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Munters Group Interim / Quarterly Report 2021
2945_10-q_2021-04-22_a77c3637-83f5-428b-90d2-1de09d990fd7.pdf
Interim / Quarterly Report
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01
Munters
Q1
"Solid first quarter
with improved market conditions"
January-March 2021
In general, market conditions improved. The major effect from the Covid-19 pandemic was increased costs from shortages in the supply chain that was managed well.
- Order intake increased $+8\%$ , currency adjusted strong growth of $+20\%$ , and net sales increased $+3\%$ , currency adjusted $+14\%$ . Growth was mainly driven by the battery and pharma sub-segments (part of the industrial segment) in business area AirTech and the swine segment in China in business area FoodTech. Also, Services had good growth.
The adjusted EBITA-margin improved to $12.3\%$ (8.3). The improvement was mainly driven by increased net sales, high utilization rates and continued low indirect costs.
- Leverage (net debt/adjusted EBITDA, LTM*) was at 1.9x, the same level at per end of December 2020. The positive effect from improved cash flow from operating activities was offset an increase in net debt.
- Net debt as of March 31 amounted to MSEK 2,208 compared to MSEK 2,116 at the end of December 2020. The increase in net debt in the quarter was mainly driven by a negative exchange rate effect on outstanding borrowings related to USD/SEK of MSEK -134.
- The implementation of the measures for sharpening of the customer offering and footprint optimization are progressing according to plan. In the first quarter, MSEK -24 was realized, whereof MSEK -12 from the original provision and another MSEK -12 of costs reported as incurred. All measures are on track to be implemented in 2021.
Financial summary
| MSEK | 2021 | 2020 | Δ% | Apr-Mar | 2020 |
|---|---|---|---|---|---|
| Order intake | 1,995 | 1,849 | 8 | 7,396 | 7,249 |
| Net sales | 1,612 | 1,566 | 3 | 7,060 | 7,015 |
| Operating profit (EBIT) | 222 | 110 | 103 | 819 | 707 |
| Adjusted EBITA | 198 | 130 | 53 | 974 | 906 |
| Adjusted EBITA margin, % | 12.3 | 8.3 | 13.8 | 12.9 | |
| Net income | 160 | 57 | 181 | 535 | 432 |
| Earnings per share before dilution, SEK | 0.88 | 0.31 | 2.91 | 2.35 | |
| Earnings per share after dilution, SEK | 0.87 | 0.31 | 2.91 | 2.35 | |
| Average number of outstanding shares before dilution | 181,920,817 | 181,745,802 | 181,589,210 | 181,545,456 | |
| Average number of outstanding shares after dilution | 182,762,723 | 181,745,802 | 181,987,972 | 181,557,708 | |
| The KPI's below includes discontinued operations ** | |||||
| Net income | 160 | 57 | 529 | 426 | |
| Earnings per share before dilution, SEK | 0.88 | 0.31 | 2.88 | 2.32 | |
| Earnings per share after dilution, SEK | 0.87 | 0.31 | 2.88 | 2.32 | |
| Cash flow from operating activities | 88 | 27 | 1,020 | 959 | |
| Net debt | 2,208 | 3,338 | 2,208 | 2,116 | |
| Net debt/Adjusted EBITDA, LTM | 1.9 | 1.9 |
- Last twelve months
** Discontinued operations is defined as the business connected to the Data Centers operations in Dison, Belgium, where the production ceased during fall 2019 but minor installation services reamained at customer sites during 2020. All income statement items in this report refers to Munters continuing operations, if not otherwise stated. See more information on page 20.
6
Munters
First quarter, 2021
CEO comments
Strong growth in industrial segment
The first quarter of 2021 showed strong growth. It was mainly driven by the battery and pharma sub-segment in the industrial segment. The Covid-19 pandemic continued to have an impact on our business, albeit in a mixed way. In some areas it led to increased demand at the same time as customers in other areas were delaying investments.
Improved profitability driven by high utilization rate and efficiency improvements
In the first quarter we achieved strong order intake and net sales, both reported and currency adjusted, despite a negative currency impact of more than ten per cent. Region APAC showed strong growth, Americas had good growth and EMEA was flat compared to 2020. The growth was driven mainly by the industrial segment in business area AirTech where both the battery and pharma sub-segment experienced strong growth. Data Centers US had improved order intake and strong net sales in the quarter, partly offset by a continued weak development in Mist Elimination. Business area FoodTech currency adjusted order intake and net sales increased. This was mainly driven by a continued strong increase in the swine segment in China. Services grew both order intake and net sales, with the strongest growth in the Americas and Asia. Overall, we achieved good growth in our prioritized market segments.
The adjusted EBITA-margin was strengthened in the first quarter because of a strong contribution from AirTech. The margin increased in AirTech because of increased net sales, high utilization rates and a continued focus on implementing efficiency improvements initiatives across the organization.
Footprint optimization, focus on innovation and a strategic review of FoodTech
The execution of our strategy continued. In the US we initiated a further optimization of our footprint with a move and expansion of a production site for the Data Centers operation. In Sweden our focus on innovation was strengthened as a new research and development lab was inaugurated.
The strategy was defined for business area FoodTech in the quarter. Going forward we aim at accelerate the implementation of the strategy in both the equipment and digital areas of the business.
Market conditions improved
Market conditions improved throughout the quarter, and we experienced continued strong demand in the industrial segment. The main effect from the Covid-19 pandemic came from shortages in the supply chain, which we managed in a good way. We expect that challenges in securing the supply chain will remain for the coming months and we will continue to monitor this development and pro-actively implement mitigating actions where possible.
Our performance is the result of the work done by our dedicated employees. I want to thank you for handling the daily operations so well and at the same time ensuring we implement our long-term strategy.
Klas Forsström, President and CEO
Mid-term financial targets
Net sales growth: Annual growth in currency adjusted net sales of 5%, as of 2019, supplemented with selected add-on acquisitions. Performance Q1 2021: +14% (-7)
Adjusted EBITA-margin: An adjusted EBITA-margin of 14%. Performance Q1 2021: 12.3% (8.3)
Capital structure: A ratio of net debt to adjusted EBITDA of 1.5x to 2.5x, and may temporarily exceed this level (e.g. as a result of acquisitions.) Performance Q1 2021: 1.9x (3.1x)
Dividend policy: Munters aim to pay an annual dividend corresponding to 30-50% of its consolidated income after tax for the period.
Proposal 2020: 30% (SEK 0.70 per share, totaling MSEK 129)
For full description of the dividend policy, see the Annual and Sustainability report 2020, page 8.
Sustainability
Throughout 2020 Munters had a strong focus on several sustainability initiatives, which resulted in improvements in several areas:
- Increased use of electricity from renewable sources
- Expanded scope of suppliers required to sign our Code of Conduct to also include indirect material suppliers
- Roll out of Safety Observation Program Stop
Examples of key sustainability ratios FY 2020:
- Total Recordable Incident Rate 1.2 (2.7)
- Code of Conduct for suppliers 100% (92)
- Electricity from renewable sources 50% (40)
Please see the Munters Annual and Sustainability report 2020, page 38-49, for further information on goals and outcome.
>> Market conditions improved and we had strong growth in the industrial segment.
