no significant contractual relationships or
transactions between Munters and its related parties, apart from the remuneration of senior executives.
PARENT COMPANY
The Parent Company's earnings after financial items during the period amounted to SEK 67 M (173). There were no external net sales (in common with the year-earlier period). Cash and cash equivalents at the close of the period amounted to SEK 37 M (104) and net debt to SEK 1,383 M (1,256). Capital expenditure totaled SEK 8 M (10). The number of employees at the end of the period was 33 (27).
NOMINATION COMMITTEE
Information on Munters' Nomination Committee for the 2009 Annual General Meeting is available on the company's website at: www.munters.com.
FUTURE INFORMATION DATES
| February 12 | Year-End Report 2008 |
|---|---|
| April 15 | Annual General Meeting. 5:00 p.m. |
| IVA, Grev Turegatan 16, Stockholm | |
| April 23 | Interim report January-March 2009 |
PRESS- AND ANALYST CONFERENCE
Munters will hold a press conference for the media, analysts and investors on Friday, October 24, at 10:00 a.m. at Berns, Berzelii Park, Stockholm, in the Kilsalen venue.
The presentation may also be monitored by telephone: +46-8-5352 6458, code 6549580.
Kista, October 24, 2008 Lars Engström President and Chief Executive Officer Board member
Munters discloses the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication on October 24, 2008 at 8:00 am (CET).
For further information, please contact:
Lars Engström, Chief Executive Officer Tel: +46-8-626 63 03, [email protected]
Jonas Samuelson, Chief Financial Officer Tel: +46-8-626 63 06, [email protected]
Munters AB (publ)
Corp. Reg. No. 556041-0606 Box 1188, SE-164 26 Kista, Sweden Tel: +46-8-626 63 00, Fax: +46-8-754 68 96 [email protected] This interim report, along with other financial information, is available on www.munters.com
AUDITORS' REPORT PERTAINING TO THE REVIEW
This interim report has not been reviewed by the company's auditors.
| Amounts in SEK M | 2008 | 2007 | 2008 | 2007 | 2007/2008 | 2007 |
|---|---|---|---|---|---|---|
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Oct-Sep | Jan-Dec | |
| 3 months | 3 months | 9 months | 9 months | 12 months | 12 months | |
| Order intake | 1,582 | 1,674 | 4,854 | 4,889 | 6,372 | 6,407 |
| Income statement | ||||||
| Net sales | 1,597 | 1,597 | 4,689 | 4,525 | 6,426 | 6,262 |
| Cost of goods sold | -1,181 | -1,151 | -3,460 | -3,248 | -4,715 | -4,503 |
| Gross earnings | 416 | 446 | 1,229 | 1,277 | 1,711 | 1,759 |
| Gross margin | 26.0% | 27.9% | 26.2% | 28.3% | 26.6% | 28.1% |
| Other operating income | 0 | - | 7 | 1 | 6 | 0 |
| Selling expenses | -197 | -159 | -524 | -480 | -697 | -653 |
| Administrative expenses | -120 | -118 | -363 | -350 | -477 | -464 |
| Research and development costs | -19 | -18 | -60 | -51 | -79 | -70 |
| Other operating expenses | 2 | -2 | -3 | -2 | -7 | -6 |
| EBIT - Earnings before interest and tax | 82 | 149 | 286 | 395 | 457 | 566 |
| EBIT margin | 5.1% | 9.3% | 6.1% | 8.7% | 7.1% | 9.0% |
| Financial income and expenses | -20 | -13 | -56 | -28 | -68 | -40 |
| Earnings after financial income | 62 | 136 | 230 | 367 | 389 | 526 |
| Taxes | -22 | -49 | -83 | -132 | -141 | -190 |
