Munters ab interim report january - march, 1998

MUNTERS AB INTERIM REPORT January - March, 1998 Strong growth 1998 1997 Change January-MarchJanuary-March % Invoicing, SEK M 554 467 + 19 Operating earnings, SEK M 32 24 +34 - as a percentage of invoicing 5.7 5.1 - Earnings before taxes, SEK M 30 21 +39 - as a percentage of invoicing 5.4 4.6 - *First quarter invoicing increased by 19 percent to SEK 554M *Operating earnings rose by 34 percent to SEK 32M *Marked improvement in the Americas and continued positive trend in Asia *Increased invoicing in Europe despite weak demand within MCS 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 1,896 employees. GROUP INVOICING AND EARNINGS During the first three months of the year, order intake increased by 5 percent to SEK 577M (547) and the order backlog rose by SEK 22M to SEK 367M (345). Invoiced sales of the Munters Group increased by 19 percent to SEK 554M (467). Adjusted for currency fluctuations, the increase was 15 percent. Distributed by region, invoicing increased by 11 percent in Europe, 34 percent in the Americas and 14 percent in Asia. Consolidated earnings before taxes increased by 39 percent to SEK 30M (21). Earnings per share rose to SEK 0.72 (0.53). 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 Munters has a seasonal pattern in which the first quarter is generally the weakest from a sales and earnings viewpoint. The market in Europe continued to develop positively. However, the weather was mild which had a negative influence on the MCS operations. Normally, MCS enjoys a positive demand in the first quarter as a result of frozen water- pipes. The market in the Americas remained strong. Brazil, Mexico and Canada reported positive trends. The market in Asia, and especially in South-East Asia, is very turbulent. As a whole, the Asian market enjoyed a continued positive trend but prospects in the region are uncertain. FINANCIAL POSITION On March 31, 1998, the equity ratio amounted to 38.9 percent (36.5 percent on December 31, 1997). At the end of the reporting period, liquid funds were SEK 140M (SEK 175M on December 31, 1997) and interest-bearing liabilities (including PRI pensions) were SEK 271M (SEK 287M on December 31, 1997). During the year, the net debt increased by SEK 19M and amounted to SEK 131M. The Group has unutilized loan facilities of approximately SEK 139M. CAPITAL EXPENDITURE The Group's capital expenditure amounted to SEK 13M (22). The majority of the investments refer to production equipment and IT investments. PERSONNEL During the year, the number of staff increased by 25. In total, the number of staff was 1,896 at the end of the reporting period. REGIONS EUROPE Invoicing in Europe increased by 11 percent to SEK 298M (269). Operating earnings fell to SEK 10M (13). Product Area Dehumidification continued the positive trend from the previous quarter and increased both invoicing and operating earnings compared with the same period in the previous year despite continued tough competition and price-squeeze on some markets. During the period, the new Modular Dehumidification System - MDS - was delivered to customers. MDS is a newly- developed modular dehumidification system to which functions can be added for, among other things, temperature-control and filtration in order to suit various customers' areas of application and climate. As a result of the extremely mild winter, Product Area MCS has had low capacity utilization which affected both invoicing and operating earnings negatively. Product Area HumiCool enjoyed a strong increase in order intake, partly as a result of increased sales of system sales and entrance into new market segments. Product Area Mist Elimination & Water Treatment reports a slow-down mainly as a result of low order intake in Water Treatment. THE AMERICAS During the reporting period, invoicing in the Americas increased by 34 percent to SEK 201M (150). Operating earnings improved to SEK 19M (9) during the period. All geographic markets contributed to the growth and the positive earnings trend. Product Area Dehumidification reports a strong trend despite a continued low investment rate in the market segment of the product, Zeol. Growth for DryCool