Q4“Platform for the future strengthened in 2019”
Fourth Quarter 2019
•

•

•
•

Market demand mixed with areas of good growth. Order intake and net
sales increased by 6% respective 5% and were flat organically, on theback of a strong fourth quarter 2018
Order intake mainly driven by larger order in Data Centers US, whereas
the industrial segment saw weaker demand. Business area FoodTech
grew in the US and Asia
Net sales increased in business area AirTech, whereas business area
FoodTech net sales declined despite good growth in Asia
Adjusted EBITA margin was slightly lower compared to last year as aresult of changed product mix and temporarily higher labor costs
related to growth in certain areas

Events after period end••

January–December 2019
•
•

•
•

•

Stable demand, with strong order intake in Data Centers US andServices within business area AirTech
Order intake in AirTech was offset by lower order intake in businessarea FoodTech. They were impacted by a weak swine market due tothe African Swine Fever (ASF) and uncertainties about effects fromtrade tariffs
Net sales grew driven by good growth in Data Centers US, Mist
Elimination and Services in AirTech, offset by a decrease in FoodTech
Adjusted EBITA increased 20% driven primarily by cost savings from
the Munters Full Potential (FPP) program. During 2019 cost savings
well in line with the estimated yearly run-rate of SEKm 210 from the
FPP program were achieved
The Board of Directors propose no dividend to be paid for 2019

During 2019 a strategic evaluation of the operations of Data Centers and Mist Elimination has been conducted. In February 2020, this resulted in adecision to keep these in Munters
Yesterday an organizational change was announced. 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

Financial summary
SEKm

Q4
2019

Jan-Dec
2018

∆%

2019

2018

∆%

Order intake

1,845

1,735

6

7,302

6,698

9

Net sales

1,842

1,757

5

7,153

6,412

12

Operating profit (EBIT)

159

158

0

556

529

5

Adjusted EBITA

229

225

2

871

725

20

Adjusted EBITA margin, %

12.5

12.8

12.2

11.3

Net income

76

93

Earnings per share before and after dilution, SEK

0.42

0.49

Average number of outstanding shares before and after dilution-18

181,745,802 182,130,802

283

327

1.55

1.73

-13

181,983,219 183,165,852

The KPI´s below includes discontinued operations *Net income

12

-321

Earnings per share before and after dilution, SEK

0.07

-1.78

Cash flow from operating activities

282

441

-36

Net debt

3,062

2,843

8

Net debt/Adjusted EBITDA, LTM

-164

-94

-0.91

-0.57

669

441

52

3,062

2,843

8

2.9

3.7

* The income statement has been restated for the years 2019 and 2018 to reflect discontinued operations in line with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations.
Discontinued operations is defined as the business connected to the Data Centers operations in Dison, Belgium, where the production has ceased but minor installation services remains at customer
sites. All income statement items in this report refers to Munters continuing operations, if not otherwise stated. See more information on page 22.

Fourth quarter, 2019

CEO COMMENTS
Platform strengthened for the future
The Munters Full Potential Program (FPP) has achieved its set ambition to strengthen the platform of Munters. Looking ahead, in 2020 we will focus on continuous improvements, and start to act on the refined strategic direction thathas been mapped out throughout the fall.

Stable demand in 2019Market demand was mixed in the fourth quarter with areas of good growth, resulting in a flat order intake, excluding
currency effects. For the full year, market demand was stable with increased organic order intake, mainly driven by
a good development in Mist Elimination and large orders received in the Data Centers US. During 2019 this area
has successfully broadened their customer offering to address a larger part of the US market. In our FoodTech
Klas Forsström, President and CEO
business area, we saw a pickup of demand in the fourth quarter, driven by good growth in the layer and broiler market in Asia. Also, the swine market improved slightly in the second half year from a low level due to the previous outbreak of the African Swine Fever (ASF).

Net sales growth for the full year, with slowdown in fourth quarter

The currency adjusted net sales was flat in the fourth quarter, reflecting a mixed market demand. For the full year net sales increased, driven by the Data
Centers US, Mist Elimination and a good growth in Services within AirTech. In our business area FoodTech currency adjusted net sales was weaker reflecting an overcapacity in the swine market in the US and uncertainties related to consequences from trade tariffs and the ASF.

Adjusted EBITA strongly improved mainly due to successful cost saving initiatives

The adjusted EBITA margin for the continuing operations was slightly lower in the fourth quarter compared to last year, as a result of changed product mix
and temporarily higher labor costs related to growth in certain areas in AirTech. Business area FoodTech’s adjusted EBITA margin continued to improve,
driven by cost savings from the FPP program. For the full year adjusted EBITA strongly improved, driven primarily by the FPP program.
Through the initiatives in the FPP program, a new platform for the direction of Munters has been set. The yearly run-rate overhead cost savings from the
FPP, estimated at SEKm 210, are well in line with the targeted level at the end of December. The total costs for the program for the year-end amounted to
SEKm 392. During the fourth quarter additional charges of SEKm 17 related to organizational changes and reviews were added.

Strategic evaluation of Data Centers and Mist Elimination prove value creation potential

During 2019, a strategic evaluation of Data Centers and Mist Elimination operations has been conducted, resulting in a decision to keep these businesses in
Munters. Both businesses made significant progress during 2019. Considering our refined strategic direction we see a strong potential for continued value
creation going forward. Both businesses operate in markets with good growth potential, driven by digitalization and high demands for sustainable solutions.
Going forward all units within Munters will continuously be evaluated to ensure they create value for the Group in the short- and long term.

Refined strategic direction going forward

During the fall a refined strategic direction has been developed for Munters. Going forward we will have a stronger focus on driving profitable growth throughstronger focus on our employees, customers, innovation, markets as well as driving continuous improvements in all areas. To enable this, yesterday weannounced an organizational change. The change aims at creating a clearer business ownership and capture local synergies and value drivers across theGroup by aligning the value chain within the business areas.
In 2020, we will continue to strengthen operations and driving profitable growth enabling progress towards reaching our mid-term financial targets. Munters
is well positioned in a growing market driven by sustainability, energy efficiency and digitalization.
Klas Forsström, President and CEO

Mid-term financial targets

Sustainability

Net sales growth: Annual growth in organic net sales of 5 per
cent, as of 2019, supplemented with selected add-on acquisitions.

Munters sustainability agenda consist of:

Adjusted EBITA-margin: An adjusted EBITA-margin of 14 percent in the medium term.
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 a result of acquisitions.)
Dividend policy: Munters aim to pay an annual dividend corresponding to 30-50 per cent of its consolidated income after tax
for the period.
For full description of the dividend policy, see the Annual and Sustainability report
2018, page 14.

2

•
•
•

Resource efficiency
Responsible business practices
People & Society

with priority areas set for each of parts of the agenda.

Please see the Munters Annual and Sustainability report 2018, page 52, for further
information on goals and outcome.

Fourth quarter, 2019

Financial performance
Previous business areas Mist Elimination and Data Centers were incorporated into business area AirTech in the first quarter of 2019, see restatement of AirTech on page 11.
The new accounting standard for leases, IFRS 16 has been applied from January 2019, for further information see page 21. Munters reports the business within the Data
Centers operations in Belgium as a discontinued operation and has restated all income statement comparisons, for information see page 22.