| Net earnings | 40 | 87 | 147 | 235 | 248 | 336 |
| Attributable to equity holders of the parent | 40 | 86 | 146 | 233 | 245 | 332 |
| Attributable to minority interest | 0 | 1 | 1 | 2 | 3 | 4 |
| Earnings per share, SEK | 0.53 | 1.16 | 1.97 | 3.15 | 3.31 | 4.49 |
| Earnings per share - after dilution, SEK | 0.53 | 1.16 | 1.97 | 3.15 | 3.31 | 4.49 |
| Order intake by division | ||||||
| Dehumidification Division | 511 | 541 | 1,525 | 1,541 | 1,985 | 2,001 |
| MCS Division | 710 | 690 | 2,025 | 1,957 | 2,698 | 2,630 |
| HumiCool Division | 369 | 460 | 1,330 | 1,443 | 1,724 | 1,837 |
| Eliminations | -8 | -17 | -26 | -52 | -35 | -61 |
| Order intake by division | 1,582 | 1,674 | 4,854 | 4,889 | 6,372 | 6,407 |
| Net sales by division | ||||||
| Dehumidification Division | 495 | 504 | 1,406 | 1,402 | 1,940 | 1,936 |
| MCS Division | 686 | 666 | 2,000 | 1,885 | 2,739 | 2,624 |
| HumiCool Division | 425 | 446 | 1,308 | 1,289 | 1,784 | 1,765 |
| Eliminations | -9 | -19 | -25 | -51 | -37 | -63 |
| Net sales | 1,597 | 1,597 | 4,689 | 4,525 | 6,426 | 6,262 |
| Operating earnings by division | ||||||
| Dehumidification Division | 48 | 55 | 126 | 162 | 198 | 234 |
| operating margin | 9.6% | 11.0% | 9.0% | 11.6% | 10.2% | 12.1% |
| MCS Division | 7 | 42 | 57 | 90 | 96 | 129 |
| operating margin | 1.0% | 6.3% | 2.8% | 4.8% | 3.5% | 4.9% |
| HumiCool Division | 36 | 64 | 132 | 178 | 205 | 251 |
| operating margin | 8.5% | 14.3% | 10.1% | 13.8% | 11.5% | 14.2% |
| Central, eliminations etc. | -7 | -9 | -23 | -30 | -33 | -40 |
| EBIT before amortizations, interest and tax | 84 | 152 | 292 | 400 | 466 | 574 |
| Amortizations on acquisition related intangible assets | -2 | -3 | -6 | -5 | -9 | -8 |
| EBIT - Earnings before interest and tax | 82 | 149 | 286 | 395 | 457 | 566 |
| Amounts in SEK M | 2008 | 2008 | 2007 | 2007 |
|---|---|---|---|---|
| 30 Sep | 30 Jun | 31 Dec | 30 Sep | |
| Balance sheet | ||||
| Assets | ||||
| Fixed assets | ||||
| Tangible assets | ||||
| Buildings and land | 194 | 185 | 172 | 171 |
| Plant and machinery | 144 | 139 | 144 | 142 |
| Equipment, tools, fixtures and fittings | 269 | 261 | 262 | 253 |
| Construction in progress | 12 619 |
7 592 |
22 600 |
15 581 |
| Intangible assets | ||||
| Patent, licenses, trademarks and similar rights | 113 | 107 | 110 | 103 |
| Goodwill | 852 | 804 | 794 | 776 |
| 965 | 911 | 904 | 879 | |
| Other fixed assets | ||||
| Participation in associated companies | 2 | 2 | 2 | 5 |
| Other long-term receivables | 21 | 19 | 19 | 17 |
| Deferred tax assets | 92 115 |
86 107 |
62 83 |
79 101 |
| 1,699 | 1,610 | 1,587 | 1,561 | |
| Current assets | ||||
| Inventory etc. | 668 | 622 | 536 | 614 |
| Accounts receivable | 1,174 | 1,182 | 1,292 | 1,172 |
| Other receivables | 231 | 192 | 171 | 182 |
| Liquid funds | 251 | 242 | 276 | 307 |
| 2,324 | 2,238 | 2,275 | 2,275 | |
| Total assets | 4,023 | 3,848 | 3,862 | 3,836 |
| Equity and liabilities | ||||
| Equity | 1,188 | 1,076 | 1,202 | 1,077 |
| Long-term liabilities | ||||
| Interest-bearing liabilities | 1,385 | 1,332 | 1,168 | 31 |
| Provisions | 165 | 163 | 165 | 178 |
| Deferred tax liabilities | 72 | 69 | 47 | 53 |
| Other liabilities | 8 | 8 | 3 | 3 |
| 1,630 | 1,572 | 1,383 | 265 | |
| Short-term liabilities | ||||
