Q4”A stronger base forthe future growth journey”

October-December 2020

January-December 2020■

Munters was impacted by the outbreak of Covid-19 in the fourth quarter withdelays both in deliveries to customers as well as postponed investments bycustomers.

■

Order intake decreased -13%, currency adjusted -4%, mainly driven by lower
order intake in Data Centers US on the back of a strong 2019.

■■

Net sales was flat, currency adjusted strong growth of +8%, mainly driven bygood growth in business area AirTech’s pharma sub-segment and Services aswell as the swine segment in business area FoodTech.

■■

The adjusted EBITA-margin improved to 13.3% (12.5). The improvement was
driven by an improved gross margin and continued low indirect costs in businessarea AirTech.

■■

Leverage (net debt/adjusted EBITDA, LTM*) decreased to 1.9x from 2.5x end of
September 2020. The decrease was mainly driven by a strong cash flow
development and a positive exchange rate effect of MSEK 200 on outstanding
interest bearing borrowings (USD/SEK).

■

The measures for implementing a sharpening of the customer offering andfootprint optimization were implemented according to plan. The main focus
during the fourth quarter has been to prepare for execution of the measures in
2021. In the fourth quarter, only minor costs has been incurred.

■■

The impact from the outbreak of Covid-19 was mixed with the largest impact
experienced in the second and fourth quarter. All production units, except forone minor unit, have been operational throughout the year with only minor
disturbances.
Order intake decreased -1%, currency adjusted +2%. The slight increase was
because of a good order intake in business are FoodTech.
Net sales declined by -2%, currency adjusted +1% with a strong development in
the swine segment in China for business area FoodTech. This was offset by aweak development in Mist Elimination in business area AirTech.
The adjusted EBITA-margin improved to 12.9% (12.2). The improvement was
driven mainly by higher net sales and a tight cost control.
Leverage (net debt/adjusted EBITDA, LTM*) decreased to 1.9x from 2.9x at theend of December 2019. The decrease in net debt was mainly driven by a strong
cash flow development and a positive exchange rate effect of MSEK 282 on
outstanding interest bearing borrowings (USD/SEK).

■ At the end of June 2020, a total of MSEK 188 relating to the measures for

implementing a sharpening of the customer offering and footprint optimization
were estimated to be recorded as Items Affecting Comparability (IAC) over the
coming 18 months. The measures have been implemented according to planwith focus on the exit of the non-core part of the commercial business in the US
as well as the consolidation of operations in Netherlands during the second halfof 2020.

Events after year-end 2020:

The Board of Directors proposes a dividend for 2020 of SEK 0.70 (0) per share.

Financial summary

Q4

Jan-Dec

MSEK

2020

2019

∆%

2020

2019

∆%

Order intake

1,611

1,845

-13

7,249

7,302

-1

Net sales

1,841

1,842

-0

7,015

7,153

-2

Operating profit (EBIT)

250

159

58

707

556

27

Adjusted EBITA

245

229

7

906

871

4

Adjusted EBITA margin, %

13.3

12.5

12.9

12.2

Net income

172

76

432

283

126

Earnings per share before dilution, SEK

0.93

0.42

2.35

1.55

Earnings per share after dilution, SEK

0.93

0.42

2.35

1.55

Average number of outstanding shares before dilution

181,423,919

181,745,802

181,545,456

181,983,219

Average number of outstanding shares after dilution

182,151,560

181,745,802

181,557,708

181,983,219

52

The KPI´s below includes discontinued operations **Net income

171

12

426

-164

Earnings per share before dilution, SEK

0.92

0.07

2.32

-0.91
-0.91

Earnings per share after dilution, SEK

0.92

0.07

2.32

Cash flow from operating activities

416

282

977

669

Net debt

2,116

3,062

2,116

3,062

1.9

2.9

Net debt/Adjusted EBITDA, LTM* Last twelve months** The income statement has been restated for 2019 to reflect the discontinued operation in line with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Discontinued operations isdefined as the business connected to the Data Centers operations in Dison, Belgium, where the production has ceased during fall 2019 but minor installation services remains at customer sites during2020. All income statement items in this report refers to Munters continuing operations, if not otherwise stated. See more information on page 23.

Fourth quarter, 2020»

CEO comments
Strong performance despite the on-going pandemic

Despite a challenging market environment in 2020 we continued the journey to transform Munters. Our focus
continues to be on strengthening the base and turn Munters into a more customer centric company striving forzero impact on the planet. Our efforts resulted in growing currency adjusted net sales and profitability for theyear. Efficiency improvement initiatives led to strong operating cash flow, up almost 50 per cent vs 2019, and aleverage at 1.9x down from 2.9x at year end 2019.
Stable net sales, improved profitability

Digitalization of
the customer
offering and ourvalue chain is a
key enabler forenhancedsustainability
and growth.

Currency adjusted order intake decreased in the fourth quarter mainly as a result of lower order intake in Data
Centers US on the back of a strong 2019. For the year order intake was flat with a good order intake in businessarea FoodTech driven by a strong swine segment in China.
Currency adjusted net sales in the fourth quarter was strong with a flat development for the full year. In the quarter we had an increase in the pharma-subsegment and Services in business area AirTech as well as the swine
segment in China in business area FoodTech. For the full year the stable net sales was driven by a strong
development in the swine segment in China for business area FoodTech offset by a weak development in Mist
Elimination in business area AirTech.
The adjusted EBITA-margin was strengthened in the fourth quarter as well as in the full year mainly by theongoing efficiency improvements initiatives and net sales growth in business area FoodTech.
Entering a new phase of our growth journey

Since the start of 2020 we constantly have secured the execution of our strategy. In 2020 we achieved growth inprioritized areas, a pruning of our product portfolio and improved ways-of-working. In addition, we launched new,innovative products, for example in business area FoodTech the modular fan series Saturn that increase thefunctionality and reduce complexity was launched. The organization structure now has been adapted for our
future ambitions with clear responsibilities and accountability.

Klas Forsström, President and CEO

The implementation of measures announced in July 2020 aiming at driving a sharpening of our customer offeringand optimize our footprint are running according to plan. We expect all measures to be implemented throughout
2021.
Going forward, we will continue to invest in product rationalization and standardization together with digitalizationof our offering. Digitalization of the customer offering and our value chain is a key enabler for enhanced
sustainability and growth.
Market conditions challenging

Market conditions continued to be challenging in the fourth quarter with delays both in deliveries to customers aswell as postponed investments by customers. Currently, the market visibility continues to be low due to thelingering Covid-19 outbreak.
I want to thank our employees for their dedication during the year. Their fantastic capability to handle the effectsof the pandemic and at the same time focus on our strategy implementation has resulted in a strong
performance.
Klas Forsström, President and CEO

Mid-term financial targets

Net sales growth: Annual growth in currency adjusted net salesof 5%, as of 2019, supplemented with selected add-on acquisitions. Performance 2020: +1%.
Adjusted EBITA-margin: An adjusted EBITA-margin of 14%.
Performance 2020: 12.9%.
Capital structure: A ratio of net debt to adjusted EBITDA of
1.5x to 2.5x, and may temporarily exceed this level (e. g. as aresult of acquisitions.) Performance 2020: 1.9x
Dividend policy: Munters aim to pay an annual dividend
corresponding to 30-50% of its consolidated income after tax forthe period.
Proposal 2020: 30% (SEK 0.70 per share, totalling MSEK 129)
For full description of the dividend policy, see the Annual and Sustainability report
2019, page 18.

2

Sustainability
In 2020 Munters has:•

Created conditions for setting more ambitious sustainability goals during 2021 and integrated sustainability
throughout the strategy•

Focused on analyzing and following up the company's
carbon dioxide emissions and on strengthening safety,
diversity and environmental work•

Conducted an employee survey for 2020 that showed
great commitment and motivation among employees andthat there is a high level of confidence in management's
decisions and actions during the pandemic

Please see the Munters Annual and Sustainability report 2019, page 46-55, for further information on goals and outcome.

Fourth quarter, 2020

Financial performance
During the third and fourth quarter 2019, Munters reported the business within the Data Centers operations in Belgium as a
discontinued operation. Therefore all income statement has been restated for 2019 to reflect the discontinued operation in linewith IFRS 5, for information see page 23. All income statement items in this report refers to Munters continuing operations, if
not otherwise stated.

