Interim Report January-September 1999

MUNTERS AB INTERIM REPORT January - September 1999 1999 1998 Change Jan - Sep Jan - Sep Order intake, SEK M 1,916 1,762 + 9 % Invoicing, SEK M 1,863 1,745 + 7 % Operating earnings, SEK M 154 132 + 17 % - as a percentage of invoicing 8.3 7.6 - Earnings before taxes, SEK M 148 126 + 17 % - as a percentage of invoicing 7.9 7.2 - Earnings per share, SEK 3.73 3.09 + 21 % *Invoicing increased by 7 per cent to SEK 1,863M *Operating earnings improved by 17 per cent to SEK 154M *Continued strong growth within the MCS operations *Continued success for pre-coolers for gas turbine inlets *Earnings per share increased by 21 per cent to SEK 3.73 MUNTER'S 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. At the quarter-end, the Group had 2,026 employees. GROUP ORDER INTAKE INVOICING AND EARNINGS During the first nine months of the year, order intake increased by 9 per cent to SEK 1,916M (1,762) and order backlog rose by SEK 46M to SEK 390M (344). Invoiced sales of the Munters Group rose by 7 per cent to SEK 1,863M (1,745). Adjusted for currency fluctuations, the increase was 3 per cent. Distributed by region, invoicing increased by 7 per cent in Europe, 6 per cent in the Americas and 10 per cent in Asia. Consolidated operating earnings amounted to SEK 154M (132), an increase of 17 per cent. Operating earnings were positively affected by exchange rate fluctuations of approximately SEK 5M. Consolidated earnings before taxes increased by 17 per cent to SEK 148M (126). Net earnings for the period rose by 21 per cent to SEK 93M (77) after an effective tax rate of 37 per cent (39). Earnings per share increased to SEK 3.73 (3.09). The earnings improvement is due to increased invoicing and implemented rationalisation. Rationalisation measures have indirectly meant that staff were reduced by 15 in Product Area Dehumidification and by 23 in Europe within Product Area Mist Elimination & Water Treatment. At the same time, staff increased within Product Area MCS in which growth was high. MARKET DEVELOPMENT The market in Europe developed positively with the exception of Mist Elimination & Water Treatment. Demand in the MCS operations showed a continued positive trend during the period. The market in America showed continued positive growth within Product Area HumiCool and improvement within Product Area MCS. The market in Asia continues to improve. Demand in China, South-East Asia and Australia is high. In addition, Japan now shows a trend towards improvement. Demand for the Group's products and services have a seasonal pattern which means that invoicing and earnings during the second half of the year are generally higher than in the first half. FINANCIAL POSITION At 30 September, the equity ratio amounted to 44.0 per cent (41.1). Liquid funds were SEK 105M (84) and interest-bearing liabilities (including PRI pensions) were SEK 198M (248). During the year, the net debt has decreased by SEK 42M to SEK 93M. The Group has unutilised loan facilities of approximately SEK 255M. CAPITAL EXPENDITURE The Group's total capital expenditure amounted to SEK 75M (63). The majority refers to investments in production machines and IT equipment. Expansion of the production capacity in Tobo, Sweden, was carried out in 1998 and during the first half of 1999. Fine-tuning of the production plant took place during the third quarter and production of HumiCool products started on a full scale. Capital expenditure in this expansion amounts to SEK 43M, of which SEK16M has been made during 1999. PERSONNEL At the end of the reporting period, the total number of employees was 2,026 which is an increase of 47 during the year. The increase has been made within Product Area MCS. The other Product Areas report a net decrease. REGIONS EUROPE Order intake in Europe rose by 10 per cent during the reporting period. Invoicing increased by 7 per cent to SEK 1,010M (943). Adjusted for currency fluctuations, the increase was 5 per cent. Operating earnings amounted to SEK 62M (47). Product Area Dehumidification reports increased order intake and slightly lower invoicing compared with the same period in the previous year. Earnings were negatively affected as a result of an unfavourable product mix and production interruptions due to the expansion within the production unit in Tobo, Sweden. Product Area MCS strengthened the very positive development of the first half year. 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 significantly compared with the same period in the previous year. Product Area HumiCool reports strongly increased order intake, which refers mainly to deliveries for cooling of induction air to gas turbines and equipment for cooling chicken houses and green houses. Compared with the corresponding period in the previous year, HumiCool reports increased invoicing and improved earnings thanks to a positive product mix. With the investment made in the production unit in Tobo, Sweden, production capacity has been raised to meet the increased order intake. Product Area Mist Elimination & Water Treatment reports significantly decreased order intake, reduced invoicing and fall in earnings. Measures have been implemented to reduce the cost level. AMERICAS During the reporting period, order intake in the Americas increased by 5 per cent. Invoicing rose by 6 per cent to SEK 704M (662). Adjusted for currency fluctuations, the increase was 2 per cent. Earnings during the period amounted to SEK 71M (74). An unfavourable product mix and costs in connection with staff reductions affected earnings during the year. Product Area Dehumidification reports a slightly positive order trend. Order intake for dehumidification units for department stores, the handling of frozen products, and ice hockey arenas continued to increase. As a result of continued investments within the industrial segment as well as positive demand in the moisture control segment, Product Area MCS reports improved earnings. During autumn, several orders were received as a result of hurricanes. Product Areas HumiCool and Mist Elimination enjoyed positive growth with increased order intake and invoicing as well as improved earnings. This was achieved through increased sales of refrigeration equipment to the chicken industry and equipment for cooling of induction air to gas turbines. ASIA Munters' operations in Asia report continued improvement. During the period, order intake increased by 20 per cent and invoicing rose by 10 per cent to SEK 194M (176). Adjusted for currency fluctuations, order intake increased by 9 per cent and invoicing was on a par with the previous year. Earnings amounted to SEK 28M (25). All Product Areas report an increase in order intake and invoicing. The weak invoicing during the beginning of the year in the dehumidification operation in Japan showed some recovery. Order intake, invoicing and earnings in Product Area HumiCool continued to develop positively. China, South-East Asia and Australia report a continued positive earnings trend. PARENT COMPANY In the first nine months of the year, the Parent Company's result after financial income/expense amounted to SEK -9.7M (-11.5). There were no sales. Capital expenditure amounted to SEK 0.3M (0.3) and number of employees was 16 (18). FUTURE INFORMATION DATES 22 February 2000 - Preliminary Accounts Report for 1999 27 April 2000 - Annual General Meeting and Interim Report January-March 2000 10 August 2000 - Interim Report January-June 2000 26 October 2000 - Interim Report January-September 2000 Stockholm, 27 October 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 Communication, Tel: +46 8-626 63 08 E-mail address: per.bowallius@munters.se Munters AB (publ) Box 430 SE-191 24 SOLLENTUNA Tel: +46 8-626 63 00 Fax: +46 8-754 68 96 Home page 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/1999/10/27/19991027BIT00300/bit0001.doc The Full Report http://www.bit.se/bitonline/1999/10/27/19991027BIT00300/bit0002.pdf The Full Report