| Interest-bearing liabilities | 33 | 60 | 32 | 1,370 |
| Advances from customers | 91 | 89 | 99 | 93 |
| Accounts payable | 437 | 460 | 496 | 445 |
| Provisions | 77 | 73 | 66 | 60 |
| Other liabilities | 567 1,205 |
518 1,200 |
584 1,277 |
526 2,494 |
| Total equity and liabilities | 4,023 | 3,848 | 3,862 | 3,836 |
| Consolidated statement of recognized income and expense | ||||
| Income and expenses recognized in equity | 2008 | 2008 | 2007 | 2007 |
| Jan-Sep | Jan-Jun | Jan-Dec | Jan-Sep | |
| Actuarial gains and losses related to pensions, including special employer's contribution |
-1 | -1 | 3 | 0 |
| Cash flow hedges | 1 | -1 | -1 | -2 |
| Exchange differences on translation of foreign operations | 26 | -44 | 10 | -11 |
| Tax on items reported directly in equity | 0 | 0 | 0 | 0 |
| Total transactions reported in equity | 26 | -46 | 12 | -13 |
| Net earnings for the period | 147 | 107 | 336 | 235 |
| Total income and expenses recognized for the period, net | 173 | 61 | 348 | 222 |
| Attributable to: | ||||
| Equity holders of the parent | 172 | 60 | 344 | 220 |
| Minority interest | 1 173 |
1 61 |
4 348 |
2 222 |
| Amounts in SEK M | 2008 | 2007 | 2008 | 2007 | 2007/2008 | 2007 |
|---|---|---|---|---|---|---|
| Jul-Sep 3 months |
Jul-Sep 3 months |
Jan-Sep 9 months |
Jan-Sep 9 months |
Oct-Sep 12 months |
Jan-Dec 12 months |
|
| Cash flow statement | ||||||
| Current operations | ||||||
| Earnings after financial items | 62 | 136 | 230 | 367 | 389 | 526 |
| Reversal of depreciation etc. | 39 | 40 | 120 | 115 | 161 | 156 |
| Other earnings not affecting cash flow | 1 | -3 | 1 | -12 | -6 | -19 |
| Taxes paid | -37 | -56 | -136 | -161 | -162 | -187 |
| Cash flow from current operations before changes in working capital |
65 | 117 | 215 | 309 | 382 | 476 |
| Cash flow from changes in working capital | ||||||
| Changes in inventory | -9 | -28 | -109 | -110 | -27 | -28 |
| Changes in accounts receivable | 68 | -82 | 146 | 9 | 35 | -102 |
| Changes in other receivables | -23 | -17 | -42 | -24 | -33 | -15 |
| Changes in accounts payable | -46 | 31 | -74 | -17 | -26 | 31 |
| Changes in other liabilities | 25 | 21 | -1 | 18 | 14 | 33 |
| Sum of changes in working capital | 15 | -75 | -80 | -124 | -37 | -81 |
| Cash flow from current operations | 80 | 42 | 135 | 185 | 345 | 395 |
| Investing activities | ||||||
| Acquisitions and disposals of businesses | -5 | -61 | -26 | -316 | -26 | -316 |
| Investments in intangible assets | -2 | -10 | -5 | -15 | -15 | -25 |
| Investments in tangible assets | -29 | -56 | -113 | -143 | -155 | -185 |
| Sales of tangible assets | 0 | 0 | 2 | 1 | 5 | 4 |
| Change in other financial assets | 0 | -1 | 0 | 0 | 0 | 0 |
| Cash flow from current operations | -36 | -128 | -142 | -473 | -191 | -522 |
| Financing activities | ||||||
| Changes in loans | -44 | 105 | 164 | 1,041 | -30 | 847 |
| Dividend paid | -4 | - | -189 | -166 | -189 | -166 |
| Redemption of shares | - | - | - | -494 | - | -494 |
| Sales of treasury stock | - | - | - | 11 | - | 11 |
| Cash flow from investing activities | -48 | 105 | -25 | 392 | -219 | 198 |
| Cash flow for the period | -4 | 19 | -32 | 104 | -65 | 71 |
| Liquid funds at the beginning of the period | 242 | 291 | 276 | 201 | 307 | 201 |
