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Munters Group Interim / Quarterly Report 2022
2945_ir_2022-07-15_13ed1b74-8869-49f3-9f8a-7232b53a2cbe.pdf
Interim / Quarterly Report
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Munters
Q2 2022
Strong growth in a quarter marked by continued challenges
April-June
- Strong order intake driven by business area Data Center Technologies (DCT) in Americas and in Battery and Service in business area AirTech.
- Net sales increased driven mainly by DCT in Americas and by good growth in Battery and Service in AirTech, offset by a continued weak market in China for business area FoodTech.
- In adj. EBITA our price increases compensated for inflationary pressure, however offset mainly by costs due to component shortages, business mix change in DCT, lower volumes for FoodTech in EMEA and APAC and operational challenges.
- Leverage increased mainly as a result of the increased working capital resulting from strong volume growth, dividend payout and exchange-rate effects as the SEK weakened against several currencies.
- Strong order intake led to an increase of working capital and lower cash flow from operating activities. This is driven mainly by preparations for project deliveries over the coming 18 months in the Battery sub-segment in AirTech and DCT.
January-June
- Order intake increased mainly driven by DCT and in Battery and Service in AirTech. DCT signed Munters largest order ever received in January. FoodTech had good growth in Americas and signed a large SaaS deal in the subsidiary MTech in the first quarter.
- In the first quarter Munters suspended all business activities with Russia due to the war in Ukraine.
- Net sales increased in all business areas with strong growth in AirTech and DCT. FoodTech experienced weakened markets in EMEA and China, slightly offset by growth in the US.
- In adj. EBITA our price increases compensated for inflationary pressure, however offset mainly by costs due to component shortages, business mix change in DCT, lower volumes for FoodTech in EMEA and APAC and operational challenges.
- Leverage increased mainly due to the acquisition of Edpac at the beginning of the year, working capital build-up as a consequence of the strong volume growth and exchange-rate effects.
- Strong order intake led to an increase of working capital and lower cash flow from operating activities.
| Financial summary | Q2 | Jan-Jun | LTM* | Full-year | ||||
|---|---|---|---|---|---|---|---|---|
| MSEK | 2022 | 2021 | Δ% | 2022 | 2021 | Δ% | Jul-Jun | 2021 |
| Order intake | 3,200 | 2,118 | 51 | 7,333 | 4,113 | 78 | 12,233 | 9,013 |
| Net sales | 2,610 | 1,822 | 43 | 4,731 | 3,434 | 38 | 8,645 | 7,348 |
| Growth | 43% | 3% | 38% | 3% | 22% | 5% | ||
| of which organic growth | 25% | 13% | 21% | 13% | 14% | 10% | ||
| of which acquisitions and divestments | 4% | - | 4% | - | 2% | - | ||
| of which currency effects | 14% | -10% | 12% | -11% | 6% | -5% | ||
| Operating profit (EBIT) | 220 | 147 | 50 | 354 | 369 | -4 | 738 | 753 |
| Adjusted EBITA | 272 | 259 | 5 | 473 | 457 | 4 | 906 | 889 |
| Adjusted EBITA margin, % | 10.4 | 14.2 | 10.0 | 13.3 | 10.5 | 12.1 | ||
| Net income | 166 | 84 | 98 | 268 | 244 | 10 | 540 | 515 |
| Earnings per share before dilution, SEK | 0.93 | 0.46 | 1.51 | 1.33 | 2.99 | 2.81 | ||
| Earnings per share after dilution, SEK | 0.93 | 0.45 | 1.51 | 1.33 | 2.98 | 2.81 | ||
| Cash flow from operating activities | 105 | 159 | 79 | 247 | 352 | 519 | ||
| Net debt | 3,241 | 2,209 | 3,241 | 2,209 | 3,241 | 2,389 | ||
| Net debt/Adjusted EBITDA, LTM | 2.9 | 1.9 | 2.9 | 2.2 | ||||
| * Lost twelve months |
Interim report April-June 2022
Klas Forsström
President and CEO
"We are growing strongly. To lay the foundation for an effective execution of our growth strategy going forward, we are investing for scalability."
CEO comments
Strong growth in a quarter marked by continued challenges
The second quarter showed solid growth as we continue to benefit from the strong megatrends of digitization, electrification and increased demand for sustainable solutions.
Growth was mainly driven by DCT and Battery and Service in AirTech. Lockdowns related to Covid-19 outbreaks in China impacted both AirTech and FoodTech. A continued weak Chinese swine market also had a negative impact on FoodTech.
Price increases implemented in previous quarters compensated for inflationary pressure. We continue to adjust prices in all regions to secure coverage for increasing costs. Simultaneously efforts to secure components have intensified during the year and more work goes in to manage lead times. This is particularly noticeable in DCT where we also had a negative business mix in the quarter. Lower volumes for FoodTech in EMEA and APAC had a negative impact on the margin in the quarter. The operational challenges in a production unit in AirTech, that started in the fourth quarter last year, continued to have a negative impact on the margin. Operating working capital increased as the order backlog includes some larger orders received in the first half of the year with deliveries scheduled to start in the fourth quarter this year.
Increased investments to capture market opportunities
To lay the foundation for an effective execution of our growth strategy and become more efficient and scalable, we are continuing to increase our strategic investments into digitization and automation. Focused investments are made to reduce costs, decrease lead times, improve quality and become more scalable. These investments will enable Munters to improve and align processes, systems, information flows and master data management.
To meet growing demand, we are also expanding our capacity with two new manufacturing plants this year, which will be inaugurated in the third quarter. One is dedicated to the battery segment, located in the Czech Republic, and one in the US for business area DCT.
Execution on long-term strategy for value-creating growth
DCT has experienced strong growth in recent years and entered Europe at the beginning of this year through the acquisition of Ireland-based Edpac. Continued investments in scalable production and innovation builds for profitable growth in this area and as of June 30, it is reported as a separate business area.
It's encouraging to see the increased demand in especially the battery and data center areas and the dedicated work of our employees to balance global market challenges while enhancing our operational efficiency. I'm confident in Munters' ability to deliver on our growth strategy and proud of all employees' constant ambition to exceed customer expectations.
Midterm financial targets
| Net sales growth: | Annual organic growth of net sales of 5%
Performance Q2 2022: +25% (13) |
| --- | --- |
| Adjusted EBITA-margin: | An adjusted EBITA-margin of 14%.
Performance Q2 2022: 10.4% (14.2) |
| 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 Q2 2022: 2.9x (1.9x) |
| Dividend policy: | Munters aim to pay an annual dividend corresponding to 30-50% of its consolidated income after tax for the period.
For 2021 a dividend of SEK 0.85 (30% of income after tax) was paid in the second quarter, totaling MSEK 1.54. |
For full description of the dividend policy, see the Annual and Sustainability report 2021, page 10 or at www.munters.com.
Sustainability
To maintain a sustainable and profitable business, Munters has integrated sustainability in every aspect of the business strategy.
Highlights second quarter 2022:
- Mandatory training for all non-production employees of our Code of Conduct policy which provides transparency and understanding of behaviors expected at Munters. It also illustrates when to escalate issues and who to turn to for support to create an environment where people feel safe to come forward with concerns and questions.
- Updated sustainability scorecard for new products which helps determine the impact categories: raw materials, production, use phase and end-of-life.
