Munters AB preliminary accounts report, 1 january - 31 december 2000

MUNTERS AB PRELIMINARY ACCOUNTS REPORT, 1 January- 31 December 2000 2000 1999 Change Order intake, SEK M 3,322 2,608 + 27 % Invoicing, SEK M 3,179 2,594 + 23 % Operating earnings1), SEK 306 237 + 29 % M - as a percentage of 9.6 9.1 - invoicing Earnings before taxes1), 289 231 + 25 % SEK M - as a percentage of 9.1 8.9 - invoicing Earnings per share, SEK 7.34 5.78 + 27 % Dividend (for 2000, 2.30 1.80 + 28 % proposal) 1) Excluding the current value of so far received and future refunds of surplus from SPP totalling SEK 15M. · The company saw continued strong development in the fourth quarter and has now achieved uninterrupted growth over 28 quarters · In the fourth quarter, invoicing increased by 27 per cent and operating earnings by 37 per cent · Invoicing rose by 23 per cent to SEK 3,179M during the year · Operating earnings improved by 29 per cent to SEK 306M · Earnings per share increased by 27 per cent to SEK 7.34 · The Board of Directors proposes a dividend of SEK 2.30 (1.80) MUNTERS' OPERATIONS Munters is the world leader in moisture control with products and services for dehumidification, humidification and air cooling within selected niches. Munters' business concept is to be a global application and service driven company in air treatment from a base in dehumidification and humidification. 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 2,374 employees at the end of the year. MARKET DEVELOPMENT During the year, the market in Europe developed positively. Demand, especially within HumiCool, has accelerated and demand within MCS was high throughout the year. In the fourth quarter, demand increased within Dehumidification. The market in America showed a high growth rate in all product areas and a significant market growth within HumiCool, within the Zeol segment and within Dehumidification for industrial applications. The market in Asia showed strong demand in China and Australia, whereas market activities have been lower in Japan and South East Asia. FOURTH QUARTER 2000 In the fourth quarter, Munters' order intake increased by 25 per cent to SEK 863M (691). Invoicing rose by 27 per cent to SEK 932M (731). Adjusted for exchange rate fluctuations the increase was 20 per cent compared with the fourth quarter of 1999. If the effects of the acquisition of Euroemme are also excluded, the sales increase was 15 per cent. Operating earnings, excluding the discounted value of surplus funds from SPP, improved by 37 per cent to SEK 114M (83). This is equivalent to an operating margin of 12.2 per cent (11.4). Adjusted for currency fluctuations the increase was 28 per cent. Munters has now enjoyed uninterrupted sales growth over 28 quarters, compared with the same quarter in the previous year. GROUP ORDER INTAKE, NET SALES AND EARNINGS FOR 2000 During the year, order intake increased by 27 per cent to SEK 3,322M (2,608) and the backlog rose by SEK 153M to SEK 510M (357). Invoicing of the Munters Group rose by 23 per cent to SEK 3,179M (2,594). Adjusted for currency fluctuations the increase was 18 per cent and excluding the effects of the acquisition of Euroemme, the sales increase was 13 per cent. Distributed by region invoicing increased by 19 per cent in Europe, 27 per cent in the Americas and 20 per cent in Asia. Consolidated operating earnings, excluding the discounted current value of surplus funds from SPP, amounted to SEK 306M (237), an increase of 29 per cent. During the year, the operating margin amounted to 9.6 per cent (9.1). Operating earnings were affected positively by exchange rates fluctuations, by approximately SEK 9M. Consolidated earnings before taxes, including the discounted current value of surplus funds from SPP, increased by 31 per cent to SEK 303M (231). Net earnings for the year rose by 27 per cent to SEK 184M (144) after an effective tax rate of just over 39 per cent (37). Adjusted for non- deductible goodwill amortisation, the tax rate was 38 per cent. Earnings per share increased to SEK 7.34 (5.78). The earnings improvement is due to increased invoicing, a favourable product mix and an implemented rationalisation. Sales increased thanks to the launch of new products and improved added value in made deliveries. From a percentage viewpoint, the number of employees has increased less than sales in all regions. FINANCIAL POSITION At the year end, the equity ratio amounted to 40,8 per cent (38.8). Liquid funds were SEK 88M (121) and