Q4

Jan-Dec

MSEK

2020

2019

∆%

2020

2019

∆%

Order intake

1,611
1,172
450
-11
1,841
1,323
531
-12
245
211
66
-32
13.3
15.9
12.3

1,845
1,361
491
-8
1,842
1,382
470
-9
229
186
61
-17
12.5
13.4
13.0

-13
-14
-8
43
-0
-4
13
33
7
14
7
83

7,249
5,101
2,196
-48
7,015
4,937
2,126
-48
906
689
310
-94
12.9
14.0
14.6

7,302
5,253
2,087
-38
7,153
5,159
2,032
-38
871
662
278
-69
12.2
12.8
13.7

-1
-3
5
25
-2
-4
5
26
4
4
12
35

AirTechFoodTech
Other and eliminations

Net sales

AirTechFoodTech
Other and eliminations

Adjusted EBITA

AirTechFoodTech
Other and eliminations

Adjusted EBITA margin, %AirTechFoodTech

ORDER INTAKE

October-December 2020

Order intake decreased by -13%, currency adjusted decrease of -4%, mainly due to a lower order intake in Data
Centers US on the back of a strong 2019. This was partly offset by good demand from the broiler segment andfor MTech Systems software solutions in business area FoodTech.

Order intake Q4,
currency adjusted change-4%
Net sales Q4,
currency adjusted change+8%Adj. EBITA-margin Q4

13.3%
Quarterly order intake, 2020
(MSEK)
2,500

8,000

2,000

6,000

Business area AirTech order intake decreased by -14%, currency adjusted decrease of -5%. The decrease wasmainly due to a lower order intake in Data Centers US on the back of a strong order intake in 2019. This waspartly offset by a strong order intake in the pharma sub-segment driven by Covid-19 relief efforts and the production of test equipment. Also the lithium battery sub-segment had good growth with several orders mainly in Europe. The supermarket sub-segment improved and achieved good growth in Americas. Services had good orderintake driven by a good development mainly in Americas, with increased orders to the existing installed base.
Mist Elimination order intake increased slightly, driven by a good development of pollution control solutions forthe power segment in India.

1,500

Business area FoodTech order intake decreased by -8%, currency adjusted increase of +1%. Region EMEA had
a slight increase in currency adjusted order intake driven by growth in the broiler segment, despite negative effects from the Covid-19 outbreak due to lack of access to customer sites. Americas had flat development compared with 2019 with good development in the broiler segment in Mexico and Brazil as well as the software and
SaaS business for MTech Systems in the US. Region APAC had a flat order intake, with good growth in Chinathat continued to see growth driven by the swine segment on the back of a weak 2019 when it was negatively
impacted by the African Swine Fever (ASF). The growth in this segment in the fourth quarter was lower than thegrowth experienced in the previous quarters.

Order intake per region Q4,2020 (MSEK)

4,000

1,000

2,000

500
0

Q4

Q1

Q2

Q3

QuarterBusiness area AirTech order intake decreased -3%, currency adjusted flat development. The currency adjustedorder intake was flat mainly due to AirTech exiting the non-core Commercial segment in July 2020. Excluding
3

0

LTM

22%

45%

January-December 2020

The order intake decreased -1%, currency adjusted increase of +2%. The currency adjusted increase was because of good order intake in FoodTech. The impact on demand from the Covid-19 outbreak was mixed with thelargest impact experienced in the second and fourth quarter.

Q4

34%
Americas

EMEA

APAC

Fourth quarter, 2020

this exit, the currency adjusted order intake increased slightly. Order intake in the Industrial segment in the US
was strong. This was driven by the pharma sub-segment where Covid-19 relief efforts and the production of test
equipment led to a good growth. Also, the lithium battery sub-segment experienced good growth with several
orders in US and Europe. Services had a positive development, mainly driven by the industrial and commercial
segments in the US. The order intake of humidification components (WET-pads) increased driven by demand
from OEMs in Europe. Data Centers US had weaker order intake on the back of a very strong development in2019. Mist Elimination had a weaker order intake, primarily driven by a weaker marine sub-segment that was
negatively impacted by a low oil price in combination with the effects from the Covid-19 pandemic.
Business area FoodTech order intake increased by +5%, currency adjusted increase of +9%. The increase wasmainly because of a very good development of order intake in Asia, driven by the swine segment in China. In
Americas and Europe, demand was softer. Both Americas and Europe has been negatively affected by the
Covid-19 pandemic throughout the year, mainly as access to customers’ sites has been limited combined withdelayed customer investments. Americas was also soft due a continued weak demand in the swine segment.

NET SALES
October-December 2020

Net sales was flat, currency adjusted increase of +8%, driven by an increase in the pharma-subsegment andServices in business area AirTech as well as the swine segment in China in business area FoodTech. Services
net sales amounted to 17% of total net sales.
Net sales in business area AirTech declined -4%, currency adjusted increase of +4%. The currency adjusted
growth was driven mainly by good growth in the pharma sub-segment and Services. The pharma sub-segment
increased driven by Covid-19 relief efforts and production of test equipment, mainly in Americas. Services grew
driven by the supermarkets sub-segment and the industrial segment, primarily in the Americas. Mist Elimination
declined due to a continued weak development in the marine sub-segment. Data Centers US also declined on
the back of a strong fourth quarter 2019. AirTech decided to exit the non-core Commercial segment in July 2020,
which has had a slight negative effect in the quarter.

Quarterly net sales, 2020
(MSEK)
2,000

8,000

1,500

6,000

1,000

4,000

500

2,000

0

Q4

Q1

Q2

Q3

Quarter0

Q4
LTM

Net sales in business area FoodTech increased by +13%, currency adjusted a strong growth of +22%, driven by
a good growth in the swine segment in China. Region EMEA had a slight currency adjusted growth driven by the
broiler segment, mainly in Northern Africa and the Middle East. This was partly offset by negative effects fromthe Covid-19 pandemic in Europe and Americas. Americas experienced continued weak net sales with a weakswine segment in US, partly offset by good growth in the broiler segment in Brazil.

January-December 2020

Net sales decreased by -2%, currency adjusted increase of +1%. The stable net sales was driven by a strong
development in the swine segment in China for business area FoodTech, offset by a weak development in Mist
Elimination in business area AirTech. Services net sales amounted to 14% of total net sales.
Net sales in business area AirTech declined -4%, currency adjusted decrease of -2%. The decline was mainly
due to a decline in Mist Elimination primarily driven by a weaker marine sub-segment that was impacted negatively by a low oil price in combination with the effects from the Covid-19 pandemic. The pharma sub-segment
had good growth driven by Covid-19 relief efforts and production of test equipment. Services had a good growth
because of a good development in Americas where net sales to the existing installed base grew despite facing
challenges to access customer sites due to the Covid-19 pandemic. In region APAC net sales was slightly lower
on the back of a very strong net sales to the lithium battery sub-segment in 2019. AirTech also decided to exit
the non-core Commercial segment in July 2020, which had a slightly negative effect.
Net sales in business area FoodTech increased +5%, currency adjusted increase of +8%, driven by a good
growth in the swine segment in China on the back of a weak 2019 when it was negatively impacted by the African Swine Fever (ASF). Europe had a flat development with growth in the broiler segment, mainly in Germany
that had good export sales to the CIS countries. This was offset by negative effects from the Covid-19 pandemicin Europe and Americas especially, which affected net sales negatively in Asia early in the year and later in Europe and Americas. In Americas, net sales declined mainly due to continued weak net sales in the swine segment, partly offset by a slight growth for MTech Systems in the US and the broiler segment in Brazil.

4

Net sales per region Q4, 2020
(MSEK)

26%

40%

34%
Americas

EMEA

APAC

Fourth quarter, 2020

RESULTS
Adjusted EBITA excludes Items Affecting Comparability, IAC, see page 6 for disclosure of the IACs.

October-December 2020

The gross margin increased to 32.9% (31.0) with a strengthened gross margin in business area AirTech driven
mainly by continued efficiency improvements and a positive product mix.

Quarterly development grossmargin, %
40%
35%
30%

Adjusted EBITDA increased to MSEK 300 (280), corresponding to an improved adjusted EBITDA-margin of
16.3% (15.2).

25%

Adjusted EBITA increased to MSEK 245 (229), corresponding to an improved adjusted EBITA-margin of 13.3%(12.5). Depreciation amounted to MSEK -55 (-51), whereof depreciation of leased assets was MSEK -29 (-26).
Adjusted EBITA for business area AirTech amounted to MSEK 211 (186) corresponding to a EBITA margin of
15.9% (13.4). The stronger EBITA-margin was a result of an improved gross margin and continued lower indirect
costs. Adjusted EBITA in business area FoodTech increased to MSEK 66 (61), corresponding to a slightly
decreased adjusted EBITA margin of 12.3% (13.0). The margin decreased on the back of a strong margin in
2019.

Quarterly adjusted EBITDAmargin, %Operating profit (EBIT) in the fourth quarter was MSEK 250 (159), corresponding to an operating margin of
13.6% (8.6). Amortization and write-downs on intangible assets in the fourth quarter was MSEK -17 (-29), where
MSEK -8 (-15) was related to amortization of intangible assets from acquisitions.

