Munters Group

July-September:

• Order intake increased +21% (+18% organic) with strong growth in Data Center Technologies (DCT), offset by negative organic development in AirTech as well as FoodTech. In AirTech, the battery sub-segment was weaker in all regions. DCT had a good level of smaller and mid-sized orders in North and Latin America. FoodTech was at a lower level mainly driven by weaker demand in Climate solutions.
• Net sales grew +6% (+5% organic). AirTech declined organically, primarily due to the continued weaker battery sub-segment in APAC and Americas. In DCT successful deliveries on large orders announced last year continued to contribute to stable growth. FoodTech grew strongly, with strong contributions from both Climate and Digital solutions.
• The adj. EBITA margin improved driven by strong net sales growth in DCT and FoodTech whereas the margin in AirTech was negatively impacted by lower net sales and thereby lower production utilization in all regions.
• Cash flow from operating activities was at a lower level primarily because of a negative impact on operating working capital in the quarter driven by consumption of advances, mainly related to project completions in AirTech. OWC/net sales improved to 11.3%, within our target range of 13-10%.
• Net debt in relation to adj. EBITDA was 1.9x where the slight increase in the third quarter compared to end of June was mainly a result of the acquisition of AEI and the included lease liabilities related to a new facility in Ireland (DCT).
• The second instalment of the dividend was paid out in September, amounting to MSEK 119.
• Earnings per share, before and after dilution, was SEK 1.44 (1.42) in the third quarter.

Events after the close of the period:

• In the beginning of October, the acquisition of Geoclima, an Italian manufacturer of air- and water-cooled chillers was closed. Geoclima’s product offering completes DCTs cooling portfolio, enhancing the ability to offer full solutions to the total data center cooling market.
• In October, Munters announced that an agreement has been signed for business area FoodTech to acquire Hotraco, a Dutch developer of control systems and sensors for the agricultural sector. The acquisition is in line with the strategy to create a digital ecosystem to support a more efficient and sustainable food production.

CEO comments:

Strong demand in most of our end-user segments, but the battery market continued to show weak outlook and our capacity expansion is on track
To summarize our achievements for the quarter, I would first like to highlight that we continue to see strong demand for our data center cooling technologies, driven by the mega-trend of digitalization. This will remain for the foreseeable future. The strong market demand resulted in substantial growth in order intake for DCT, where we for the second consecutive quarter observed robust order intake in small- and mid-sized orders. In Cork, Ireland, the expansion of our manufacturing footprint in Europe through the build of our new DCT facility, is on track to be inaugurated during the fourth quarter.

In AirTech organic order intake was negative, mainly driven by the weaker battery market. This market has seen delays in investments across all regions, resulting in significantly decreased demand over the past quarter and aggressive price pressure. We anticipate these challenging conditions to remain in 2025; however, the long-term outlook remains strong. Our new build of the manufacturing site in Amesbury for AirTech, is on track. We will start to move in at the beginning of 2025, running two sites in parallel during the first months of 2025. The new facility will significantly increase capacity and be the largest in Munters. This site, as well as the DCT facility in Cork are designed to support Munters’ goal of reducing Scope 1 & 2.

Order intake in FoodTech was weaker, mainly driven by Climate solutions where seasonal effects and timing of orders received had a negative effect. Despite slightly lower order intake in Digital solutions we continue to see strong demand for our software and controllers, driven by the megatrend of sustainability where the need to optimize the value chain for food production and reduce emissions and waste, is high.

Solid growth & robust profits driven by strong net sales
Secondly, net sales grew, with a significant increase in FoodTech, driven by strong growth of equipment sales across all segments in Climate solutions. Digital solutions in Americas saw growth in both software implementations and SaaS revenue (ARR*), with the latter increasing by more than 50 per cent in the quarter. DCT also saw strong growth driven by the good progression of deliveries to customers. AirTech had lower organic net sales mainly related to the weaker battery market, which was partly offset by growth in the rest of the Industrial segment in EMEA and APAC.

Thirdly, I am very pleased that we continue to deliver a strong EBITA-margin, with both DCT and FoodTech delivering very strong margins driven by good net sales growth. In AirTech, lower production utilization due to lower net sales had a negative impact, partly offset by a positive product mix as deliveries on a major order were finalized. As the outlook for the battery market in 2025 remains weak, we have taken further mitigating actions in the quarter to counter future potential lower volumes and under-absorption. We will continue to monitor this situation closely.

All business areas continued to work with operational efficiency initiatives, such as lean, resulting in an increased flexibility.

Strengthened market position through M&A and partnerships
In the quarter, we closed the acquisition of a majority share in Automated Environments (AEI), which accelerates our digital journey in FoodTech as we add control systems for the layer industry to our offering. In addition, after the quarter closed, we announced an agreement to acquire the Dutch company Hotraco within FoodTech, offering control technology for the livestock, crop storage and greenhouse sectors. This is in line with our strategy to build a digital ecosystem to support a more sustainable and efficient food industry. Also, after the quarter closed, we announced the acquisition of Geoclima, an Italian manufacturer of air- and water-cooled chillers, and the strategic alliance for data center cooling innovation with ZutaCore, aiming at tackling the challenges of managing AI-generated heat more efficiently and sustainably. Munters and ZutaCore, will integrate Munters SyCool systems with ZutaCore’s advanced 2-phase liquid cooling technology.

I would like to extend my sincere appreciation to all our dedicated employees for their diligent efforts and commitment.

Klas Forsström, President & CEO 

*ARR =  Annualized Recurring software Revenues

Information about the webcast and telephone conference 

Welcome to join a webcast or telephone conference today, October 22, at 9:00 CEST, when President and CEO Klas Forsström together with the Group Vice President and CFO, Katharina Fischer, will present the report.

Webcast: https://ir.financialhearings.com/munters-q3-report-2024

Conference call: If you wish to participate via teleconference, please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference. https://conference.financialhearings.com/teleconference/?id=50049852

This interim report, presentation material and a link to the webcast will be available on  https://www.munters.com/en-se/investors/

For more information, please contact: 

Investors and analysts
Ann-Sofi Jönsson, Vice President, Investor Relations & Group Risk Management
E-mail: ann-sofi.jonsson@munters.com, Phone: +46 (0)730 251 005

Line Dovärn, Director, Investor Relations
E-mail: line.dovarn@munters.com, Phone: +46 (0)730 488 444

Media
Eva Carlsson, Director External Communications
E-mail: eva.carlsson@munters.com, Phone: +46 (0)70 88 33 500

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 persons set out above, at 07.30 CEST on October 22, 2024.

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 5,100 employees carry out manufacturing and sales in more than 30 countries. Munters Group AB reported annual net sales of more than SEK 14 billion in 2023 and is listed on Nasdaq Stockholm. For more information, please visit www.munters.com.