STOCKHOLM, Sweden, October 28, 2002 (PRIMEZONE) -- Munters (Other OTC:MUNTF) (Stockholm:MTRS):
2002 2001
Jan-Sep Jan-Sep Change
Order intake, SEK M 3 531 2 916 + 21 %
Net sales, SEK M 3 380 2 830 + 19 %
Operating earnings, SEK M 318 265 + 20 %
- as a percentage of net sales 9.4 9.4 -
Earnings before taxes, SEK M 300 255 + 18 %
- as a percentage of net sales 8.9 9.0 -
Earnings per share, SEK 7.24 6.19 + 17 %
- Order intake increased by 25 per cent to SEK 1,229M in the third quarter
- Two strategic acquisitions were implemented during the quarter
- Operating earnings increased by 20 per cent to SEK 318M
- Following the acquisitions, service (MCS and after sales service)
represent nearly 50 per cent of sales
- Earnings per share increased by 17 per cent to SEK 7.24
MUNTERS OPERATIONS
Munters is the world leader in moisture control with products and services for dehumidification, humidification, air cooling and water damage restoration.
Munters' mission is to be a global applications and service-driven niche 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 divisions: Dehumidification, Moisture Control Services (MCS) and HumiCool. Manufacturing and sales are carried out through the Group's own companies in more than 25 countries. The Group had 3,216 employees at the quarter end.
MARKET TREND
The market in Europe continued to improve within MCS and Dehumidification. During the latter part of the quarter, demand for MCS's services was high in the water damage restoration segment following floods in Europe.
Despite the negative economic trend, the markets in America showed continued growth within the Dehumidification and HumiCool divisions. The market situation for Munters Zeol business, which is included in the Dehumidification division, has stabilised at a lower demand level after a dramatic decline during the previous quarters. Products for cooling of inlet air to gas turbines were also in lower demand. In the previous year, MCS reported strong demand for services relating to water damage restoration after Hurricane Allison in Texas. Demand for normal water damage restoration continued to increase during the reporting period. Demand was high in Australia and Thailand, but there was a continued low level of activity in Japan and South-East Asia.
THIRD QUARTER 2002
During the third quarter, order intake increased by 25 per cent to SEK 1,228M (982). When adjusted for currency fluctuations, the order intake for comparable units rose by five per cent.
Net sales of the Munters Group rose by 16 per cent to SEK 1,179M (1,020). When adjusted for currency fluctuations, sales for comparable units were unchanged. In the third quarter of 2001, Munters invoiced its largest ever MCS project, as a result of Hurricane Allison in Houston, Texas. At the same time the demand within the cyclical semi-conductor industry reached its peak. If these effects are discounted, Munters had a currency-adjusted sales growth for comparable units of six per cent. Compared with the third quarter in the previous year, operating earnings improved by 17 per cent to SEK 118M (100), equivalent to an operating margin of 10.0 per cent (9.8). Amortisation of goodwill and surplus values are included by SEK 10M (5) and SEK 1M (0), respectively. When adjusted for currency fluctuations, the operating profit for comparable units rose by six per cent.
In July, Munters acquired the fire damage restoration operations from the German group, Svt (System- und Verfahrenstechnik GmbH). The business reported net sales of approximately SEK 180M and has 65 employees. The acquisition is aimed at further strengthening Munters' position in the German water and fire damage restoration market. The acquisition was structured as a combined share and assets and liabilities deal. The total purchase price includes a fixed price of approximately SEK 90M and an earn-out based on the company's operating earnings in 2002 and 2003, up to a maximum of approximately SEK 45M. The acquisition was consolidated in Munters from 1 July 2002 and gave rise to goodwill of SEK 125M which will be amortised over 10 years.
In July, Munters acquired all the shares in Aerotech Inc, a leading supplier of evaporative cooling systems and ventilation systems mainly for the poultry industry in the USA. The company has 80 employees and reported net sales of approximately SEK 180M in 2001. The acquisition is aimed at positioning Munters as the leading global supplier of cooling systems for the poultry industry. The total purchase price will not exceed SEK 107M and consists of a fixed portion and an earn-out based on Aerotech's operating earnings in 2002 and 2003. On the date of acquisition, Aerotech had interest-bearing liabilities of approximately SEK 20M. The acquisition was consolidated in Munters from 1 July 2002 and gave rise to goodwill of approximately SEK 75M which will be amortised over 15 years.
