MUNTERS AB INTERIM REPORT January-September 2000

MUNTERS AB INTERIM REPORT January-September 2000 2000 1999 Jan - Sep Jan - Sep Change Order intake, SEK M 2,459 1,916 + 28 % Invoicing, SEK M 2,247 1,863 + 21 % 1) Operating earnings, SEK M 192 154 + 25 % - as a percentage of invoicing 8.6 8.3 - 1) Earnings before taxes, SEK M 180 148 + 22 % - as a percentage of invoicing 8.0 7.9 - Earnings per share, SEK 4.71 3.73 + 26 % 1) Excluding the current value of current and future refunds of surplus funds from SPP totalling SEK 15M. Order intake in the third quarter increased by 28 per cent to SEK 784M Invoicing in the third quarter rose by 25 per cent to SEK 799M Operating earnings, excluding surplus funds from SPP, improved by 25 per cent to SEK 192 M Significant growth in HumiCool Continued strong development and uninterrupted growth over 27 quarters 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) and HumiCool. Manufacturing and sales are carried out via the Group's own companies in more than 25 countries. The Group has 2,346 employees at the end of the reporting period. MARKET DEVELOPMENT The market in Europe developed positively. Demand within HumiCool generated accelerating growth during the period, and increased demand is noted within Mist Elimination & Water Treatment. The market in America showed continued high growth, especially within Dehumidification, Zeol and HumiCool. During the last quarter, the market in Latin America also developed positively within Dehumidification and HumiCool. Activities in the Asian market remains high in China and Australia. THIRD QUARTER 2000 In the third quarter, Munters' order intake increased by 28 per cent to SEK 784M (614). Invoicing rose by 25 per cent to SEK 799M (637). Munters has now enjoyed uninterrupted sales growth over 27 quarters, compared with the same quarter in the previous year. Adjusted for exchange rate fluctuations the increase during the third quarter was 20 per cent. Operating earnings, excluding surplus funds from SPP of SEK 15M, improved by 20 per cent to SEK 76M (64). Adjusted for exchange rate fluctuations the increase was 15 per cent. GROUP ORDER INTAKE, INVOICING AND EARNINGS In the first nine months of the year, order intake increased by 28 per cent to SEK 2,459M (1,916). Excluding Euroemme, which was acquired in December 1999, the increase was 23 per cent. During the year, order backlog rose by 71 per cent to SEK 610M (390). Invoicing of the Munters Group rose by 21 per cent to SEK 2,247M (1,863). Adjusted for exchange rate fluctuations the increase was 18 per cent. Excluding Euroemme, the increase was 16 per cent. Distributed by region, invoicing increased by 17 per cent in Europe, 24 per cent in the Americas and 23 per cent in Asia. Consolidated operating earnings, excluding surplus funds from SPP, amounted to SEK 192M (154), an increase of 25 per cent. Operating earnings were positively affected by exchange rate fluctuations by approximately SEK 4M. Consolidated earnings before taxes rose by 31 per cent to SEK 195M (148). During the period, earnings increased by 26 per cent to SEK 118M (93) after an effective tax rate just over 39 per cent (37). Adjusted for non- deductible goodwill amortisation, the tax rate was 38 per cent. Earnings per share increased by 26 per cent to SEK 4.71 (3.73). The earnings improvement is due to increased invoicing especially within HumiCool, including Euroemme, Dehumidification in the Americas and the implementation of rationalisation within the Group. Decided rationalisation measures within Dehumidification in Europe were written- off by SEK 5M. The group's share of SPP's surplus funds, calculated at current values, amounts to SEK 15M. In the third quarter, this is reported as an item affecting comparability in the income statement. During September, the first payment of SEK 3M was received. FINANCIAL POSITION On 30 September, the equity ratio amounted to 39.1 per cent (44.0). Liquid funds were SEK 90M (105) and interest-bearing liabilities (including PRI pensions) were SEK 439M (198). During the year, the net debt has increased by SEK 119M to SEK 349M due to buy-back of own shares SEK 25M; supplementary purchase price paid in respect of the acquisition of Euroemme SEK 28M; and increased requirement for working capital due to the growth of the Group. The group has unutilised loan facilities of approximately SEK 75M. INVESTMENTS AND DEPRECIATION