| Exchange-differences in liquid funds | 13 | -3 | 7 | 2 | 9 | 4 |
| Liquid funds at end of the period | 251 | 307 | 251 | 307 | 251 | 276 |
| Operating cash flow | 49 | -25 | 19 | 28 | 180 | 189 |
| Key figures | ||||||
| More key figures are disclosed in the quarterly review | ||||||
| Capital turnover rate, times (4 quarters) | - | - | 2.5 | 2.7 | 2.5 | 2.7 |
| Return on capital employed, % (4 quarters) | - | - | 17.8 | 24.8 | 17.8 | 24.8 |
| Return on equity, % (4 quarters) | - | - | 21.4 | 24.1 | 21.4 | 25.7 |
| Return on total capital, % (4 quarters) | - | - | 12.1 | 16.4 | 12.1 | 16.4 |
| Interest coverage ratio, times | 3.6 | 8.9 | 5.0 | 11.8 | 6.0 | 10.7 |
| Net debt structure | ||||||
| Short-term interest-bearing liabilities | - | - | 33 | 1,370 | 33 | 32 |
| Long-term interest-bearing liabilities | - | - | 1,385 | 31 | 1,385 | 1,168 |
| Defined benefit plans etc. | - | - | 144 | 151 | 144 | 144 |
| Interest-bearing liabilities | - | - | -251 | -307 | -251 | -276 |
| Net debt | - | - | 1,311 | 1,245 | 1,311 | 1,068 |
Quarterly overview - consolidated earnings, share data and cash flow
| Amounts in SEK M | 2008 | 2007 | 20061 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
| Order intake | 1,582 | 1,686 | 1,586 | 1,518 | 1,674 | 1,688 | 1,527 | 1,311 | 1,362 | 1,573 | 1,515 |
| Income statement | |||||||||||
| Net sales | 1,597 | 1,548 | 1,545 | 1,737 | 1,597 | 1,524 | 1,404 | 1,462 | 1,408 | 1,456 | 1,386 |
| Operating expenses | -1,515 | -1,453 | -1,437 | -1,566 | -1,448 | -1,405 | -1,277 | -1,319 | -1,268 | -1,327 | -1,268 |
| EBIT | 82 | 95 | 108 | 171 | 149 | 119 | 127 | 143 | 140 | 129 | 118 |
| EBIT margin | 5.1% | 6.1% | 7.0% | 9.8% | 9.3% | 7.8% | 9.0% | 9.8% | 9.9% | 8.8% | 8.5% |
| Financial income and expense | -20 | -18 | -17 | -12 | -13 | -9 | -6 | -3 | -4 | -4 | -5 |
| Earnings after financial items | 62 | 77 | 91 | 159 | 136 | 110 | 121 | 140 | 136 | 125 | 113 |
| Taxes | -22 | -28 | -33 | -58 | -49 | -40 | -43 | -48 | -50 | -46 | -42 |
| Net earnings | 40 | 49 | 58 | 101 | 87 | 70 | 78 | 92 | 86 | 79 | 71 |
| Depreciations and impairments | 39 | 38 | 43 | 41 | 40 | 38 | 37 | 28 | 32 | 30 | 46 |
| Share data1,3 | |||||||||||
| Earnings per share, SEK | 0.53 | 0.66 | 0.78 | 1.34 | 1.16 | 0.95 | 1.04 | 1.23 | 1.15 | 1.06 | 0.96 |
| Earnings per share after dilution, SEK | 0.53 | 0.66 | 0.78 | 1.34 | 1.16 | 0.95 | 1.04 | 1.23 | 1.15 | 1.06 | 0.96 |
| Average no of shares outstanding, thousand | 73,933 73,933 73,933 73,898 73,887 73,863 73,791 73,749 73,743 73,743 73,743 | ||||||||||
| No of shares outstanding at period-end, thousan 73,933 73,933 73,933 73,933 73,933 73,933 73,933 73,785 73,746 73,743 73,743 | |||||||||||
| Number of treasury shares, thousand | 1,067 | 1,067 | 1,067 | 1,067 | 1,067 | 1,067 | 1,067 | 1,215 | 1,254 | 1,257 | 1,257 |
| Equity per share, SEK | 15.99 | 14.48 | 16.11 | 16.16 | 14.51 | 14.36 | 22.13 | 20.33 | 19.66 | 18.48 | 20.04 |
| Stock price at period-end, SEK | 48.50 | 57.25 | 68.50 | 76.75 | 93.00 107.50 100.67 | 106 | 95 | 80 | 88 | ||
| Market cap at period-end, SEK M2 | 3,638 | 4,294 | 5,138 | 5,756 | 6,975 | 8,063 | 7,550 | 7,925 | 7,100 | 6,013 | 6,613 |
| Cash flow statement | |||||||||||