Klas Forsström, President and CEO
5
Munters
First quarter, 2021
Financial performance
| MSEK | Q1 | Δ% | LTM | Full year | |
|---|---|---|---|---|---|
| 2021 | 2020 | Apr-Mar | 2020 | ||
| Order intake | 1,995 | 1,849 | 8 | 7,396 | 7,249 |
| AirTech | 1,483 | 1,343 | 10 | 5,241 | 5,101 |
| FoodTech | 520 | 515 | 1 | 2,201 | 2,196 |
| Other and eliminations | -8 | -10 | -20 | -46 | -48 |
| Net sales | 1,612 | 1,566 | 3 | 7,060 | 7,015 |
| AirTech | 1,195 | 1,127 | 6 | 5,005 | 4,937 |
| FoodTech | 425 | 449 | -5 | 2,102 | 2,126 |
| Other and eliminations | -8 | -9 | -19 | -46 | -48 |
| Adjusted EBITA | 198 | 130 | 53 | 974 | 906 |
| AirTech | 181 | 100 | 81 | 770 | 689 |
| FoodTech | 39 | 52 | -25 | 297 | 310 |
| Other and eliminations | -21 | -22 | -2 | -93 | -94 |
| Adjusted EBITA margin, % | 12.3 | 8.3 | 13.8 | 12.9 | |
| AirTech | 15.1 | 8.8 | 15.4 | 14.0 | |
| FoodTech | 9.1 | 11.5 | 14.1 | 14.6 |
Order intake Q1, currency adjusted change
20%
Net sales Q1, currency adjusted change
+14%
Adj. EBITA-margin Q1
12.3%
ORDER INTAKE
January-March 2021
Order intake increased by +8%, currency adjusted increase of +20%, driven mainly by a strong growth in the battery and pharma sub-segment in business area AirTech. The order backlog decreased -1% to MSEK 2,769 (2,808), currency adjusted +11%.
Business area AirTech order intake increased by +10%, currency adjusted increase of +23%. Excluding the non-core commercial business US that was exited in 2020, order intake increased appr. +27% currency adjusted. The strong growth was driven mainly by strong growth in APAC for the battery sub-segment and in the US for the pharma sub-segment. Data Centers US order intake increased, whereas Mist Elimination experienced a continued weak order intake. Services had good order intake driven by a good development in Americas and APAC, whereas EMEA had a flat development.
Business area FoodTech order intake increased by +1%, currency adjusted increase of +12%. All regions experienced a growth in currency adjusted order intake. Region EMEA experienced growth driven mainly by orders in the greenhouse segment and region Americas grew driven mainly by the US. The US had a slight increase in the swine, layer and dairy segments, that was somewhat offset by a weak broiler market. In APAC the swine market in China continued to see strong growth. Some countries in APAC saw customers postponing investments due to Covid-19.
Quarterly order intake, 2021 (MSEK)
Order intake per region Q1, 2021 (MSEK)
6
Munters
First quarter, 2021
NET SALES
January-March 2021
Net sales increased +3%, currency adjusted increase of +14%, driven by an increase in the battery and pharma sub-segments and Services in business area AirTech as well as the swine segment in China in business area FoodTech. Services net sales amounted to 14% of total net sales.
Net sales in business area AirTech increased +6%, currency adjusted increase of +17%. Excluding net sales to the non-core commercial business US that was exited in 2020 currency adjusted net sales increased appr. +24%. The growth was driven mainly by strong growth in the battery and pharma sub-segment in the industrial segment as well as in Services. The pharma sub-segment increased strongly in the US driven by Covid-19 relief efforts and production of test equipment. The battery sub-segment experienced a strong growth in region APAC. Data Centers US grew strongly, whereas Mist Elimination declined mainly as the marine market continued to be weak. Services grew in region Americas and APAC, whereas EMEA remained flat.
Net sales in business area FoodTech decreased by -5%, currency adjusted an increase with +5%, driven by a very strong growth in the swine segment in China on the back of a weaker first quarter 2020 when the country was negatively impacted by the Covid-19 outbreak. The equipment business experienced good growth in Americas, whereas the software business in the subsidiary MTech was flat. Region EMEA had a weaker development, partly due to weaker controller sales from the operations in Israel as demand in the US broiler market was dampened in the quarter.
RESULTS
Adjusted EBITA excludes Items Affecting Comparability, IAC, see page 4 for disclosure of the IACs.
January-March 2021
The gross margin increased to 33.3% (32.4) with a strengthened gross margin in business area AirTech driven mainly by high utilization rates and continued efficiency improvements.
Adjusted EBITDA increased to MSEK 250 (187), corresponding to an improved adjusted EBITDA-margin of 15.5% (11.9). Depreciation amounted to MSEK -52 (-57), whereof depreciation of leased assets was MSEK -26 (-30). Adjusted EBITA increased to MSEK 198 (130), corresponding to an improved adjusted EBITA-margin of 12.3% (8.3).
Adjusted EBITA for business area AirTech amounted to MSEK 181 (100) corresponding to an EBITA-margin of 15.1% (8.8). The improvement was an effect of increased net sales and high utilization rates. The continued focus on implementing efficiency improvements initiatives across the organization also contributed as well as continued low indirect costs.
Adjusted EBITA in business area FoodTech decreased to MSEK 39 (52), corresponding to a decreased adjusted EBITA-margin of 9.1% (11.5). It was impacted by lower level of controller sales as well as increased transportation costs as a result of Covid-19. The margin also decreased on the back of a strong margin in 2020.
Adjusted EBITA for Other amounted to MSEK -21 (-22). Other mainly includes corporate office functions.
Operating profit (EBIT) in the first quarter was MSEK 222 (110), corresponding to an operating margin of 13.8% (7.0). Amortization and write-downs on intangible assets in the first quarter was MSEK -17 (-20), where MSEK -7 (-11) was related to amortization of intangible assets from acquisitions.
ITEMS AFFECTING COMPARABILITY (IAC)
Items affecting comparability in the first quarter mainly related to activities connected with measures aiming at sharpening the customer offering and footprint optimization of MSEK -12, a net of Covid-19 related expenses and government grants of MSEK -1 and legal cases outside the ordinary business operation related to a previous customer claim that was settled in February 2021 of MSEK -9. Also, an insurance compensation was received linked to a previous exchange of specific components at a customer site within the European Data Center business of MSEK 61. This was previously communicated in press release in September 2019.
Since July 2020, the implementation has proceeded according to plan. Total items affecting comparability for the full year 2020 amounted to MSEK-124. For the first quarter, 2021 total items affecting comparability amounted to MSEK -12.
The originally communicated total cost for the implementation of the measures of MSEK -188 is estimated to MSEK -176. The lower figure is a result of an adjustment of inventory items during the fourth quarter 2020. As of March 31, 2021, MSEK -68 of the MSEK -176 have been realized, whereof MSEK -24 during the first quarter 2021.
Quarterly net sales, 2021 (MSEK)
Net sales per region Q1, 2021 (MSEK)
Quarterly gross margin, %
Quarterly adjusted EBITDA margin, %
Quarterly adjusted EBITA margin, %
Quarterly EBIT margin, %
5
Munters
First quarter, 2021
Of these, MSEK -12 has been used of the original provision, and another MSEK -12 of costs to be reported as incurred, have been expensed.
During the first quarter last year, Munters did not incur any IACs. IACs for the full year 2020 relates to measures to implement the strategy, Covid-19 related expenses and government grants, legal cases outside the ordinary business operation, a gain from sale of office building and refund of sales tax in Brazil.
For further information, see the reconciliation of Munters alternative performance measures on page 21.