January-December 2020

The gross margin was slightly above 2019 at 33.5% (32.6) with an improved margin development in AirTech
driven mainly by continued efficiency improvements and a positive product mix.
Adjusted EBITDA increased to MSEK 1,126 (1,079), corresponding to an improved adjusted EBITDA-margin of
16.1% (15.1).
Adjusted EBITA increased to MSEK 906 (871), corresponding to a higher adjusted EBITA-margin of 12.9%(12.2). Depreciation amounted to MSEK -221 (-208), whereof depreciation of leased assets was MSEK -113(-138). Adjusted EBITA for business area AirTech amounted to MSEK 689 (662), corresponding to an improved
adjusted EBITA margin of 14.0% (12.8). The higher EBITA-margin was a result of an improved gross margin andcontinued lower indirect costs. Adjusted EBITA in business area FoodTech increased to MSEK 310 (278),
corresponding to an improved adjusted EBITA margin of 14.6% (13.7). The improvement was driven byincreased net sales.
Operating profit (EBIT) for the full year was MSEK 707 (556), corresponding to an operating margin of 10.1%(7.8). Amortization and write-downs on intangible assets for the full year was MSEK -87 (-134), where MSEK -39(-88) was related to amortization of intangible assets from acquisitions.

5

Q4

Q1

Q2

Q3

Q4

20%
10%
0%

Q4

Q1

Q2

Q3

Q4

Quarterly adjusted EBITAmargin, %
20%
10%
0%

Q4

Q1

Q2

Q3

Q4

Quarterly EBIT-margin, %
20%
10%
0%

Q4

Q1

Q2

Q3

Q4

Fourth quarter, 2020

ITEMS AFFECTING COMPARABILITY (IAC)
During the second quarter 2020, Munters decided upon a further step in the implementation of the strategy, focused on sharpening the customer offering and footprint optimization measures. At the end of June, 2020
Munters made a restructuring and inventory provision of MSEK -136, mainly within business area AirTech, related to severance costs, warranty claims and winding down activities for the exit of the non-core part of the commercial business in the US. The full amount was expensed to other operating expenses and recorded as an IAC.
Another MSEK -52 associated with the strategy was at the end of June identified to be recognized and reported
as IACs when incurred.
In the second half of 2020, the implementation of measures have proceeded according to plan. As a result of ananalysis made of the business during the fourth quarter, a provision related to inventory was partly released of
MSEK 12, and in addition to this, minor of the additionally identified costs to be reported as incurred have beenreported as items affecting comparability. Total items affecting comparability for the full year amounts to
MSEK -124.
Of the originally communicated total cost of MSEK -188, which after adjustment of the inventory item during thefourth quarter is estimated to MSEK -176, costs of MSEK -44 have been realized. MSEK -41 has been used ofthe provision, and another MSEK -3 of the additionally identified costs have been reported as IAC when incurred.
Corona related IACs, comprising of a net of sanitation and hazard pay expenses and received government
grants/government assistance for e.g. salary payments and social security contributions, amounted to MSEK 1 in
the fourth quarter and MSEK 8 for the full year.
Other IACs in the fourth quarter relates to MSEK -8 for a previous customer claim, a net gain of MSEK 6 for asale of a previous office building and an income of MSEK 12 for refund of sales tax in Brazil. Other IACs for thefull year also comprises a MSEK -5 provision for legal fees and fines.
For further information, see the reconciliation of Munters alternative performance measures on page 24.

Continuing operations
Q4

Jan-Dec

MSEK
AirTechMunters Full Potential Program

2020
26
-

2019
-19
-19

2020
-95
-

2019
-67
-67

Severance costs
Consulting fees and other
Covid-19 related items
Implementation refined strategy
Other items affecting comparability
FoodTech
Munters Full Potential Program

1
13
13
6
-

-13
-6
-3
-3

7
-109
7
1
-

-52
-15
-36
-36

Severance costs

-

-0

-

-10

Consulting fees and other
Covid-19 related items
Implementation refined strategy
Other items affecting comparability

1
-1
6

-2
-

1
-6
6

-26
-

Other
Munters Full Potential Program
Severance costs
Consulting fees and other
Covid-19 related items
Implementation refined strategy
Other items affecting comparability
Total
Munters Full Potential Program
Covid-19 related items
Implementation refined strategy
Other items affecting comparability

-10
-2
-8
22
1
10
11

-21
-21
-6
-15
-42
-42
-

-18
1
-10
-8
-111
8
-124
5

-78
-78
-27
-51
-181
-181
-

6

Fourth quarter, 2020

FINANCIAL ITEMS
Financial income and expenses for the fourth quarter amounted to MSEK -45 (-55). The financial expenses werepositively impacted by a lower USD interest rate compared to same quarter last year. Interest expense on leaseliabilities amounts to MSEK -4 (-3). The average weighted interest rate including fees per end of the quarter was
3.1% (4.2).
Financial income and expenses for the full year amounted to MSEK -156 (-189).

TAXES
Income taxes for the fourth quarter was MSEK -33 (-27) and the effective tax rate was 16% (26). In Q4, the low
effective tax rate is driven mainly by a tax refund received in Brazil, increased tax credits in the US due to the
CARES Act as well as revaluation effects on deferred taxes mainly in China.
Income taxes for the full year was MSEK -120 (-83) and the effective tax rate was 22% (23).

EARNINGS PER SHARE

Net income, including the discontinued operation, attributable to Parent Company’s ordinary shareholders
amounted to MSEK 168 (13) for the fourth quarter. Earnings per share, before and after dilution, in the fourth
quarter 2020 was SEK 0.92 (0.07).
Net income, including the discontinued operation, attributable to Parent Company’s ordinary shareholders
amounted to MSEK 420 (-166) for the full year. Earnings per share, before and after dilution, for the full year was
SEK 2.32 (-0.91).

Effective tax rate, 2020%

22%
EPS, 2020 SEK

2.32

The average number of outstanding ordinary shares in the fourth quarter, for the purpose of calculating earnings
per share, was 181,423,919 before dilution and 182,151,560 after dilution.

FINANCIAL POSITION
Interest-bearing liabilities amounted to MSEK 2,786 (3,497). Cash and cash equivalents amounted to MSEK 970(722) as of December 31.
Munters primary financing facilities consists of a term loan of MUSD 250 and a revolving credit facility (RCF) of
MEUR 185 with final maturity date in May 2022. The loan agreements have one financial covenant, consolidated
net debt in relation to adjusted EBITDA, with some adjustments. The accounting standard for leases, IFRS 16,
does not affect the covenant calculation according to the loan agreement definition and neither does the net pension liability. As part of an agreement reached with the bank group in the second quarter 2020 the covenant is
temporarily eased. Therefore until the first quarter 2021, the threshold for the leverage ratio, as mentioned
above, is set to 5.5x. In addition, in July 2020 Munters established a back up facility of MSEK 750 maturing in
2023. This is secured by a guarantee from EKN (The Swedish Export Credit Agency). The purpose of the MSEK
750 RCF is to serve as a back-up facility. It was established as a precautionary measure in the challenging business environment due to the Covid-19 outbreak. The combined facilities have no mandatory amortization requirement.
Net debt as of December 31 amounted to MSEK 2,116 compared to MSEK 2,694 at the end of September 2020.
The decrease in net debt was driven by a strong cash flow development and a positive exchange rate effect onoutstanding borrowings related to USD/SEK of MSEK 200 in the quarter. See more information about reconciliation of net debt and leverage on page 24.
The leverage ratio per end of December was 1.9x compared to 2.5x at the end of September and 2.9x at yearend 2019. During 2020 the exchange rate USD/SEK impacted outstanding debt positively with MSEK -282 andtogether with strong cash flow during the year the leverage ratio was 1.0x lower than year-end 2019.
At quarter end the term loan was fully drawn with MUSD 250 and MEUR 56 (91) of the total revolving credit facility were utilized in EUR and SEK. Available unutilized credit facilities as of December 31 amounted to MEUR 129(94). Along with the main loan facility, an amount of MSEK 15 (25) in local debt is outstanding in i.a. Brazil andIndia.
Average capital employed for the last twelve months was MSEK 7,433 (7,647). Return on capital employed, including the discontinued operation, (ROCE) for last twelve months was 9.5% (1.5). EBIT plus financial income
was affected by a restructuring provision related to the closure of the Data Center operation in Dison, Belgium, in
7

ROCE %, 2020

9.5%

Fourth quarter, 2020

the third quarter of 2019, impacting the last year period return. Return on capital employed, where EBIT plus financial income is adjusted for items affecting comparability (IAC) and average capital employed adjusted for
goodwill, for the last twelve months was 26.0% (20.6). Munters changed the definition of the ROCE in the third
quarter, see more information on page 21.