- Opening of Munters Academy, a place for colleagues to gather and learn about the latest air treatment systems and technologies in both theory and practice.
See the Munters Annual and Sustainability report 2021, pages 40-49, for further information on goals and outcome or at www.munters.com.
Interim report April-June 2022
Financial performance
As of June 30 2022 Munters Group AB report its operations in three business areas: AirTech, Data Center Technologies (DCT) and FoodTech. Historical financial information is presented on Munters Group ABs homepage, munters.com/investors.
| MSEK | Q2 | Jan-Jun | LTM Full-year | |||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Δ% | 2022 | 2021 | Δ% | Jul-Jun | 2021 | |
| Order intake | 3,200 | 2,118 | 51 | 7,333 | 4,113 | 78 | 12,233 | 9,013 |
| AirTech | 1,727 | 1,315 | 31 | 3,305 | 2,589 | 28 | 6,557 | 5,842 |
| DCT | 939 | 180 | 421 | 2,809 | 389 | 621 | 3,471 | 1,051 |
| FoodTech | 554 | 636 | -13 | 1,252 | 1,156 | 8 | 2,262 | 2,166 |
| Corporate & elim. | -20 | -14 | - | -33 | -22 | - | -57 | -46 |
| Net sales | 2,610 | 1,822 | 43 | 4,731 | 3,434 | 38 | 8,645 | 7,348 |
| AirTech | 1,723 | 1,088 | 58 | 3,133 | 2,102 | 49 | 5,694 | 4,664 |
| DCT | 303 | 177 | 72 | 523 | 357 | 46 | 868 | 702 |
| FoodTech | 599 | 567 | 6 | 1,104 | 992 | 11 | 2,139 | 2,028 |
| Corporate & elim. | -15 | -10 | - | -28 | -17 | - | -56 | -46 |
| Adjusted EBITA | 272 | 259 | 5 | 473 | 457 | 4 | 906 | 889 |
| AirTech | 242 | 177 | 37 | 442 | 336 | 32 | 788 | 682 |
| DCT | 18 | 28 | -36 | 24 | 49 | -51 | 67 | 92 |
| FoodTech | 50 | 80 | -37 | 72 | 119 | -40 | 163 | 210 |
| Corporate & elim. | -39 | -26 | - | -65 | -47 | - | -112 | -95 |
| Adjusted EBITA margin, % | 10.4 | 14.2 | 10.0 | 13.3 | 10.5 | 12.1 | ||
| AirTech | 14.1 | 16.2 | 14.1 | 16.0 | 13.8 | 14.6 | ||
| DCT | 5.9 | 15.9 | 4.6 | 13.8 | 7.7 | 13.2 | ||
| FoodTech | 8.4 | 14.1 | 6.5 | 12.0 | 7.6 | 10.4 |
Order intake
April-June 2022
Order intake increased by +51% (an organic growth of +33%, acquisitions and divestments +2% and currency effects +17%) mainly driven by strong growth in DCT in Americas and Battery and Service in business area AirTech. The order backlog increased +149% to MSEK 7,515 (3,018) (an organic increase of +114% and currency effects +32%). Price increases in the quarter contributed to approximately +9% of the organic growth.
Order intake in AirTech increased by +31% (an organic increase of +19% and currency effects +12%) with growth in all regions. In APAC, lockdowns related to Covid-19 impacted negatively however offset by good growth in Battery. Battery also grew in EMEA, and in Americas Food and Components had good growth. Clean Technologies (CT) showed good growth in all regions, primarily driven by the process industries. Services also experienced good growth mainly in Americas. Price increases in the quarter contributed to approximately +9% of the organic growth.
Order intake in DCT increased by +421% (an organic growth of +318%, acquisitions and divestments +18% and currency effects +85%) mainly driven by colocation customers in Americas and specifically orders for the newly launched SyCool product range. Price increases in the quarter contributed to approximately +8% of the organic growth.
Order intake in FoodTech decreased by -13% (an organic decrease of -22% and currency effects +9%). In region APAC, China continued to have a weak development with lower levels of new constructions in the swine market marked by overcapacity. Also, lockdowns related to Covid-19 impacted negatively in China. In EMEA, the underlying market situation weakened, mainly as a consequence of the war in Ukraine, supply chain constraints and increasing input costs for the farming industry. In Americas, Digital Solutions grew. Price increases in the quarter contributed to approximately +13% of the organic growth.
January-June 2022
The order intake in the first six months increased by +78% (an organic growth of +59%, acquisitions and divestments +3% and currency effects +16%), mainly driven by DCT. At the beginning of the year, DCT received the largest order ever for Munters from a colocation operator in the US valued at approximately MUSD 115. In AirTech Battery and Service experienced strong growth. In FoodTech Digital solutions grew in the US, mainly because a large SaaS deal in MTech was signed in March with an order value of about MUSD 19.
Quarterly order intake (MSEK)
Order intake per region Q2, 2022 (MSEK)
Interim report April-June 2022
Net sales
April-June 2022
Net sales increased +43% (an organic growth of +25%, acquisitions and divestments +4% and currency effects +14%) driven mainly by DCT in Americas and by good growth in Battery and Services in AirTech. Services net sales amounted to 14% of total net sales. Price increases in the quarter contributed to approximately +9% of the organic growth.
AirTech increased +58% (an organic growth of +43% and currency effects +15%) with good growth in all regions. Battery had strong growth in APAC and Americas. CT grew strongly, especially in Americas. Service showed growth in all regions, with good growth in Americas. Service net sales amounted to 20% of net sales in AirTech. Price increases contributed to approximately +6% of the organic growth in the quarter.
DCT increased by +72% (an organic growth +10%, acquisitions and divestments +39% and currency effects +23%) with strong growth driven by collocation customers in both EMEA and Americas. Component shortages led to extended lead times, and the business mix also changed. Price increases contributed to approximately +2% of the organic growth in the quarter.
FoodTech increased +6% (an organic decrease of -5% and currency effects +10%). Americas grew slightly driven by the Broiler and Layer segments. APAC declined due to a continued weak Swine segment and Covid-19 lock-downs in China. Supply chain constraints impacted both EMEA and APAC negatively. Region EMEA had flat development. Price increases contributed to approximately +10% of the organic growth in the quarter.
January-June 2022
Net sales in the first six months increased by +38% (an organic growth of +21%, acquisitions and divestments +4% and currency effects +12%), mainly driven by the Industrial segment in Americas and EMEA, the Battery sub-segment in APAC as well as Service in Americas in AirTech. DCT had good growth in EMEA, offset by a decline in Americas. FoodTech grew in Americas with a flat development in EMEA. Net sales in APAC declined due to Covid-19 related lockdowns and a continued weak swine market in China. Service net sales amounted to 14% of total net sales.
Results
Adjusted EBITA excludes Items Affecting Comparability, IAC, see page 19 for disclosure of the IACs.
April-June 2022
The gross margin amounted to 28.5% (34.7). The net price increase was offset by increasing work to secure components and to manage lead times in all business areas, a changed business mix in DCT, lower volumes in EMEA and APAC for FoodTech and operational challenges.
Adjusted EBITDA amounted to MSEK 332 (311), corresponding to an adjusted EBITDA-margin of 12.7% (17.1). Depreciation of tangible assets amounted to MSEK -60 (-53), whereof depreciation of leased assets was MSEK -30 (-26).