Continuing operations
| MSEK | Q1 | LTM | 2020 | |
|---|---|---|---|---|
| 2021 | 2020 | Apr-Mar | Full year | |
| Covid-19 related items | -0 | - | 6 | 7 |
| Implementation refined strategy | -7 | - | -116 | -109 |
| Other items affecting comparability | 62 | - | 69 | 7 |
| AirTech | 54 | - | -41 | -95 |
| Covid-19 related items | -0 | - | 0 | 1 |
| Implementation refined strategy | -0 | - | -6 | -6 |
| Other items affecting comparability | - | - | 6 | 6 |
| FoodTech | -1 | - | 1 | 1 |
| Covid-19 related items | - | - | 1 | 1 |
| Implementation refined strategy | -4 | - | -14 | -10 |
| Other items affecting comparability | -9 | - | -17 | -8 |
| Other | -12 | - | -30 | -18 |
| Covid-19 related items | -1 | - | 7 | 8 |
| Implementation refined strategy | -12 | - | -136 | -124 |
| Other items affecting comparability | 54 | - | 59 | 5 |
| Total | 41 | - | -70 | -111 |
FINANCIAL ITEMS
Financial income and expenses for the first quarter amounted to MSEK -25 (-31). The financial expenses were positively impacted by a lower USD interest rate compared to same quarter last year. Interest expense on lease liabilities amounted to MSEK -4 (-5) in the first quarter. The average weighted interest rate including fees per end of the quarter was 3.0% (3.5).
TAXES
Income taxes for the first quarter was MSEK -38 (-22) and the effective tax rate was 19% (28). The lower income tax was driven mainly by the insurance compensation as mentioned above which was covered by off balance tax losses.
EARNINGS PER SHARE
Net income, including the discontinued operation, attributable to Parent Company's ordinary shareholders amounted to MSEK 160 (57) for the first quarter. Earnings per share, before dilution, in the first quarter 2021 was SEK 0.88 (0.31). Earnings per share, after dilution, in the first quarter 2021 was SEK 0.87 (0.31).
The average number of outstanding ordinary shares in the first quarter, for the purpose of calculating earnings per share, was 181,920,817 before dilution and 182,762,723 after dilution.
FINANCIAL POSITION
Interest-bearing liabilities amounted to MSEK 2,853 (3,964). Cash and cash equivalents amounted to MSEK 916 (900) as of March 31.
EPS, 2021 SEK
0.87
6
Munters
First quarter, 2021
Munters primary financing facilities consists of a term loan of MUSD 250 and a revolving credit facility (RCF) of MEUR 185, with final maturity date in May 2022. In addition, Munters has also a backup facility of MSEK 750 maturing in 2023 which is secured by a guarantee from EKN (The Swedish Export Credit Agency). The combined facilities have no mandatory amortization requirement. The loan agreements have one financial covenant, consolidated net debt in relation to adjusted EBITDA, with some adjustments. The accounting standard for leases, IFRS 16, does not affect the covenant calculation according to the loan agreement definition and neither does the net pension liability.
Net debt as of March 31 amounted to MSEK 2,208 compared to MSEK 2,116 at the end of December 2020. The increase in net debt was driven by a mix of various aspects, where the main driver was FX-exchange rate effect from a higher USD/SEK exchange rate of MSEK -134. See more information about reconciliation of net debt and leverage on page 21.
The leverage ratio per end of March was 1.9x which is the same ratio as per end of December 2020 as the strong cash flow from operations was offset by the negative FX-rate effect relating to USD/SEK.
At quarter end the term loan was fully drawn with MUSD 250 and MEUR 46 (109) of the total revolving credit facility were utilized in EUR. Available unutilized amount as of March 31 under the RCF MEUR 185 amounted to MEUR 139 (76), while the RCF MSEK 750 was entirely unutilized. Along with the main loan facility, an amount of MSEK 8 (36) in local debt is outstanding in i.e. India.
Average capital employed for the last twelve months was MSEK 7,229 (7,769). Return on capital employed, including the discontinued operation, (ROCE) for last twelve months was 11.3% (2.7). EBIT plus financial income was affected by a restructuring provision related to the closure of the Data Center operations in Dison, Belgium, in the third quarter of 2019, impacting the last year period return. Return on capital employed, where EBIT plus financial income is adjusted for items affecting comparability (IAC) and average capital employed adjusted for goodwill, for the last twelve months was 29.1% (21.2).
ROCE %, 2021
11.3%
CASH FLOW
Cash flow from operating activities amounted to MSEK 88 (27) during the first quarter. The improvement mainly was an effect of a positive profit development.
Cash flow from changes in working capital had a negative impact on the cash flow with MSEK -138 (-57) in the first quarter. The negative effect origins from an increase in accounts receivables and accrued income in business area AirTech as a consequence of increased net sales and build-up of projects. In FoodTech inventory levels increased as a consequence of delayed transportation due to Covid-19 challenges in the supply chain.
Cash flow for the period amounted to MSEK -71 (169), affected by an MSEK 100 RCF amortization made in the quarter.
PARENT COMPANY AND OWNERSHIP
The parent company for the Group is Munters Group AB. All Group supporting functions within Munters is accounted for within Munters Group AB. The company holds shares in subsidiaries, cash and accounts payables. The Parent Company does not engage in sales of goods and services to external customers. Cash and cash equivalents at the end of the period amounted to MSEK 59 (15).
EMPLOYEES
The number of permanent FTEs (Full Time Equivalents), at March 31, 2021 was 3,201 (3,154). The amount of FTEs at March 31, 2021 in business area AirTech was 2,327 (2,247), in FoodTech 803 (840) and at Group functions 72 (67).
OUTSTANDING SHARES AND REPURCHASES
As of 31 March 2021, Munters held 2,537,000 treasury shares of the total outstanding shares of 184,457,817.
DIVIDEND
During 2020 Munters established a solid base with increased profitability and a strengthened capital structure. The leverage was at 1.9x at year-end, which is within the mid-term target range for net debt to adjusted EBITDA of
| Ten largest shareholders | 31 Mar |
|---|---|
| % | Total |
| FAM AB | 26,6 |
| ODIN Funds | 9,0 |
| First Swedish National Pension Fund | 8,4 |
| Swedbank Robur Funds | 7,8 |
| Fourth Swedish National Pension Fund | 5,2 |
| Handelsbanken Funds | 4,1 |
| Columbia Threadneedle | 3,4 |
| C WorldWide Asset Management | 2,4 |
| La Financière de l'Echiquier | 2,2 |
| Vanguard | 1,5 |
6
Munters
First quarter, 2021
1.5x-2.5x. Therefore the Board of Directors proposes a dividend of SEK 0.70 (0.0) per share for 2020. This represents 30 per cent of the net income 2020.
OTHER EVENTS
Munters collaborates with CTT to design more efficient humidifiers that create the perfect climate conditions inside aircraft – Munters Group AB, has teamed up with CTT Systems AB (CTT), the market leader of aircraft humidity control system, to develop a new type of evaporative media that aims to improve efficiency and performance of CTT's aircraft humidifiers. Significantly higher humidity is a requirement in order to create optimal work and flying conditions for air crew and their passengers. Today, dry air inside airplanes can contribute to fatigue, jetlag, red eyes, dry skin and spread of viruses. With CTT's humidification system these problems can be reduced.
EVENTS AFTER THE CLOSE OF THE PERIOD
Peter Gisel-Ekdahl, President of Business Area AirTech, to leave Munters – Peter Gisel-Ekdahl, President of Munters Business Area AirTech, has decided to pursue an opportunity outside Munters as CEO of a company based in the Nordic region. Klas Forsström, CEO and President of Munters will, in addition to his current role, take on the responsibility for AirTech to ensure the future growth plans and continuous focus on strategy deployment.
Peter will support a successful transition and stay within Munters no shorter than the full second quarter of 2021.