Q4

Jan-Dec

SEKm

2019

2018

∆%

2019

2018

∆%

Order intake

1,845

1,735

6
6
9

7,302

6,698

9
14
-1

AirTechFoodTech
Other and eliminations

Net sales

AirTechFoodTech
Other and eliminations

Adjusted EBITA

AirTechFoodTech
Other and eliminations

Adjusted EBITA margin, %AirTechFoodTech

1,361
491
-8

1,842

1,382
470
-9

229

186
61
-17

1,289
452
-6

1,757

1,267
497
-8

225

185
49
-10

5,253
2,087
-38

5
9
-6

7,153

2
0
24

871

5,159
2,032
-38
662
278
-69

4,621
2,107
-30

6,412

4,426
2,018
-32

725

522
249
-46

12.5

12.8

12.2

11.3

13.4
13.0

14.6
9.9

12.8
13.7

11.8
12.4

Order intake (SEKm)
2,500

8,000

2,000

6,000

1,500

4,000

1,000

12
17
1
20
27
11

2,000

500
0

Q4 Q1 Q2 Q3 Q4Quarter

2,000

8,000

1,500

6,000

1,000

4,000

500

2,000

0

Fourth quarter

Q4 Q1 Q2 Q3 Q4

The order intake in the quarter increased by 6% and was flat organically, with areas of good growth.

Business area FoodTech order intake increased by 9% and by 3% organically. Order intake increased in Americas,
driven by several orders to the dairy segment in the US. In Asia, order intake increased strongly, where China hadstrong growth in the layer and broiler segment. In Europe, demand was softer compared to the same period lastyear.

January–December

Order intake for the full year increased by 9% and by 3% organically, primarily driven by Data Centers US, Mist Elimination and Services within AirTech. Services grew 8% organically and accounted for 13% of total order intake.

LTM

Net sales (SEKm)

ORDER INTAKE
Business area AirTech order intake increased by 6% and was flat organically, compared to a strong fourth quarter
2018, which included a large order related to the lithium battery industry. The Industrial segment in general had aweak order intake in the quarter. Data Centers US received several large orders and we also saw strong orderintake in the Commercial segment. Services had a flat development compared to a strong fourth quarter in 2018.

0

Quarter0
LTM

Adjusted EBITA (SEKm)
300

1,000

250

800

200

600

150

400

100

200

50
0

Q4

Q1

Q2

Quarter

Q3

Q4

0
LTM

Business area AirTech order intake increased by 14% and by 8% organically, driven by strong order intake in Data
Centers US and Mist Elimination. Services had increased order intake during the year, whereas demand from theSupermarket segment was low. The Industrial segment saw weak order intake, with lower volumes in the lithium battery sector in China and lower demand
from Aerospace applications in the Americas.
Business area FoodTech order intake declined by -1% and organically by -6%. This was primarily driven by a weaker demand from the swine segment in
China and the US. In the US demand was weaker as a consequence of an overcapacity in the swine market, together with uncertainties related to consequences from new trade tariffs. The ASF also impacted the demand in China negative.

NET SALES

Fourth quarter

Net sales in the quarter increased by 5% and declined by -1% organically, due to continued weak net sales in Foodtech, not fully offset by growth in
AirTech.
Net sales in business area AirTech increased by 9% and by 3% organically. The increase was mainly driven by a strong increase in Data Centers US andthe Commercial segment. The Industrial segment saw weak net sales in all regions. Services had weak sales in the Americas and Asia, on the back of astrong fourth quarter 2018, whereas region Europe and the Middle East saw good growth in the quarter.
Net sales in business area FoodTech declined by -6% and by -11% organically with decreased sales in all regions. This was only partially offset by growth in3

Fourth quarter, 2019the broiler market in South East Asia and growth in net sales of controllers. Market conditions remain uncertain due to the ASF and effects from trade tariffs.

January–December

Net sales for the year increased by 12% and by 6% organically, primarily driven by growth in Data Centers US, Mist Elimination and Services within AirTech.
Services grew 8% organically and accounted for 13% of total net sales.
Business area AirTech net sales increased by 17% and by 10% organically, mainly driven by an increase in Data Centers US and Mist Elimination. Services
increased net sales of 8% organically. Also the Industrial segment increased sales for the year driven by a strong demand from the lithium battery segment,
which was partially offset by weaker demand from the Aerospace segment.
Business area FoodTech net sales increased by 1% and decreased for the full year of -5% organically, with a decline in net sales in China and the US
following the weaker order intake during the first nine months of the year. Net sales this year have had a slightly more positive development than orderintake, as some of the order intake growth in 2018 included Software as a Service contracts recognized over several years.

ADJUSTED EBITA

Adjusted EBITA excludes Items Affecting Comparability, IAC.

Fourth quarter

Adjusted EBITA increased by 2% to SEKm 229 (225), corresponding to a slightly lower adjusted EBITA margin of 12.5% (12.8) on the back of a strong
fourth quarter in business area AirTech in 2018.
Adjusted EBITA for business area AirTech amounted to SEKm 186 (185), corresponding to a lower adjusted EBITA margin of 13.4% (14.6) on the back of astrong fourth quarter 2018. The FPP program delivered significant savings of indirect costs, however this was offset by a lower gross margin that resulted
from a changed product mix and temporarily higher labor costs in areas with strong growth.
Adjusted EBITA in business area FoodTech increased to SEKm 61 (49), corresponding to an adjusted EBITA margin of 13.0% (9.9). The margin
improvement was mainly driven by the FPP program initiatives that have led to lower indirect costs.

January–December

The Group’s adjusted EBITA for the full year increased by 20% to SEKm 871 (725), corresponding to an adjusted EBITA margin of 12.2% (11.3). The improvement was mainly driven by lower indirect costs resulting from the FPP program.
Adjusted EBITA in business area AirTech increased 27% to SEKm 662 (522), corresponding to an adjusted EBITA margin of 12.8% (11.8). The improved
margin is a result of higher volumes and a high utilization rate, together with a changed product mix and lower indirect costs resulting from the FPP program.
Adjusted EBITA in business area FoodTech increased 12% to SEKm 278 (249) corresponding to an adjusted EBITA margin of 13.7% (12.4). The
improvement compared to last year was driven by savings achieved from initiatives run within the FPP, as well as improved gross margin driven by a higher
share of sales from controllers, together with overall operational improvements.

ITEMS AFFECTING COMPARABILITY (IAC)

During 2019 Munters has incurred IACs relating to the FPP program launched in February 2019 as well as IACs related to other operating excellence initiatives. The IACs have been incurred in both the continuing operations as well as the discontinuing operations. In the fourth quarter, costs amounting to
SEKm -86 (-31) were accounted for as IACs, of which SEKm -66 (0) related to the FPP program. IACs, for the full year amounted to SEKm -554 (-39).

Continuing operations

In the fourth quarter, costs amounting to SEKm -42 (-31) were accounted for as IACs in Munters continuing operations, of which SEKm -40 (0) related to the
FPP program. Costs were mainly related to severance and consulting fees. IACs for continuing operations for the full year amounted to SEKm -181 (-39), of
which SEKm -153 related to the FPP program.