At 1 September, Munters acquired all the shares in Polygon Kristiansand AS, Norway, through its subsidiary Polygon AS in Norway. The company, which was previously a franchisee of Polygon, has seven employees. The acquisition is aimed at strengthening Polygon's position within the water and fire damage restoration segment in the Norwegian market. All the aforementioned acquisitions are expected to make a positive impact on Munters profit by the end 2002.
FIRST NINE MONTHS OF 2002
During the first nine months of the year, order intake increased by 21 per cent to SEK 3,531M (2,916). When adjusted for currency fluctuations, the increase in order intake for comparable units was five per cent. At the period end, the backlog was SEK 703M (638), an increase of 10 per cent. When adjusted for currency fluctuations for comparable units, the backlog increase was 15 per cent.
Net sales of the Munters Group rose by 19 per cent to SEK 3,380M (2,830). When adjusted for currency fluctuations, the sales increase for comparable units was four per cent.
Distributed by region, net sales increased by 38 per cent in Europe, one per cent in the Americas and seven per cent in Asia. Operating earnings, after goodwill amortisation, amounted to SEK 318M (265), an improvement of 20 per cent.
Operating earnings were negatively affected by exchange rates fluctuations of SEK 5M. The operating margin amounted to 9.4 per cent (9.4). Amortisation of goodwill and surplus values are included by SEK 22M (11) and SEK 2M (0), respectively. For comparable units, the operating margin was 10.0 per cent (9.4). Consolidated earnings before taxes increased by 18 per cent to SEK 300M (255). Net earnings for the period improved by 17 per cent to SEK 181M (155) after an effective tax rate of 39 per cent (39). Earnings per share increased to SEK 7.24 (6.19).
Net sales increased through acquisitions within MCS and HumiCool. The earnings improvement is due to increased net sales, a favourable product mix and implemented rationalisation programme primarily on indirect costs.
FINANCIAL POSITION
The equity ratio fell during the reporting period as a result of implemented acquisitions, and amounted to 38.0 per cent on 30 September (31 December 2001: 45.4 per cent). Liquid funds were SEK 112M (120) and interest-bearing liabilities (including PRI pensions) were SEK 637M (442). During the year, the net debt has increased by SEK 329M, of which financing of acquisitions (including refinanced loans) accounts for SEK 313M and buy back of own shares for SEK 25M. Net debt amounted to SEK 525M at the end of the reporting period. The Group has unutilised loan facilities of approximately SEK 140M.
From 3 October 2002, Alecta has temporarily stopped repayment of previously paid SPP premiums (so-called company-linked funds). At the end of the reporting period, there was a claim for SEK 6.6M in Munters Group relating to repayment of these funds.
INVESTMENTS
The Group's capital expenditure amounted to SEK 135M (91). The majority relates to investment in equipment for the MCS operation and production and IT equipment. Depreciation amounted to SEK 96M (70) during the period.
During the period, a new production plant was completed in China. At the end of the reporting period, the total investment of SEK 24M had been implemented.
PERSONNEL
At the end of the reporting period, the number of staff was 3,216, an increase of 637 during the year. Within Region Europe, the number increased by 521; within Region Americas by 73; and within Region Asia by 43. Product area MCS reported the largest increase in the number of staff, up by 476, of which approximately 400 relate to personnel in the acquired companies - Polygon AS, Alfa Service Senter, Svt and Polygon Kristiansand.
BUY-BACK OF SHARES
In connection with the year's call-option scheme, Munters bought back 114,700 own shares at an average price of SEK 218.50 per share, equivalent to SEK 25.1M in total.
REGIONS
EUROPE
During the reporting period, order intake in Europe increased by 40 per cent to SEK 2,010M (1,441). Net sales rose by 38 per cent to SEK 1,917M (1,388). When adjusted for currency fluctuations, the sales increase was 10 per cent for comparable units.