Annual General Meeting 2021 – The annual general meeting will be held on Wednesday 19 May 2021. Due to the coronavirus and in order to reduce the risk of spreading the virus, the board of directors has decided that the general meeting should be conducted by way of postal vote pursuant to temporary legislation being in effect in 2021. This means that the general meeting will be held without the physical presence of shareholders, representatives or third parties. The shareholders will therefore only be able to exercise their voting rights by postal voting. Information on the resolutions passed at the meeting will be made available on 19 May 2021 as soon as the result of the postal voting has been finally confirmed. An interview with the president and CEO Klas Forsström and the chairman of the board of directors Magnus Lindquist will be made available on Munters website, www.munters.com, on 14 May 2021. More information about the Annual General Meeting can be found on: https://www.munters.com/en/about-us/corporate-governance/general-meetings/
Munters collaborates with CTT to design more efficient humidifiers that can further improve the humidifier performance in an aircraft
8
Munters
First quarter, 2021
AirTech
Business area AirTech is a global leader in energy-efficient air treatment for industrial and commercial applications. We offer solutions for mission-critical processes that require exact control of moisture and temperature, with a focus on energy-efficiency and sustainable climate systems. Our climate systems also provide better indoor air quality and comfort, as well as increased production capacity.
- Order intake increased in the first quarter. The strong growth was driven mainly by strong growth in APAC for the battery sub-segment and in the US for the pharma sub-segment. Data Centers US order intake increased, but Mist Elimination experienced a continued weak order intake. Services had good order intake driven by a good development in Americas and APAC, whereas EMEA had a flat development.
- Net sales increased driven mainly by strong growth in the battery and pharma sub-segment in the industrial segment as well as in Services. Data Centers US grew strongly, whereas Mist Elimination declined mainly as the marine market continued to be weak.
- The adjusted EBITA margin improved mainly as an effect of increased net sales and high utilization rates.
| MSEK | Q1 | LTM | Full year | ||
|---|---|---|---|---|---|
| 2021 | 2020 | Δ% | Apr-Mar | 2020 | |
| Order intake | 1,483 | 1,343 | 10 | 5,241 | 5,101 |
| Growth | 10% | -7% | 2% | -3% | |
| Net sales | 1,195 | 1,127 | 6 | 5,005 | 4,937 |
| Growth | 6% | -3% | -2% | -4% | |
| of which organic growth | 17% | ||||
| of which currency effects | -11% | ||||
| Operating profit (EBIT) | 231 | 94 | 145 | 701 | 565 |
| Adjusted EBITA | 181 | 100 | 81 | 770 | 689 |
| Growth | 81% | -9% | 18% | 4% | |
| Adjusted EBITA margin, % | 15.1 | 8.8 | 15.4 | 14.0 |
FoodTech
Business area FoodTech is one of the world's leading suppliers of innovative, energy-efficient climate systems for livestock farming and greenhouses, as well as software for controlling and optimizing the entire food production value chain. Our solutions increase productivity while contributing to sustainable food production, where strict requirements are placed on quality, animal health and food safety.
- Order intake increased in the first quarter. Region EMEA experienced growth driven mainly by orders in the greenhouse segment, Region Americas grew driven mainly by the US. The US had a slight increase in the swine, layer and dairy segments, that was somewhat offset by a weak broiler market. In APAC the swine market in China continued to see strong growth.
- Currency adjusted Net sales an increased driven by a very strong growth in the swine segment in China. The equipment business experienced good growth in Americas, whereas the software business in the subsidiary MTech was flat. Region EMEA had a weaker development.
- The EBITA-margin decreased on the back of a strong margin in 2020, lower level of controller sales as well as increased transportation costs due to Covid-19.
| MSEK | Q1 | LTM | Full year | ||
|---|---|---|---|---|---|
| 2021 | 2020 | Δ% | Apr-Mar | 2020 | |
| Order intake | 520 | 515 | 1 | 2,201 | 2,196 |
| Growth | 1% | 3% | 5% | 5% | |
| Net sales | 425 | 449 | -5 | 2,102 | 2,126 |
| Growth | -5% | -4% | 4% | 5% | |
| of which organic growth | 5% | ||||
| of which currency effects | -11% | ||||
| Operating profit (EBIT) | 32 | 47 | -32 | 276 | 291 |
| Adjusted EBITA | 39 | 52 | -25 | 297 | 310 |
| Growth | -25% | 12% | 5% | 12% | |
| Adjusted EBITA margin, % | 9.1 | 11.5 | 14.1 | 14.6 |
9
Munters
First quarter, 2021
About Munters
Munters is a global leader in energy-efficient and sustainable climate solutions. The solutions guarantee temperature and humidity control, which is mission-critical for customers. Munters offers solutions to many different industries where controlling temperature and humidity is mission-critical. Our solutions reduce customers' climate and environmental impact through lower resource consumption, and in the process contribute to cleaner air, higher efficiency and reduced carbon emissions. Sustainability is an important part of Munters' business strategy and value creation.
Short facts
- 3,500 employees
- 30 countries with sales and manufacturing
- 17 production units
- 22% female leaders
- Two business areas: AirTech and FoodTech
In 2020 AirTech generated 70% of the total net sales of Munters and FoodTech 30%.
Purpose
For customer success and a healthier planet
Curiosity and a drive to create pioneering technologies are part of our DNA. Our climate solutions are mission-critical to our customers' success and contribute to a more sustainable planet.
The strategy of Munters
Munters has a strong position in most of our markets. We see major opportunities to improve and strengthen our market position and to achieve our mid-term financial targets and deliver on our strategy. The key to success is how we respond in working toward our goals. Our overarching strategic priorities show which areas we regard as important to our success. For each strategic priority we have clear action plans and ambitions what we want to achieve. Sustainability is a priority issue reflected in every strategic priority.
People - The employees at Munters are the hub of our business. Through collaboration and a passion for creating sustainable solutions for our customers and partners, we contribute to our customers' success and a better world.
Customers - We closely cooperate our customers. We try not only to understand their needs today, but also in the future. Our expertise is built through unique insight into our customers' businesses and production processes. Munters works every day to deliver value over and above our customers' expectations.
Innovation - We at Munters work in a structured way to optimize innovation in the organization. We continually monitor technological developments in the market and work closely with our customers to understand their needs. We also work with other institutions that strengthen our competence and create value for customers. By continuously questioning and improving how we work, we create sustainable solutions, technologies and business models for the future.
Market - Munters is active around the world in a market driven by strong trends in sustainability and digitization. We focus resources on strengthening our position in areas where we can be a market leader. For Munters, a market leader not only has a leading position but also higher profitable growth than others in the industry.
Excellence in everything we do - We strive for quality and efficiency in everything we do. We work with continuous improvements in every area. We prioritize and focus on selected investments and areas of improvement. We follow up, learn, correct and improve.
Sustainability
Sustainability is one of the most important drivers for Munters' strategy today and in the future. Everything we do has to be sustainable for all our stakeholders and the environment. Our medium-term financial targets are important to create room for investments in the future. As we work toward these targets, we make various decisions and act in the best way to achieve our ambitions. These ambitions contain priorities on resource efficiency, responsible business practices and people & society. These three parts today constitute the framework for Munters' sustainability agenda.
