Interim Report January - March 1999

Interim Report January - March 1999 Strong order increase during first quarter - During the first quarter order intake increased by 14 per cent to SEK 659M - Order intake increased by 13 per cent during the last two quarters - Operating earnings improved by 17 per cent to SEK 37M - Earnings per share increased by 25 per cent to SEK 0.90 MUNTERS' OPERATIONS Munters is the world leader in moisture control with products and services for dehumidification, humidification and cooling of air. Operations are divided into three geographic regions - Europe, the Americas and Asia. In each region, operations are subdivided into Product Areas: Dehumidification, Moisture Control Services (MCS), HumiCool and Mist Elimination & Water Treatment. Manufacturing and sales are carried out via the Group's own companies in 25 countries. At the quarter-end, the Group had 1,962 employees. GROUP ORDER INTAKE, INVOICING AND EARNINGS During the first three months of the year, order intake increased by 14 per cent to SEK 659M (577) and the order backlog rose by SEK 79M to SEK 423M (344). Invoiced sales of the Munters Group increased by 4 per cent to SEK 574M (554). The currency influence between the comparative periods is negligible. Distributed by region, invoicing rose by 8 per cent in Europe, 3 per cent in the Americas and fell by 8 per cent in Asia. Consolidated operating earnings amounted to SEK 37M (32), an increase of 17 per cent. Operating earnings were positively affected by exchange rate fluctuations of SEK 1M. Consolidated earnings before taxes increased by 20 per cent to SEK 36M (30). Net earnings for the period rose by 25 per cent to SEK 23M (18) after an effective tax rate of 37 per cent (40). Earnings per share increased to SEK 0.90 (0.72). The earnings improvement is due to increased invoicing and implemented rationalisation. These rationalisation measures meant that it has been possible to reduce the workforce in region Americas and Region Europe in Product Area ehumidification. At the same time, staff has been increased in areas with high growth. The number of employees was reduced by 17 net. MARKET DEVELOPMENT The market in Europe continued to develop positively. Demand within the MCS operations had a positive trend during the first quarter. The market in America showed continued sound growth, mainly in MCS and HumiCool. However, the turbulence in South America is significant and affected marketing activities, mainly in Brazil. The market in Asia shows signs of improvement. Demand is especially high in China and the market situation in South-East Asia shows some improvement. Japan reported continued weak demand. Demand for the Group's products and services have a seasonal pattern which means that invoicing and earnings during the first quarter is generally the weakest. FINANCIAL POSITION The equity ratio improved during the period and amounted to 44.4 per cent (38.8) at 31 March. Liquid funds were SEK 102M (140) and interest-bearing liabilities (including PRI pensions) were SEK 215M (271). During the year, the net debt fell by SEK 21M to SEK 114M. The Group had unutilised loan facilities of approximately SEK 190M. INVESTMENTS The Group's capital expenditure amounted to SEK 29M (13). The majority refers to investments in production machines and IT equipment. An investment totalling SEK 40M relating to expansion of the production capacity in Tobo, Sweden, is being carried out during 1998 and the first half of 1999. So far, SEK 36M of this investment has been carried out, of which SEK 9M during 1999. PERSONNEL At the end of the reporting period, the total number of employees was 1,962, which is a decrease of 17 during the year. REGIONS EUROPE Order intake in Europe increased by 19 per cent during the quarter. Invoicing rose by 8 per cent to SEK 321M (298). Adjusted for currency fluctuations, the increase was 6 per cent. Operating earnings amounted to SEK 17M (10). Despite a weak start to the year, Product Area Dehumidification reports increased order intake and invoicing compared with the same period in the previous year. Order intake remains strong for MDS (Modular Dehumidification System), the new modular product concept which was launched during the previous year. MDS provides the customer with a more complete system and generates increased delivery values for Munters. Product Area MCS reported a very positive trend during the first quarter. The proportion of weather-dependent operations in the Product Area reduced in favour of industrial applications and service to the construction industry. Order intake as well as invoicing and earnings increased compared with the corresponding period in the previous year. Product Area HumiCool reports slightly reduced order intake and invoicing and lower earnings compared with the corresponding period in the previous year. Product Area Mist Elimination & Water Treatment reports a slight rise in invoicing and improved earnings, thanks to a number of large deliveries to water treatment plants in Great Britain. THE AMERICAS During the reporting period, order intake in the Americas increased by 13 per cent and invoicing rose by 3 per cent to SEK 208M (201). Adjusted for currency fluctuations, the increase in invoicing was 4 per cent. Earnings during the period was SEK 14M (19). The result of the quarter was affected by an unfavourable product mix as well as costs in connection with a reduction of the workforce. Product Area Dehumidification reports a positive order trend. Order intake for dehumidification units for department stores and ice hockey arenas continued to increase. As a result of investments within the industrial segment as well as positive demand in the moisture control segment, Product Area MCS reported continued growth with substantially increased operating earnings. Product Area HumiCool enjoyed positive growth with increased order intake, mainly from the poultry industry. Product Area Mist Elimination & Water Treatment reports reduced invoicing and a fall in earnings. ASIA Munters' operations in Asia report a continued stable trend. In local currencies invoicing increased by 2 per cent. However, translated to SEK order intake decreased by 8 per cent and invoicing fell by 8 per cent to SEK 62M (67). Earnings fell by 7 per cent to SEK 9M (10). Adjusted for currency fluctuations, earnings increased by 1 per cent. Earnings in Product Area HumiCool developed positively, whereas the other Product Areas had a slightly negative trend calculated in SEK but a positive trend in local currencies. China continued the positive trend from the fourth quarter of 1998. FUTURE INFORMATION DATES 11 August 1999 - Interim Report January - June 27 October 1999 - Interim Report January -September Stockholm, 28 April 1999 Lennart Evrell President For further information, please contact: Lennart Evrell, CEO Tel: +46 8-626 63 03 Bernt Ingman, CFO Tel: +46 8-626 63 06 Per Bowallius, Head of Corporate Communications Tel: +46 8-626 63 08 E-mail address: per.bowallius@munters.se Munters AB (publ) P.O. Box 430 SE-191 24 SOLLENTUNA Tel: +46 8-626 63 00 Fax: +46 8-754 68 96 Homepage on the internet: www.munters.com This report has not been the subject of special examination by the Company's Auditors. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/28/19990819BIT00140/bit0001.doc http://www.bit.se/bitonline/1999/04/28/19990819BIT00140/bit0002.pdf