CASH FLOW

Cash flow from operating activities was MSEK 413 (282) in the fourth quarter and MSEK 977 (669) for the fullyear 2020. Cash flow improved as a consequence of a good improvement in EBIT as well as the ongoing focus
to improve operating working capital.
Cash flow from changes in working capital had a positive impact on the cash flow with MSEK 161 (286) in the
fourth quarter and MSEK 183 (221) for the full year 2020. The positive impact from changes in working capital in
the fourth quarter was driven by reduced inventories and lower account receivables, mainly in business area AirTech. For the full year the positive impact was mainly because of decreased accounts receivables and increased
advances from customers.
Cash flow for the fourth quarter amounted to MSEK 201 (236) and for the full year 2020 MSEK 287 (310). Cashflow for the fourth quarter was negatively impacted by a repayment of outstanding RCF drawings of MEUR -14
equivalent to MSEK 141.

PARENT COMPANY AND OWNERSHIPThe parent company for the Group is Munters Group AB. All Group supporting functions within Munters is accounted for within Munters Group AB. The company holds shares in subsidiaries, cash and accounts payables.
The Parent Company does not engage in sales of goods and services to external customers. Cash and cash
equivalents at the end of the period amounted to MSEK 62 (28).

EMPLOYEESThe number of permanent FTEs (Full Time Equivalents), at December 31, 2020 was 3,214 (3,088). The amountof FTEs at December 31, 2020 in business area AirTech was 2,286 (2,184), in FoodTech 861 (833) and at
Group functions 68 (71).

OUTSTANDING SHARES AND REPURCHASESIn November 851,500 subscription warrants in Munters’ warrant program series 2017/2020 were exercised. As aconsequence, the number of shares and votes in the company increased by 860,015.
As of 31 December 2020, Munters held 2,537,000 treasury shares of the total outstanding shares of
184,457,817.
The Annual General Meeting in May 2020 authorized the Board of Directors to repurchase of shares in the company in relation to the Long Term Incentive Programme 2020 (LTIP 2020). Acquisitions could be made of no
more than 685,000 shares in order to secure the delivery obligations of shares to participants in the LTIP 2020and for subsequent transfers on a regulated market to cover cash-flow effects associated with the Programme,
primarily social security charges and cash settled employee stock options. The shares could only be acquired on
Nasdaq Stockholm and be acquired at a price per share within the from time to time registered trading interval. In
July and August 2020 Munters repurchased a total number of 685,000 shares at an average price of SEK 63.25.

Ten largest shareholders%
FAM ABODIN Funds
First Swedish National Pension Fund
Swedbank Robur Funds
Fourth Swedish National Pension Fund
Handelsbanken Funds
Columbia Threadneedle
C WorldWide Asset Management
La Financière de l'Echiquier
Norges Bank

Source: Modular Finance

DIVIDEND

During 2020 Munters has established a solid base with increased profitability and a strengthened capital structure. The leverage was at 1.9x at year-end, which is within the mid-term target range for net debt to adjusted
EBITDA of 1.5x-2.5x. Therefore the Board of Directors proposes a dividend of SEK 0.70 (0.0) per share for 2020.
This represents 30 per cent of the net income 2020.

8

31 Dec
Total
26.0
8.5
8.4
8.3
4.9
3.9
3.6
2.4
2.3
1.8

Fourth quarter, 2020

OTHER EVENTSStrategic evaluation of the Data Centers and Mist Elimination operations - During 2019 a strategic evaluation of the Data Centers and Mist Elimination operations was conducted. In February 2020, this resulted in a decision to keep these businesses in Munters. Both businesses made significant progress during 2019. Considering Munters strategic direction we see a good strategic fit. Both businesses operate in markets with good growthpotential, driven by digitalization and high demands for sustainable solutions. The businesses are today part ofbusiness area AirTech.
Organizational change – In February, Munters announced an organizational change. The change aims at creating a clearer business ownership and capture local synergies and value drivers across the Group, by aligning
the value chain within the business areas. The change means that the business areas have full profit and loss
responsibility for their respective area. The role Global operations in the Group management team changed intoa Strategic operations role with focus on driving lean practices, manufacturing excellence, shared tools and processes and overall footprint optimization. Two roles were added: Innovation, with focus on driving R&D processes, including shared technologies coordination and product introduction development and Commercial excellence, with focus on coordinating sales training, drive practice of value selling, pricing strategies and go-tomarket methods.
New President business area FoodTech announced – In February, it was announced that Pia Brantgärde
Linder, previously Senior Vice President and Business Unit Manager of High Voltage Products in Northern Europe at ABB, had been appointed President of Business Area FoodTech. Pia started her position at Munters on
August 16, 2020.
2020 Annual General Meeting - The Annual General Meeting of Munters Group AB was held on 7 May in Kista,
Stockholm. In accordance with the Nomination Committee’s proposal the following Board members were reelected as ordinary members proposal: Magnus Lindquist, Helen Fasth Gillstedt, Per Hallius, Lena Olving,
Kristian Sildeby and Juan Vargues. In addition, Håkan Buskhe and Anna Westerberg were elected as new Board
members and Magnus Lindquist was re-elected as Chairman of the Board of Directors.
Nomination committee for the 2021 Annual General Meeting – In October Munters announced the nomination committee for the 2021 Annual General Meeting. The Nomination Committee shall be composed of the representatives of the four largest shareholders in terms of voting rights listed in the shareholders’ register maintained by Euroclear Sweden AB as of 31 August each year, and the Chairman of the Board, who will also convene the first meeting of the Nomination Committee. The committee comprises: Magnus Fernström, FAM AB,
Chairman of the Nomination Committee, Jan Dworsky, Swedbank Robur Funds, Mats Larsson, First Swedish
National Pension Fund, Jonathan Schönbäck, Odin Fund Management and Magnus Lindquist, Chairman of theBoard of Munters Group AB.
Change in number of shares - In November 851,500 subscription warrants in Munters’ warrant program series
2017/2020 have been exercised. As a consequence, the number of shares and votes in the company increased
by 860,015 and as at 30 November 2020, there were in total 184,457,817 shares and votes in Munters GroupAB.
Head of Innovation announced - In November it was announced that Munters had appointed Stéphane Darcq,
as Group Vice President and Head of Innovation as of December 1 2020. In this role, he reports to CEO Klas
Forsström and is part of Munters Group Management team. Stéphane combines this role with the role he alsopreviously had, as responsible for Product Management, Product Development and Marketing within businessarea FoodTech.
Head of Commercial Excellence announced – In November Stefan Aspman, previously Head of BusinessControl and Performance Management at Sandvik Coromant, Product Management and R&D, had been appointed Head of Commercial Excellence as of February, 2021. He will report to CEO Klas Forsström and be apart of Munters Group Management Team.

9

In 2019, a strategic evaluation of theData Centers and Mist Elimination operations was conducted. In 2020 thisresulted in a decision to keep thesebusinesses in Munters. The businesses are today part of businessarea AirTech.

Third quarter, 2020

AirTechBusiness area AirTech is a global leader in energy-efficient air treatment for industrial and commercial applications. We offer solutions formission-critical processes that require exact control of moisture and temperature, with a focus on energy-efficiency and sustainable climate
systems. Our climate systems also provide better indoor air quality and comfort, as well as increased production capacity.

■ Order intake decreased in the fourth quarter. The decrease was mainly due to a lower order intake in Data Centers US on the back of a strong orderintake in 2019. This was partly offset by a strong order intake in the pharma, lithium battery and supermarket sub-segment. Services had good growth
driven by a good development mainly in Americas.
■ Currency adjusted net sales increased driven mainly by good growth in the pharma sub-segment and Services. Mist Elimination declined due to acontinued weak development in the marine sub-segment. Data Centers US also declined on the back of a strong fourth quarter 2019.
■ The adjusted EBITA-margin improved as a result of an improved gross margin and continued lower indirect costs.
Q4

Jan-Dec

MSEK

2020

2019

∆%

2020

2019

∆%

Order intake

1,172
-14%
1,323
-4%
4%
-8%
234
211
14%
15.9

1,361
6%
1,382
9%

-14

5,253
14%
5,159
17%

-3

159
186
0%
13.4

47
14

5,101
-3%
4,937
-4%
-2%
-3%
565
689
4%
14.0

GrowthNet sales
Growthof which organic growthof which currency effects

Operating profit (EBIT)
Adjusted EBITA
GrowthAdjusted EBITA margin, %

-4

565
662
27%
12.8

-4

-0
4

FoodTechBusiness area FoodTech is one of the world’s leading suppliers of innovative, energy-efficient climate systems for livestock farming andgreenhouses, as well as software for controlling and optimizing the entire food production value chain. Our solutions increase productivity
while contributing to sustainable food production, where strict requirements are placed on quality, animal health and food safety.