2019
SEKm
AirTechSeverance costs
Consulting fees and other
FoodTechSeverance costs
Consulting fees and other
Other
Severance costs
Consulting fees and other
Total

4

2018

Q4
-19

Q3
-11

Q2
-14

Q1 Full year
-23
-67

Q4
-8

Q3
-8

Q2
−

Q1 Full year
−
-16

-13
-6

-11
-1

-9
-5

-19
-4

-52
-15

-5
-4

−
-8

−
−

−
−

-5
-11

-3

-6

-8

-19

-36

−

−

−

−

−

-0
-2

0
-7

-1
-7

-9
-10

-10
-26

−
−

−
−

−
−

−
−

−
−

-21

-24

-14

-18

-78

-22

−

−

−

-22

-6
-15

-16
-8

-1
-14

-4
-14

-27
-51

-22
-0

−
−

−
−

−
−

-22
-0

-42

-42

-36

-61

-181

-31

-8

−

−

-39

Fourth quarter, 2019

Discontinuing operations

The closure of the Data Centers factory in Dison, Belgium, has been a part of the FPP program. During the third quarter 2019, the closure of Dison was
decided and as of then the European Data Centers business, and the related IAC´s, has been defined as a discontinued operation in accordance with IFRS
5. The IACs for the discontinuing operations during the fourth quarter amounted to SEKm -48, of which SEKm -26 (0) was related to the FPP program, andwas mainly associated with warranty and other accruals. For the full year, IACs amounted to SEKm -257, of which SEKm -239 (0) was related to the FPP
program (SEKm -139 was severance pay and SEKm -118 was warranty and other accruals, asset and inventory write-downs).
In relation to the closure process of Dison, specified components, for a previously sold customized Munters solution, had to be replaced at a specific customer’s sites. As a result of this, Munters incurred non-recurring cost of SEKm -116 in the third quarter 2019, which was paid in the fourth quarter. This cost
is not included in the total cost for the FPP program described above. Munters has insurance solutions in place for this type of events, but since Munters has
not concluded the discussions with its insurance providers the final financial and cash flow net effect on Munters can not yet be determined.

OPERATING PROFIT (EBIT)
Fourth quarter

Operating profit (EBIT), excluding discontinued operations, in the fourth quarter was SEKm 159 (158), corresponding to an operating margin of 8.6% (9.0).
Depreciation amounted to SEKm -51 (-25) and amortization and write-downs on intangible assets of SEKm -29 (-36), where SEKm -15 (-29) was related toamortization of intangible assets from acquisitions. Depreciation of leased assets in the fourth quarter was SEKm -25 (-) (see specification of IFRS 16 impacts on page 21). EBIT was also negatively impacted by SEKm -42 (-31) due to IAC´s related to the continuing operations, which are further outlined
above.

January–December

EBIT, excluding discontinued operations, for the full year 2019 was SEKm 556 (529), corresponding to an operating margin of 7.8% (8.3). Depreciation
amounted to SEKm -213 (-95) and amortizations and write-downs on intangible assets of SEKm -134 (-157), where SEKm -88 (-133) was related to amortization of intangible assets from acquisitions. Depreciation of leased assets for the full year was SEKm -106 (-) (see specification of IFRS 16 impacts on
page 21). EBIT was also impacted by SEKm -181 (-39) due to IAC´s related to the continuing operations, as outlined above.

FINANCIAL ITEMSThe comments below on financial income and expenses relates to Munters total business, i.e. including the discontinued operation.
Financial income and expenses for the fourth quarter amounted to SEKm -57 (-31). The financial expenses were negatively impacted by currency effects,
mainly related to USD, compared to same quarter last year. The accounting standard IFRS16 has increased interest expenses with SEKm -4 (0). Further
information of the IFRS 16 impact is found in the section Accounting Principles. The average weighted interest rate including fees per end of the quarter was
4.2% (4.6).
Financial income and expenses for the year amounted to SEKm -194 (-127). The increase in the financial expenses in the full year 2019 compared to 2018was mainly due to increased interest rates and higher interest expenses related to IFRS16.

TAXES

Income taxes for the fourth quarter was SEKm -27 (-34) and the effective tax rate was 26% (27). Income taxes for the full year was SEKm -83 (-77) and theeffective tax rate was 23% (19).

EARNINGS PER SHARE

Net income, including the discontinued operation, attributable to Parent Company’s ordinary shareholders amounted to SEKm 13 (-324) for the fourth quarter. Earnings per share, before and after dilution, in the fourth quarter 2019 was SEK 0.07 (-1.78).
Net income, including the discontinued operation, attributable to Parent Company’s ordinary shareholders amounted to SEKm -166 (-105) for the full year.
Earnings per share, before and after dilution, was SEK -0.91 (-0.57).
The average number of outstanding ordinary shares in 2019, was 181,983,219 before and after dilution. 1,852,000 shares was held in own custody.

FINANCIAL POSITION AND LIQUIDITY

Munters primary financing facilities consists of a term loan of USDm 250 and a revolving credit facility of EURm 185. The facilities have no mandatory amortization requirement. The final maturity date is May 2022. The loan agreement has one financial covenant (consolidated net debt in relation to adjusted
EBITDA). The new accounting standard for leases, IFRS 16, does not affect the covenant calculation according to the loan agreement definition. For further
information on the IFRS 16 effect, see section Accounting Policies. Interest-bearing liabilities amounted to SEKm 3,497 (3,013). Cash and cash equivalents
amounted to SEKm 722 (404) as of December 31, 2019.
At quarter end the term loan was fully drawn with USDm 250 and EURm 91 of the total revolving credit facility were utilized in EUR, USD and SEK. Available unutilized credit facilities as of December 31 amounted to SEKm 985 (918). Along with the main loan facility, an amount of SEKm 25 (13) in local debt isoutstanding in i.a. China and Brazil.

5Fourth quarter, 2019

CASH FLOW AND CAPITAL EMPLOYEDCash flow from operating activities was SEKm 282 (441) in the fourth quarter. As a result of several ongoing initiatives to reduce working capital, this was
reduced and had a positive impact on cash flow of SEKm 286 (329). A major item of this is related to an advance payment related to a specific project to bedelivered over the coming months. In relation to the closure process of Dison, specified components, for a previously sold customized Munters solution, had
to be replaced at a specific customer’s sites. Munters incurred non-recurring cost of SEKm -116 in the third quarter 2019 for this, which was paid in the
fourth quarter. Cash flow from operating activities was positively affected by SEKm 32 (-) due to IFRS 16, compared to the same period last year, as lease
payments are reflected as change in lease liabilities under financial activities.
Cash flow from operating activities during the full year amounted to SEKm 669 (441). The improved cash flow compared to last year was mainly due theongoing initiatives to reduce working capital which resulted in a large decrease in working capital during 2019. Cash flow from operating activities for the fullyear was positively affected by SEKm 123 (-) due to IFRS 16 with a corresponding negative impact on cash flow from financing activities.
Average capital employed for the last twelve months was SEKm 7,254 (7,022). Return on capital employed (ROCE) for last twelve months was 1% (2). The
increase in capital employed was related to IFRS 16, see page 21, which was offset by a decrease in operating working capital.
Return on capital employed, where EBIT is adjusted for items affecting comparability (IAC) and capital employed adjusted for goodwill, for the last twelve
months was 23% (7). EBIT was affected by a write-down of goodwill amounting to SEKm 323 in the fourth quarter of 2018.

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 SEKm 28 (77).
As of December 31, the ten largest shareholders in Munters Group AB consisted of:
FAM AB with 21.1% of the capital followed by Nordic Capital, 14.7%, Swedbank Robur Funds, 9.0%, First AP-fund, 8.6%, Handelsbanken funds, 3.8%,
Fourth AP-fund, 3.5%, JP Morgan Asset Management, 2.5%, Kuwait Investment Authority, 2.4%, AMF Insurance & Funds, 2.2% and La Financière del’Echiquier, 1.7%.

DIVIDEND

During 2019 Munters has made major changes to the overall overhead cost structure, reducing its employees by approximately 500 and is reporting a loss
for the year. Major efforts has gone into stabilizing the business, ensuring value creation in all units. The work with stabilizing operations and make continuous improvement will continue in 2020. In order to ensure long-term profitable growth, 2020 will entail investments in research and development and initiatives to drive synergies across the Group. Due to the current situation combined with the strategic intentions for the future, the Board of Directors proposes
no dividend to be paid for 2019.