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11
Munters
First quarter, 2021
Quarterly overview Group and Segments
| Group | 2021 | 2020 | 2019 | 2020 | 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| MSEK | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Full year | Full year |
| Order backlog | 2,769 | 2,253 | 2,664 | 2,660 | 2,808 | 2,307 | 2,440 | 2,496 | 2,554 | 2,253 | 2,307 |
| Order intake | 1,995 | 1,611 | 1,919 | 1,870 | 1,849 | 1,845 | 1,680 | 1,840 | 1,938 | 7,249 | 7,302 |
| Net sales | 1,612 | 1,841 | 1,833 | 1,773 | 1,566 | 1,842 | 1,813 | 1,877 | 1,620 | 7,015 | 7,153 |
| Operating profit (EBIT) | 222 | 250 | 245 | 103 | 110 | 159 | 174 | 185 | 38 | 707 | 556 |
| Net income | 160 | 172 | 163 | 39 | 57 | 76 | 100 | 104 | 3 | 432 | 283 |
| Amortization and write-down | -17 | -17 | -30 | -20 | -20 | -29 | -32 | -41 | -32 | -87 | -134 |
| Items affecting comparability (IAC) | 41 | 22 | 4 | -138 | - | -42 | -42 | -36 | -61 | -111 | -181 |
| Adjusted EBITA | 198 | 245 | 271 | 260 | 130 | 229 | 248 | 262 | 131 | 906 | 871 |
| Adjusted EBITA margin, % | 12.3 | 13.3 | 14.8 | 14.7 | 8.3 | 12.5 | 13.7 | 13.9 | 8.1 | 12.9 | 12.2 |
| AirTech | 2021 | 2020 | 2019 | 2020 | 2019 | ||||||
| MSEK | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Full year | Full year |
| External order backlog | 2,129 | 1,737 | 2,025 | 2,003 | 2,186 | 1,780 | 1,886 | 1,926 | 1,993 | 1,737 | 1,780 |
| Order intake | 1,483 | 1,172 | 1,354 | 1,231 | 1,343 | 1,361 | 1,179 | 1,264 | 1,449 | 5,101 | 5,253 |
| External net sales | 1,193 | 1,321 | 1,270 | 1,205 | 1,127 | 1,378 | 1,286 | 1,323 | 1,164 | 4,924 | 5,151 |
| Transactions between segments | 2 | 2 | 9 | 2 | 0 | 4 | 1 | 1 | 2 | 13 | 8 |
| Operating profit (EBIT) | 231 | 234 | 185 | 51 | 94 | 159 | 151 | 173 | 82 | 565 | 565 |
| Amortization and write-down | -4 | -4 | -16 | -5 | -5 | -9 | -5 | -13 | -5 | -30 | -31 |
| Items affecting comparability (IAC) | 54 | 26 | 3 | -125 | - | -19 | -11 | -14 | -23 | -95 | -67 |
| Re-allocation of internal services | - | -0 | - | - | - | -1 | - | - | - | -0 | -1 |
| Adjusted EBITA | 181 | 211 | 198 | 181 | 100 | 186 | 167 | 199 | 110 | 689 | 662 |
| Adjusted EBITA margin, % | 15.1 | 15.9 | 15.4 | 15.0 | 8.8 | 13.4 | 12.9 | 15.1 | 9.4 | 14.0 | 12.8 |
| FoodTech | 2021 | 2020 | 2019 | 2020 | 2019 | ||||||
| MSEK | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Full year | Full year |
| External order backlog | 640 | 516 | 640 | 656 | 622 | 526 | 554 | 570 | 561 | 516 | 526 |
| Order intake | 520 | 450 | 575 | 656 | 515 | 491 | 513 | 582 | 500 | 2,196 | 2,087 |
| External net sales | 419 | 520 | 563 | 568 | 440 | 464 | 527 | 554 | 456 | 2,091 | 2,002 |
| Transactions between segments | 6 | 11 | 9 | 7 | 9 | 5 | 7 | 8 | 9 | 35 | 31 |
| Operating profit (EBIT) | 32 | 67 | 90 | 87 | 47 | 55 | 75 | 74 | 24 | 291 | 226 |
| Amortization and write-down | -6 | -5 | -5 | -5 | -5 | -4 | -4 | -4 | -4 | -20 | -15 |
| Items affecting comparability (IAC) | -1 | 6 | 0 | -6 | - | -3 | -6 | -8 | -19 | 1 | -36 |
| Re-allocation of internal services | - | -0 | - | - | - | - | - | - | - | -0 | - |
| Adjusted EBITA | 39 | 66 | 95 | 98 | 52 | 61 | 85 | 85 | 46 | 310 | 278 |
| Adjusted EBITA margin, % | 9.1 | 12.3 | 16.5 | 17.1 | 11.5 | 13.0 | 15.9 | 15.2 | 9.9 | 14.6 | 13.7 |
| Other and eliminations | 2021 | 2020 | 2019 | 2020 | 2019 | ||||||
| MSEK | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Full year | Full year |
| Order intake | -8 | -11 | -10 | -17 | -10 | -8 | -13 | -7 | -11 | -48 | -38 |
| Transactions between segments | -8 | -12 | -18 | -8 | -9 | -9 | -9 | -9 | -11 | -48 | -38 |
| Operating profit (EBIT) | -41 | -50 | -31 | -36 | -32 | -55 | -52 | -62 | -67 | -149 | -236 |
| Amortization and write-down | -7 | -8 | -10 | -10 | -10 | -16 | -24 | -24 | -23 | -37 | -88 |
| Items affecting comparability (IAC) | -12 | -10 | -0 | -7 | - | -21 | -24 | -14 | -18 | -18 | -78 |
| Re-allocation of internal services | - | 0 | - | - | - | 1 | - | - | - | 0 | 1 |
| Adjusted EBITA | -21 | -32 | -21 | -19 | -22 | -17 | -3 | -23 | -25 | -94 | -69 |
12
Munters
First quarter, 2021
Discontinued operation
| MSEK | 2021 | 2020 | 2019 | 2020 | 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Full year | Full year | |
| External order backlog | - | - | - | - | - | 2 | 8 | 43 | 111 | - | 2 |
| Order intake | - | - | -1 | 1 | - | 4 | -3 | 3 | 11 | - | 15 |
| External net sales | - | -0 | 13 | 3 | -0 | 9 | 38 | 87 | 42 | 16 | 176 |
| Operating profit (EBIT) | - | -2 | -3 | -1 | 0 | -65 | -341 | -20 | -24 | -6 | -450 |
| Amortization and write-down | - | - | - | - | - | 0 | 3 | -0 | 0 | - | 3 |
| Items affecting comparability (IAC) | - | - | - | - | - | -45 | -325 | -3 | -0 | - | -373 |
| Adjusted EBITA | - | -2 | -3 | -1 | 0 | -20 | -19 | -17 | -24 | -6 | -80 |
5
Munters
First quarter, 2021
Condensed income statement
| Q1 | LTM | Full year | ||
|---|---|---|---|---|
| MSEK | 2021 | 2020 | Apr-Mar | 2020 |
| Net sales | 1,612 | 1,566 | 7,060 | 7,015 |
| Cost of goods sold | -1,075 | -1,058 | -4,682 | -4,665 |
| Gross profit | 537 | 508 | 2,379 | 2,350 |
| Selling expenses | -191 | -210 | -799 | -818 |
| Administrative costs | -135 | -140 | -533 | -538 |
| Research and development costs | -37 | -48 | -175 | -186 |
| Other operating income and expenses | 48 | 0 | -53 | -101 |
| Operating profit | 222 | 110 | 819 | 707 |
| Financial income and expenses | -25 | -31 | -150 | -156 |
| Profit/Loss after financial items | 197 | 79 | 670 | 552 |
| Tax | -38 | -22 | -135 | -120 |
| Net income for the period from continuing operations | 160 | 57 | 535 | 432 |
| Net income from discontinued operations | - | -0 | -6 | -6 |
| Net income for the period | 160 | 57 | 529 | 426 |
| Attributable to Parent Company shareholders | 160 | 57 | 523 | 420 |
| Attributable to non-controlling interests | 0 | -0 | 6 | 6 |
| Average number of outstanding shares before dilution* | 181,920,817 | 181,745,802 | 181,589,210 | 181,545,456 |
| Average number of outstanding shares after dilution* | 182,762,723 | 181,745,802 | 181,987,972 | 181,557,708 |
| Earnings per share for net income for the period from continuing operations attributable to the ordinary equity holders of the company: | ||||
| Earnings per share before dilution, SEK | 0.88 | 0.31 | 2.91 | 2.35 |
| Earnings per share after dilution, SEK | 0.87 | 0.31 | 2.91 | 2.35 |
| Earnings per share for net income for the period attributable to the ordinary equity holders of the company: | ||||
| Earnings per share before dilution, SEK | 0.88 | 0.31 | 2.88 | 2.32 |
| Earnings per share after dilution, SEK | 0.87 | 0.31 | 2.88 | 2.32 |
| Other comprehensive income | ||||
| Other comprehensive income that may be reclassified to profit or loss in subsequent periods: | ||||
| Exchange-rate differences on translation of foreign operations | 161 | 211 | -375 | -325 |
| Other comprehensive income not to be reclassified to profit or loss in subsequent periods: | ||||
| Actuarial gains and losses on defined-benefit pension obligations, incl. payroll tax | 35 | 15 | 14 | -7 |
| Income tax effect not to be reclassified to profit or loss | -7 | -3 | -3 | 1 |
| Other comprehensive income, net after tax | 189 | 222 | -365 | -331 |
| Total comprehensive income for the period | 349 | 279 | 164 | 95 |
| Attributable to Parent Company shareholders | 349 | 279 | 160 | 91 |
| Attributable to non-controlling interests | -0 | - | 4 | 4 |
*Excluding shares held in own custody.
