"Stable profitability in a in challenging business environment"
January-March 2020:
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The outbreak of Covid-19 impacted Munters in the first quarter. Demand was robust in January and February, except in China that was affected by the outbreak in February. In March demand was negatively impacted by the outbreak in Europe and Americas. In China, demand recovered somewhat mid-March.
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Order intake declined -5% (currency adjusted -8%) mainly driven by a decline in the industrial segment within business areas AirTech. Business area FoodTech increased 3%, with a flat organic development. In Asia, FoodTechs’ order intake increased as investments in production capacity in the swine segment within China increased.
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Net sales declined by -3% (currency adjusted -7%) mainly driven by lower demand in the industrial segment in all regions in the business area AirTech. Business area FoodTech had a weak development in Americas and APAC and a flat development in EMEA.
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The adjusted EBITA-margin improved slightly to 8.3% (8.1) as a result of continued streamlining of indirect costs and an active mitigation of the effects from the Covid-19 outbreak.
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Leverage increased to 3.1x from 2.9x at year-end 2019. The increase was mainly due to exchange rate effects on borrowings related to USD/SEK.
CEO comments:
Order intake and net sales impacted by the Covid-19 outbreak
In the first quarter, the outbreak of Covid-19 had an impact on Munters. All our production units, except two minor units, have managed operations throughout the quarter without any major disturbances. Order intake declined organically by -8%. Demand was robust in January and February, except in China that was affected by the outbreak in February. Order intake in March was negatively impacted by the outbreak in Europe and Americas. In China, demand recovered somewhat mid-March, which was visible in the order intake for the business area FoodTech.
Net sales declined organically by -7%, mainly driven by lower demand in the industrial segment in all regions in the business area AirTech. Business area FoodTech had a weak development in Americas and APAC.
Slightly improved profitability and focus on continuous improvements
The adjusted EBITA-margin improved slightly over last year. This was mainly driven by a continuous focus by all parts of the organization to streamline indirect costs and an active mitigation of the effects from the Covid-19 outbreak.
In relation to the outbreak of Covid-19, our focus in the last months has first and foremost been on securing the health and safety of our employees and other stakeholders. To limit the effects from the outbreak on Munters, we initiated mitigating actions in the beginning of February. These involves reducing costs and planned investments as well as diligently managing our supply chain, where we so far have not had any major disturbances.
The cost reduction program executed and the work to improve management of working capital in 2019 strengthened Munters financial position. Our focus on cashflow and continuous improvements in operations is a central part of the ongoing refined strategy implementation.
Continued challenging business environment
For the coming quarters we expect a challenging business environment with a larger impact from the Covid-19 outbreak than seen in the first quarter. At this time, the visibility of the effect from the outbreak is limited. We currently have a healthy order backlog but depending on the length and severity of the outbreak we see an increased risk for project delays.
Implementation of refined strategy ongoing
Munters is well positioned in a long-term growing market driven by climate change, energy efficiency and digitalization. At the beginning of the year, we launched a refined strategy with clear focus areas and ambitions.
Despite great attention on managing in the current business environment we are continuing to implement the strategy. During 2020, I expect us to accelerate the implementation and especially our analysis of how to align the product assortment and optimize our manufacturing footprint.
I am very proud of our dedicated employees world-wide and their contribution and hard work in these challenging times.
Klas Forsström, President and CEO
On 23 April, at 9:00 the President and CEO, Klas Forsström, together with the Group Vice President and CFO, Annette Kumlien will present the report in an audiocast with telephone conference.
Audiocast:
More information: http://www.financialhearings.com/event/12365
Link to Audiocast: https://tv.streamfabriken.com/munters-q1-2020
Dial-in number for the telephone conference:
SE: +46850558350
UK: +443333009264
US: +18335268398
This interim report, presentation material and a link to the audiocast will be available on https://www.munters.com/en/investor-relations/
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 3,100 employees carry out manufacturing and sales in more than 30 countries. Munters Group AB reports annual net sales of more than SEK 7 billion and is listed on Nasdaq Stockholm. For more information, please visit www.munters.com.
This information is information that Munters Group AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 08.00 CET on April 23, 2020.
For more information:
Ann-Sofi Jönsson, Investor Relations
E-mail: ann-sofi.jonsson@munters.se
Phone: +46 (0)730 251 005