EMPLOYEESThe number of FTEs (Full Time Equivalents) at December 31, 2019 was 3,088 (3,518). The lower level of FTEs is mainly due to the initiatives part of the
FPP program. The single most contributing factor to the lower number of FTEs was the closing of the Data Centers factory in Dison, Belgium. The amount of
FTEs at year-end 2019 in business area AirTech was 2,184 (2,559), in FoodTech 833 (875) and at Group functions 71 (84).

OTHER EVENTS DURING THE YEAR

Munters Full Potential Program - In February 2019, Munters announced the launch of a three-phase plan for progression to capture Munters full potential
to improve Group earnings. As part of the first phase of the program, Munters announced the intention to close down the European Data Centers factory in
Dison, Belgium. The process to close the factory was decided and initiated in the third quarter. During 2019, Munters gradually shifted focus to the second
phase of the program, which included activities such as driving business mix towards most attractive applications, a more focused product development, etc.
The third and final phase in the program is to accelerate growth with focus on attractive segments where the company see solid long-term demand andwhere strong market positions can be established. The total yearly run-rate overhead cost saving from the program was well in line with the SEKm 210 at
the end of the year 2019. In total, Munters expected a positive Group adjusted EBITA effect of SEKm 105 in 2019 and SEKm 210 in annual effect from2020. The program has been implemented successfully and the financial targets have been realized. The majority of the actions took effect already during
the first half of 2019. Specifically for the Dison closure, the reporting of the European Data Center business as a discontinued business means that the full
impact was realized already in 2019.
Non-recurring charges for the FPP program totalled SEKm 392 and they were all charged in 2019. The FPP program has temporarily increased the leverage during 2019 and necessary consent from the lending banks has been received.
Management changes – In April 2019, the Board of Directors appointed Klas Forsström as President and CEO of Munters Group AB. He entered his position on August 12, 2019. Prior he was the President of Sandvik Machining Solutions Business area. Johan Ek, the interim President and CEO of Muntersfrom December 2018 until August 12, 2019, remain in his current role as a member of the Board of Directors of Munters.
In May 2019, Munters Group appointed Annette Kumlien as new Group Vice President and CFO. Annette entered her position on August 12, 2019, taking
over responsibilities from Jonas Ågrup, CFO of Munters Group since 2011. Annette Kumlien has previously held positions at Diaverum as SVP and COO
and prior to that as CFO.
6

Fourth quarter, 2019

In October, Munters announced that Peter Gisel-Ekdal had been appointed the role as President of business area AirTech as of November 1, 2019. Peter
Gisel-Ekdahl has been President of Munters business area FoodTech since 2007 and a member of Group Management team since 2011. Johan Ekeström,
was appointed Interim President for FoodTech as of 1 November, 2019.
Buy-back of shares in Munters Group AB – In August Munters announced it had repurchased a total number of 385,000 shares pursuant to the authorization granted by the Annual General Meeting 2019. The purpose of the repurchases was to secure the delivery of shares to the participants of Munters’
long-term incentive programme which was resolved by the Annual General Meeting 2019, and to cover costs related to the programme. As of August 13,
Munters had repurchased a total of 385,000 shares to an average price of SEK 40.98.
Nomination committee for the 2020 Annual General Meeting – In September 2019, Munters announced the Nomination Committee of Munters Group
AB. 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 theNomination Committee. The Nomination Committee was appointed in September and comprised the following members: Robert Furuhjelm, Nordic Capital,
Chairman of the Nomination Committee, Lars Wedenborn, FAM AB, Johan Grip, First AP-fund, Jan Dworsky, Swedbank Robur Funds and Magnus Lindquist, Chairman of the Board of Munters. Following the change in ownership during November, when Nordic Capital sold 20% of the share in Munters, theChairman of the Nomination Committee was changed to reflect the new ownership structure. The Chairman of the Nomination committee changed to Lars
Wedenborn, FAM AB and Robert Furuhjelm, Nordic Capital, is a member of the Nominations Committee.
European Data Centers operation incurred additional costs - In October 2019, Munters announced that the European Data Centers operations would
make a provision for an estimated additional non-recurring costs of SEKm 116 in the third quarter 2019 related to the closure of the Data Centers factory in
Dison, Belgium. This was paid in the fourth quarter. The estimated non-recurring costs were incurred due to certain specified components, for a previously
sold customized Munters solution, having to be replaced at a specific customer’s sites. Munters has insurance solutions in place for this type of events, butsince Munters has not concluded the discussions with its insurance providers the financial and cash flow net effect on Munters can not yet be finally determined.

EVENTS AFTER THE CLOSING OF THE PERIOD
Strategic evaluation of the Data Centers and Mist Elimination operations - During 2019 a strategic evaluation of the Data Centers and Mist Elimination
operations has been conducted. In February 2020, this resulted in a decision to keep these businesses in Munters. Both businesses made significant progress during 2019. Considering our refined strategic direction we see a good strategic fit. Both businesses operate in markets with good growth potential,
driven by digitalization and high demands for sustainable solutions.
Organizational change - Yesterday an organizational change was announced. 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 havefull profit and loss responsibility for their respective area. The role Global operations in the Group management team will be changed into a Strategic operations role with focus on driving lean practices, manufacturing excellence, shared tools and processes and overall footprint optimization. Two roles have been
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-to-market methods.

7Fourth quarter, 2019

AirTech•Order intake grew by 6% and was flat organically in the quarter, compared with a strong fourth quarter 2018.
High demand in Data Centers US and the Commercial segment, Industrial segment saw weaker demand•

Net sales grew by 9% and by 3% organically in the fourth quarter, driven by Data Centers US and theCommercial segment•

The adjusted EBITA-margin in the fourth quarter weaker than previous year, due to a lower gross marginresulting from a changed product mix and temporarily higher labor cost in areas with strong growth•

Strategic evaluation of Mist Elimination and Data Centers business concluded that these areas will remain in
Munters

FINANCIAL SUMMARY

Q4

Jan-Dec

SEKm

2019

2018

2019

2018

Order intake

1,361

1,289

5,253

4,621

Growth

6%

20%

14%

-14%

Net sales

1,382

1,267

5,159

4,426

Growth

9%

21%

17%

-8%

of which organic growth

3%

10%

of which currency effects

6%6%

of which structural effects

0%0%Order intake (SEKm)
2,000

Operating profit (EBIT)

159

185

565

503

1,500

Adjusted EBITA

186

185

662

522

1,000

0%

60%

27%

6%

13.4

14.6

12.8

11.8

GrowthAdjusted EBITA margin, %Order intake for the full year increased by 14% and organically 8%, mainly driven by a strong increase in orderintake for Data Centers US, Mist Eliminations and an increase of Services. The order intake was weaker in the
Supermarket segment in the US and we also saw lower demand from the lithium battery industry in China.
Region EMEA showed stronger order intake driven by a good development in Mist Elimination and Services.

0

1,000
Q4 Q1 Q2 Q3 Q4

0
LTM

6,000
5,000

1,200

4,000

800

3,000
2,000

400
0

1,000
Q4 Q1 Q2 Q3 Q4Quarter0
LTM

Adjusted EBITA (SEKm)

Adjusted EBITA

100

8

2,000

1,600

250

The improved adjusted EBITA margin for the full year is a result of higher volumes and a higher utilization rate,
together with a changed product mix and lower indirect costs resulting from the FPP program.