| From current operations | 80 | 55 | 0 | 210 | 42 | 60 | 83 | 112 | 184 | 138 | 96 |
| From investing operations | -36 | -63 | -43 | -49 | -128 | -305 | -40 | -210 | -45 | -28 | -4 |
| From financing operations | -48 | 7 | 16 | -194 | 105 | 320 | -33 | 3 | -50 | -140 | -19 |
| Cash flow for the period | -4 | -1 | -27 | -33 | 19 | 75 | 10 | -95 | 89 | -30 | 73 |
| Operating cash flow | 49 | 13 | -43 | 161 | -25 | 8 | 45 | 61 | 138 | 110 | 66 |
1 The periods Q4 2005 to Q3 2006 have been restated in accordance with new option in IAS 19 applied in 2006.
2 The market cap is calculated on total number of issued shares, including treasury shares.
3 Historical data for the share are adjusted for the share split, redemption and bonus issue performed in Q2 2007.
Quarterly overview - Consolidated balance sheet and key figures
| Amounts in SEK M | 2008 | 2007 | 20061 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
| Balance sheet | |||||||||||
| Assets | |||||||||||
| Fixed assets | |||||||||||
| Tangible assets | 619 | 592 | 577 | 600 | 581 | 575 | 550 | 538 | 507 | 497 | 520 |
| Intangible assets | 965 | 911 | 876 | 904 | 879 | 843 | 609 | 586 | 370 | 370 | 379 |
| Other fixed assets | 115 | 107 | 107 | 83 | 101 | 99 | 79 | 80 | 83 | 84 | 85 |
| 1,699 1,610 1,560 | 1,587 | 1,561 | 1,517 | 1,238 | 1,204 | 960 | 951 | 984 | |||
| Current assets | |||||||||||
| Inventory etc. | 668 | 622 | 577 | 536 | 614 | 581 | 498 | 458 | 472 | 464 | 471 |
| Accounts receivable | 1,174 1,182 1,197 | 1,292 | 1,172 | 1,096 | 1,077 | 1,132 | 994 | 1,040 | 1,066 | ||
| Other receivables | 231 | 192 | 179 | 171 | 182 | 162 | 181 | 149 | 151 | 161 | 150 |
| Liquid funds | 251 | 242 | 242 | 276 | 307 | 291 | 216 | 201 | 297 | 213 | 248 |
| 2,324 2,238 2,195 | 2,275 | 2,275 | 2,130 | 1,972 | 1,940 | 1,914 | 1,878 | 1,935 | |||
| Total assets | 4,023 3,848 3,755 | 3,862 | 3,836 | 3,647 | 3,210 | 3,144 | 2,874 | 2,829 | 2,919 | ||
| Equity and liabilities | |||||||||||
| Equity | 1,188 1,076 1,198 | 1,202 | 1,077 | 1,066 | 1,640 | 1,506 | 1,454 | 1,367 | 1,483 | ||
| Long-term liabilities | 245 | 240 | 239 | 215 | 234 | 222 | 215 | 204 | 193 | 190 | 183 |
| Interest-bearing liabilities | 1,418 1,392 1,214 | 1,200 | 1,401 | 1,282 | 268 | 315 | 273 | 323 | 332 | ||
| Accounts payable | 437 | 460 | 414 | 496 | 445 | 426 | 416 | 435 | 320 | 344 | 328 |
| Other short-term liabilities | 735 | 680 | 690 | 749 | 679 | 651 | 671 | 684 | 634 | 605 | 593 |
| Total equity and liabilities | 4,023 3,848 3,755 | 3,862 | 3,836 | 3,647 | 3,210 | 3,144 | 2,874 | 2,829 | 2,919 | ||
| Key figures | |||||||||||
| Equity ratio, % | 29.5 | 28.0 | 31.8 | 31.1 | 28.1 | 29.2 | 51.1 | 47.9 | 50.6 | 48.3 | 50.8 |
| Net debt, SEK M | 1,311 1,292 1,119 | 1,068 | 1,245 | 1,138 | 209 | 257 | 127 | 258 | 229 | ||
| Net debt ratio, times | 1.10 | 1.20 | 0.93 | 0.89 | 1.16 | 1.07 | 0.13 | 0.17 | 0.09 | 0.19 | 0.15 |
| Interest coverage ratio, times | 3.6 | 5.5 | 6.3 | 8.9 | 8.9 | 11.1 | 22.2 | 21.1 | 28.3 | 27.2 | 24.9 |
| Investments in tangible assets, SEK M | 29 | 41 | 43 | 42 | 56 | 53 | 34 | 53 | 44 | 26 | 30 |
| Number of employees at period-end | 4,044 4,083 4,099 | 4,043 | 3,982 | 3,915 | 3,669 | 3,552 | 3,449 | 3,400 | 3,365 |