14
Munters
First quarter, 2021
Condensed balance sheet
| MSEK | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Goodwill | 4,144 | 4,660 | 3,952 |
| Patents, licenses, brands, and similar rights | 1,435 | 1,562 | 1,356 |
| Buildings and land | 236 | 280 | 209 |
| Plant and machinery | 474 | 600 | 467 |
| Equipment, tools, fixtures and fittings | 163 | 163 | 161 |
| Construction in progress | 52 | 33 | 41 |
| Financial assets | 19 | 21 | 19 |
| Deferred tax assets | 255 | 233 | 246 |
| Total non-current assets | 6,778 | 7,552 | 6,451 |
| CURRENT ASSETS | |||
| Raw materials and consumables | 387 | 432 | 350 |
| Products in process | 119 | 136 | 118 |
| Finished products and goods for resale | 259 | 299 | 215 |
| Projects in progress | 7 | 3 | 3 |
| Advances to suppliers | 7 | 17 | 5 |
| Accounts receivable | 982 | 1,157 | 935 |
| Prepaid expenses and accrued income | 428 | 254 | 376 |
| Derivative instruments | 8 | 1 | – |
| Current tax assets | 51 | 59 | 55 |
| Other receivables | 89 | 102 | 96 |
| Cash and cash equivalents | 916 | 900 | 970 |
| Total current assets | 3,253 | 3,361 | 3,123 |
| TOTAL ASSETS | 10,031 | 10,913 | 9,574 |
5
Munters
First quarter, 2021
Condensed balance sheet
| MSEK | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Shareholders' equity | 4,093 | 3,906 | 3,746 |
| Non-controlling interests | 5 | -0 | 5 |
| Total equity | 4,099 | 3,906 | 3,751 |
| NON-CURRENT LIABILITIES | |||
| Interest-bearing liabilities | 2,760 | 3,827 | 2,690 |
| Provisions for pensions and similar commitments | 271 | 273 | 299 |
| Other provisions | 40 | 29 | 33 |
| Other liabilities | 140 | 145 | 132 |
| Deferred tax liabilities | 388 | 433 | 371 |
| Total non-current liabilities | 3,599 | 4,708 | 3,525 |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities | 93 | 136 | 96 |
| Advances from customers | 549 | 444 | 509 |
| Accounts payable | 522 | 653 | 529 |
| Accrued expenses and deferred income | 745 | 659 | 742 |
| Derivative instruments | 0 | 6 | 2 |
| Current tax liabilities | 65 | 31 | 52 |
| Other liabilities | 104 | 133 | 111 |
| Provisions for pensions and similar commitments | 9 | 9 | 10 |
| Other provisions | 246 | 226 | 248 |
| Total current liabilities | 2,333 | 2,299 | 2,299 |
| TOTAL EQUITY AND LIABILITIES | 10,031 | 10,913 | 9,574 |
CONDENSED STATEMENT OF CHANGES IN EQUITY
| MSEK | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|
| Opening balance | 3,751 | 3,627 | 3,627 |
| Total comprehensive income for the period | 349 | 279 | 95 |
| New share issue | - | - | 61 |
| Change in non-controlling interest | - | - | 0 |
| Put/call option related to non controlling interests | -1 | -1 | -4 |
| Repurchase of shares | - | - | -43 |
| Share option plan inc deferred tax | -0 | 1 | 14 |
| Closing balance | 4,099 | 3,906 | 3,751 |
| Total shareholders' equity attributable to: | |||
| The parent company's shareholders | 4,093 | 3,906 | 3,746 |
| Non-controlling interests | 5 | -0 | 5 |
5
Munters
First quarter, 2021
Condensed cash flow statement
| Q1 | LTM | Full year | ||
|---|---|---|---|---|
| MSEK | 2021 | 2020 | Apr-Mar | 2020 |
| OPERATING ACTIVITIES | ||||
| Operating profit | 222 | 110 | 814 | 701 |
| Reversal of non-cash items | ||||
| Depreciation, amortization and impairments | 69 | 77 | 300 | 308 |
| Other profit/loss items not affecting liquidity | -6 | -3 | 18 | 20 |
| Change in provisions | ||||
| Provisions | -6 | -61 | 54 | -1 |
| Cash flow before interest and tax | 279 | 123 | 1,185 | 1,029 |
| Paid financial items | -20 | -28 | -143 | -151 |
| Taxes paid | -33 | -11 | -124 | -102 |
| Cash flow from operating activities before changes in working capital | 226 | 84 | 918 | 776 |
| Cash flow from changes in working capital | -138 | -57 | 102 | 183 |
| Cash flow from operating activities | 88 | 27 | 1,020 | 959 |
| INVESTING ACTIVITIES | ||||
| Business acquisitions | - | -8 | -1 | -9 |
| Sale of tangible fixed assets | 1 | 1 | 14 | 14 |
| Sale of intangible fixed assets | - | - | 2 | 2 |
| Investment in tangible assets | -22 | -28 | -108 | -114 |
| Investment in intangible assets | -36 | -15 | -125 | -103 |
| Cash flow from investing activities | -58 | -50 | -217 | -209 |
| FINANCING ACTIVITIES | ||||
| New share issue | - | - | 61 | 61 |
| Loan raised | 26 | 292 | 60 | 329 |
| Amortization of loans | -99 | -74 | -723 | -698 |
| Repayment of lease liabilities | -26 | -27 | -111 | -112 |
| Repurchase of shares | - | - | -43 | -43 |
| Cash flow from financing activities | -101 | 192 | -756 | -463 |
| Cash flow for the period | -71 | 169 | 47 | 287 |
| Cash and cash equivalents at period start | 970 | 722 | 900 | 722 |
| Exchange-rate differences in cash and cash equivalents | 17 | 10 | -31 | -38 |
| Cash and cash equivalents at period end | 916 | 900 | 916 | 970 |
Operating profit in prior period includes the discontinued operation. Isolated cash flow from the discontinued operations is disclosed in a separate note, see page 20.
