Munters AB Interim Report January-September 2001

INTERIM REPORT January - September 2001 2001 2000 Jan - Sep Jan - Sep Change Order intake, SEK M 2 916 2 459 + 19 % Net sales, SEK M 2 830 2 247 + 26 % Operating earnings, SEK M 265 192 1) + 38 % - as a percentage of invoicing 9.4 8.6 1) - Earnings before taxes, SEK M 255 180 1) + 42 % - as a percentage of net sales 9.0 8.0 - Earnings per share, SEK 6.19 4.35 + 42 % 1) Excluding the discounted value of surplus funds of SEK15M from Alecta/SPP which was booked in quarter 3 of 2000. · Order intake during the third quarter increased by 25 per cent to SEK 982M · Sales in the first nine months of the year rose by 26 per cent to SEK 2,830M · Operating earnings improved by 38 per cent to SEK 265M · Strong growth within Moisture Control Services (MCS) in all regions · Earnings per share increased by 42 per cent to SEK 6.19 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 2,563 employees at the end of the reporting period. MARKET TRENDS A larger proportion of Munters' customers are relatively trend insensitive which has lead to continued high demand. However, individual customer segments and markets show significant variations. The demand trend in the European market was relatively weak during the quarter. However, the market for the MCS operation remained strong. During the period, demand in the Americas fell, partly due to a low level of investment within the semiconductor and poultry industries. However, demand for MCS was very high. The market in Asia also showed signs of slowing down, especially in Japan and South-East Asia, whereas the other parts of the region reported a normal development. The downturn in the economy has meant that customers tend to place their orders later, in the current market situation, large block orders consisting of several projects or sub-projects are split into a number of smaller orders. The demand trend was irregular and showed significant differences between different product areas and countries. THIRD QUARTER 2001 Munters' order intake amounted to SEK 982M (784), an increase of 25 per cent compared with the third quarter in the previous year. The quarter's order growth is accordingly the highest this year. When adjusted for currency fluctuations, the order intake increased by 13 per cent compared with the same quarter in the previous year. The order backlog after the third quarter was SEK 639M compared with SEK 610M at the end of the third quarter in the previous year. Net sales increased by 28 per cent to SEK 1,020M (799). When adjusted for currency fluctuations, the increase during the third quarter was 16 per cent. Operating earnings improved by 31 per cent to SEK 100M (76, excluding Alecta/SPP refund). This is equivalent to an operating margin of 9.8 per cent (9.6). When adjusted for currency fluctuations, the increase in operating earnings was 14 per cent. When broken down by region, net sales increased by 17 per cent in Europe, 44 per cent in the Americas and by 15 per cent in Asia. In all the regions, the MCS operation shows the highest growth. During the quarter, the biggest MCS project to date was carried out in Texas, USA. Water damage restoration after Hurricane Allison was completed with a total order amount of approximately SEK 80M. In July, Munters acquired 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 and sales of approximately SEK 14M per annum. The acquisition is aimed at expanding Munters' MCS business and strengthening its market position in Southern France. THE FIRST NINE MONTHS OF 2001 In the first nine months of the year, order intake increased by 19 per cent to SEK 2,916M (2,459). The backlog has increased by SEK 129M to SEK 639M during the year. Net sales of the Munters Group rose by 26 per cent to SEK 2,830M (2,247). When adjusted for currency fluctuations, the increase was 15 per cent. When broken down by region, net sales increased by 18 per cent in Europe, 35 per cent in the Americas and 27 per cent in Asia. Consolidated operating earnings amounted to SEK 265M (192, excluding the Alecta/SPP refund), an increase of 38 per cent. Currency adjusted the increase was 21 per cent. Consolidated earnings before taxes increased by 42 per cent to SEK 255M (180, excluding the Alecta/SPP refund). Net earnings for the period improved by 31 per cent to SEK 155M (118, excluding the Alecta/SPP refund) 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 42 per cent to SEK 6.19 (4.35). Net sales rose due to a higher delivery volume, mainly within MCS, and positive currency effects. The earnings improvement is due to increased net sales within all product areas and improved margins, especially within MCS and Dehumidification, as a result of the implementation of rationalisation measures and positive currency effects. FINANCIAL POSITION The equity ratio amounted to 40.5 per cent on 30 September (31 December 2000: 40.8 per cent). The equity ratio has decreased by 1.1 per cent due to a buy- back of 247,500 shares for SEK 41M. Liquid funds were SEK 120M (90) and interest-bearing liabilities (including PRI pensions) were SEK 442M (439). During the year, the net debt has reduced by SEK 11M to SEK 322M in spite of buy-back of own shares and a strong growth. The Group has unutilised loan facilities of approximately SEK 140M. INVESTMENTS AND DEPRECIATION The Group's capital expenditure amounted to SEK 91M (99). 