1 The periods Q4 2005 to Q3 2006 have been restated in accordance with new option in 2006.
Definition of the financial key figures can be found on page 73 in the Annual Report 2007.
Quarterly overview - Divisions
| Amounts in SEK M | 2008 | 2007 | 2006 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
| Order intake | |||||||||||
| Dehumidification Division | 511 | 528 | 487 | 460 | 541 | 556 | 444 | 355 | 443 | 465 | 430 |
| MCS Division | 710 | 643 | 672 | 673 | 690 | 634 | 633 | 636 | 601 | 654 | 650 |
| HumiCool Division | 369 | 525 | 436 | 395 | 460 | 518 | 465 | 333 | 340 | 462 | 450 |
| Eliminations | -8 | -10 | -9 | -10 | -17 | -20 | -15 | -13 | -22 | -8 | -15 |
| Order intake | 1,582 | 1,686 | 1,586 | 1,518 | 1,674 | 1,688 | 1,527 | 1,311 | 1,362 | 1,573 | 1,515 |
| Net sales | |||||||||||
| Dehumidification Division | 495 | 478 | 433 | 534 | 504 | 527 | 371 | 432 | 423 | 419 | 360 |
| MCS Division | 686 | 645 | 669 | 739 | 666 | 605 | 614 | 686 | 638 | 635 | 660 |
| HumiCool Division | 425 | 433 | 451 | 476 | 446 | 414 | 429 | 361 | 367 | 411 | 376 |
| Eliminations | -9 | -8 | -8 | -12 | -19 | -22 | -10 | -17 | -20 | -9 | -10 |
| Net sales | 1,597 | 1,548 | 1,545 | 1,737 | 1,597 | 1,524 | 1,404 | 1,462 | 1,408 | 1,456 | 1,386 |
| Operating earnings | |||||||||||
| Dehumidification Division | 48 | 45 | 33 | 72 | 55 | 69 | 38 | 65 | 51 | 49 | 29 |
| operating margin | 9.6% | 9.5% | 7.6% | 13.5% | 11.0% | 13.1% | 10.2% | 15.0% | 11.9% | 11.8% | 8.1% |
| MCS Division | 7 | 14 | 36 | 39 | 42 | 10 | 38 | 45 | 39 | 29 | 46 |
| operating margin | 1.0% | 2.2% | 5.3% | 5.3% | 6.3% | 1.7% | 6.2% | 6.5% | 6.1% | 4.6% | 7.0% |
| HumiCool Division | 36 | 44 | 51 | 73 | 64 | 55 | 59 | 44 | 56 | 62 | 51 |
| operating margin | 8.5% | 10.2% | 11.4% | 15.3% | 14.3% | 13.3% | 13.8% | 12.2% | 15.2% | 15.2% | 13.6% |
| Group overheads, eliminations etc. | -9 | -8 | -12 | -13 | -12 | -15 | -8 | -11 | -6 | -11 | -8 |
| Earnings before interest and tax | 82 | 95 | 108 | 171 | 149 | 119 | 127 | 143 | 140 | 129 | 118 |
| EBIT margin | 5.1% | 6.1% | 7.0% | 9.8% | 9.3% | 7.8% | 9.0% | 9.8% | 9.9% | 8.8% | 8.5% |
| Operating capital | |||||||||||
| Dehumidification Division | 524 | 480 | 476 | 481 | 477 | 488 | 384 | 383 | 394 | 392 | 395 |
| MCS Division | 880 | 856 | 871 | 895 | 885 | 790 | 805 | 811 | 779 | 779 | 824 |
| HumiCool Division | 582 | 567 | 542 | 497 | 494 | 492 | 452 | 391 | 392 | 399 | 436 |
| Central, eliminations | 59 | 52 | 65 | 69 | 77 | 49 | 30 | 34 | 12 | 16 | 13 |
| Operating capital | 2,045 | 1,955 | 1,954 | 1,942 | 1,933 | 1,819 | 1,671 | 1,619 | 1,577 | 1,586 | 1,668 |
| Permanent employees | |||||||||||
| Dehumidification Division | 1,173 | 1,196 | 1,184 | 1,180 | 1,151 | 1,126 | 913 | 900 | 890 | 877 | 867 |
| MCS Division | 1,942 | 1,952 | 1,938 | 1,918 | 1,903 | 1,916 | 1,906 | 1,845 | 1,842 | 1,830 | 1,784 |