17
Munters
First quarter, 2021
Parent company
CONDENSED INCOME STATEMENT
| Q1 | LTM | Full year | ||
|---|---|---|---|---|
| MSEK | 2021 | 2020 | Apr-Mar | 2020 |
| Net sales | - | - | - | - |
| Gross profit/loss | - | - | - | - |
| Administrative costs | -0 | -11 | -11 | -22 |
| Other operating expenses | -1 | - | -7 | -5 |
| Profit/Loss before interest and tax (EBIT) | -2 | -11 | -18 | -27 |
| Financial income and expenses | 0 | - | -0 | -0 |
| Profit/Loss after financial items | -2 | -11 | -18 | -28 |
| Group contributions | - | - | 23 | 23 |
| Profit/Loss before tax | -2 | -11 | 5 | -5 |
| Tax | 0 | - | 2 | 2 |
| Net income for the period | -1 | -11 | 7 | -3 |
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
| Q1 | LTM | Full year | ||
|---|---|---|---|---|
| MSEK | 2021 | 2020 | Apr-Mar | 2020 |
| Profit/Loss for the period | -1 | -11 | 7 | -3 |
| Other comprehensive income, net after tax | - | - | - | - |
| Comprehensive income for the period | -1 | -11 | 7 | -3 |
18
Munters
First quarter, 2021
Parent company
CONDENSED BALANCE SHEET
| MSEK | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Participations in subsidiaries | 4,102 | 4,091 | 4,099 |
| Other financial assets | 4 | 0 | 4 |
| Total non-current assets | 4,106 | 4,091 | 4,104 |
| CURRENT ASSETS | |||
| Other current receivables | 0 | 2 | – |
| Prepaid expenses and accrued income | 1 | 0 | 0 |
| Current tax assets | 0 | 0 | 1 |
| Receivables from subsidiaries | 28 | 43 | 27 |
| Cash and cash equivalents | 59 | 15 | 62 |
| Total current assets | 89 | 61 | 90 |
| TOTAL ASSETS | 4,195 | 4,152 | 4,194 |
| MSEK | 2021-03-31 | 2020-03-31 | 2020-12-31 |
| --- | --- | --- | --- |
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Share capital | 6 | 6 | 6 |
| Share premium reserve | 4,135 | 4,074 | 4,135 |
| Profit brought forward | 32 | 65 | 33 |
| Income for the period | -1 | -11 | -3 |
| Total equity | 4,171 | 4,133 | 4,171 |
| NON-CURRENT LIABILITIES | |||
| Provisions for pensions and similar commitments | 1 | 0 | 1 |
| Total non-current liabilities | 1 | 0 | 1 |
| CURRENT LIABILITIES | |||
| Accounts payable | 1 | 3 | 1 |
| Accrued expenses and deferred income | 19 | 12 | 21 |
| Liabilities to subsidiaries | – | 0 | – |
| Other liabilities | 2 | 3 | – |
| Total current liabilities | 22 | 18 | 22 |
| TOTAL EQUITY AND LIABILITIES | 4,195 | 4,152 | 4,194 |
5
Munters
First quarter, 2021
Other disclosures
ACCOUNTING POLICIES
This report has been prepared, with regards to the Group, in accordance with IAS 34 Interim Financial Reporting, recommendation RFR 1 of the Swedish Financial Reporting Board and the Swedish Annual Accounts Act and, with regards to the Parent Company, in accordance with recommendation RFR 2 of the Swedish Financial Reporting Board and the Swedish Annual Accounts Act. The accounting principles applied correspond to those presented in the Annual- and Sustainability report 2020 (Note 1). In Q1, 2021, the cash flow statement has been changed in regards to interest paid on leased liabilities (prior periods restated). Previously the item "Repayment of leasing liabilities" included paid interest. The correction has resulted in that "Cash flow from operating activities" has decreased and "Financing operations" are improved compared with previous reporting, impacting first quarter last year with MSEK 6.
DEFINITION OF KEY FINANCIAL INDICATORS
The Group presents certain financial metrics in the Interim report that are not defined in accordance with IFRS. The Group is of the opinion that these metrics provide valuable complementary information, in that they enable an evaluation of the Group's performance. The financial metrics are calculated in accordance with the definitions presented on page 125 of the Annual- and Sustainability report 2020.
TRANSACTIONS WITH RELATED PARTIES
There has been no transactions with related parties during the period.
ENVIRONMENTAL IMPACT AND ENVIRONMENTAL POLICY
Munters' operations affect the external environment through air and water emissions, the handling of chemicals and waste, transport of input goods and finished products to and from Munters factories. Munters is committed to constant vigilance regarding the environmental impact of its operations. Munters is committed to complying with all laws and to continuously promoting improvements in all Environment, Health & Safety ("EHS") aspects, wherever Munters conducts business. Munters constantly seeks opportunities to reduce risk and to create a safer, healthier, more diverse and more environmentally friendly workplace for our employees, customers, communities, and the overall environment. Munters' manufacturing facilities all over the world are committed to working according to an EHS Management Program. The purpose of the EHS Program is to ensure regulatory compliance, actively prevent injuries, and reduce the impact that our business has on the environment.
RISKS AND UNCERTAINTIES
The Group's significant risks and uncertainties can be divided into four categories; strategic, operational, financial and regulatory risks. In these categories, there are both risks due to political and macroeconomic trends and specific risks directly linked to the business carried out by the
Group. A risk assessment is carried out on an annual basis and the purpose is to identify and address the most important risks.
Munters' products are used in complex customer processes. Quality and contract obligations are critical and could result in claims for damages. The Group depends to some extent on key customers and key personnel. Considering that Munters is a company with geographically widespread operations and many small organizational units, there is a risk of failure to comply with relevant regulations in the business ethics area, e.g. anti-bribery rules.
Financial risks mainly consist of currency, interest and financing risks. Munters works actively with insurance solutions, and group-wide insurances are governed by central guidelines. This includes for example coverage for general liability and product liability, property, business interruption, transportation, the liability of Board members and the CEO and employment practices liabilities.
During 2021 the Covid-19 pandemic continued to have an impact on our business, albeit in a mixed way. In some areas it led to increased demand at the same time as customers in other areas were delaying investments. The main effect from the Covid-19 pandemic came from shortages in the supply chain, which were managed in a good way. We expect that challenges in securing the supply chain will remain for the coming months. Therefore, we will continue to constantly monitor this development and to implement mitigating actions where possible.
A more detailed description of the Group's risks and how they are managed can be found in the Annual- and Sustainability report 2020 on pages 50-55.
ALLOCATION OF NET SALES
The majority of customer contracts within Munters business segments AirTech and FoodTech fulfill the requirements to recognize net sales at a point in time, however there are a number of customer contracts within the segments that requires to recognize net sales over time, especially in AirTech sub-segment Data Centers, which is reflected in the below matrix. In addition to unit/equipment sales, Munters provides different kinds of services to customers such as installation, commissioning, startup and maintenance. Net sales from services are recognized over time as these services are performed. The services transferred over time in the matrix below is not equivalent to the net sales from Services mentioned on the business segment pages earlier in this interim report. This is due to the fact that part of the net sales within Services are recognized at a point in time, such as spare parts. Net sales from the discontinued operation is all recognized over time.