Operating earnings improved by 50 per cent and amounted to SEK 164M (109). Of this, acquired units, excluding goodwill amortisation, contributed SEK 34M. Earnings were affected positively by increased net sales within all the divisions.
The Dehumidification division reported increased order intake, sales and improved operating earnings after a normal start to the year. Growth was high in Northern Europe, whereas Southern Europe reported slightly weaker growth. Growth is mainly driven by strong demand in the food and pharmaceutical industries.
The MCS division enjoyed continued organic growth which was strengthened still further by acquisitions implemented during the year. Order intake, sales and operating earnings improved significantly compared with the corresponding period in the previous year. Following the floods in Europe during the third quarter, Munters is continually receiving orders for water damage restoration.
The HumiCool division reported increased order intake, sales and improved operating earnings. Growth remains high in cooling systems for the poultry industry and for mist eliminators. The water treatment operation and products for cooling of inlet air to gas turbines reported a weak trend.
AMERICAS
During the reporting period, order intake in the Americas rose by two per cent to SEK 1,239M (1,217). Net sales increased by one per cent to SEK 1,190M (1,180) during the reporting period. When adjusted for currency fluctuations net sales fell by four per cent for comparable units. Operating earnings amounted to SEK 154M (148). Earnings during the reporting period were positively affected by material-cost reductions.
The Dehumidification division reported continued strong order intake, sales and operating earnings with the exception of the Zeol operation which mainly sells to the semiconductor industry. During the third quarter, order intake for Zeol was on a par with the corresponding period in the previous year, whereas sales fell by SEK 25M. Order intake for dehumidification units for industrial applications and department stores showed continued high growth.
The MCS division reported a significant fall in order intake. During the third quarter of 2001 it reported sales of approximately SEK 69M as a result of Hurricane Allison. Industrial applications for temporary dehumidification enjoyed a continued positive trend. As a result of the previous year's effects of Hurricane Allison, order intake, net sales and operating earnings have fallen significantly. The operating margin remains on a good level.
The HumiCool division reports continuing growth. Order intake, sales and operating earnings improved significantly compared with the previous year. Sales of components for mist eliminators showed a significant growth.
ASIA
Munters' operations in Region Asia reported a positive trend in order intake, sales and earnings despite a low level of activity in Japan. During the reporting period, order intake increased by 11 per cent to SEK 334M (301). Net sales rose by seven per cent to SEK 325M (304). When adjusted for currency fluctuations, it represented an increase of 15 per cent. Operating earnings increased by three per cent to SEK 37M (36).
The Dehumidification division reported a fall in order intake, sales and operating earnings, mainly due to the delayed start-up of the new production unit in China and low demand in Japan.
The MCS division reported continued growth in order intake and sales. Operating earnings improved during the second and third quarters. The HumiCool division enjoyed a continued increase in order intake, sales and operating earnings. The HumiCool operations in Thailand and Australia, in particular, reported a strong trend. The positive development of the poultry industry in Thailand and China has a positive effect on the HumiCool operation. Components for evaporative cooling systems also showed a positive trend.
FUTURE INFORMATION DATES
25 February 2003 - Year-End Report 2002
25 April 2003 - Interim Report
January-March 2003
7 May 2003 Annual General Meeting
Stockholm, 28 October 2002
Lennart Evrell President
For further information, please contact:
Lennart Evrell, CEO Tel: +46 8-626 63 03 Mob: 070-588 1515 lennart.evrell@munters.se Bernt Ingman, CFO Tel: +46 8-626 63 06 Mob: 070-672 74 54 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
Comments on the accounts
The applied accounting principles and calculation methods correspond with the latest Annual Report with the addition of the Swedish Accounting Standards Council's recommendations which came into force on 1 January 2002. The application of these recommendations has not had any significant effect on the company's results and position. The alternative, to re-calculate goodwill in accordance with the transitional regulations in RR 1:00, has not been applied as such re- calculation would not involve any significant change.
This Interim Report has not been examined by the company's auditors.
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