The group's total capital expenditure amounted to SEK 99M (75). The majority refers to investment in MCS, production and IT equipment. Depreciation amounted to SEK 75M (58) during the period, of which goodwill accounted for SEK 8M (2). PERSONNEL At the end of the reporting period, the number of staff was 2,346, an increase of 200 during the year. The largest increase in the number of employees has taken place within MCS and HumiCool. REGIONS EUROPE During the reporting period, order intake in Europe increased by 20 per cent to SEK 1,255M (1,049). Invoicing rose by 17 per cent to SEK 1,181M (1,010). Adjusted for exchange rate fluctuations, the increase was 21 per cent. Operating earnings amounted to SEK 80M (62). Product Area Dehumidification reports a fall in order intake and increased invoicing compared with the same period in the previous year. Operating earnings are positive but unsatisfactorily low, and action aimed at increasing profitability has therefore been initiated. Product Area MCS reports strong growth during the first nine months of the year. The proportion of weather-dependent operations in the Product Area has reduced in favour of industrial applications and services to the construction industry. Both order intake and invoicing increased compared with the same period in the previous year. However, operating earnings are lower than in the previous year as a consequence of high initial costs in connection with the increase of personnel. Product Area HumiCool reports strongly increased order intake, invoicing and earnings compared with the corresponding period in the previous year. Euroemme, Italy, which was acquired in December 1999, is included in Product Area HumiCool from 1 January 2000. The increase relates to deliveries of equipment for cooling of induction air to gas turbines and cooling equipment for poultry farms and greenhouses. Mist Elimination & Water Treatment reports an improvement in earnings during the latter part of the reporting period thanks to the cost-adjustment measures that were implemented earlier. THE AMERICAS During the reporting period, order intake in the Americas rose by 43 per cent. Invoicing increased by 24 per cent to SEK 873M (704). Adjusted for exchange rate fluctuations, the increase was 14 per cent. Operating earnings during the period amounted to SEK 95M (71). During the year, earnings were positively affected by high invoicing, a favourable product mix within Product Area Dehumidification, and previously implemented rationalisation measures. Product Area Dehumidification reports continued strong order intake and invoicing. Order intake of dehumidification units for department stores, industrial processes and Zeol applications has increased. Product Area MCS successfully continued its investment within the industrial segment, but the absence so far of the annual flooding in the region has affected earnings negatively. Product Area HumiCool enjoyed very high growth in order intake despite a slowdown in cooling equipment for poultry farms. Growth is mainly generated by products for cooling of induction air to gas turbines, and by new cooling applications. ASIA Munters' operations in Asia show a continued positive trend. During the period, order intake increased by 21 per cent, and invoicing rose by 23 per cent to SEK 239M (194). Adjusted for exchange rate fluctuations, the increase was 12 per cent. Earnings amounted to SEK 31M (28). Product Areas HumiCool and Dehumidification report increased order intake and invoicing as well as improved earnings. China, Australia and Japan show a positive earnings trend. FUTURE INFORMATION DATES 22 February 2001 - Year-end Report for 2000 25 April 2001 - Annual General Meeting and Interim Report January-March 2001 Stockholm, 26 October 2000 Lennart Evrell President For further information, please contact: Lennart Evrell, CEO Tel: +46 8-626 63 03 E-mail address: lennart.evrell@munters.se Bernt Ingman, CFO Tel: +46 8-626 63 06 E-mail address: bernt.ingman@munters.se Munters AB (publ) Box 430 SE-191 24 SOLLENTUNA Sweden Tel: +46 8-626 63 00 Fax: +46 8-754 68 96 Website on the Internet: www.munters.com This Report has not been the subject of special examination by the company's auditors. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/10/26/20001026BIT00670/bit0001.doc The full report http://www.bit.se/bitonline/2000/10/26/20001026BIT00670/bit0002.pdf The full report