50
Munters
First quarter, 2021
| MSEK | Q1 2021 | ||
|---|---|---|---|
| AirTech FoodTech | Total | ||
| Goods transferred at a point in time | 780 | 372 | 1,152 |
| Goods transferred over time | 325 | 14 | 339 |
| Services transferred over time | 89 | 33 | 122 |
| Total | 1,193 | 419 | 1,612 |
| whereof related to the discontinued operation | - | - | - |
| Total net sales from continuing operations | 1,193 | 419 | 1,612 |
| SEKm | Q1 2020 | ||
| --- | --- | --- | --- |
| AirTech FoodTech | Total | ||
| Goods transferred at a point in time | 771 | 382 | 1,154 |
| Goods transferred over time | 285 | 20 | 305 |
| Services transferred over time | 70 | 37 | 107 |
| Total | 1,127 | 439 | 1,566 |
| whereof related to the discontinued operation | - | - | - |
| Total net sales from continuing operations | 1,127 | 439 | 1,566 |
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Group's derivatives, recognized at fair value in the statement of financial position, are measured according to IFRS 9 and are categorized in level 2 in the fair value hierarchy. The derivatives amounted to MSEK 8 (1) in financial assets and to MSEK 0 (6) in financial liabilities.
The Group's put/call acquisition option, recognized at fair value in the statement of financial position, are measured according to IFRS 9 and are categorized in level 3 in the fair value hierarchy. The opening balance for the period relates to the put/call option from the acquisition of MTech Systems in 2017, which is based on EBITDA for the 12 months prior to execution and matures in January 2023. The change in the period relates to a discounting effect and currency translations on the put/call option.
| MSEK | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|
| Opening balance | 121 | 142 | 142 |
| Payments | 6 | -9 | -9 |
| Discounting | 3 | 1 | 4 |
| Exchange-rate differences for the period | - | 11 | -16 |
| Closing balance | 129 | 145 | 121 |
Munters deems that the interest rate on interest-bearing liabilities are in line with market terms at March 31, 2021, and the fair value at the end of the reporting period therefore in all material aspects corresponds to the carrying amount.
DISCONTINUED OPERATIONS
On September 9, 2019 Munters decided to close its European Data Center factory in Dison, Belgium, following the finalization of negotiations with the unions. The production ceased in 2019 but minor installation services remained at customer sites during 2020. The table below shows the income statement for the discontinued operation as well as the cash flow from operating activities.
| Q1 | LTM | Full year | ||
|---|---|---|---|---|
| MSEK | 2021 | 2020 | Apr-Mar | 2020 |
| Net sales | - | - | 16 | 16 |
| Cost of goods sold | - | 0 | -11 | -11 |
| Gross profit | - | 0 | 5 | 6 |
| Selling expenses | - | -0 | -7 | -8 |
| Administrative costs | - | -0 | -2 | -2 |
| Research and development costs | - | 0 | 0 | 0 |
| Other operating income and expenses | - | 0 | -2 | -2 |
| Operating profit | - | 0 | -6 | -6 |
| Financial income and expenses | - | -0 | -0 | -0 |
| Profit/Loss after financial items | - | -0 | -6 | -6 |
| Tax | - | - | 0 | 0 |
| Net income for the period from discontinued operations | - | -0 | -6 | -6 |
| Cash flow from operating activities | 46 | -58 | -45 | -149 |
5
Munters
First quarter, 2021
RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES
Below is a reconciliation of Munters adjusted performance measures from items affecting comparability. These items originates from the implementation of the refined strategy communicated in Q2, 2020, legal cases outside the ordinary business operation related to a previous customer claim that was finally settled in February 2021, insurance compensation linked to previous exchange of specific components at a customer
site within the European Data Center business (where costs for the exchange amounted to MSEK 116 and were reported during the third quarter of 2019) minor Covid-19 related expenses and government grants.
During the first quarter last year, Munters did not incur any IACs.
The reconciliation below does not include the discontinued operation.
| MSEK | Q1 | Full year | ||
|---|---|---|---|---|
| 2021-03-31 | 2020-03-31 | LTM | Jan-Dec | |
| Adjusted EBITDA | 250 | 187 | 1,189 | 1,126 |
| Amortizations and write-downs of tangible assets | -52 | -57 | -215 | -221 |
| Adjusted EBITA | 198 | 130 | 974 | 906 |
| Amortizations and write-downs of intangible assets | -17 | -20 | -84 | -87 |
| Adjusted operating profit (EBIT) | 181 | 110 | 890 | 818 |
| Restructuring activities | -12 | 0 | -136 | -124 |
| Gains/losses from sale of fixed assets | 0 | 0 | 6 | 6 |
| Legal cases outside the ordinary business operation | -7 | 0 | -21 | -14 |
| Proceeds from insurance reimbursements from legal cases | 61 | 0 | 61 | 0 |
| Received government grants/government assistance | 1 | 0 | 21 | 20 |
| Corona related expenses | -1 | 0 | -14 | -12 |
| Earned refund of sales tax in Brazil | 0 | 0 | 13 | 13 |
| Operating profit (EBIT) | 222 | 110 | 819 | 707 |
RECONCILIATION OF NET DEBT AND LEVERAGE
The reconciliation of net debt and leverage below includes the discontinued operation.
| MSEK | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|
| CURRENT ASSETS | |||
| Cash and cash equivalents | -916 | -900 | -970 |
| NON-CURRENT LIABILITIES | |||
| Interest-bearing liabilities, excluding leases | 2,484 | 3,488 | 2,440 |
| Interest-bearing lease liabilities | 276 | 340 | 250 |
| Provisions for pensions | 255 | 257 | 285 |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities, excluding leases | 7 | 35 | 14 |
| Interest-bearing lease liabilities | 86 | 101 | 82 |
| Accrued expenses | 10 | 11 | 9 |
| Provisions for pensions | 6 | 7 | 6 |
| Total Net debt | 2,208 | 3,338 | 2,116 |
| Operating profit (EBIT) | 814 | 201 | 701 |
| Depreciations | -216 | -279 | -221 |
| Amortization and write-down | -84 | -119 | -87 |
| EBITDA | 1,114 | 599 | 1,010 |
| Items affecting comparability | -70 | -465 | -111 |
| Adjusted EBITDA, LTM | 1,184 | 1,064 | 1,121 |
| Net debt/Adjusted EBITDA, LTM | 1.9 | 3.1 | 1.9 |
Munters
First quarter, 2021
This report has not been subject to review by the company's auditors.
INFORMATION AND REPORTING DATES
Contact person:
Ann-Sofi Jönsson, Vice President, Investor Relations and Enterprise Risk Management
Phone: +46 (0)730 251 005
Email: [email protected]
On April 22, at 9:00 the President and CEO, Klas Forsström, together with the Group Vice President and CFO, Annette Kumlien will present the report in a live webcast simultaneously with a telephone conference.
Webcast:
https://tv.streamfabriken.com/munters-q1-2021
Dial-in number for the telephone conference:
SE: +46 8 56642693
UK: +44 3333009031
US: +1 8335268347
This interim report, presentation material and a link to the webcast will be available on https://www.munters.com/en/investor-relations/
Financial calendar:
May 11, Capital Markets Update, webcasted live.
May 19, Annual General Meeting 2021 in Stockholm, Kista, Sweden.
July 16, Interim report January-June 2021
October 22, Interim report January-September 2021
This information is information that Munters Group AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07.30 CET on April 22, 2021.
Munters Group AB, Corp. Reg. No. 556819-2321
About Munters Group
Munters is a global leader in energy efficient air treatment and climate solutions. Using innovative technologies, Munters creates the perfect climate for customers in a wide range of industries. Munters has been defining the future of air treatment since 1955. Today, around 3,500 employees carry out manufacturing and sales in more than 30 countries. Munters Group AB reported annual net sales of more than SEK 7 billion in 2020 and is listed on Nasdaq Stockholm. For more information, please visit www.munters.com.
Every care has been taken in the translation of this interim report. In the event of discrepancies, the Swedish original will supersede the English translation. The addition of the totals presented may result in minor rounding differences.