| HumiCool Division | 908 | 914 | 959 | 924 | 911 | 855 | 832 | 789 | 698 | 672 | 695 |
| Central | 21 | 21 | 18 | 21 | 17 | 18 | 18 | 18 | 19 | 21 | 19 |
| Number of permanent employees | 4,044 | 4,083 | 4,099 | 4,043 | 3,982 | 3,915 | 3,669 | 3,552 | 3,449 | 3,400 | 3,365 |
| Amounts in SEK M | 2008 | 2007 | 2008 | 2007 | 2007/2008 | 2007 |
|---|---|---|---|---|---|---|
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Oct-Sep | Jan-Dec | |
| MUNTERS AB | 3 months | 3 months | 9 months | 9 months | 12 months | 12 months |
| Income statement | ||||||
| Net sales | 13 | 13 | 37 | 38 | 50 | 51 |
| Cost of goods sold | - | - | - | - | - | - |
| Gross earnings | 13 | 13 | 37 | 38 | 50 | 51 |
| Other operating income | 0 | 1 | 2 | 2 | 2 | 2 |
| Selling expenses | 0 | 0 | 0 | 0 | 0 | 0 |
| Administrative expenses | -20 | -19 | -70 | -59 | -89 | -78 |
| Other operating expenses | 0 | 0 | 0 | 0 | -1 | -1 |
| EBIT - Earnings before interest and tax | -7 | -5 | -31 | -19 | -38 | -26 |
| Financial income and expenses | 27 | 34 | 98 | 192 | 189 | 283 |
| Earnings after financial items | 20 | 29 | 67 | 173 | 151 | 257 |
| Transfer to tax allocation reserve | - | - | - | - | -15 | -15 |
| Income taxes | 0 | 7 | 11 | 4 | 11 | 4 |
| Net earnings | 20 | 36 | 78 | 177 | 147 | 246 |
| 2008 | 2008 | 2007 | 2007 | |||
| 30 Sep | 30 Jun | 31 Dec | 30 Sep | |||
| Balance sheet | ||||||
| Assets | ||||||
| Fixed assets | ||||||
| Tangible assets | ||||||
| Equipment, tools, fixtures and fittings | 23 | 23 | 19 | 19 | ||
| 23 | 23 | 19 | 19 | |||
| Intangible assets | ||||||
| Patent, licenses and similar rights | 18 | 18 | 17 | 10 | ||
| 18 | 18 | 17 | 10 | |||
| Financial assets | ||||||
| Participation in subsidiaries | 712 | 716 | 690 | 672 | ||
| Receivables from subsidiaries | 1,495 | 1,432 | 1,385 | 1,360 | ||
| 2,207 | 2,148 | 2,075 | 2,032 | |||
| 2,248 | 2,189 | 2,111 | 2,061 | |||
| Current assets | ||||||
| Receivables from subsidiaries | 55 | 85 | 82 | 57 | ||
| Other receivables | 31 | 21 | 18 | 43 | ||
| Liquid funds | 37 | 0 | 75 | 104 | ||
| 123 | 106 | 175 | 204 | |||
| Total assets | 2,371 | 2,295 | 2,286 | 2,265 | ||
| Equity and liabilities | ||||||
| Equity | 805 | 786 | 912 | 798 | ||
| Untaxed reserves | 15 | 15 | 15 | - | ||
| Long-term liabilities | ||||||
| Interest-bearing liabilities | 1,368 | 1,316 | 1,137 | - | ||
| Provisions | 38 | 38 | 37 | 36 | ||
| 1,406 | 1,354 | 1,174 | 36 | |||
| Short-term liabilities | ||||||
| Interest-bearing liabilities | 14 | - | - | 1,324 | ||
| Liabilities to subsidiaries | 101 | 97 | 152 | 2 | ||
| Accounts payable | 6 | 6 | 6 | 4 | ||
| Other liabilities | 24 | 37 | 27 | 101 | ||
| 145 | 140 | 185 | 1,431 | |||
| Total equity and liabilities | 2,371 | 2,295 | 2,286 | 2,265 |
Notes
Note 1. Accounting principles