recovered from the low level of the previous year. Product Areas MCS and HumiCool report continued strong growth. Product Area Mist Elimination registered increased order intake and invoicing in flue gas treatment for coal-fired powerstations. ASIA Invoicing increased by 14 percent during the period to SEK 67M (58). Operating earnings improved by 38 percent to SEK 10M (7). Product Area Dehumidification reports continued strong development, primarily in Japan, whereas the order intake slowed down in South-East Asia as a result of the financial crisis. Product Area HumiCool developed strongly in Australia, whereas China and South-East Asia had weaker demand as a consequence of the financial crisis. SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD At today's Board Meeting it was decided to make an investment of SEK 40M to increase production capacity in Tobo, Sweden, for the Product Areas Dehumidification and HumiCool. The need for this investment was mentioned in the prospectus for the offering in October 1997. FUTURE INFORMATION DATES Interim Report January - June will be published on August 10, 1998. Interim Report January - September will be published on November 2, 1998. Stockholm, May 5, 1998 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 Henrik Hegardt, Head of Corporate Communication Tel: +46 8-626 63 05 This Report has not been the subject of special examination by the Company's Auditors. Comparative figures relating to 1997 are reported pro forma below. INCOME STATEMENT January-MarchJanuary-MarchApril-MarchFull year SEK M 1998 1997 97/98 1997 Order intake 577 547 2,295 2,265 Invoiced sales 554 467 2,284 2,197 1) Operating expenses -522 -443 -2,092 -2,013 Operating earnings 32 24 192 184 Earnings from participations in associated companies1 1 8 8 Financial net -3 -4 -13 -14 Earnings before taxes 30 21 187 178 Taxes -12 -8 -77 -73 Net earnings for the period 18 13 110 105 1) Of which, depreciation 18 15 70 67 BALANCE SHEET SEK M 980331970331971231 Assets Fixed assets Intangible assets 19 25 19 Plants 313 315 331 Shares and participations 31 27 29 Long-term receivables 8 8 8 Total fixed assets 371 375 387 Current assets Inventories 152 141 148 Trade receivables 441 415 448 Current receivables 70 103 41 Liquid funds 140 66 175 Total current assets 803 725 812 Total assets 1,1741,1001,199 Shareholders' equity and liabilities 2) Shareholders' equity 456 339 437 Long-term liabilities and provisions 28 24 56 Long-term liabilities, interest-bearing 75 204 93 Advances from customers 38 25 36 Current liabilities and provisions 381 308 383 Current liabilities, interest-bearing 196 200 194 Total shareholders' equity and liabilities 1,1741,100 1,199 2) Number of shares 25 000 000 INVOICING AND OPERATING EARNINGS BY REGION January-MarchJanuary-MarchApril-MarchFull year Invoicing, SEK M 1998 1997 97/98 1997 Europe 298 269 1,220 1,191 The Americas 201 150 841 790 Asia 67 58 271 262 Eliminations/adjustments -12 -10 -48 -46 Total 554 467 2,284 2,197 January-MarchJanuary-MarchApril-MarchFull year Operating earnings SEK M 1998 1997 97/98 1997 Europe 10 13 89 92 The Americas 19 9 94 84 Asia 10 7 32 29 Group overheads -6 -4 -21 -19 Eliminations/adjustments -1 -1 -2 -2 Total 32 24 192 184 QUARTERLY SUMMARY 1997 1998 SEK M 1 2 3 4 1 234 Order intake 547608554556 577 Sales 467557570603 554 Opearting earnings 24 49 48 63 32 Operating margin 5.18.88.410.4 5.7 KEY FIGURES January-MarchJanuary-MarchApril-MarchWhole year SEK M 1998 1997 97/98 1997 Operating margin % 5.7 5.1 8.4 8.4 1) Return on capital employes % n.a. n.a. 33.9 34.5 1) Return on shareholders' equity % n.a. n.a. 24.5 28.2 Equity ratio, % 38.9 30.9 n.a. 36.5 Net debt, SEK M 131 338 n.a. 112 Net debt ratio 0.3 1.0 n.a. 0.3 Interest coverage ratio 6.5 6.2 10.3 10.5 Investments in fixed assets, SEK M 13 22 75 84 Number of shares at period-end, million 25 25 25 25 Earnings per shre, SEK 0.72 0.53 4.38 4.18 Equity per share, SEK 18.20 13.60 n.a. 17.50 Number of employees at period-end 1,896 1,791 n.a. 1,871 1) Rolling twelve-month values ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1998/05/05/19990819BIT00360/bit0001.doc http://www.bit.se/bitonline/1998/05/05/19990819BIT00360/bit0002.pdf