3,000

Net sales (SEKm)

Net sales for the full year increased, driven by strong sales increase in Data Centers US, Mist Elimination andgood growth in Services. The segment Industrial as well as Commercial saw a flat development for the full year.
Components shipments to OEMs were down due to lower demand from the lithium battery industry in China.
The adjusted EBITA in the quarter was slightly lower compared to the strong fourth quarter in 2018. It wasslightly lower mainly due to a lower gross margin resulting from a changed product mix and temporarily higher
labor cost in areas with strong growth. The FPP program continued to delivered significant savings in thequarter.

4,000

Quarter

Net sales

Net sales grew by 9% and by 3% organically in the fourth quarter, driven by a strong net sales increase in Data
Centers US and the Commercial segment, where the sub-segment Supermarket saw strong growth. This wasoffset by decreased component deliveries to OEMs. Net sales, excluding currency effects, for Services were on
the same level as the strong fourth quarter 2018.

5,000

500

Order intake

Order intake increased by 6% while organically flat in the quarter. Large orders were received in Data Centers
US, whereas order intake in the Industrial segment was weak reflecting low demand from particularly the lithium
battery industry in China. In the fourth quarter 2018, a large order related from the lithium battery industry wasreceived. The order intake in the Commercial segment strengthened with a large order to an ice rink as well as
strong demand from Supermarkets in the US, whereas Services saw flat order intake compared to a strong
fourth quarter 2018.

6,000

800

200

600

150

400
200

50
0

Q4

Q1

Q2

Quarter

Q3

Q4

0
LTM

Fourth quarter, 2019

FoodTech•

Order intake increased by 9% and by 3% organically in the quarter, with growing demand in Asia•

Net sales declined by -6% and by -11% organically in the quarter and in all regions, following previous weakorder intake•

Improvement of adjusted EBITA-margin in the quarter, mainly driven by the FPP program that have led tolower indirect costs

FINANCIAL SUMMARY

Q4

SEKm

2019

Order intake
GrowthJan-Dec
2018

2019

2018

491

452

2,087

2,107

9%

-14%

-1%

13%

Net sales

470

497

2,032

2,018

Growth

-6%

-4%

1%

10%

of which organic growth

-11%

-5%

of which currency effects

5%6%Operating profit (EBIT)

55

53

226

244

Adjusted EBITA

61

49

278

249

Order intake (SEKm)

24%

-35%

11%

6%

800

13.0

9.9

13.7

12.4

GrowthAdjusted EBITA margin, %Order intake

Order intake for the quarter increased by 9% and by 3% organically. Americas saw increased order intake, partly
driven by several orders to the dairy segment in the US. Asia also saw a strong increase, primarily driven by
growth in the layer and the broiler segments in China. The order intake in the Swine segment in China wasslightly higher than the fourth quarter 2018, but lower compared to the third quarter 2019. In Europe and Middle
East, demand was softer compared to the same period last year. Market conditions remain uncertain due to the
ASF and consequences from trade tariffs.
For the full year order intake declined by -1% and organically by -6%. This was primarily driven by a weaker
demand from the Swine segment in China and the US, as a consequence of an overcapacity in the Swine
market in the US, uncertainties related to consequences from new trade tariffs and ASF. Order intake grew inEurope and Middle East, partly due to increased sales of controllers and strong demand in the CIS-countries.

Net sales

Net sales for the quarter declined by -6% and by -11% organically. The decrease was seen in all regions
following the lower order intake in the previous quarter, and was only partially offset by net sales growth insoftware solutions, an increase in the broiler segment in South East Asia as well as in the CIS-countries.
Net sales for the full year decreased -5% organically with a decline in net sales in China and the US following theweaker order intake during the first nine months of the year. Net sales 2019 have had a slightly more positive
development than order intake, as some of the order intake growth in 2018 included Software as a Service
contracts recognized over several years.

Adjusted EBITA

The improvement of the adjusted EBITA-margin in the quarter was mainly driven by the FPP program that have
led to lower indirect costs.
The adjusted EBITA margin for the full year improvement was mainly driven by the reduction of overhead cost as
a result of the FPP program, as well as improved gross margin driven by a higher share of sales from controllers
but also operational improvements.

2,400
2,000

600

1,600

400

1,200
800

200
0

400
Q4

Q1

Q2

0

Q4

QuarterLTM

Net sales (SEKm)
600

2,500

500

2,000

400

1,500

300

1,000

200

500

100
0

Q4

Q1

Q2

Q3

Quarter

0

Q4

LTM

Adjusted EBITA (SEKm)
100

300

80

250
200

60

150

40

100

20
0

50
Q4

Q1

Q2

Quarter

9

Q3

Q3

Q4
LTM

0

Fourth quarter, 2019

Quarterly overview Group and Segments
Group
SEKm
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, %2019

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, %

2019

2018

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Full year

Full year

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

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

2,170
1,735
1,757
158
-31
-34
93
-36
-31
225
12.8

2,222
1,590
1,559
136
-49
-7
80
-43
-8
186
12.0

2,227
1,748
1,686
161
-19
-29
114
-40
−
201
11.9

2,097
1,626
1,410
74
-27
-8
40
-38
−
113
8.0

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

2,170
6,698
6,412
529
-125
-77
327
-157
-39
725
11.3

2019

2018

AirTech
SEKm

2018

2019

2018

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Full year

Full year

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

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

1,652
1,289
1,265
2
185
-5
-8
-13
185
14.6

1,671
1,073
1,049
1
104
-4
-8
−
116
11.0

1,670
1,145
1,138
1
132
-3
−
−
135
11.9

1,599
1,114
968
2
82
-3
−
−
85
8.8

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

1,652
4,621
4,421
5
503
-15
-16
-13
522
11.8

2019

2018

FoodTech

2019

2018

SEKm

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, %

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

518
452
491
6
53
-3
−
-7
49
9.9

552
524
510
8
73
-3
−
−
76
14.7

557
610
548
7
77
-3
−
−
81
14.5

498
520
442
6
41
-3
−
−
43
9.7

526
2,087
2,002
31
226
-15
-36
−
278
13.7

518
2,107
1,991
27
244
-12
−
-7
249
12.4

2019

2018

Other and eliminations

2019

2018

SEKm

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

-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

-6
-8
-80
-28
-22
20
-10

-8
-8
-41
-36
−
−
-5

-7
-8
-48
-33
−
−
-15

-8
-8
-48
-32
−
−
-16

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

-30
-32
-217
-130
-22
20
-46

10

Fourth quarter, 2019

Discontinued operations
2019

2018

2019

2018

Order intake

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

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

147
18
78
-414
-344
−
-71

166
111
190
8
-1
−
8

250
79
252
9
-1
−
10

419
9
190
2
-1
−
3

2
15
176
-450
3
-373
-80

147
216
710
-396
-346
−
-49

Restatement of AirTech
Previous business segments Mist Elimination and Data Centers were incorporated into former Air Treatment (renamed to AirTech) in the first quarter of
2019, see restatement of 2018 below.