■ Order intake decreased in the fourth quarter, currency adjusted increased. Region EMEA had a slight increase driven by currency adjusted growth in
the broiler segment. Region Americas and region APAC had flat development. Region APAC had continued good growth in China.
■ Net sales increased driven by a good growth in the swine segment in China. Region EMEA had a slight currency adjusted growth driven by the broiler
segment, mainly in Northern Africa and the Middle East. Americas experienced continued weak net sales with a weak swine segment in US.
■ The EBITA-margin decreased in the fourth quarter on the back of a strong margin in 2019.
Q4

Jan-Dec

MSEK

2020

2019

∆%

2020

2019

∆%

Order intake

450
-8%
531
13%
22%
-9%
67
66
7%
12.3

491
9%
470
-6%

-8

2,196
5%
2,126
5%
8%
-3%
291
310
12%
14.6

2,087
-1%
2,032
1%

5

226
278
11%
13.7

28
12

GrowthNet sales
Growthof which organic growthof which currency effects

Operating profit (EBIT)
Adjusted EBITA
GrowthAdjusted EBITA margin, %

10

55
61
24%
13.0

13

22
7

5

Third quarter, 2020

About Munters
Munters is a global leader in energy-efficient and sustainable climate solutions. The solutions guarantee
temperature and humidity control, which is mission-critical for customers. Munters offers solutions to manydifferent industries where controlling temperature and humidity is mission-critical. Our solutions reduce
customers’ climate and environmental impact through lower resource consumption, and in the process contributeto cleaner air, higher efficiency and reduced carbon emissions. Sustainability is an important part of Munters’
business strategy and value creation.
Short facts

■
■
■
■
■

3,500 employees
30 countries with sales and manufacturing
17 production units
22% female leaders
Two business areas: AirTech and FoodTech

PurposeFor customer success and a healthier planet
Curiosity and a drive to create pioneering
technologies are part of our DNA. Our climate
solutions are mission-critical to our customers’
success and contribute to a more sustainable
planet.

In 2020 AirTech generated 70% of the total net
sales of Munters and FoodTech 30%.

The strategy of Munters
Munters has a strong position in most of our markets. We see major opportunities to improve and strengthen our market position and to achieve our mid-term
financial targets and deliver on our strategy. The key to success is how we respond in working toward our goals. Our overarching strategic priorities show whichareas we regard as important to our success. For each strategic priority we have clear action plans and ambitions what we want to achieve. Sustainability is apriority issue reflected in every strategic priority.
People - The employees at Munters are the hub of our business. Through collaboration and a passion for creating sustainable solutions for our customers andpartners, we contribute to our customers’ success and a better world.
Customers - We closely cooperate our customers. We try not only to understand their needs today, but also in
the future. Our expertise is built through unique insight into our customers’ businesses and production
processes. Munters works every day to deliver value over and above our customers’ expectations.
Innovation - We at Munters work in a structured way to optimize innovation in the organization. We continuallymonitor technological developments in the market and work closely with our customers to understand theirneeds. We also work with other institutions that strengthen our competence and create value for customers. By
continuously questioning and improving how we work, we create sustainable solutions, technologies andbusiness models for the future.
Market - Munters is active around the world in a market driven by strong trends in sustainability and digitization. We focus resources on strengthening our position in areas where we can be a market leader. For
Munters, a market leader not only has a leading position but also higher profitable growth than others in the industry.
Excellence in everything we do - We strive for quality and efficiency in everything we do. We work with continuous improvements in every area. We prioritize
and focus on selected investments and areas of improvement. We follow up, learn, correct and improve.
Sustainability
Sustainability is one of the most important drivers for Munters’ strategy today and in the future. Everything we do has to be sustainable for all our stakeholders
and the environment. Our medium-term financial targets are important to create room for investments in the future. As we work toward these targets, we makevarious decisions and act in the best way to achieve our ambitions. These ambitions contain priorities on resource efficiency, responsible business practices andpeople & society. These three parts today constitute the framework for Munters’ sustainability agenda.

11Third quarter, 2020¨

12Fourth quarter, 2020

Quarterly overview
Group and Segments
Group
MSEK
Order backlog
Order intake
Net sales
Operating profit (EBIT)
Financial income and expenses
Tax
Net income
Amortization and write-down
Items affecting comparability (IAC)
Adjusted EBITA
Adjusted EBITA margin, %2020

External order backlog
Order intake
External net sales
Transactions between segments
Operating profit (EBIT)
Amortization and write-down
Items affecting comparability (IAC)
Re-allocation of internal services
Adjusted EBITA
Adjusted EBITA margin, %

2020

Q4

Q3

Q2

Q1

Q4

Q3

Q2

2,253
1,611
1,841
250
-45
-33
172
-17
22
245
13.3

2,664
1,919
1,833
245
-30
-51
163
-30
4
271
14.8

2,660
1,870
1,773
103
-50
-13
39
-20
-138
260
14.7

2,808
1,849
1,566
110
-31
-22
57
-20
−
130
8.3

2,307
1,845
1,842
159
-55
-27
76
-29
-42
229
12.5

2,440
1,680
1,813
174
-40
-34
100
-32
-42
248
13.7

2,496
1,840
1,877
185
-51
-30
104
-41
-36
262
13.9

AirTech
MSEK

2019

2020
Q3

Q2

Q1

Q4

Q3

Q2

1,737
1,172
1,321
2
234
-4
26
-0
211
15.9

2,025
1,354
1,270
9
185
-16
3
−
198
15.4

2,003
1,231
1,205
2
51
-5
-125
−
181
15.0

2,186
1,343
1,127
0
94
-5
−
−
100
8.8

1,780
1,361
1,378
4
159
-9
-19
-1
186
13.4

1,886
1,179
1,286
1
151
-5
-11
−
167
12.9

1,926
1,264
1,323
1
173
-13
-14
−
199
15.1

FoodTech

Q1 Full year Full year
2,554
1,938
1,620
38
-43
8
3
-32
-61
131
8.1

2019

Q4

2020

2019

2,253
7,249
7,015
707
-156
-120
432
-87
-111
906
12.9

2,307
7,302
7,153
556
-189
-83
283
-134
-181
871
12.2

2020

2019

Q1 Full year Full year
1,993
1,449
1,164
2
82
-5
-23
−
110
9.4

2019

1,737
5,101
4,924
13
565
-30
-95
-0
689
14.0

1,780
5,253
5,151
8
565
-31
-67
-1
662
12.8

2020

2019

MSEK

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1 Full year Full year

External order backlog
Order intake
External net sales
Transactions between segments
Operating profit (EBIT)
Amortization and write-down
Items affecting comparability (IAC)
Re-allocation of internal services
Adjusted EBITA
Adjusted EBITA margin, %

516
450
520
11
67
-5
6
-0
66
12.3

640
575
563
9
90
-5
0
−
95
16.5

656
656
568
7
87
-5
-6
−
98
17.1

622
515
440
9
47
-5
−
−
52
11.5

526
491
464
5
55
-4
-3
−
61
13.0

554
513
527
7
75
-4
-6
−
85
15.9

570
582
554
8
74
-4
-8
−
85
15.2

561
500
456
9
24
-4
-19
−
46
9.9

Other and eliminations

2020

2019

516
2,196
2,091
35
291
-20
1
-0
310
14.6

526
2,087
2,002
31
226
-15
-36

2020

2019

278
13.7

MSEK

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1 Full year Full year

Order intake
Transactions between segments
Operating profit (EBIT)
Amortization and write-down
Items affecting comparability (IAC)
Re-allocation of internal services
Adjusted EBITA

-11
-12
-50
-8
-10
0
-32

-10
-18
-31
-10
-0
−
-21

-17
-8
-36
-10
-7
−
-19

-10
-9
-32
-10
−
−
-22

-8
-9
-55
-16
-21
1
-17

-13
-9
-52
-24
-24
−
-3

-7
-9
-62
-24
-14
−
-23

-11
-11
-67
-23
-18
−
-25

13

-48
-48
-149
-37
-18
0
-94

-38
-38
-236
-88
-78
1
-69

Fourth quarter, 2020

Discontinued operation
2020

2019

2020

2019

MSEK

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1 Full year Full year

External order backlog
Order intake
External net sales
Operating profit (EBIT)
Amortization and write-down
Items affecting comparability (IAC)
Adjusted EBITA