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Annual Accounts Act. The accounting principles and calculation methods applied in this interim report remain unchanged compared with the principles and methods applied in the 2007 Annual Report.
Note 2. Changes in equity
| Amounts in SEK M | 2008 | 2008 | 2007 | 2007 |
|---|---|---|---|---|
| 30 Sep | 30 Jun | 31 Dec | 30 Sep | |
| Equity at the beginning of the year | 1,202 | 1,202 | 1,506 | 1,506 |
| Total recognized income and expenses | 173 | 61 | 348 | 222 |
| Change in minority interest | -2 | -2 | -3 | -2 |
| Sales of treasury shares | - | - | 11 | 11 |
| Dividend | -185 | -185 | -166 | -166 |
| Redemption of treasury shares | - | - | -494 | -494 |
| Equity at the end of the period | 1,188 | 1,076 | 1,202 | 1,077 |
Note 3. Acquisition of operations
Munters Form
On April 30, 2008, Munters acquired 80% of the Turkish company Munters-Form Endüstri Sistemleri Sanayi ve Ticaret A.Ş. Munters-Form is primarily active in the dehumidification area, ventilation products for the agriculture sector and precoolers for gas turbines. The company was consolidated on May 1, 2008. The acquired operations contributed SEK 31 M in revenues and slightly more than SEK 4 M in earnings before tax for the period May 1, 2008 to September 30, 2008. If the acquisition had taken place on January 1, 2008, the company would have contributed SEK 41 M in revenues and slightly more than SEK 5 M in profit.
Information on acquired net assets and goodwill is as follows:
Purchase consideration
| - purchase consideration paid in cash | 21 |
|---|---|
| - expenses directly attributable to the acquisition | 2 |
| Sub-total acquisition value | 23 |
| Additional purchase consideration – estimated | 7 |
| Total acquisition value | 30 |
| Fair value of acquired net assets | -6 |
| Minority interest | 1 |
| Goodwill | 25 |
Goodwill is attributable to anticipated future synergies and expansion opportunities primarily in distribution in the region and neighboring countries.
| The acquired company's net assets at the time of acquisition: |
Carrying amounts |
Fair value adjustment |
Fair value |
|---|---|---|---|
| Tangible fixed assets | 0 | 0 | |
| Intangible assets – customer relationships | 0 | 5 | 5 |
| Current assets | 5 | 5 | |
| Non-interest-bearing receivables | 5 | 5 | |
| Cash and cash equivalents | 1 | 1 | |
| Interest-free liabilities (including deferred tax liabilities) | -9 | -1 | -10 |
| Net identifiable assets and liabilities | 2 | 4 | 6 |
| Purchase consideration paid in cash and expenses directly attributable to the | |||
| acquisition | 23 | ||
| Cash and cash equivalents at the time of the acquisition | -1 | ||
| Change in the Group's cash and cash equivalents at the time of the | |||
| acquisition. | 22 |
This document is a translation of the Swedish version. In the event of any discrepancies between this translation and the Swedish version, the Swedish version shall prevail.