Munters AB interim report january- june 2001

MUNTERS AB INTERIM REPORT January - June 2001 2001 2000 Jan - Jun Jan - Jun Change Order intake, SEK 1 934 1 675 + 15 % M Net sales, SEK M 1 811 1 448 + 25 % Operating 164 116 + 42 % earnings, SEK M - as a percentage 9,1 8,0 - of net sales Earnings before 158 108 + 47 % taxes, SEK M - as a percentage 8.7 7.4 - of net sales Earnings per 3.83 2.62 + 46 % share, SEK · Sales in the first half of the year rose by 25 per cent to SEK 1,811M · Operating earnings improved by 42 per cent to SEK 164M · Strong growth within Moisture Control Services (MCS) · Earnings per share increased by 46 per cent to 3.83 kronor MUNTERS' OPERATIONS Munters is the world leader in moisture control with products and services for dehumidification, humidification and air cooling. 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) and HumiCool. Manufacturing and sales are carried out via the Group's own companies in more than 25 countries. The Group had 2,488 employees at the end of the reporting period. MARKET DEVELOPMENT The demand in the European market slowed down during the quarter. However, the market for the MCS operation remained good. During the period, demand in the Americas fell partly due to a very low investment level within the semiconductor and chicken production industries. Demand for the MCS operation remained very high. The market in Asia also showed signs of slowing down, especially in Japan. In all the markets it was noted that customers tend to place their orders later and, in the current market situation, that large block orders, which comprise several projects or sub-projects, are split into a number of smaller orders. SECOND QUARTER 2001 Munters' order intake amounted to SEK 973M (884), an increase of 10 per cent compared with the second quarter in the previous year, which was the strongest ever with a growth of 37 per cent. When adjusted for currency fluctuations, order intake decreased by 1 per cent compared with the same quarter in the previous year. The backlog rose by four per cent to SEK 669M (644) in the second quarter. Compared with the end of the second quarter the previous year the backlog increased by 14 per cent. Net sales increased by 30 per cent to SEK 960M (741). When adjusted for currency fluctuations, the increase in net sales was 16 per cent during the second quarter. Operating earnings improved by 43 per cent to SEK 92M (65) compared with the second quarter in the previous year. This is equivalent to an operating margin of 9.6 per cent (8.7). When adjusted for currency fluctuations, the increase was 31 per cent. In June, Munters acquired all the shares in Sundsvalls Totalsanering AB in Sweden. The company has three service depots with a total of around 25 employees and reported net sales of SEK 13M. The acquisition is aimed at expanding Munters' service offering and to strengthen its market position in northern Sweden. In addition, Munters acquired the assets and liabilities, including know- how and patent rights regarding SCR systems (Selective Catalytic Reduction) for NOx reduction from ABB Fläkt Marine. The operation will be integrated with Munters' HumiCool business relating to NOx reduction, in which some 15 staff will be employed in the combined operations. It enables Munters to offer a complete range of products for treatment of nitrogen oxide waste from large diesel engine installations. THE FIRST SIX MONTHS OF 2001 In the first six months of the year, order intake increased by 15 per cent to SEK 1,934M (1,675). The backlog has increased by SEK 159M to SEK 669M during the year. Net sales of the Munters Group rose by 25 per cent to SEK 1,811M (1,448). Adjusted for currency fluctuations, the increase was 14 per cent. When broken down by region, net sales increased by 18 per cent in Europe, 30 per cent in the Americas and 36 per cent in Asia. Consolidated operating earnings amounted to SEK 164M (116), an increase of 42 per cent. Operating earnings were affected positively by approximately SEK 15M as a result of exchange rate fluctuations. Consolidated earnings before taxes increased by 47 per cent to SEK 158M (108). Net earnings for the period improved by 46 per cent to SEK 96M (66) after an effective tax rate of approximately 39 per cent (39). When adjusted for non-deductible goodwill amortisation, the tax rate was just under 37 per cent. Earnings per share increased by 46 per cent to SEK 3.83 (2.62). Net sales rose due to a higher delivery volume, currency effects and improved product mix. The earnings improvement is due to increased net sales within all product areas, improved margins, especially within MCS and Dehumidification, and the previous implemented rationalisation measures. FINANCIAL POSITION The equity ratio amounted to 41.9 per cent (31 December 2000: 40.8 per cent). Liquid funds were SEK 79M (107) and interest-bearing liabilities (including PRI pensions) were SEK 416M (458). During the year, the net debt has incresed by SEK 4M to SEK 337M due to an increased need for working capital due to the Group's growth. The Group has unutilised loan facilities of approximately SEK 140M. INVESTMENTS AND DEPRECIATION The Group's capital expenditure amounted to SEK 64M (66). The majority refers to investment in MCS, production and IT equipment. During the second quarter, a decision was made to invest approximately SEK 25M in new production premises, including production equipment, in China to meet the increased demand. The production unit is planned to be operational during the first quarter of 2002. During the period, depreciation amounted to SEK 59M (49), of which SEK 6M (5) was amortisation of goodwill. PERSONNEL At the end of the reporting period, the number of staff was 2,488, an increase of 114 during the year. The number of employees increased especially within MCS and HumiCool in Europe. In accordance with a resolution passed by the Annual General