−
−
-0
-2
−
−
-2

−
-1
13
-3
−
−
-3

−
1
3
-1
−
−
-1

−
−
-0
0
−
−
0

2
4
9
-65
0
-45
-20

8
-3
38
-341
3
-325
-19

43
3
87
-20
-0
-3
-17

111
11
42
-24
0
-0
-24

14

−
−
16
-6
−
−
-6

2
15
176
-450
3
-373
-80

Fourth quarter, 2020

Condensed income statement
Q4

Jan-Dec

MSEK

2020

2019

2020

2019

Net sales
Cost of goods sold
Gross profit

1,841-1,235606

1,842-1,271571

7,015-4,6652,350

7,153-4,822
2,331

Selling expenses
Administrative costs
Research and development costs
Other operating income and expenses
Operating profit

-195
-144
-41
24
250

-207
-148
-53
-4
159

-818
-538
-186
-101
707

-970
-610
-197
2
556

Financial income and expenses
Profit/Loss after financial items

-45
205

-55
104

-156
552

-189
367

Tax
Net income for the period from continuing operations

-33
172

-27
76

-120
432

-83
283

Net income from discontinued operations

-2

-65

-6

-448

Net income for the period

171

12

426

-164

Attributable to Parent Company shareholders
Attributable to non-controlling interests

168

13

420

-166

3

-1

6

2

181,423,919
182,151,560

181,745,802
181,745,802

181,545,456
181,557,708

181,983,219
181,983,219

Earnings per share for net income for the period from continuing operations
attributable to the ordinary equity holders of the company:
Earnings per share before dilution, SEK
Earnings per share after dilution, SEK

0.93
0.93

0.42
0.42

2.35
2.35

1.55
1.55

Earnings per share for net income for the period attributable to the ordinary equity
holders of the company:
Earnings per share before dilution, SEK
Earnings per share after dilution, SEK

0.92
0.92

0.07
0.07

2.32
2.32

-0.91
-0.91

-232

-128

-325

122

Actuarial gains and losses on defined-benefit pension obligations, incl. payroll tax
Income tax effect not to be reclassified to profit or loss
Other comprehensive income, net after tax

-2
-0
-234

-44
10
-162

-7
1
-331

-44
9
87

Total comprehensive income for the period
Attributable to Parent Company shareholders
Attributable to non-controlling interests

-64
-64
0

-150
-150
-0

95
91
4

-77
-79
2

Average number of outstanding shares before dilution*
Average number of outstanding shares after dilution*

Other comprehensive income
Other comprehensive income that may be reclassified to profit or loss in subsequent
periods:
Exchange-rate differences on translation of foreign operations
Other comprehensive income not to be reclassified to profit or loss in subsequent periods:*Excluding shares held in own custody.

15

Fourth quarter, 2020

Condensed balance sheet
MSEK

2020-12-31

2019-12-31

3,952
1,356
209
467
161
41
19
246
6,451

4,348
1,469
248
554
162
55
19
249
7,103

Raw materials and consumables
Products in process
Finished products and goods for resale
Projects in progress
Advances to suppliers
Accounts receivable
Prepaid expenses and accrued income
Derivative instruments
Current tax assets
Other receivables
Cash and cash equivalents
Total current assets

350
118
215
3
5
935
376
−
55
96
970
3,123

350
107
296
7
12
1,050
288
5
56
96
722
2,989

TOTAL ASSETS

9,574

10,093ASSETSNON-CURRENT ASSETS
Goodwill
Patents, licenses, brands, and similar rights
Buildings and land
Plant and machinery
Equipment, tools, fixtures and fittings
Construction in progress
Financial assets
Deferred tax assets
Total non-current assets
CURRENT ASSETS

16

Fourth quarter, 2020

Condensed balance sheet
MSEK

2020-12-31

2019-12-31

Shareholders' equity

3,746

3,628

Non-controlling interests
Total equity

5
3,751

-0
3,627

2,690
299
33
132
371
3,525

3,371
282
24
134
409
4,221

Interest-bearing liabilities
Advances from customers
Accounts payable
Accrued expenses and deferred income
Derivative instruments
Current tax liabilities
Other liabilities
Provisions for pensions and similar commitments
Other provisions
Total current liabilities

96
509
529
742
2
52
111
10
248
2,299

126
374
556
716
−
32
153
9
278
2,244

TOTAL EQUITY AND LIABILITIES

9,574

10,0932020-12-31

2019-12-31

Opening balance
Total comprehensive income for the period
New share issue
Change in non-controlling interest
Put/call option related to non controlling interests
Repurchase of shares
Share option plan inc deferred tax
Closing balance

3,627
95
61
0
-4
-43
14
3,751

3,716
-77
−
0
0
-16
4
3,627

Total shareholders´equity attributable to:
The parent company's shareholders
Non-controlling interests

3,746
5

3,627
-0

EQUITY AND LIABILITIESEQUITYNON-CURRENT LIABILITIESInterest-bearing liabilities
Provisions for pensions and similar commitments
Other provisions
Other liabilities
Deferred tax liabilities
Total non-current liabilities
CURRENT LIABILITIESCONDENSED STATEMENT OF CHANGES IN EQUITY
MSEK

17

Fourth quarter, 2020

Condensed cash flow statement
Q4
MSEK

Jan-Dec

2020

2019

2020

2019

Operating profit
Reversal of non-cash items
Depreciation, amortization and impairments
Other profit/loss items not affecting liquidity
Change in provisions
Provisions
Cash flow before interest and tax

248

94

701

105

72
-9

82
37

308
38

408
63

14
326

-134
79

-1
1,047

158
735

Paid financial items
Taxes paid
Cash flow from operating activites beforechanges in working capital

-37
-37

-51
-32

-151
-102

-177
-111

252

-5

794

448

Cash flow from changes in working capital

161

286

183

221

Cash flow from operating activities

413

282

977

669

INVESTING ACTIVITIESBusiness acquisitions
Sale of tangible fixed assets
Sale of intangible fixed assets
Investment in tangible assets
Investment in intangible assets
Cash flow from investing activities

0
14
2
-28
-43
-56

0
15
0
-23
-28
-36

-9
14
2
-114
-103
-209

-0
18
2
-118
-76
-174

FINANCING ACTIVITIESNew share issue
Loan raised
Amortization of loans
Repayment of lease liabilities
Repurchase of shares
Cash flow from financing activities

61
3
-188
-33
-156

0
170
-149
-32
-10

61
329
-698
-130
-43
-481

0
284
-332
-123
-16
-185

Cash flow for the period
Cash and cash equivalents at period start
Exchange-rate differences in cash and cash equivalents
Cash and cash equivalents at period end

201
790
-21
970

236
497
-12
722

287
722
-38
970

310
404
7
722

OPERATING ACTIVITIESOperating profit includes the discontinued operation. Isolated cash flow from the discontinued operations is disclosed in a separate note, see page 23.

18

Fourth quarter, 2020

Parent company
CONDENSED INCOME STATEMENT
Q4MSEK

Jan-Dec

2020

2019

2020

2019

Net sales
Gross profit/loss
Administrative costs
Other operating expenses
Profit/Loss before interest and tax (EBIT)

−
−
-5
-3
-8

−
−
-8
−
-8

−
−
-22
-5
-27

−
−
-44
0
-44

Financial income and expenses
Profit/Loss after financial items

-0

-0

0

0

-8

-8

-28

-44

Group contributions

23

43

23

43

Profit/Loss before tax

15

35

-5

-1

Tax

2

0

2

0

Net income for the period

17

35

-3

-1

CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Q4
MSEK
Profit/Loss for the period
Other comprehensive income, net after tax
Comprehensive income for the period

19

Jan-Dec

2020

2019

2020

2019

17
−
17

35
−
35

-3
−
-3

-1
−
-1

Fourth quarter, 2020

Parent company
CONDENSED BALANCE SHEETMSEK

2020-12-31

2019-12-31

4,099
4
4,104

4,086
0
4,086

−
0
1
27
62
90

−
0
0
45
28
74

4,194

4,160

ASSETSNON-CURRENT ASSETS
Participations in subsidiaries
Other financial assets
Total non-current assets
CURRENT ASSETS
Other current receivables
Prepaid expenses and accrued income
Current tax assets
Receivables from subsidiaries
Cash and cash equivalents
Total current assets
TOTAL ASSETS

MSEK

2020-12-31

2019-12-31

6
4,135
33
-3
4,171

6
4,074
60
-1
4,139

1
1

0
0

1
21
−
−
−
22

3
11
0
2
5
21

4,194

4,160

EQUITY AND LIABILITIESEQUITY
Share capital
Share premium reserve
Profit brought forward
Income for the period
Total equity
NON-CURRENT LIABILITIESProvisions for pensions and similar commitments
Total non-current liabilities
CURRENT LIABILITIES
Accounts payable
Accrued expenses and deferred income
Liabilities to subsidiaries
Other liabilities
Other provisions
Total current liabilities
TOTAL EQUITY AND LIABILITIES

20

Fourth quarter, 2020

Other disclosures
ACCOUNTING POLICIESThis report has been prepared, with regards to the Group, in accordancewith IAS 34 Interim Financial Reporting, recommendation RFR 1 of theSwedish Financial Reporting Board and the Swedish Annual Accounts
Act and, with regards to the Parent Company, in accordance withrecommendation RFR 2 of the Swedish Financial Reporting Board andthe Swedish Annual Accounts Act. The accounting principles appliedcorrespond to those presented in the Annual- and Sustainability report2019 (Note 1).
Munters has received government grants to cover e.g.salary payments,
in order to reduce the financial effects of the current Covid-19 pandemic.
When it is reasonably certain that this grant is being received, the grantis recognised as other operating income in the period in which therelated costs arise. These grants, together with other governent
assistance, e.g. social security contributions, are reported as items
affecting comparability.