Adjusted EBITA amounted to MSEK 272 (259), corresponding to an adjusted EBITA-margin of 10.4% (14.2).
Adjusted EBITA for business area AirTech amounted to MSEK 242 (177), corresponding to an adjusted EBITA-margin of 14.1% (16.2). Our price increases compensated for inflationary pressure. Amplified component shortages in the quarter led to more work to manage lead times. The operational challenges in a production unit, that started in the fourth quarter last year, continued to have a negative impact on the margin.
Adjusted EBITA for business area DCT amounted to MSEK 18 (28), corresponding to an adjusted EBITA-margin of 5.9% (15.9). Increasing work related to component shortages in the quarter led to increased lead times and increased costs. Also, the business mix changed in the quarter.
Adjusted EBITA in business area FoodTech was MSEK 50 (80), corresponding to an adjusted EBITA-margin of 8.4% (14.1). The margin declined partly due to lower volumes in China as well as continued investments in Digital Solutions. Also, the war in Ukraine has led to uncertainties on the market and resulted in lower volumes in EMEA. This has led to operational challenges in a production unit that had a negative impact on the margin.
Quarterly net sales, (MSEK)
Net sales per region Q2, 2022 (MSEK)
Quarterly gross margin, %
Quarterly adjusted EBITDA margin, %
Quarterly adjusted EBITA margin, %
Quarterly EBIT margin, %
Interim report April-June 2022
Adjusted EBITA for Corporate amounted to MSEK -39 (-26). Enhanced investments into digitization and automation to create a scalable business to capture growth led to higher costs. Investments will continue to increase and in the second half of this year, the implementation of a Human Capital Management system will intensify.
Operating profit (EBIT) was MSEK 220 (147), corresponding to an operating margin of 8.4% (8.0). Amortization and write-downs of intangible assets in the second quarter were MSEK -24 (-21), where MSEK -9 (-7) related to amortization of intangible assets from acquisitions.
January-June 2022
The gross margin for the first six months was 28.8% (34.1). Net price increases were offset by increasing work to manage lead times, a changed business mix in DCT and lower net sales in APAC and EMEA for FoodTech. Also, a production unit in AirTech continued to experience operational challenges which had a negative impact on the margin.
Adjusted EBITDA at MSEK 592 (561), corresponding to an adjusted EBITDA-margin of 12.5% (16.3). Depreciation of tangible assets amounted to MSEK -119 (-105), whereof depreciation of leased assets was MSEK -58 (-52).
Adjusted EBITA at MSEK 473 (457), corresponding to an adjusted EBITA-margin of 10.0% (13.3).
Operating profit (EBIT) was MSEK 354 (369), corresponding to an operating margin of 7.5% (10.7). Amortization and write-downs of intangible assets for the first six months was MSEK -47 (-38), where MSEK -18 (-14) related to amortization of intangible assets from acquisitions.
Items affecting comparability (IAC)
Items affecting comparability totaled MSEK -28 (-91) in the second quarter of which costs related to the on-going strategy implementations in mainly AirTech and FoodTech amounted to MSEK -16 (-89). In addition, IACs of MSEK -9 were recorded in the quarter as a consequence of Munters having stopped all business activities in Russia.
For the first six months IACs totaled MSEK -72 (-50) including strategy implementation costs of MSEK -44 (-101). IACs related to close-down of business activities in Russia amounted to MSEK -27 and include mainly costs for write-down of inventory and right-sizing severance provisions. No additional IACs related to Russia are expected. In addition, other IAC of MSEK -1 (51) were recorded in the first six months.
Financial items
Financial income and expenses for the second quarter amounted to MSEK -14 (-25). Foreign exchange rate effects have had a positive impact as the SEK has weakened against several currencies, offset by increasing interest expenses compared to last year. Interest expenses grew due to increasing loans and interest rates. Interest expense on lease liabilities amounts to MSEK -4 (-4) in the second quarter.
Financial income and expenses for the first six months amounted to MSEK -37 (-50). Interest expense on lease liabilities amounts to MSEK -7 (-8) in the first six months. The average weighted interest rate including fees per end of June was 3.6% (2.1).
Taxes
Income taxes for the second quarter was MSEK -39 (-37). The effective tax rate in the second quarter was 19% (31). Income taxes for the first six months was MSEK -49 (-75). The effective tax rate for the first six months was 15% (24).
The lower effective tax rate is mainly driven by tax related to previous years and a revaluation effect on deferred taxes in Sweden.
Earnings per share
Net income attributable to Parent Company's ordinary shareholders amounted to MSEK 169 (83) for the second quarter. Earnings per share, before dilution, in the second quarter 2022 was SEK 0.93 (0.46). Earnings per share, after dilution, in the second quarter 2022 was SEK 0.93 (0.45).
Interim report April-June 2022
The average number of outstanding ordinary shares in the second quarter, for the purpose of calculating earnings per share, was 181,616,912 before dilution and 181,760,257 after dilution.
Financial position
Interest-bearing liabilities, including lease liabilities, increased by MSEK 268 in the quarter and amounted to MSEK 3,468 (2,629). Cash and cash equivalents decreased by MSEK 106 in the quarter and amounted to MSEK 459 (680) as of June 30.
Munters primary financing facilities consists of a term loan of MUSD 165 and a Revolving Credit Facility (RCF) of MEUR 250 with final maturity date in June 2026. The facilities are granted by a group of six banks and have no mandatory amortization requirement. Since November 2021 Munters has linked sustainability targets to the loan facilities to support the ambition for an environmentally and socially sustainable growth. The primary financing facilities have one financial covenant, consolidated net debt in relation to adjusted EBITDA, with some adjustments made in accordance with the loan agreement. 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.
Munters also has a backup facility of MSEK 750 maturing in 2023 which is secured by a guarantee from EKN (The Swedish Export Credit Agency).
Net debt as of June 30 amounted to MSEK 3,241 compared to 2,938 at the end of March 2022 and MSEK 2,389 at the end of December 2021.
Net debt in relation to Adjusted EBITDA was 2.9x compared to 2.6x at end of March 2022 and 2.2x at the end of December 2021. The leverage ratio increased as a consequence of build-up of working capital because of the strong growth in order intake, the acquisition of Edpac funded by debt, dividend pay-out and a negative impact from exchange rates, mainly in SEK to USD.
At quarter end the term loan facility of MUSD 165 was fully drawn. Of the RCF of MEUR 250 an amount of MEUR 132 (86) was utilized in EUR and SEK. Unutilized of the RCF as of June 30 amounted to MEUR 118 (164). Along with the primary loan facilities, an amount of MSEK 26 (5) in local debt is outstanding in i.e. Ireland, Brazil, and India. The backup facility with EKN was unutilized.
Average capital employed for the last twelve months was MSEK 7,699 (7,042). Return on capital employed (ROCE) for last twelve months was 9.6% (12.2). Adjusted ROCE 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 25.1% (30.0). ROCE decreased mainly because of a slightly higher capital employed and a reduced operating margin.
Cash flow
Cash flow from operating activities amounted to MSEK 105 (159) in the second quarter and MSEK 79 (247) for the first six months of 2022. The lower cash flow is due to a lower level of operating earnings compared to 2021, as well as a negative impact from working capital.
Cash flow from changes in working capital had a negative impact of MSEK -101 (39) in the second quarter and a negative impact of MSEK -303 (-99) for the first six months of 2022. The negative effect both in the quarter and in the first six months of 2022 is mainly driven by the strong order intake growth leading to increased inventory levels and accrued income, partly offset by increased advances from customers.