interest-bearing liabilities (including PRI pensions) were SEK 421M (351). During the year, the net debt increased by SEK 103M to SEK 333M due to a buy-back of the company's own shares of SEK 25M; a supplementary purchase price paid in respect of the acquisition of Euroemme of SEK 28; and an increased requirement for working capital due to the growth of the Group. The Group has unutilised loan facilities of approximately SEK 200M. INVESTMENTS The Group's total capital expenditure amounted to SEK 148M (114). The majority refers to investment in MCS, production and IT equipment. Depreciation amounted to SEK 103M (82) during the period, of which goodwill amortisation accounted for SEK 11M (3). PERSONNEL At the year end, the number of staff was 2,374, an increase of 228. Within Europe, the number increased by 126; within the Americas by 88; and within Asia by 18. MCS is the product area which reported the largest increase in the number of staff, up by 113. During the year, 42 senior executives have subscribed for call options in Munters AB on market terms. In connection with the subscription of the options Munters bought back 200,000 shares in the Company at an average price of SEK 124 per share to cover the Company's commitments to the call options programme. REGIONS EUROPE During the year, order intake in Europe increased by 20 per cent to SEK 1,702M (1,423). Invoicing rose by 19 per cent to SEK 1,674M (1,404). Adjusted for currency fluctuations, the increase was 22 per cent. Operating earnings improved by 45 per cent and amounted to SEK 150M (103). During the year, the production unit in Tobo, Sweden, was certified in accordance with ISO 14001. Product Area Dehumidification reports an order intake which is on a par with the previous year, following a recovery during the last quarter of the year. In the third quarter, a rationalisation programme was started aimed at increasing the operating margin within the product area. Invoicing increased during the year thanks to a favourable product mix and an implemented rationalisation, which led to significantly improved operating earnings. Product Area MCS enjoyed strong growth. The proportion of weather- dependent operations in the product area reduced during the first nine months of the year. In the last quarter, Great Britain, France, Italy and Sweden suffered extensive flooding, which had a positive effect on sales. Volume from flooding and other catastrophe business is less than 5 per cent of total invoicing in the product area. Both order intake and invoicing increased significantly compared with the corresponding period in the previous year. However, operating earnings fell as a result of high marginal costs in connection with staff expansion. Product Area HumiCool reported a strongly increased order intake, increased invoicing and improved earnings compared with the previous year. Euroemme, Italy, which was acquired at the end of December 1999, is included in HumiCool from 1 January 2000. The previously separate product area, Mist Elimination and Water Treatment, has been integrated into HumiCool. The growth and earnings improvements relate to deliveries for cooling of inlet air to gas turbines, equipment for cooling chicken houses and greenhouses, and new applications. The acquisition of Euroemme has enabled Munters to establish itself as a supplier of cooling systems for chicken houses and greenhouses, having previously been recognised primarily as a component supplier. During the year, invoicing of Mist Elimination and Water Treatment fell but earnings were maintained at the previous year's level thanks to a significant rationalisation implemented during the latter part of the previous year. THE AMERICAS During the year, order intake in the Americas rose by 39 per cent to SEK 1,325M (956). Invoicing increased by 27 per cent to SEK 1,231M (970). Adjusted for currency fluctuations, the increase was 14 per cent. Earnings during the period amounted to SEK 140M (104). Earnings during the year were influenced by high invoicing, a favourable product mix and a generally sound market situation. Product Area Dehumidification reported a strong order intake and good invoicing, especially for dehumidification units for industrial processes and Zeol applications for the semiconductor and automotive industries. Operating earnings improved significantly compared with the previous year thanks to increased sales and the rationalisation implemented at the end of 1999. Product Area MCS - through continued investment within the industrial segment and high demand within the water damage control segment - reported an increased order intake and invoicing, as well as improved earnings despite the absence of major flooding during the year. Product Area HumiCool enjoyed a very high growth rate in order intake and invoicing. The growth emanates mainly from products for cooling of inlet air to gas turbines, from new applications and increased value content in made deliveries. ASIA During the year, Munters' operations in Asia showed continued improvement except in Japan and South-East Asia. Order intake increased by 25 per cent to SEK 357M (285) and invoicing rose by 20 per cent to SEK 335M (279). Adjusted for exchange rate fluctuations the increase in invoicing was nine per cent. Earnings amounted to SEK 40M (41) after the year had been charged with costs in connection with establishing new operations in Thailand and Korea. All Product Areas reported increased order intake and invoicing. Product Area Dehumidification reported strong development in China. The dehumidification operation in Japan, which had a weak start to the year, reported an improvement in the latter part of the year. Order intake, invoicing and earnings within Product Area HumiCool showed a positive trend. During the year, a production unit for CELdek was established in Thailand. ITEMS AFFECTING COMPARABILITY The Group's share of SPP's surplus funds amount to SEK 15M, calculated on current values. In the third quarter, these were reported as an item affecting comparability in the income statement. During the year, the first instalment of SEK 3M was received. PROVISIONS Munters has made a provision of SEK 10M in operating expenses during the fourth quarter relating to a legal dispute from 1991. PARENT COMPANY The Parent Company's results after financial income and expenses amounted to SEK -14,7M (-15.2). There were no sales. Capital expenditure amounted to SEK 0.2M (0.7) and the number of employees was 13 (16). EVENTS AFTER THE END OF THE REPORTING PERIOD At 4 January 2001, Munters has acquired the operations of the Australian company, Mullins Restoration. The company operates in the property restoration control segment and has three depots, around 30 employees and sales of approximately SEK 35M. PROPOSAL FOR DIVIDEND The Board of Directors has decided to propose that the Annual General Meeting decide an increase in dividend to SEK 2.30 (1.80) per share for 2000. This is equivalent to a dividend of SEK 57M (45). WARRANT PROGRAMME The Board of Directors intends to propose that the Annual General Meeting authorise the Board to issue a warrant programme directed at senior executives within Munters. The scope and terms of the programme are currently being analysed. The Board intends to submit its proposal to the Annual General Meeting in April. OPPORTUNITY TO BUY BACK SHARES The Board of Directors intends to propose that the Annual General Meeting renew the Board's authority to decide a buy-back of the Company's shares. Such a mandate would mean that the Board is given the opportunity until the next AGM - if this is deemed to be appropriate - to decide a buy-back of the company's shares. Any buy-back could be made via the stockmarket as well as via an offer to the shareholders. The Board of Directors' mandate is also proposed to include an opportunity to transfer repurchased shares within the limits permitted by the legislation. ANNUAL GENERAL MEETING The Annual General Meeting will be held in Konferenshallen Polstjärnan, Sveavägen 77, in Stockholm at 5pm on Wednesday 25 April 2001. FUTURE INFORMATION DATES The complete Annual Report for Munters AB will be available on the Company's premises at the March/April turn of the month. At the same time, it will be distributed to the registered shareholders. 25 April 2001 - Annual General Meeting and Interim Report January-March 2001 10 August 2001 - Interim Report January-June 2001 26 October 2001 - Interim Report January-September 2001 February 2002 - Year-end Report 2001 Stockholm, 22 February 2001 Munters AB (publ) 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 Munters AB (publ) Box 430 SE-191 24 SOLLENTUNA Sweden Tel: +46 8-626 63 00 Fax: +46 8-754 68 96 Web site on the Internet: www.munters.com ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/22/20010222BIT00930/bit0001.doc The full year-end report http://www.bit.se/bitonline/2001/02/22/20010222BIT00930/bit0001.pdf The full year-end report