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 a new production plant, including production equipment, in China to meet the increased demand. The plant is planned to be operational during the first quarter of 2002. So far SEK 8M has been invested in this production plant. During the period, depreciation amounted to SEK 81M (75), of which SEK 11M (8) was amortisation of goodwill. PERSONNEL At the end of the reporting period, the number of staff was 2,563, an increase of 189 during the year. The number of employees increased especially within MCS, whereas staff reductions were implemented within HumiCool. 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. In connection with the previous option scheme from 2000 and the year's option scheme Munters AB has bought back 448,000 of the company's own shares for an average price of just under SEK 147 per share to cover the company's commitment in accordance with the option schemes. REGIONS EUROPE In the first nine months of the year, order intake in Europe increased by 15 per cent to SEK 1,441M (1,255). Net sales rose by 18 per cent to SEK 1,388M (1,181). When adjusted for currency fluctuations, the increase was 10 per cent. Operating earnings amounted to SEK 107M (80). Earnings were positively affected by the increased net sales within MCS and HumiCool; the implementation of rationalisation within the production of dehumidifiers; and through positive currency effects. Product area Dehumidification reported a relatively weak quarter as a result of reconstruction within the production process and reduced demand. Product area MCS enjoyed increasing growth. Order intake, sales and operating earnings improved significantly compared with the previous year. The operating margin improved through the increased sales and a more even geographic distribution of the sales growth than in the previous year. Product area HumiCool had a slow increase in order intake and sales, whereas the operating margin decreased. Growth remains high for cooling equipment for cooling chicken houses; and green houses. AMERICAS In the first nine months of the year, order intake in the Americas rose by 22 per cent to SEK 1,217M (1,000). Net sales increased by 35 per cent to SEK 1,180M (873) during the same period. When adjusted for currency fluctuations, the increase was 18 per cent. Earnings amounted to SEK 142M (95) during the period. The implementation of rationalisation, increased net sales within MCS and Dehumidification and currency effects positively affected earnings. Product area Dehumidification reported continued strong order intake, sales and earnings. Order intake for dehumidifiers for supermarkets and industrial processes within the food and pharmaceutical industries enjoyed continued high growth, whereas order intake relating to Zeol applications, which are mainly sold to the electronics industry, showed a gradually weakening order trend. Product area MCS reported continuing very strong growth, partly as a result of the water damage restoration after Hurricane Allison, Texas. The increased sales and a favourable service mix meant that earnings continued to develop very positively. Product area HumiCool reported weak order intake, whereas sales increased slightly. Earnings were slightly lower than during the corresponding period in the previous year. Order intake was affected by the slow-down in the American chicken industry. This market has weakened as a result of reduced exports due to the stronger US dollar. 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 18 per cent to SEK 301M (255). Net sales increased by 27 per cent to SEK 304M (239). When adjusted for currency fluctuations, the increase was 22 per cent. Earnings amounted to SEK 36M (31). Product area Dehumidification reported higher order intake and sales. MCS's sales have increased significantly through the acquisition of Mullins Restoration in Australia January 2001 which has enjoyed strong growth. Operating earnings improved in all the product areas. HumiCool's earnings were positively affected by the establishment of the operation in Thailand. FUTURE INFORMATION DATES 22 February 2002 - Year-end Report 2001 25 April 2002 - Annual General Meeting and Interim Report January-March 2002 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 Accounting Standards Council's recommendation RR 20, interim reporting. From 2001, the company applies the Financial Accounting Standards Council's new recommendations with the exception of the recommendations whose coming into force has been postponed to 2002. The application of the new rules has no material 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/2001/10/26/20011026BIT00940/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/10/26/20011026BIT00940/bit0001.pdf The full report