Total cash flow for the second quarter amounted to MSEK -115 (-233) and MSEK -235 (-304) for the first six months of 2022. The total cash flow for the first six months were impacted by acquisitions of MSEK -302, dividend payment in May 2022 of MSEK -156, whereof MSEK 2 to and external minority in one of the subsidiaries and increased external borrowing of MSEK 436.
Parent company
The parent company for the Group is Munters Group AB. 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 0 (2).
Net debt per quarter
ROCE, %
Interim report April-June 2022
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.
| MSEK | Q2 | Jan-Jun | LTM Full-year | |||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Δ% | 2022 | 2021 | Δ% | Jul-Jun | 2021 | |
| External order backlog | 3,204 | 1,998 | 60 | 3,204 | 1,998 | 60 | 3,204 | 2,796 |
| Order intake | 1,727 | 1,315 | 31 | 3,305 | 2,589 | 28 | 6,557 | 5,842 |
| Growth | 31% | 31% | 28% | 22% | 34% | 31% | ||
| Net sales | 1,723 | 1,088 | 58 | 3,133 | 2,102 | 49 | 5,694 | 4,664 |
| Growth | 58% | 8% | 49% | 5% | 35% | 13% | ||
| of which organic growth | 43% | 36% | ||||||
| of which acq. and div. | - | - | ||||||
| of which currency effects | 15% | 13% | ||||||
| Operating profit (EBIT)* | 228 | 158 | 45 | 409 | 306 | 34 | 739 | 635 |
| Amortization of intang. asset | -6 | -5 | -11 | -11 | -22 | -22 | ||
| Items affecting comparability | -9 | -14 | -22 | -20 | -13 | -11 | ||
| Re-allocation of int. services | - | - | -1 | - | -13 | -12 | ||
| Adjusted EBITA | 242 | 177 | 37 | 442 | 336 | 32 | 788 | 682 |
| Adjusted EBITA margin, % | 14.1 | 16.2 | 14.1 | 16.0 | 13.8 | 14.6 |
- A reclassification in regards to amortization has been made between the business areas in periods prior to Q1-22 impacting EBIT.
Data Center Technologies
Data Center Technologies (DCT) is a leading supplier of advanced climate cooling solutions using a wide range of heat rejection technologies. Our solutions produce significant energy savings for data centers compared with traditional cooling solutions. With a diversified product portfolio and extensive application knowledge, we create sustainable climate solutions for data center operators worldwide. In the first quarter of 2022 Edpac was acquired, an Ireland-based manufacturer of data center cooling equipment and air handling systems. The acquisition strengthens the presence in Europe.
| MSEK | Q2 | Jan-Jun | LTM Full-year | |||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Δ% | 2022 | 2021 | Δ% | Jul-Jun | 2021 | |
| External order backlog | 3,369 | 319 | 955 | 3,369 | 319 | 955 | 3,369 | 703 |
| Order intake | 939 | 180 | 421 | 2,809 | 389 | 621 | 3,471 | 1,051 |
| Growth | 421% | -21% | 621% | -13% | 481% | 60% | ||
| Net sales | 303 | 177 | 72 | 523 | 357 | 46 | 868 | 702 |
| Growth | 72% | -10% | 46% | 7% | 3% | -15% | ||
| of which organic growth | 10% | -13% | ||||||
| of which acq. and div. | 39% | 41% | ||||||
| of which currency effects | 23% | 18% | ||||||
| Operating profit (EBIT)* | 13 | 24 | -46 | 22 | 104 | -79 | 66 | 148 |
| Amortization of intang. asset | -5 | -2 | -10 | -4 | -14 | -8 | ||
| Items affecting comparability | -0 | -2 | 8 | 59 | 11 | 62 | ||
| Re-allocation of int. services | - | - | - | - | 1 | 1 | ||
| Adjusted EBITA | 18 | 28 | -36 | 24 | 49 | -51 | 67 | 92 |
| Adjusted EBITA margin, % | 5.9 | 15.9 | 4.6 | 13.8 | 7.7 | 13.2 |
Quarterly net sales - AirTech, (MSEK)
Quarterly adjusted EBITA margin % - AirTech,
Quarterly net sales - DCT, (MSEK)
Quarterly adjusted EBITA margin % - DCT
Interim report April-June 2022
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.
| MSEK | Q2 | Jan-Jun | LTM Full-year | |||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Δ% | 2022 | 2021 | Δ% | Jul-Jun | 2021 | |
| External order backlog | 942 | 700 | 35 | 942 | 700 | 35 | 942 | 700 |
| Order intake | 554 | 636 | -13 | 1,252 | 1,156 | 8 | 2,262 | 2,166 |
| Growth | -13% | -3% | 8% | -1% | 4% | -1% | ||
| Net sales | 599 | 567 | 6 | 1,104 | 992 | 11 | 2,139 | 2,028 |
| Growth | 6% | -1% | 11% | -3% | 2% | -5% | ||
| of which organic growth | -5% | 2% | ||||||
| of which currency effects | 10% | 10% | ||||||
| Operating profit (EBIT)* | 22 | -8 | -364 | -3 | 21 | -114 | 47 | 71 |
| Amortization of intang. asset | -12 | -13 | -24 | -22 | -42 | -40 | ||
| Items affecting comparability | -16 | -75 | -50 | -76 | -71 | -97 | ||
| Re-allocation of int. services | - | - | - | - | -2 | -2 | ||
| Adjusted EBITA | 50 | 80 | -37 | 72 | 119 | -40 | 163 | 210 |
| Adjusted EBITA margin, % | 8.4 | 14.1 | 6.5 | 12.0 | 7.6 | 10.4 |
*A reclassification in regards to amortization has been made between the business areas in periods prior to Q1-22 impacting EBIT.
Corporate
The Corporate function reported an EBITA of MSEK -39 (-26) in the second quarter. Corporate staff functions as well as minority investments are accounted for within Corporate. The increase was mainly due to expansion of corporate staff functions focusing on work with streamlining and digitalization ways of working. To further enhance Munters strategic journey we have started to make financial investments in start-ups with the aim to support innovation for the group within digitalization, technology, and sustainability. In the first six months 2022, one minority investments was made in the digital space.
Quarterly net sales - FoodTech, (MSEK)
Quarterly adjusted EBITA margin % - FoodTech
Interim report April-June 2022
Employees
The number of permanent FTEs (Full Time Equivalents), at June 30, 2022 was 3,654 (3,274). The amount of FTEs at June 30, 2022 in business area AirTech was 2,403 (2,184), in DCT 340 (193), in FoodTech 826 (813) and at Group functions 85 (84). The increase in DCT is mainly explained by the acquisition of Edpac which contributed with about 150 employees.
Outstanding shares
As of June 30, 2022, Munters held 2,804,611 treasury shares of the total outstanding shares of 184,457,817.
Dividend
A dividend of SEK 0.85 (0.70) per share was paid in May 2022, in total MSEK 154 (127). This represented 30 per cent of the net income 2021.
Other events during the quarter
Webinar focused on Data Centers — On May 16 Investor Relations hosted a webinar focused on the Data Center cooling market, a prioritized growth market for Munters. The webinar provided an overview of the market as well as Munters strategy and operations. The event is available for viewing on-demand on Munters Investor Relations website.