DEFINITION OF KEY FINANCIAL
INDICATORSThe Group presents certain financial metrics in the Interim report thatare not defined in accordance with IFRS. The Group is of the opinion
that these metrics provide valuable complementary information, in thatthey enable an evaluation of the Group’s performance. The financial
metrics are calculated in accordance with the definitions presented on
page 127 of the Annual- and Sustainability report 2019, except for the
ROCE, where the definition was changed during the third quarter 2020.
The background to this is the fact that the capital employed used in the
denominator in the former definition was closer to invested capital, used
for ROIC, than capital employed to be used for ROCE. Also, the former
definition used EBIT, instead of EBIT plus financial income in the
numerator. This change of definition has had only insignificant impact on
ROCE for the last twelve months prior year. Both under the old definitionand new definition, ROCE was 1%, however ROCE adjusted for IAC
and goodwill was 23% under old definition and 21% under the new definition.

TRANSACTIONSWITH RELATED PARTIESAt the annual general meeting in May 2020 it was resolved in accordance with the Board’s proposal on the implementation of a performancebased long-term incentive programme (“LTIP 2020” or the “Programme”). The programme was to comprise no more than 1,699,000
employee stock options to be granted to members of the group management and certain other key employees, approximately 74 employees intotal. A total of 69 employees has accepted the offer comprising
1,513,000 employee stock options, whereof 90,000 cash settled. Each
employee stock option that is not cash settled shall entitle the holder toacquire one share in the company at an exercise price equivalent to110% of the volume-weighted average price paid for the company’s
shares at Nasdaq Stockholm during a period of ten business days immediately following the date of the 2020 annual general meeting. Eachcash-settled employee stock option shall entitle the holder to a cash
amount equivalent to the value of one share in the company calculated
as the volume-weighted average price paid for the company’s shares at

21

Nasdaq Stockholm during a period of ten business days immediately
prior to the exercise of the option, with deduction of an exercise pricedetermined according to the method mentioned above. The employee
stock options vest during a three year period and the programme participants shall be able to exercise employee stock options during a one
year period as from and including the date of the expiry of the vesting
period. Exercise of the employee stock options shall as a principal rule
be conditional upon the programme participant still being employed withthe group at the time of exercise and has been employed with the groupduring the whole vesting period. The employee stock options are divided
in three series. Exercise of employee stock options of all series is dependent on the extent to which performance targets, linked to the compound annual growth rate in adjusted EBITA for Munters, the compound
annual growth rate in Munters net sales and a compounded sustainability goal consisting of three sub-components, respectively, are satisfied
during the financial years 2020-2022. The costs of the programme,
based on the assumptions stated in the notice of the annual general
meeting, is estimated to MSEK 8.
At the extraordinary General Meeting on May 7, 2017, it was resolved toissue warrants as part of an incentive program for certain members of
the Group Management at that time. The warrants were issued in two
separate series. The first series expired already last year, however theseries 2017/2020 was exercisable up until November 19, 2020 and comprised 2,611,000 warrants. During the fourth quarter, a total of 851,500
was exercised resulting in 860,015 new shares, impacting the sharecapital and share premium with MSEK 62, corresponding to approximately 0.5% of the share capital. The average exercise price for thesewarrants was SEK 72.

ENVIRONMENTAL IMPACT
AND ENVIRONMENTAL POLICY

Munters’ operations affect the external environment through air and water emissions, the handling of chemicals and waste, transport of input
goods and finished products to and from Munters factories. Munters iscommitted to constant vigilance regarding the environmental impact of
its operations. Munters is committed to complying with all laws and tocontinuously promoting improvements in all Environment, Health &Safety (“EHS”) aspects, wherever Munters conducts business. Muntersconstantly seeks opportunities to reduce risk and to create a safer,
healthier, more diverse and more environmentally friendly workplace forour employees, customers, communities, and the overall environment.
Munters’ manufacturing facilities all over the world are committed toworking according to an EHS Management Program. The purpose of the
EHS Program is to ensure regulatory compliance, actively prevent injuries, and reduce the impact that our business has on the environment.

LEGAL CASES

Since 10 years, Munters US has been party to a dispute with the New
Jersey Department of Environmental Protection (“NJDEP”) regarding a
potential liability under ISRA (Industrial Site Recovery Act). This relates
to environmental conditions on a property previously leased by a company subsequently acquired by and merged into Munters US. In the firsthalf year 2020, this case was resolved and further appeal denied by theSupreme Court in New Jersey, resulting in Munters US being responsible to conduct investigative and remedial activities on the property.

Fourth quarter, 2020

Munters US has insurance cover for the expected costs associated with
the investigative and remedial activities. Since Munters will likely haveto bear approximately MSEK 6 in regulatory fines and fees issued by the
NJDEP, however subject to ongoing discussions with the NJDEP, a provision of the MSEK 6 was booked in Q2 2020, and reported as an item
affecting comparability.
Hunter New England Health District has sued Munters’ Australian subsidiary, Munters Pty Ltd., for breach of contract in relation to services provided to John Hunter Hospital in the spring of 2008. The services were
provided as part of Munters Pty Ltd.’s Moisture Control Services, whichwere later divested in 2010. Munters Pty Ltd. disputes the claim.
Munters Pty Ltd is protected under local liability insurance and for surplus
amounts up to the limit in effect at the time under Munters AB’s insurance.
In the event Munters Pty Ltd. is held liable for the damage, there is a riskthat the company will have to bear that part of the damage that exceeds
the part covered by insurance.

RISKS AND UNCERTAINTIESThe Group’s significant risks and uncertainties can be divided into four
categories; strategic, operational, financial and regulatory risks. In thesecategories, there are both risks due to political and macroeconomic
trends and specific risks directly linked to the business carried out by theGroup. A risk assessment is carried out on an annual basis and the purpose is to identify and address the most important risks.
Munters’ products are used in complex customer processes. Quality andcontract obligations are critical and could result in claims for damages.
The Group depends to some extent on key customers and key personnel. Considering that Munters is a company with geographically widespread operations and many small organizational units, there is a risk offailure to comply with relevant regulations in the business ethics area,
e.g. anti-bribery rules.
Munters made a provision for warranty costs of estimated MSEK 3.5 in
the third quarter 2020 related to a limited number of customer claims
where Munters have not fulfilled agreed specifications. The estimatedcosts will be incurred because of certain components having to be replaced at the relevant customer installations. During the fourth quarterand additional provision of MSEK 3.8 was made, relating to an increased cost per installation, and 1.5 MSEK of the total provision has
MSEK
Allocation timing of revenue recognition
Goods transferred at a point in time
Goods transferred over time
Services transferred over time
Total
whereof related to the discontinued operation
Total net sales from continuing operations

been used for actual replacements. Although the company’s current assessment is that the risk is limited, it cannot be excluded that additionalcustomer claims may arise.
Financial risks mainly consist of currency, interest and financing risks.
Munters works actively with insurance solutions, and group-wide insurances are governed by central guidelines. This includes for example
coverage for general liability and product liability, property, business interruption, transportation, the liability of Board members and the CEOand employment practices liabilities.
During 2020 the Covid-19 outbreak had a mixed impact on Munters withthe largest impact experienced in the second and fourth quarter, with delays both in deliveries to customers as well as postponed investments bycustomers. All our production units, except one minor unit, upheld production with only minor disturbances throughout the year. We have continuously been implementing mitigating actions and adjusting our costbase and investments as well as our supply chain. So far, we have not
had any major disturbances.
Currently, the market visibility of demand remains low due to the lingering Covid-19 outbreak.
A more detailed description of the Group’s risks and how they are managed can be found in the Annual- and Sustainability report 2019.