Meeting, senior executives have been invited to subscribe for warrants in Munters AB at market prices. In total, 49 employees subscribed for such warrants. This involves a maximum dilution effect of 245,500 shares, equivalent to approximately one per cent of the share capital. REGIONS EUROPE During the reporting period, order intake in Europe increased by 12 per cent to SEK 960M (858). Net sales rose by 18 per cent to SEK 913M (775). When adjusted for currency fluctuations, the increase was 11 per cent. Earnings amounted to SEK 74M (48). Earnings were positively affected by the increased net sales within MCS and HumiCool; implementation of rationalisation within production of dehumidifiers; and through positive currency effects. Product area Dehumidification continued the weak start of the year relating to order intake and sales. Operating earnings increased significantly, mainly thanks to the measures which are being implemented within the production unit in Sweden. Product area MCS enjoyed continued growth. Order intake, sales and operating earnings improved significantly compared with the previous year. The increase in operating margin is due to a more evenly distributed geographical growth compared to previous years. Product area HumiCool reported a continued strong order intake and increased sales, whereas the operating margin fell slightly due to an altered product mix. Growth remains high for products and systems for cooling inlet air to gas turbines, equipment for cooling chicken houses and greenhouses, and in mist elimination and water treatment. AMERICAS During the reporting period, order intake in the Americas rose by 17 per cent to SEK 794M (676). Net sales increased by 30 per cent to SEK 731M (561) during the same period. When adjusted for currency fluctuations, the increase was 13 per cent. Earnings amounted to SEK 82M (63) during the period. The implementation of rationalisation, increased invoicing, a favourable product mix and positive currency effects all had positive effects on earnings. Product area Dehumidification reported significantly increased order intake, sales and earnings. Order intake for dehumidification units for super markets and industrial processes within the food and pharmaceutical industries, grew strongly, whereas order intake relating to Zeol applications developed negatively towards the end of the reporting period due to the low investment level within the semiconductor industry. Product area MCS reported continued strong growth as a result of its investment within the industrial segment, high demand within the water damage control segment, and the projects won in the wake of the damage in Texas caused by Hurricane Allison. Earnings developed very positively due to the increased sales and a favourable service mix. Product area HumiCool reported a weakening trend relating to order intake, whereas sales increased and earnings were on a par with the corresponding period in the previous year. Order intake was affected by the low growth rate, mainly due to a slow-down in the market relating to equipment for cooling chicken houses, and because large block orders, which comprise several projects or sub-projects, are split into a number of smaller orders during the current market situation. ASIA Munters' operations in Asia showed a positive trend relating to order intake, net sales and earnings. During the reporting period, order intake rose by 19 per cent to SEK 209M (176). Net sales increased by 36 per cent to SEK 195M (144). When adjusted for currency fluctuations, the increase was 29 per cent. Earnings amounted to SEK 23M (16). Product areas Dehumidification and MCS reported substantially higher order intake and sales. MCS's sales have increased through the acquisition of Mullins Restoration in Australia on 4 January 2001. Operating earnings improved within Dehumidification and HumiCool, whereas earnings within MCS are on a par with the previous year. HumiCool's earnings were positively affected by the establishment in Thailand. PARENT COMPANY The parent company's earnings after financial income and expenses amounted to SEK -11.0M (-8.5)) in the first six months of the year. No sales were made. Investments amounted to SEK 1.2M (0.1) and the number of employees was 16 (14). EVENTS AFTER THE END OF THE REPORTING PERIOD On 24 July 2001, Munters made an agreement to acquire all the shares in M'Renov SA, France. The company is located in St Head, near St Etienne in France and has around 20 employees. M'Renov reported sales of approximately SEK 14M. The acquisition is aimed at expanding Munters' service supply and to strengthen its market position in the Rhone-Alpes region. FUTURE INFORMATION DATES 26 October 2001 - Interim Report January- September February 2002 - Year-end Report 2001 April 2002 - Annual General Meeting and Interim Report January- March 2002 Stockholm, 10 August 2001 Lennart Evrell President For further information, please contact: Lennart Evrell, CEO, Tel: +46 8-626 63 03 E-mail: lennart.evrell@munters.se Bernt Ingman, CFO Tel: +46 8-626 63 06 E-mail: bernt.ingman@munters.se Munters AB (publ) Box 430 SE-191 24 SOLLENTUNA Tel: +46 8-626 63 00 Fax: +46 8-754 68 96 Web site on the Internet: www.munters.com This Report has not been the subject of special examination by the company's auditors. Accounting principles This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation RR20, interim reporting. From 2001, the company applies the Swedish Financial Accounting Standards Council's new recommendations, with the exception of the recommendations whose coming into force have been postponed to 2002. The application of the new recommendations has not had any significant effect on the company's results and position. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/10/20010810BIT00230/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/10/20010810BIT00230/bit0001.pdf The full report