Henrik Teiwik appointed President Business Area AirTech — On May 11 it was announced that Henrik Teiwik has been appointed Group Vice President and President for business area AirTech and will join Munters' management team. Henrik has extensive leadership experience as CEO of Handicare Group and before that as Vice President at Alimak Group. Those roles included an IPO process, M&A processes, board assignments as well as other areas. He has previously held a number of highly qualified positions such as Associate Principal at McKinsey & Company, mainly focused on the industrial sector, with broad international experience. Henrik has lived in the US, Germany and Australia and has worked globally. He has a Master of Science in Business Administration from the Stockholm School of Economics. Henrik will assume his position on 15 August 2022.
Annual general meeting 2022 — The annual general meeting was held on Wednesday, May 18. The Annual General Meeting was held without the physical presence of shareholders, representatives or third parties. More information around main resolutions made at the Annual General Meeting can be found on www.munters.com.
New business area Data Center Technologies — On May 25 an organizational change was announced, Data Center Technologies becomes a new business area. Data centers is a prioritized and growing market segment for Munters, which has achieved high traction and strong growth. Our data center solutions, technologies and customer projects are specialized for the segment and will benefit from increased focus in the organization. The change also aims to decentralize business responsibility and simplify the way we work. Stefan Aspman, currently Group Vice President and Head of Commercial Excellence and Strategic Marketing at Munters, has been appointed President of business area Data Center Technologies. Initially, Stefan will combine this new role with his current assignment. With the organizational changes, Munters will have three business areas: AirTech, FoodTech and Data Center Technologies. Like the other business areas, Data Center Technologies will be responsible for its own profit and loss and the full value chain to enable profitable growth.
Events after the close of the period
No major events occurred after the close of the period.
Ten largest shareholders
| As of 30 Jun | Total (%) |
|---|---|
| FAM AB | 28.0 |
| ODIN Funds | 9.0 |
| Forth Swedish National Pension Fund | 7.9 |
| First Swedish National Pension Fund | 7.2 |
| Swedbank Robur Fund | 3.9 |
| Columbia Threadneedle | 3.2 |
| La Financière de l'Echiquier | 2.7 |
| C WorldWide Asset Management | 2.6 |
| Vanguard | 2.0 |
| Capital Group | 1.5 |
Source: Monitor
Interim report April-June 2022
10
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
- ~3,700 employees (FTEs)
- >30 countries with sales and manufacturing
- 18 production units
- 23% women in management
- Three business areas: AirTech, Data Center Technologies and FoodTech
In 2021, AirTech generated 63%, Data Center Technologies 10% and FoodTech 27% of the total net sales of Munters
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 great 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:
Employees are the hub of our business and their safety and health is a priority. Diversity and inclusion are important to us, since we are convinced that diversity leads to stronger innovation. Through collaboration and a passion for creating energy-efficient solutions for our customers and partners, we contribute to our customers' success and a better world
Customers:
We help our customers succeed by supplying high-quality climate solutions that make them more sustainable. Our success is built on close, long-term relationships and a deep understanding of the customer's business and future needs. Our strategy is to continue to build customer insight and utilize our broadbased expertise on applications, technology and components to supply attractive solutions and services.
Innovation:
Curiosity and an ambition to create pioneering technologies are part of our DNA. We will stay at the forefront of the industry's development and contribute to sustainable development through our energy- and resource-efficient climate solutions. We continue to invest in our core technologies, solutions and digitization to optimize our product portfolio and our innovative production technology.
Markets:
Munters is active around the world and climate change, digitization and population growth are the key markets drivers. Our resources are focused on strengthening our position in areas where we can be a market leader and growing the service business. With high-quality, resource-efficient solutions and a conscious effort to re-duce our own climate impact, we contribute to sustainable development.
Excellence in everything we do:
Our aim is to increase efficiency and quality in everything we do and to reduce our climate impact. Munters' operations all share responsible business practices and high ethical standards with a respect for human rights, diversity, and health and safety in the workplace
Quarterly overview Group
Income Statement
| 2022 | 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| MSEK | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Order backlog | 7,515 | 6,367 | 4,198 | 3,525 | 3,018 | 2,769 | 2,253 | 2,664 | 2,660 |
| Order intake | 3,200 | 4,133 | 2,605 | 2,295 | 2,118 | 1,995 | 1,611 | 1,919 | 1,870 |
| Net sales | 2,610 | 2,121 | 2,057 | 1,857 | 1,822 | 1,612 | 1,841 | 1,833 | 1,773 |
| Adjusted EBITDA | 332 | 260 | 274 | 270 | 311 | 250 | 300 | 326 | 313 |
| Depreciation tangible assets | -60 | -59 | -56 | -55 | -53 | -52 | -55 | -55 | -53 |
| Adjusted EBITA | 272 | 201 | 217 | 215 | 259 | 198 | 245 | 271 | 260 |
| Amortization intangible assets from acq. | -9 | -9 | -8 | -8 | -7 | -7 | -8 | -10 | -10 |
| Amortization other intangible assets | -15 | -14 | -10 | -10 | -14 | -10 | -8 | -20 | -10 |
| Items affecting comparability (IAC) | -28 | -44 | -9 | -3 | -91 | 41 | 22 | 4 | -138 |
| Operating profit (EBIT) | 220 | 134 | 190 | 194 | 147 | 222 | 250 | 245 | 103 |
| Financial income and expenses | -14 | -23 | -14 | -20 | -25 | -25 | -45 | -30 | -50 |
| Tax | -39 | -10 | -43 | -35 | -37 | -38 | -33 | -51 | -13 |
| Net income | 166 | 102 | 133 | 138 | 84 | 160 | 172 | 163 | 39 |
| -attributable to Parent Comp. Shareholders | 169 | 104 | 133 | 138 | 83 | 160 | 169 | 161 | 39 |