2018
SEKm

Q4

Q3

Q2

Q1 Full year

Order intake AirTech
Order intake Air Treatment
Order intake Data Centers
Order intake Mist Elimination
Transactions between segments

1,289
979
204
117
-11

1,073
906
68
106
-7

1,145
951
80
125
-10

1,114
963
57
97
-4

4,621
3,798
409
445
-32

External net sales AirTech
External net sales Air Treatment
External net sales Data Centers
External net sales Mist Elimination

1,265
1,060
82
123

1,049
924
34
91

1,138
963
89
86

968
775
104
89

4,421
3,723
309
389

EBIT AirTech
EBIT Air Treatment
EBIT Data Centers
EBIT Mist Elimination

185
176
-13
22

104
121
-32
15

132
126
-3
9

82
73
3
6

503
496
-44
52

Adjusted EBITA AirTech
Adjusted EBITA Air Treatment
Adjusted EBITA Data Centers
Adjusted EBITA Mist Elimination

185
170
-6
22

116
124
-23
15

135
129
-2
9

85
75
4
6

522
497
-27
52

11

Fourth quarter, 2019

Condensed income statement
Q4

Jan-Dec

SEKm

2019

2018

2019

2018

Net sales
Cost of goods sold
Gross profit

1,842-1,271571

1,757-1,122
634

7,153-4,822
2,331

6,412-4,1602,252

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

-207
-148
-53
-4
159

-255
-171
-53
3
158

-970
-610
-197
2
556

-987
-553
-191
8
529

Financial income and expenses
Profit/Loss after financial items

-55
104

-31
127

-189
367

-125
404

Tax
Net income for the period from continuing operations

-27
76

-34
93

-83
283

-77
327

Net income from discontinued operations

-65

-414

-448

-421

Net income for the period

12

-321

-164

-94

Attributable to Parent Company shareholders

13

-324

-166

-105

Attributable to non-controlling interests

-1

3

2

11

181,745,802
181,745,802

182,130,802
182,130,802

181,983,219
181,983,219

183,165,852
183,165,852

0.42
0.42

0.49
0.49

1.55
1.55

1.73
1.73

0.07
0.07

-1.78
-1.78

-0.91
-0.91

-0.57
-0.57

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

-128

17

122

193

-44
10
-162

-17
4
3

-44
9
87

-17
4
179

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

-150
-150
-0

-317
-321
4

-77
-79
2

85
75
10

*Excluding shares held in own custody.

12Fourth quarter, 2019

Condensed balance sheet
SEKm

2019/12/31

2018/12/31

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

4,218
1,480
168
270
137
62
11
227
6,575

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

391
106
282
7
20
1,095
224
3
53
109
404
2,693

TOTAL ASSETS

10,093

9,268

ASSETSNON-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

913Fourth quarter, 2019

Condensed balance sheet
2019/12/31

2018/12/31

Shareholders' equity
Non-controlling interests
Total equity

3,627
-0
3,627

3,720
-4
3,716

NON-CURRENT LIABILITIESInterest-bearing liabilities
Provisions for pensions and similar commitments
Other provisions
Other liabilities
Deferred tax liabilities
Total non-current liabilities

3,371
282
24
134
409
4,221

3,002
230
16
137
421
3,805

CURRENT LIABILITIESInterest-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

126
374
556
716
−
32
153
9
278
2,244

11
285
535
590
1
28
181
8
107
1,746

TOTAL EQUITY AND LIABILITIES

10,093

9,268

2019/12/31

2018/12/31

Opening balance
Total comprehensive income for the period
Change in non-controlling interest
Put/call option related to non controlling interests
Dividends paid
Repurchase of shares
Share option plan
Closing balance

3,716
-77
0
0
−
-16
4
3,627

3,748
85
0
-4
-55
-59
1
3,716

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

3,627
-0

3,720
-4

SEKm
EQUITY AND LIABILITIESEQUITYCONDENSED STATEMENT OF CHANGES IN EQUITY
SEKm

14

Fourth quarter, 2019

Condensed cashflow statement
Q4

Jan-Dec

2019

2018

2019

2018

94

-256

105

134

82
37

406
19

408
63

602
19

-134
79

16
185

158
735

-19
736

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

-51
-32

-27
-47

-177
-111

-109
-123

-5

111

448

503

Cash flow from changes in working capital

286

329

221

-63

Cash flow from operating activities

282

441

669

441

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

−
15
0
−
-23
-28
-35

-1
1
1
−
-42
-24
-64

−
18
2
−
-118
-76
-174

-37
2
1
-0
-148
-84
-266

FINANCING ACTIVITIESLoan raised
Amortization of loans
Repayment of lease liabilities
Repurchase of shares
Dividends paid
Cash flow from financing activities

170
-149
-32
−
−
-10

-0
-297
−
−
−
-297

284
-332
-123
-16
−
-185

407
-473
−
-59
-55
-180

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

237
497
-12
722

80
322
3
404

310
404
7
722

-5
402
8
404

SEKm
OPERATING ACTIVITIESOperating 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

Cash flow from the discontinued operations is disclosed in a separate note, see page 22.

15

Fourth quarter, 2019

Parent company
CONDENSED INCOME STATEMENT
SEKm

Q4

Jan-Dec

2019

2018

2019

2018

Net sales
Gross profit/loss

−
−

−
−

−
−

−
−

Administrative costs
Profit/Loss before interest and tax (EBIT)

-8
-8

-5
-5

-44
-44

-11
-11

Financial income and expenses
Profit/Loss after financial items

-0
-8

0
-5

-0
-44

-0
-11

Group contributions
Profit/Loss before tax

43
35

−
-5

43
-1

−
-11

Tax
Net income for the period

0
35

0
-5

0
-1

0
-11

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

Q4

Jan-Dec

2019

2018

2019

2018

35
−
35

-5
−
-5

-1
−
-1

-11
−
-11

16

Fourth quarter, 2019

Parent company
CONDENSED BALANCE SHEET
SEKm

2019/12/31

2018/12/31

4,086
4,086

4,086
4,086

0
0
45
28
74

0
0
−
77
77

4,160

4,163

2019/12/31

2018/12/31

6
4,074
60
-1
4,139

6
4,074
87
-11
4,155

3
11
0
2
5
21

0
2
3
2
−
8

4,160

4,163

ASSETSNON-CURRENT ASSETS
Participations in subsidiaries
Total non-current assets
CURRENT ASSETS
Prepaid expenses and accrued income
Current tax assets
Receivables from subsidiaries
Cash and cash equivalents
Total current assets
TOTAL ASSETSSEKm
EQUITY AND LIABILITIESEQUITY
Share capital
Share premium reserve
Profit brought forward
Income for the period
Total equity
CURRENT LIABILITIES
Accounts payable
Accrued expenses and deferred income
Liabilities to subsidiaries
Other liabilities
Other provisions
Total current liabilities
TOTAL EQUITY AND LIABILITIES