ALLOCATION OF NET SALES
The majority of customer contracts within Munters business segments
AirTech and FoodTech fulfill the requirements to recognize net sales ata point in time, however there are a number of customer contracts within
the segments that requires to recognize net sales over time, especiallyin AirTech sub-segment Data Centers, which is reflected in the below
matrix. In addition to unit/equipment sales, Munters provides different
kinds of services to customers such as installation, commissioning,
startup and maintenance. Net sales from services are recognized overtime as these services are performed. The services transferred overtime in the matrix below is not equivalent to the net sales from Services
mentioned on the business segment pages earlier in this interim report.
This is due to the fact that part of the net sales within Services are recognized at a point in time, such as spare parts. Net sales from the discontinued operation is all recognized over time.
Q4 2020

Jan-Dec 2020

AirTechFoodTech

Total

AirTechFoodTech

Total

906
264
151
1,321
0
1,321

473
7
40
520
−
520

1,379
271
191
1,841
0
1,841

3,136
1,408
397
4,940
16
4,924

1,883
59
150
2,091
0
2,091

5,019
1,466
546
7,031
16
7,015

Q4 2019
SEKm
Allocation timing of revenue recognition
Goods transferred at a point in time
Goods transferred over time
Services transferred over time
Total
whereof related to the discontinued operation
Total net sales from continuing operations

22

Jan-Dec 2019

AirTechFoodTech

Total

AirTechFoodTech

Total

932
380
74
1,387
9
1,378

410
10
45
464
−
464

1,342
390
118
1,851
9
1,842

3,509
1,361
457
5,327
176
5,151

1,793
57
151
2,002
−
2,002

5,302
1,418
608
7,329
176
7,153

Fourth quarter, 2020

FAIR VALUE OF FINANCIAL
INSTRUMENTS
The Group’s derivatives, recognized at fair value in the statement of financial position, are measured according to IFRS 9 and are categorizedin level 2 in the fair value hierarchy. The derivatives amounted to SEKm
0 (5) in financial assets and to SEKm 2 (0) in financial liabilities.
The Group’s contingent earn-outs and put/call acquisition options, recognized at fair value in the statement of financial position, are measured
according to IFRS 9 and are categorized in level 3 in the fair value hierarchy. The opening balance for the period was related to the put/call option from the acquisition of MTech Systems in 2017 and a contingent
consideration related to the acquisition of Humi-Tech Services Ltd in
July 2018. The put/call option related to MTech Systems matures in
MSEKContingent considerations andput/call options
Opening balance
Payments
Discounting
Exchange-rate differences for the period
Closing balance

January, 2023 and is based on EBITDA for the 12 months prior to execution. The earn-out in Humi-Tech Services Ltd was based on EBITDA
for the fiscal years of 2018 and 2019 and has been paid during the year.
The remaining change relates to a discounting effect and currency translations on the put/call option in MTech.
Munters deems that the interest rate on interest-bearing liabilities are inline with market terms at December 31, 2020, and the fair value at theend of the reporting period therefore in all material aspects corresponds
to the carrying amount.

2020-12-31 2019-12-31

142
-9
4
-16
121

137
−
1
5
142

DISCONTINUED OPERATIONSOn September 9, 2019 Munters decided to close its European Data
Center factory in Dison, Belgium, following the finalization of negotiations with the unions. The production has ceased but minor installation
services remains at customer sites. Therefore, this business was classified as a discontinued operation in Q3, 2020. The table below shows theincome statement for the discontinued operation as well as the cash flowfrom operating activities, since the discontinued operations has mainly
had cash flows from operating activities.
The net sales for the fourth quarter and the full year 2020 relates to installations done at customer site, with associated costs.

Q4
MSEK

Jan-Dec

2020

2019

2020

2019

Net sales
Cost of goods sold
Gross profit

-0
-1
-1

9
-56
-47

16
-11
6

176
-427
-251

Selling expenses
Administrative costs
Research and development costs
Other operating income and expenses
Operating profit

2
-1
0
-2
-2

-12
-9
-1
3
-65

-8
-2
0
-2
-6

-39
-39
-9
-113
-450

Financial income and expenses

0

-2

-0

-5

Profit/Loss after financial items

-2

-67

-6

-455

Tax
Net income for the period from discontinued operations

0

2

0

8

-2

-65

-6

-448

Cash flow from operating activities

-43

-190

-149

-431

23

Fourth quarter, 2020

RECONCILIATION OF ALTERNATIVEPERFORMANCE MEASURES
Below is a reconciliation of Munters adjusted performance measuresfrom items affecting comparability. These items originates from the implementation of the refined strategy in terms of restructuring activities, a
net gain from a sale of an office building in the Netherlands, legal cases
outside the ordinary business operation related to a previous customer
claim and regulatory fines and fees from a ten year old dispute regarding
a potential liability under the US Industrial Site Recovery Act, and an
earned refund of several years of incorrectly charged sales tax in Brazil.

In addition to this, Munters has due to the current Covid-19 pandemic incurred Covid-19-related IACs, which comprises of a net of sanitation andhazard pay expenses and received government grants/government assistance for e.g. salary payments and social security contributions.
During 2019 Munters incurred IACs from Full Potential Program (FPP),
launched in February 2019.
The reconciliation below does not include the discontinued operation.

Q4
MSEK
Adjusted EBITDA
Amortizations and write-downs of tangible assets
Adjusted EBITA
Amortizations and write-downs of intangible assets
Adjusted operating profit (EBIT)
Restructuring activities
Gains/losses from sale of fixed assets
Legal cases outside the ordinary business operation
Received government grants/government assistanceCorona related expenses
Earned refund of sales tax in Brazil
Operating profit (EBIT)

Jan-Dec

2020-12-31

2019-12-31

2020-12-31

2019-12-31

300
-55
245
-17
228
10
6
-8
6
-4
13
250

280
-50
229
-29
201
-42
0
0
0
0
0
159

1,126
-221
906
-87
818
-124
6
-14
20
-12
13
707

1,079
-208
871
-133
737
-181
0
0
0
0
0
556

RECONCILIATION OF NET DEBT
AND LEVERAGE
The reconciliation of net debt and leverage below includes the discontinued operation.
MSEK

2020-12-31

2019-12-31

CURRENT ASSETS
Cash and cash equivalents

-970

-722

NON-CURRENT LIABILITIESInterest-bearing liabilities, excluding leases
Interest-bearing lease liabilities
Provisions for pensions

2,440
250
285

3,057
314
268

CURRENT LIABILITIESInterest-bearing liabilities, excluding leases
Interest-bearing lease liabilities
Accrued expenses
Provisions for pensions

14
82
9
6

24
102
12
6

Total Net debt
Operating profit (EBIT)
Depreciations
Amortization and write-down
EBITDA
Items affecting comparability

2,116
701
-221
-87
1,010
-111

3,062
105
-277
-131
514
-525

Adjusted EBITDA, LTM

1,121

1,039

1.9

2.9

Net debt/Adjusted EBITDA, LTM

24

Fourth quarter, 2020

This report has not been subject to review by the company’s auditors.

INFORMATION AND REPORTING DATESContact person:

Ann-Sofi Jönsson, Vice President, Investor Relations and Enterprise Risk Management
Phone: + 46 (0)730 251 005
Email: ann-sofi.jonsson@munters.com
On February 4, at 9:00 the President and CEO, Klas Forsström, together with the Group Vice President and CFO, Annette Kumlien will present the report ina live webcast simultaneously with a telephone conference.
Webcast:https://tv.streamfabriken.com/munters-q4-2020
Dial-in number for the telephone conference:
SE: +46 8 56642693
UK: +44 3333009035
US: +1 8335268397
This interim report, presentation material and a link to the webcast will be available on https://www.munters.com/en/investor-relations/____________________________________________________________________________________________________________________________
Financial calendar:
April 22, 2021, Interim report January-March 2021
May 19, Annual General Meeting 2021 in Stockholm, Kista, Sweden.
July 16, Interim report January-June 2021
October 22, Interim report January-September 2021____________________________________________________________________________________________________________________________
This information is information that Munters Group AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was
submitted for publication, through the agency of the contact person set out above, at 08.00 CET on February 4, 2021.
Munters Group AB, Corp. Reg. No. 556819-2321
About Munters Group
Munters is a global leader in energy efficient air treatment and climate solutions. Using innovative technologies, Munters creates the perfect climate forcustomers in a wide range of industries. Munters has been defining the future of air treatment since 1955. Today, around 3,500 employees carry out manufacturing and sales in more than 30 countries. Munters Group AB reported annual net sales of more than SEK 7 billion in 2020 and is listed on Nasdaq
Stockholm. For more information, please visit www.munters.com.
Every care has been taken in the translation of this interim report. In the event of discrepancies, the Swedish original will supersede the English
translation. The addition of the totals presented may result in minor rounding differences.

25