Key performance indicators
| 2022 | 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| MSEK | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Organic Growth, Net Sales | 25% | 16% | 10% | 3% | 13% | 14% | 8% | 8% | -6% |
| Adjusted EBITA margin, % | 10.4 | 9.5 | 10.6 | 11.6 | 14.2 | 12.3 | 13.3 | 14.8 | 14.7 |
| Operating margin, % | 8.4 | 6.3 | 9.2 | 10.5 | 8.0 | 13.8 | 13.6 | 13.3 | 5.8 |
| Earnings per share before dilution, SEK | 0.93 | 0.57 | 0.73 | 0.75 | 0.46 | 0.88 | 0.93 | 0.89 | 0.21 |
| Earnings per share before after, SEK | 0.93 | 0.57 | 0.73 | 0.75 | 0.45 | 0.87 | 0.93 | 0.89 | 0.21 |
| Net Debt/Adjusted EBITDA, LTM | 2.9 | 2.6 | 2.2 | 2.2 | 1.9 | 1.9 | 1.9 | 2.5 | 2.7 |
Net Debt
| 2022 | 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| MSEK | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Cash and cash equivalents | -459 | -565 | -674 | -440 | -680 | -916 | -970 | -790 | -827 |
| Interest-bearing liabilities | 3 101 | 2 830 | 2 374 | 2 324 | 2 263 | 2 491 | 2 455 | 2 822 | 3 063 |
| Lease liabilities | 367 | 370 | 376 | 369 | 366 | 362 | 332 | 366 | 378 |
| Provisions for pensions | 226 | 298 | 308 | 279 | 255 | 261 | 291 | 288 | 270 |
| Accrued financial expenses | 6 | 5 | 5 | 4 | 4 | 10 | 9 | 9 | 12 |
| Net Debt | 3 241 | 2 938 | 2 389 | 2 536 | 2 209 | 2 208 | 2 116 | 2 694 | 2 895 |
Interim report April-June 2022
Condensed statement of comprehensive income
| Q2 | Jan-Jun | LTM | Full-year | |||
|---|---|---|---|---|---|---|
| MSEK | 2022 | 2021 | 2022 | 2021 | Jul-Jun | 2021 |
| Net sales | 2,610 | 1,822 | 4,731 | 3,434 | 8,645 | 7,348 |
| Cost of goods sold | -1,865 | -1,190 | -3,367 | -2,265 | -6,096 | -4,994 |
| Gross profit | 745 | 632 | 1,364 | 1,170 | 2,548 | 2,354 |
| Selling expenses | -263 | -217 | -501 | -408 | -938 | -844 |
| Administrative costs | -198 | -141 | -361 | -276 | -641 | -556 |
| Research and development costs | -52 | -40 | -110 | -77 | -195 | -162 |
| Other operating income and expenses | -12 | -88 | -37 | -40 | -36 | -39 |
| Operating profit | 220 | 147 | 354 | 369 | 738 | 753 |
| Financial income and expenses | -14 | -25 | -37 | -50 | -71 | -84 |
| Profit/Loss after financial items | 205 | 121 | 317 | 319 | 667 | 668 |
| Tax | -39 | -37 | -49 | -75 | -127 | -153 |
| Net income for the period | 166 | 84 | 268 | 244 | 540 | 515 |
| Attributable to Parent Company shareholders | 169 | 83 | 274 | 243 | 544 | 513 |
| Attributable to non-controlling interests | -3 | 1 | -5 | 1 | -4 | 3 |
| Average number of outstanding shares before dilution | 181,616,912 | 182,016,452 | 181,613,506 | 181,968,367 | 182,023,757 | 182,207,520 |
| Average number of outstanding shares after dilution | 181,760,257 | 182,798,778 | 181,781,139 | 182,701,021 | 182,266,620 | 182,548,017 |
| Earnings per share before dilution, SEK | 0.93 | 0.46 | 1.51 | 1.33 | 2.99 | 2.81 |
| Earnings per share after dilution, SEK | 0.93 | 0.45 | 1.51 | 1.33 | 2.98 | 2.81 |
| Other comprehensive income | ||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||
| Exchange-rate differences on translation of foreign operations | 292 | -62 | 354 | 99 | 522 | 268 |
| Items that will not be reclassified to profit or loss: | ||||||
| Actuarial gains and losses on defined-benefit pension obligations, incl. payroll tax | 74 | 8 | 87 | 44 | 40 | -3 |
| Income tax effect not to be reclassified to profit or loss | -15 | -1 | -18 | -9 | -9 | -0 |
| Other comprehensive income, net after tax | 350 | -55 | 423 | 134 | 553 | 264 |
| Total comprehensive income for the period | 517 | 29 | 691 | 378 | 1,093 | 779 |
| Attributable to Parent Company shareholders | 519 | 28 | 697 | 377 | 1,098 | 779 |
| Attributable to non-controlling interests | -3 | 1 | -6 | 0 | -6 | 1 |
Interim report April-June 2022
Condensed statement of financial position
| MSEK | 2022-06-30 | 2021-06-30 | 2021-12-31 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Goodwill | 4,855 | 4,063 | 4,248 |
| Patents, licenses, brands, and similar rights | 1,889 | 1,457 | 1,586 |
| Buildings and land | 282 | 238 | 239 |
| Plant and machinery | 478 | 469 | 469 |
| Equipment, tools, fixtures and fittings | 196 | 164 | 185 |
| Construction in progress | 130 | 60 | 78 |
| Financial assets | 21 | 19 | 20 |
| Deferred tax assets | 292 | 263 | 278 |
| Total non-current assets | 8,143 | 6,733 | 7,103 |
| CURRENT ASSETS | |||
| Raw materials and consumables | 707 | 435 | 532 |
| Products in process | 292 | 165 | 170 |
| Finished products and goods for resale | 456 | 284 | 347 |
| Projects in progress | 27 | 13 | 11 |
| Advances to suppliers | 39 | 9 | 12 |
| Accounts receivable | 1,526 | 1,028 | 1,394 |
| Prepaid expenses and accrued income | 817 | 473 | 368 |
| Derivative instruments | 3 | 0 | 1 |
| Current tax assets | 74 | 39 | 52 |
| Other receivables | 98 | 64 | 78 |
| Cash and cash equivalents | 459 | 680 | 674 |
| Total current assets | 4,499 | 3,189 | 3,639 |
| TOTAL ASSETS | 12,641 | 9,922 | 10,742 |
Interim report April-June 2022
Condensed statement of financial position
| MSEK | 2022-06-30 | 2021-06-30 | 2021-12-31 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Shareholders’ equity | 4,898 | 4,029 | 4,360 |
| Non-controlling interests | 2 | 4 | 3 |
| Total equity | 4,901 | 4,034 | 4,363 |
| NON-CURRENT LIABILITIES | |||
| Interest-bearing liabilities | 3,340 | 2,532 | 2,636 |
| Provisions for pensions and similar commitments | 248 | 266 | 324 |
| Other provisions | 46 | 47 | 41 |
| Other liabilities | 157 | 139 | 140 |
| Deferred tax liabilities | 438 | 381 | 405 |
| Total non-current liabilities | 4,230 | 3,365 | 3,546 |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities | 128 | 97 | 114 |
| Advances from customers | 1,105 | 623 | 648 |
| Accounts payable | 910 | 662 | 771 |
| Accrued expenses and deferred income | 1,039 | 767 | 998 |
| Derivative instruments | 1 | - | - |
| Current tax liabilities | 36 | 40 | 40 |
| Other liabilities | 119 | 93 | 100 |
| Provisions for pensions and similar commitments | 4 | 9 | 9 |
| Other provisions | 168 | 232 | 153 |
| Total current liabilities | 3,511 | 2,523 | 2,833 |
| TOTAL EQUITY AND LIABILITIES | 12,641 | 9,922 | 10,742 |
Condensed statement of changes in equity
| MSEK | 2022-06-30 | 2021-06-30 | 2021-12-31 |
|---|---|---|---|
| Opening balance | 4,363 | 3,751 | 3,751 |
| Total comprehensive income for the period | 691 | 378 | 779 |
| Exercised share options | 4 | 32 | 40 |
