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Munters interim report January-September 2021 - ”Continued strong order intake while margin negatively impacted by remaining supply chain challenges”

okt 22, 2021 07.30

July-September 2021

  • Demand was strong in the quarter. Constraints in the supply chain remained.
  • Order intake increased by +20%, a currency adjusted increase of +21%, and net sales increased +1%, currency adjusted +3%, mainly driven by strong growth in business area AirTech within mainly the sub-segment Battery and Data Centers.
  • The adjusted EBITA-margin was 11.6% (14.8), negatively impacted by the supply chain constraints, higher raw material prices and freight costs, changed business mix, lower FoodTech volumes in China and the time lag of the impact of our own price increases.
  • Leverage (net debt/adjusted EBITDA, LTM*) was 2.2x, slightly higher than 1.9x at the end of June 2021, due to supply chain challenges.
  • Net debt as of September 30 amounted to MSEK 2,536 compared to MSEK 2,209 at the end of June 2021.
  • During the quarter, AirTech successfully continued its strategy execution with focus on core market segments which resulted in strong growth in prioritized areas. FoodTech has during the quarter continued to invest in its digital journey with the aim to establish a connected offering throughout the value chain. We continue to invest in innovation, competence and projects to increase capacity, efficiency improvements and ways of working in order to enhance our offering and further strengthen our market position.

January-September 2021

  • Strong demand in the period with impact of supply chain constraints from the second quarter and forward.
  • Order intake increased by +14%, a currency adjusted increase of +21% and net sales increased +2%, currency adjusted +10%, mainly driven by strong growth in the Battery sub-segment in business area AirTech.
  • The adjusted EBITA-margin was 12.7% (12.8), negatively impacted during the second and third quarters by the supply chain constraints, higher raw material prices and freight costs as well as the time lag of the impact of our own price increases. The AirTech margin was positively impacted by increased net sales, high utilization rates and efficiency improvements while the FoodTech margin was negatively impacted by lower volumes in China.
  • Leverage (net debt/adjusted EBITDA, LTM*) was 2.2x, higher than 1.9x per end of December 2020 and lower than same period last year (2.5x).
  • Net debt as of September 30 amounted to MSEK 2,536 compared to MSEK 2,116 at the end of December 2020. In the second quarter a 5-year re-financing was secured enabling execution of the long-term strategy.

CEO comments:

Strong demand – supply chain constraints remain, impacting margin

During the third quarter demand was strong, while the adjusted EBITA margin was still impacted by the supply chain constraints and higher raw material prices as well as the time lag of the impact of our price increases, which is in line with the communication in the second quarter report.

It is encouraging to see the particularly strong growth in prioritized market segments such as battery and data centers. This is key to us since our business wins in these segments ensure a robust market and technology position, and in-crease our potential aftermarket services sales. One of our most recent wins is the strategic turnkey project to design and build a lithium battery laboratory in Scandinavia, which confirms Munters’ position as a leading supplier to manufacturers of lithium batteries. Another of our key strategic priorities is to grow the services business where it is gratifying to see the accelerating development.

The constraints in the supply chain along with higher raw material prices and freight cost increases seen throughout the second quarter, continued to impact our business during the third quarter. The margin was also negatively impact-ed by a changed business mix in AirTech with more larger projects and lower FoodTech volumes in China. During the quarter, we have continued to implement price increases although, as communicated in the second quarter report, most of our consecutive price increases implemented 2021 will come into effect next year due to the order backlog and extended lead times. Because of these effects, the adjusted EBITA margin was weaker in the quarter. In the second quarter report, we anticipated the supply chain challenges to remain in the second half of 2021 and we now expect these challenges to continue throughout the first half of 2022.

Continued focus on the execution of our strategy

Munters has strong, leading market positions and we work constantly to further strengthen our offering and to deliver on our strategy. The investments in new innovative solutions such as improved systems for the battery industry and data centers, and the Amino software for the poultry industry are key factors for our success in these segments. We also notice a growing interest in our more long-term technology solutions in areas such a carbon capture technology, next generation rotor media as well as AI driven software for the growing food industry. In addition, I’m pleased to see that we have successfully managed to reduce our number of product variations by 40% over the past two years. This, in combination with continued investments in competence and ongoing projects to increase capacity, efficiency improvements and ways of working in our operations, give us a solid foundation for sustained profitable growth.

We make our customers more sustainable

We see strong interest in Munters leading innovative and energy efficient climate solutions. Munters climate solutions are often mission-critical for our customers’ success and contribute to make their businesses more sustainable. This is a strong motivation for us in our daily work and I want to express my sincere thanks to all employees for your dedicat-ed work and contribution to our customers’ success.

Klas Forsström, President and CEO

Information about the webcast:

You are welcome to join a webcast or telephone conference on October 22, at 9:00am 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-Q3-2021

Dial-in number for the telephone conference:

SE: +46850558358

UK: +443333009034

US: +16467224904

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

Contact information:

Åse Lindskog, Interim Head of Investor Relations
Phone: +46 (0)730 244 872
Email: ase.lindskog@munters.com

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 07.30am CEST on October 22, 2021.

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 3,300 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.

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