17

Fourth quarter, 2019

Other disclosures
ACCOUNTING POLICIESThis report has been prepared, with regards to the Group, in accordance with IAS 34 Interim Financial Reporting, recommendation RFR 1 of the Swedish
Financial Reporting Board and the Swedish Annual Accounts Act and, with regards to the Parent Company, in accordance with recommendation RFR 2 of
the Swedish Financial Reporting Board and the Swedish Annual Accounts Act. The accounting principles applied correspond to those presented in the
Annual- and Sustainability report 2018 (Note 1).
As of January 1, 2019 all new lease agreements are accounted for according to requirments under IFRS 16. This means that lease agreements are reported
as right-of-use assets in the balance sheet and a corresponding lease liability recognized on the commencement day of the lease. Each lease payment isdivided between a repayment of the debt and an interest expense. The interest expense is distributed over the lease term so that each accounting period isexpensed with an amount corresponding to a fixed interest rate for the liability recognized during the respective period. The right-of-use asset is depreciatedon a straight-line basis over the shorter of the asset's useful life and the length of the lease. Assets and liabilities arising from leases are initially recognizedat present value. The lease payments are discounted with the implicit interest rate if that interest rate can be determined, otherwise the incremental
borrowing rate. The incremental borrowing rate is decided based on the contract duration and contract transaction currency. Payments for short-term
contracts and leases of low value are expensed on a straight-line basis in the income statement. Short-term contracts are contracts with a lease term of 12months or less. Contracts of low value include various IT-equipment and smaller office furniture. The Parent Company, should it have any leaseagreements, will not recognise leases in the balance sheet. Instead leasing fees will continue to be expensed on a straight-line basis over the lease term inaccordance with the exemption from IFRS 16 in RFR 2, Accounting for Legal Entities.
For transition purposes the simplified transition approach has been used to transfer to the new accounting standard and therefore there are no restatementsof comparative amounts for the year prior to the first adoption. Right-of-use assets are measured at the amount of the lease liability on adoption (adjusted
for any prepaid or accrued lease expenses). Munters has used the transition exempt rule under IFRS 16 not to make a new assessment if a contract is orcontains parts that constitute a lease and has therefore applied the standard for all contracts that have previously been identified as leases. Munters has
also applied the exempt rule to exclude intitial direct costs when calculating the right-of-use asset. As of January 1, 2019, Munters has recognised right-ofuse assets of approximately SEKm 475, lease liabilities of SEKm 458 (after adjustments for prepayments and accrued lease payments recognised as at
December 31, 2018) and provision for dismantling expenses of SEKm 18. Total cash flow will not be affected, however there is a shift in cash flow fromoperating activities to financial activites since the lease payments are repaying the recognized lease liability.
Since September 30, 2019 Munters is reporting a discontinued operation, see further information in separate note below. The discontinued operation relates
to the disposal group that has been abandoned constituting the European Data Center factory in Dison, Belgium. According to IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations a single amount shall be disclosed in the statement of comprehensive income comprising the total of the post-tax
profit or loss of the discontinued operation. A disclosure of the single amount is required and is presented in the separate note together with a disclosure of
cash flows from operating, investing and financing activities related to the discontinued operation. In the interim report for the third quarter 2019, thediscontinued operation for the period January to September 2019 were charged with a too low tax expense of SEKm 6 and for the full year 2018 with a too
low tax expense of SEKm 41. As a consequence the isolated quarters in 2018 as well as September year to date 2018 were effected. This report has beencorrected.
The Group presents certain financial metrics in the Interim report that are not defined in accordance with IFRS. The Group is of the opinion that these
metrics provide valuable complementary information, in that they enable an evaluation of the Group’s performance. The financial metrics are calculated inaccordance with the definitions presented on page 134 of the Annual- and Sustainability report 2018.

TRANSACTIONS WITH RELATED PARTIESAt the annual general meeting in May 2019 it was resolved in accordance with the Board’s proposal on the implementation of a long-term incentive programin the form of a performance based employee stock option program for members of the Group management and certain other key employees (“LTIP 2019”or the “Programme”), approximately 72 employees in total. The Programme was to comprise no more than 1,595,000 employee stock options divided inthree series. No more than 100,000 of these employee stock options was to be cash-settled, the remaining employee stock options shall entitle to the acquisition of shares in the company. A total of 68 employees has accepted the offer comprising 1,498,000 employee stock options, whereof 80,000 cash settled.
The employee stock options have been granted free of charge. Exercise of the employee stock options of Series A and Series B is dependent on the extent
to which certain performance targets are satisfied during the financial years 2019-2021 (the “Performance Period”). The performance conditions determine
the extent to which (if any) the employee stock options of the respective series may be exercised to acquire shares in the company or receive a cash
amount at the expiry of a period of three years from and including the date of the grant of the employee stock options (the “Vesting Period”). Each employee
stock option that is not cash settled shall entitle the holder to acquire one share in the company at an exercise price equivalent to SEK 50.27. Each cashsettled employee stock option shall entitle the holder to a cash amount equivalent to the value of one share in the company, calculated as the volumeweighted average price paid for the company’s shares at Nasdaq Stockholm during a period of ten business days immediately prior to the exercise of theoption, with deduction of an exercise price of SEK 50.27. 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. The costs of the program are estimated to SEKm 13 that will be incurred over thethree-year period.
In February Munters’ largest shareholder, a Nordic Capital Fund VII entity, offered the Chairman of the Board of Directors, Magnus Lindquist, and the acting
CEO, Johan Ek, to acquire in total 6,000,000 call options for shares in Munters. The program entailed that Magnus Lindquist and Johan Ek was offered toacquire in total 6,000,000 call options (3,000,000 call options per person) at a total value of SEKm 13.8. The Chairman of the Board of Directors, Magnus
Lindquist, acquired 3,000,000 call options and Johan Ek acquired 3,000,000 call options at February 20, 2019. Nordic Capital believes that the call option
incentive program contributes to creating a clear alignment of interests between these individuals and the other existing shareholders in Munters.
18

Fourth quarter, 2019

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 andfinished products to and from Munters factories. Munters is committed to constant vigilance regarding the environmental impact of its operations. Munters iscommitted to complying with all laws and to continuously promoting improvements in all Environment, Health & Safety (“EHS”) aspects, wherever Muntersconducts business. Munters constantly seeks opportunities to reduce risk and to create a safer, healthier, more diverse and more environmentally friendly
workplace for our 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, andreduce the impact that our business has on the environment.

RISKS AND UNCERTAINTIESThe Group’s significant risks and uncertainties can be divided into four categories; strategic, operational, financial and regulatory risks. In these categories,
there are both risks due to political and macroeconomic trends and specific risks directly linked to the business carried out by the Group. 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 and contract obligations are critical and could result in claims for damages. The Groupdepends to some extent on key customers and key personnel. Considering that Munters is a company with geographically widespread operations and manysmall organizational units, there is a risk of failure to comply with relevant regulations in the business ethics area, e.g. anti-bribery rules. 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 forgeneral liability and product liability, property, business interruption, transportation, the liability of Board members and the CEO and employment practices
liabilities. A more detailed description of the Group’s risks and how they are managed can be found in the Annual- and Sustainability report 2018.

ALLOCATION OF NET SALES

The majority of customer contracts within Munters business segments AirTech and FoodTech fulfill the requirements to recognize net sales at a point in
time, however there are a number of customer contracts within the segments that requires to recognize net sales over time, especially in 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 over time as these services are performed.
The services transferred over time in the matrix below is not equivalent to the net sales from Services mentioned on the business segment pages earlier inthis 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 thediscontinued operation is all recognized over time.

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

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

Q4 2018
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

Jan-Dec 2018

AirTechFoodTech

Total

AirTechFoodTech

Total

1,023
222
98
1,343
78
1,265

452
-0
39
491
−
491

1,475
222
137
1,834
78
1,757

3,697
1,100
334
5,131
710
4,421

1,851
1
139
1,991
−
1,991

5,548
1,101
473
7,122
710
6,412

19

Fourth quarter, 2019

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 categorized in level 2 in
the fair value hierarchy. The derivatives amounted to SEKm 5 (3) in financial assets and to SEKm 0 (1) 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 at December, 2022 and is based on EBITDA for the 12 months prior to execution. The earn-out in Humi-Tech Services Ltd isbased on EBITDA for the fiscal years of 2018 och 2019 and will be settled in early 2020. The change in the period relates to a discounting effect on theput/call option and currency translations.
SEKm
Contingent considerations and put/call options
Opening balanceContingent consideration
Excersied put/call option
Discounting
Exchange-rate differences for the period
Closing balance

2019/12/31

2018/12/31

137
−
−
1
5
142

136
8
-24
2
14
137

Munters deems that the interest rate on interest-bearing liabilities are in line with market terms at December 31, 2019, and the fair value at the end of thereporting period therefore in all material aspects corresponds to the carrying amount.