| Change in non-controlling interest | - | - | -1 |
| Put/call option related to non controlling interests | - | -2 | -4 |
| Dividends paid | -156 | -129 | -129 |
| Repurchase of shares | - | - | -69 |
| Share option plan incl. deferred tax | -1 | 4 | -5 |
| Other | - | - | 1 |
| Closing balance | 4,901 | 4,034 | 4,363 |
| Total shareholders’ equity attributable to: | |||
| The parent company’s shareholders | 4,898 | 4,029 | 4,360 |
| Non-controlling interests | 2 | 4 | 3 |
Interim report April-June 2022
Condensed cash flow statement
| Q2 | Jan-Jun | LTM | Full-year | |||
|---|---|---|---|---|---|---|
| MSEK | 2022 | 2021 | 2022 | 2021 | Jul-Jun | 2021 |
| OPERATING ACTIVITIES | ||||||
| Operating profit | 220 | 147 | 354 | 369 | 738 | 753 |
| Reversal of non-cash items | ||||||
| Depreciation, amortization and impairments | 85 | 74 | 166 | 143 | 326 | 303 |
| Other profit/loss items not affecting liquidity | -2 | 8 | -8 | 2 | 5 | 16 |
| Change in provisions | ||||||
| Provisions | -4 | -2 | 6 | -8 | -83 | -97 |
| Cash flow before interest and tax | 298 | 227 | 519 | 506 | 987 | 974 |
| Paid financial items | -11 | -50 | -30 | -70 | -59 | -99 |
| Taxes paid | -82 | -58 | -107 | -91 | -196 | -181 |
| Cash flow from operating activities before changes in working capital | 206 | 119 | 382 | 345 | 731 | 694 |
| Cash flow from changes in working capital | -101 | 39 | -303 | -99 | -379 | -175 |
| Cash flow from operating activities | 105 | 159 | 79 | 247 | 352 | 519 |
| INVESTING ACTIVITIES | ||||||
| Business acquisitions | -2 | - | -302 | - | -302 | - |
| Investments in participations and securities in other companies | 0 | - | -3 | - | -3 | - |
| Sale of tangible fixed assets | -0 | 0 | 1 | 1 | 1 | 2 |
| Investment in tangible assets | -49 | -36 | -89 | -58 | -169 | -138 |
| Investment in intangible assets | -74 | -67 | -149 | -103 | -250 | -204 |
| Cash flow from investing activities | -125 | -102 | -542 | -160 | -722 | -341 |
| FINANCING ACTIVITIES | ||||||
| Exercised share options | 2 | 32 | 4 | 32 | 12 | 40 |
| Loan raised | 205 | 574 | 785 | 598 | 2,498 | 2,311 |
| Amortization of loans | -117 | -742 | -349 | -841 | -2,058 | -2,550 |
| Repayment of lease liabilities | -29 | -24 | -56 | -50 | -111 | -105 |
| Repurchase of shares | - | - | - | - | -69 | -69 |
| Dividends paid | -156 | -129 | -156 | -129 | -156 | -129 |
| Cash flow from financing activities | -95 | -289 | 228 | -391 | 116 | -503 |
| Cash flow for the period | -115 | -233 | -235 | -304 | -255 | -324 |
| Cash and cash equivalents at period start | 565 | 916 | 674 | 970 | 680 | 970 |
| Exchange-rate differences in cash and cash equivalents | 9 | -3 | 20 | 14 | 34 | 28 |
| Cash and cash equivalents at period end | 459 | 680 | 459 | 680 | 459 | 674 |
Interim report April-June 2022
Parent company
Condensed income statement
| Q2 | Jan-Jun | LTM | Full-year | |||
|---|---|---|---|---|---|---|
| MSEK | 2022 | 2021 | 2022 | 2021 | Jul-Jun | 2021 |
| Net sales | - | - | - | - | - | - |
| Gross profit/loss | 0 | - | 0 | - | 0 | - |
| Administrative costs | -2 | -4 | -4 | -4 | -11 | -12 |
| Other operating expenses | -0 | 0 | 1 | -1 | 13 | 11 |
| Profit/Loss before interest and tax (EBIT) | -2 | -4 | -3 | -6 | 2 | 0 |
| Financial income and expenses | -1 | -0 | -1 | 0 | -2 | -1 |
| Profit/Loss after financial items | -2 | -4 | -4 | -6 | 0 | -1 |
| Group contributions | - | - | - | - | 8 | 8 |
| Profit/Loss before tax | -2 | -4 | -4 | -6 | 9 | 7 |
| Tax | - | -0 | 0 | - | 1 | 1 |
| Net income for the period | -2 | -4 | -4 | -6 | 10 | 8 |
Condensed statement of comprehensive income
| Q2 | Jan-Jun | LTM | Full-year | |||
|---|---|---|---|---|---|---|
| MSEK | 2022 | 2021 | 2022 | 2021 | Jul-Jun | 2021 |
| Profit/Loss for the period | -2 | -4 | -4 | -6 | 10 | 8 |
| Other comprehensive income, net after tax | - | - | - | - | - | - |
| Comprehensive income for the period | -2 | -4 | -4 | -6 | 10 | 8 |
Interim report April-June 2022
16
Parent company
Condensed balance sheet
| MSEK | 2022-06-30 | 2021-06-30 | 2021-12-31 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Participations in subsidiaries | 4,096 | 4,103 | 4,094 |
| Other financial assets | 3 | 4 | 5 |
| Total non-current assets | 4,099 | 4,108 | 4,100 |
| CURRENT ASSETS | |||
| Prepaid expenses and accrued income | 1 | 1 | 1 |
| Current tax assets | 1 | 1 | 1 |
| Receivables from subsidiaries | 18 | 33 | 13 |
| Cash and cash equivalents | – | 2 | 0 |
| Total current assets | 20 | 37 | 15 |
| TOTAL ASSETS | 4,119 | 4,144 | 4,115 |
| MSEK | 2022-06-30 | 2021-06-30 | 2021-12-31 |
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Share capital | 6 | 6 | 6 |
| Share premium reserve | 4,136 | 4,135 | 4,136 |
| Profit brought forward | -270 | -61 | -128 |
| Income for the period | -4 | -6 | 8 |
| Total equity | 3,867 | 4,074 | 4,022 |
| NON-CURRENT LIABILITIES | |||
| Provisions for pensions and similar commitments | 2 | 2 | 2 |
| Total non-current liabilities | 2 | 2 | 2 |
| CURRENT LIABILITIES | |||
| Accounts payable | 7 | 7 | 3 |
| Accrued expenses and deferred income | 13 | 16 | 18 |
| Liabilities to subsidiaries | 224 | 43 | 65 |
| Other liabilities | 5 | 3 | 4 |
| Total current liabilities | 250 | 68 | 91 |
| TOTAL EQUITY AND LIABILITIES | 4,119 | 4,144 | 4,115 |
Interim report April-June 2022
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 2021 (Note 1).
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 2022 the lingering Covid-19 pandemic led to continued supply chain challenges especially in region APAC and China.
As a consequence of the war in Ukraine, Munters have stopped all business activities in Russia. Annualized net sales in Russia accounted for approx. 1.5 per cent of total Group net sales and Munters had no employees in the area.
The direct financial impacts of leaving the Russian market totals MSEK -27 and has been recorded as items affecting comparability in the first half of 2022.
The indirect effects seen from the war are mainly related to material prices and logistics. For example, in general material prices have increased and some logistical routes have been cut off in Asia and Europe.
A more detailed description of the Group's risks and how they are managed can be found in the Annual- and Sustainability report 2021 on pages 54-58.
Transactions with related parties
There have been no significant transactions with related parties during the period.
