Interim report January - September 1998

Interim report January - September 1998 - Invoicing increased by 9.5 per cent to SEK 1,745M - Operating earnings improved by 10 per cent to SEK132M - Continued positive earnings trend in Asia - Profit level in MCS operations in Europe significantly improved 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 the 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. The Group has 1,936 employees. GROUP INVOICING AND EARNINGS During the quarter, order intake increased by 5 per cent and for the reporting period it rose by 3 per cent to SEK 1,763M (1,709). During the year, the order backlog increased by SEK 25M to SEK 370M. Invoiced sales of the Munters Group increased by 10 per cent to SEK 1,745M (1,594). Adjusted for currency fluctuations, the increase was 9 per cent. Distributed by region, invoicing increased by 10 per cent in Europe, 11 per cent in the Americas and fell by 8 per cent in Asia. Adjusted for currency fluctuations, invoicing in Asia was unchanged. Consolidated earnings before taxes increased by 13 per cent to SEK 126M (112). Earnings per share rose to SEK 3.09 (2.76). Comparative figures referring to 1997 and earlier are reported pro forma. The criteria for the pro forma accounts are to be found in the Company's Annual Report for 1997. MARKET DEVELOPMENT The market in Europe showed a positive trend in the third quarter. For the MCS operations, the market improved and demand during the quarter reached the previous year's high level. The market in the Americas showed some slow-down in the third quarter. The markets in Asia, and especially in South-East Asia, remain turbulent. In Asia, Australia shows a positive trend in demand. In Japan and the other Asian countries, demand has slowed down. FINANCIAL POSITION On 30 September 1998, the equity ratio amounted to 41.1 per cent (31.5). At the end of the reporting period, liquid funds were SEK 84M (129) and interest- bearing liabilities (including PRI pensions) were SEK 248M (328). During the year, the net debt has increased by SEK 53M and amounted to SEK 165M. The Group has unutilised loan facilities of approximately SEK 150M. INVESTMENTS The Group's capital expenditure amounted to SEK 63M (57). The majority of the investments refer to production equipment and IT investments. An investment totalling SEK 40M relating to expansion of the production capacity in Tobo, Sweden will be carried out during 1998 and 1999, of which SEK 10M was invested during the period. PERSONNEL At the end of the reporting period, the total number of employees was 1,936 which is an increase of 65 since the beginning of the year. REGIONS EUROPE Invoicing in Europe increased by 10 per cent to SEK 943M (857). Operating earnings amounted to SEK 47M (50). Product Area Dehumidification continued its positive trend and increased both invoicing and operating earnings compared with the same period in the previous year. Several important orders were received for MDS (Modular Dehumidification Systems), the new modular product concept. As a result of the unfavourable weather and weak demand in the fire damage restoration operations, Product Area MCS had low invoicing during the first six months of the year. During the second quarter, costs were reduced and sales were focused on a more favourable product mix. The effect of these measures, together with improved demand, had the planned impact and the Product Area reports significantly improved operating earnings in the third quarter. Product Area HumiCool had a strong increase in order intake, invoicing and operating earnings, partly as a result of increased sales of systems. Product Area Mist Elimination & Water Treatment reported a fall in operating earnings due to lower invoicing in the Water Treatment segment. THE AMERICAS During the reporting period, invoicing in the Americas increased by 11 per cent to SEK 662M (595). Operating earnings improved to SEK 74M (66) during the period. Establishment of operations in Brazil, Canada and Mexico in recent years has contributed positively to the growth and earnings development. Product Area Dehumidification reports a strong trend. Order intake for dehumidification units for supermarkets and ice hockey arenas increased. As a result of increased focus on the industrial segment and cost reduction measures, Product Area MCS reported continued growth and improved operating earnings. Product Area HumiCool reports lower growth due to low activity on the markets, especially in Latin America. Product Area Mist Elimination increased its invoicing but, due to cost over- run in two major air intake deliveries for gasturbines, the Product Area reports reduced operating earnings. ASIA Invoicing fell by 8 per cent during the period to SEK 176M (192). Operating earnings rose by 2 per cent to SEK 25M (25). In local currencies, Asia reported unchanged invoicing and operating earnings which increased by 14 per cent. This was achieved through cost reductions and a favourable product mix. Order intake during the period, calculated in local currency, was 4 per cent lower than in the previous year. Product Areas Dehumidification and HumiCool show slightly lower invoicing, continued high operating earnings but a significantly lower order intake compared with the corresponding period in the previous year. The order intake in Japan, which in 1997 showed a positive trend, reported a marked decline in the second and third quarters in 1998. However, a continued strong invoicing and operating earnings trend was noted in Australia during the same period. Product Area MCS, which is the smallest product area in the region, reports a continued positive trend, partly as a result of flooding in Australia. FUTURE INFORMATION DATES 25 February 1999 - Preliminary Accounts Report for 1998 28 April 1999 - Annual General Meeting and Interim Report January - March 1999 11 August 1999 - Interim Report January - June 1999 27 October 1999 - Interim Report January - September 1999 Stockholm, 2 November 1998 Lennart Evrell CEO For further information, please contact Lennart Evrell, CEO Tel:+46 8-626 63 03 Bernt Ingman, CFO Tel:+46 8-626 63 06 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/1998/11/02/19990818BIT00450/bit0001.doc http://www.bit.se/bitonline/1998/11/02/19990818BIT00450/bit0002.pdf