20

Fourth quarter, 2019

IMPACT OF THE NEW ACCOUNTING STANDARD FOR LEASES, IFRS 16

As of January 1, 2019 all lease agreements are accounted for according to the requirments under IFRS 16, Leases. The below analysis incluedes thediscontinued operation if not otherwise stated.
At the transition date of January 1, 2019, and according to the transition disclosure note in the annual report of 2018, net profit after tax was expected todecrease, provided no new agreements are added, by approximately SEKm 13 for the full year 2019 as a result of adopting to the new rules. EBITDA was
expected to increase with approximately SEKm 109 as the operating lease payments were included in EBITDA but the depreciation of the right-of-use
assets and interest on the lease liability are excluded from this measure. The actual decrease in net profit after tax was SEKm 31 and the reason for thedeviation from the expected amount is mainly explained by a writedown of leased asset during the year of SEKm 26, mainly related to the discontinued
operation. The actual increase in EBITDA for the full year, was SEKm 115 and the deviation from exected impact is explained by new agreements during
the year. Adjusted EBITA was expected to increase by approximately SEKm 1, as the operating lease payments were included in EBITA but the interest on
the lease liability is excluded from this measure. Adjusted EBITA from continunig operations for the full year was SEKm 4 and adjusted EBITA from thediscontinued operation was SEKm 3.
If previous accounting principles for leases (IAS 17) would have been applied, the reported EBIT in the fourth quarter would be SEKm 2 lower, financial
expenses SEKm 4 lower and profit after tax SEKm 1 higher. The reported EBIT for the twelve months would be SEKm 19 higher, financial expenses SEKm
19 lower and profit after tax SEKm 31 higher. The reason for profit after tax being higher without IFRS 16 is due to the fact that a leased asset has been
written down during the year. However, with previous principles the lease contract would most probably been regarded as onerous, resulting in a negative
impact in both EBIT and profit after tax with approximately the equivalent numbers.
IFRS 16 does not have an impact on reported cash flow, however there is a shift in cash flow from operating activities to financial activites since the lease
payments are repaying the recognized lease liability. Below is a specification per segment on the effect of the new standard on the balance sheet and income statement as of December 31, 2019.

2019/12/31
SEKm
Reported amounts in the balance sheet
Right-of-use assets
Buildings, leased
Land, leased
Plant and machinery, leased
Equipment and tools, leased
Total

AirTech FoodTech

51
2
110
29
193

Other

Total

28
0
167
10
205

0
0
0
2
2

80
2
277
41
400

171
33
204

1
3
3

314
102
416

Lease liabilities reported within interest-bearing liabilities
Long-term lease liabilities
Short-term lease liabilities
Total

142
66
209

Q4 2019
Reported amounts in the income statement
Continuing operations
Depreciation and write-downs on right-of-use
assetsInterest expense on lease liabilities
Discontinued operation
Depreciation and write-downs on right-of-use
assetsInterest expense on lease liabilities

AirTech FoodTech

Jan-Dec 2019
Other

Total

AirTech FoodTech

Other

Total

-15
-1

-8
-2

-2
0

-25
-3

-64
-7

-37
-10

-5
0

-106
-17

-1
0

0
0

0
0

-1
0

-32
-2

0
0

0
0

-32
-2

21

Fourth quarter, 2019DISCONTINUED OPERATIONSOn September 9, 2019 Munters decided to close its European Data Center factory in Dison, Belgium, following the finalization of negotiations with theunions. The production has ceased but minor installation services remains at customer sites. Therefore, this business is classified as a discontinued
operation. The closure is according to the plan of the Munters Full Potential Program launched at the start of 2019 to increase the overall performance of thecompany. All income statement items in this report have been restated and relates to Munters continuing operations if not otherwise explicitly stated.The
table below shows the income statement for the discontinued operation as well as the cash flow from operating activities, since the discontinued operations
has mainly had cash flows from operating activities during 2018 and 2019.
The IACs for the discontinuing operation during the fourth quarter amounted to SEKm -48, mainly relating to warranty and other accruals. For the full year,
IACs amounted to SEKm -257, whereof SEKm -139 was severance pay and SEKm -118 was warranty and other accruals, asset and inventory write-downs.
The adjusted EBITA was SEKm -20 for the fourth quarter and SEKm -80 for the full year.
In relation to the closure process of Dison, specified components, for a previously sold customized Munters solution, had to be replaced at a specific customer’s sites. As a result of this, Munters incurred non-recurring cost of SEKm -116 in the third quarter 2019 and was paid in the fourth quarter. This cost isin addition to the previously communicated total cost for the FPP program. Munters has insurance solutions in place for this type of events, but since
Munters has not concluded the discussions with its insurance providers the final financial and cash flow net effect on Munters can not yet be determined.

Q4

Jan-Dec

SEKm

2019

2018

2019

2018

Net sales
Cost of goods sold
Gross profit

9
-56
-47

78
-135
-57

176
-427
-251

710
-690
20

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

-12
-9
-1
3
-65

-336
-1
-21
0
-414

-39
-39
-9
-113
-450

-375
-15
-26
0
-396

Financial income and expenses
Profit/Loss after financial items

-2
-67

-0
-414

-5
-455

-2
-397

Tax
Net income for the period from discontinued operations

2
-65

0
-414

8
-448

-24
-421

Cash flow from operating activities

-190

245

-431

42

2019

2018

CURRENT ASSETS
Cash and cash equivalents

-722

-404

NON-CURRENT LIABILITIESInterest-bearing liabilities
Provisions for pensions

3,371
268

3,002
215

CURRENT LIABILITIESInterest-bearing liabilities
Accrued expenses
Provisions for pensions

126
12
6

11
13
6

TOTAL NET DEBT

3,062

2,843

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

105
-277
-131
514
-525

134
-99
-503
736
-39

Adjusted EBITDA

1,039

774

2.9

3.7

RECONCILIATION OF NET DEBT AND LEVERAGE
SEKm
Net debt

Net debt/Adjusted EBITDA, LTM

22

Fourth quarter, 2019

INFORMATION AND REPORTING DATESContact person:
Ann-Sofi Jönsson, Head of Investor Relations
Phone: + 46 (0)730 251 005
Email: ann-sofi.jonsson@munters.se
At 9:00 the President and CEO, Klas Forsström, together with the Group Vice President and CFO, Annette Kumlien will present the report in an audiocast
with telephone conference.
Audiocast:More information: http://www.financialhearings.com/event/12364
Link to Audiocast: https://tv.streamfabriken.com/munters-q4-2019
Dial-in number for the telephone conference:
SE: +46856642706
UK: +443333009269
US: +18335268398
The year-end report, presentation material and a link to the audiocast will be available on https://www.munters.com/en/investor-relations/____________________________________________________________________________________________________________________________
Financial calendar:
April 23, January-March interim report 2020
May 7, Annual General Meeting 2020
May 28, Capital Markets Day
July 17, January-June interim report 2020
October 22, January-September interim report 2020____________________________________________________________________________________________________________________________
This information is information that Munters Group AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets
Act. The information was submitted for publication, through the agency of the contact person set out above, at 08.00 CET on February 13, 2020.

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 3,100 employees carry out manufacturing and sales in more than 30 countries. Munters Group AB reports annual net sales of more than SEK 7 billion 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.

23