Fair value of financial instruments
| MSEK | 2022-06-30 | 2021-06-30 | 2021-12-31 |
|---|---|---|---|
| Opening balance | 137 | 121 | 121 |
| Discounting | - | 2 | 4 |
| Exchange-rate differences | 18 | 5 | 13 |
| Closing balance | 155 | 127 | 137 |
The Group's derivatives, recognized at fair value in the statement of financial position, are measured according to IFRS 9 and are categorized as level 2 in the fair value hierarchy. The derivatives amounted to MSEK 3 (0) in financial assets and to MSEK 1 (0) in financial liabilities. The Group's put/call acquisition option, recognized at fair value in the statement of financial position, is measured according to IFRS 9 and is 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 currency translations on the put/call option.
Munters deems that the interest rate on interest-bearing liabilities are in line with market terms at June 30, 2022, and the fair value at the end of the reporting period therefore in all material aspects corresponds to the carrying amount.
Interim report April-June 2022
Allocation of net sales
The majority of customer contracts within business areas AirTech and FoodTech fulfill the requirements to recognize net sales at a point in time while within DCT net sales from most customer contracts is recognized over time, as 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.
| MSEK | Q2 2022 | Jan-Jun 2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| AirTech | DCT | FoodTech | Total | AirTech | DCT | FoodTech | Total | |
| Goods transferred at a point in time | 1,248 | 60 | 515 | 1,823 | 2,348 | 138 | 933 | 3,419 |
| Goods transferred over time | 320 | 234 | 27 | 581 | 517 | 369 | 63 | 949 |
| Services transferred over time | 153 | 9 | 43 | 206 | 264 | 16 | 84 | 364 |
| Total net sales | 1,722 | 303 | 585 | 2,610 | 3,128 | 523 | 1,080 | 4,731 |
| Q2 2021 | Jan-Jun 2021 | |||||||
| MSEK | AirTech | DCT | FoodTech | Total | AirTech | DCT | FoodTech | Total |
| Goods transferred at a point in time | 818 | 4 | 487 | 1,309 | 1,596 | 5 | 859 | 2,461 |
| Goods transferred over time | 163 | 166 | 32 | 361 | 313 | 341 | 46 | 699 |
| Services transferred over time | 107 | 6 | 39 | 153 | 191 | 11 | 72 | 274 |
| Total net sales | 1,087 | 177 | 558 | 1,822 | 2,100 | 357 | 977 | 3,434 |
Reconciliation of alternative performance measures and items affecting comparability
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 129 in the Annual and Sustainability Report 2021.
A reconciliation of Adjusted EBITDA and Adjusted EBITA is found in the quarterly overview on page 11 in this interim report.
Items affecting comparability are events or transactions with significant financial effects, which are relevant for the understanding of the financial performance when comparing the current period to previous periods. Items included are for example, restructuring activities, capital gains and losses from divestments and M&A related costs as well as costs for other events, such as the Covid-19 pandemic and war in Ukraine, having a significant impact on the comparability.
Below is a break-down of items affecting comparability by period.
| Q2 | Jan-Jun | Full-year | ||||
|---|---|---|---|---|---|---|
| MSEK | 2022 | 2021 | 2022 | 2021 | LTM | Jan-Dec |
| Restructuring activities | -16 | -89 | -44 | -101 | -67 | -124 |
| Close down of business activities in Russia | -9 | - | -27 | - | -27 | - |
| Other items affecting comparability | -3 | -2 | -1 | 51 | 10 | 62 |
| Summa | -28 | -91 | -72 | -50 | -84 | -62 |
Interim report April-June 2022
Business acquisitions
In January 2022, Munters announced the acquisition of EDPAC, an Irish manufacturer of cooling equipment for data centers and air treatment systems, with a purchase price of MEUR 31, approximately MSEK 303. EDPAC manufactures precision cooling equipment and various air handling systems and is also a manufacturing partner for Munters Oasis systems. Sales of Munters products account for approximately seven per cent of EDPAC's total revenue. The acquisition adds complementary products to Munters' existing data center offering and is part of Munters' strategy to grow in the prioritized data center segment. EDPAC reported net sales amounting to MEUR 17 and an adjusted EBITDA of MEUR 1.7 for the financial year ended April 2021. The company is headquartered in Carrigaline, Ireland, with two manufacturing facilities in the country and the number of full-time employees is approximately 150. EDPAC has a strong customer base with sales mainly in Europe and with a smaller part in the Middle East, South America and Asia. The purchase price allocation resulted in surplus values related to customer relationships of MSEK 55, trademarks of MSEK 11 and a residual goodwill of MSEK 200. Acquisition related costs including stamp duty amounted to MSEK 8. Below is a list of paid purchase price and acquired net assets.
| MSEK | 2022-06-30 |
|---|---|
| Information about acquired net assets and goodwill | |
| Cash purchase consideration paid | 303 |
| Total purchase consideration | 303 |
| Fair value of acquired net assets | -103 |
| Goodwill | 200 |
| Acquired net assets at time of acquisition | |
| Property, plant and equipment | 46 |
| Customer relationships | 55 |
| Trademarks | 11 |
| Inventory | 35 |
| Accounts receivable | 71 |
| Prepaid expenses and accrued income | 1 |
| Other current assets | 11 |
| Cash and cash equivalents | 1 |
| Total assets | 232 |
| Non-current interest-bearing liabilities | 2 |
| Current interest-bearing liabilities | 50 |
| Other provisions | 2 |
| Accounts payable | 29 |
| Accrued expenses and deferred income | 35 |
| Deferred tax liabilities | 9 |
| Current income tax | 1 |
| Total liabilities | 129 |
| Net identifiable assets and liabilities | 103 |
| Cash purchase consideration paid | 303 |
| Cash and cash equivalents in acquired company | 1 |
| Change in the Group's cash and cash equivalents on acquisition | -302 |
Interim report April-June 2022
The Board of Directors and the President and CEO certify that the Interim Report gives a true and fair overview of the Parent Company's and Group's operations, their financial position and results of operations, and describes the significant risks and uncertainties facing the Parent Company and other companies in the Group.
Stockholm, July 15 2022
Magnus Nicolin
Chairman of the Board
Klas Forsström
President & CEO
Håkan Buskhe
Board Member
Helen Fasth Gillstedt
Board Member
Maria Håkansson
Board Member
Anders Lindqvist
Board Member
Kristian Sildeby
Board Member
Anna Westerberg
Board Member
Simon Henriksson
Board Member, employee representative
Robert Wahlgren
Board Member, employee representative
This report has not been subject to review by the company's auditors.
Interim report April-June 2022
21
Information and reporting dates
Contact persons:
Ann-Sofi Jönsson
Vice President, Investor Relations and Enterprise Risk Management
Phone: +46 (0)730 251 005
Email: [email protected]
You are welcome to join a webcast or telephone conference on July 15 at 9:00 AM CEST, when President and CEO Klas Forsström, together with Group Vice President and CFO Annette Kumlien, will present the report.
Webcast
https://tv.streamfabriken.com/munters-q2-2022
Conference call
Please, dial-in using one of the numbers below and the pin code:
SE: +46 8 505 163 86
UK: +44 20 319 848884
US: +1 412 317 6300
Pin code: 2556601#
This interim report, presentation material and a link to the webcast will be available on https://www.munters.com/en/investor-relations/
Financial calendar:
Interim report January-September 2022 October 21, 2022
Investor webinar – focus on Service September, 2022
Full year report January-December 2022 February 9, 2023
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.
This information is information that Munters Group AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, at 07.30 AM CEST on July 15, 2022.
Munters Group AB, Corp. Reg. No. 556819-2321
Interim report April-June 2022