Q2“Next step in the strategy
implementation”

April-June 2020

January-June 2020■

Order intake increased 2%, currency adjusted 1%.

■

Net sales declined by -6%, currency adjusted -6%, mainly due to a weakdevelopment in the industrial segment and in Mist Elimination within businessarea AirTech. This was partly offset by increasing net sales in business area
FoodTech driven by a strong growth in China.

■

The adjusted EBITA-margin was stronger at 14.7% (13.9), mainly because of ahigher margin in business area FoodTech.

■

Leverage (net debt/adj. EBITDA, LTM*) decreased to 2.7x from 3.1x end of
March 2020.

■

Next step has been decided for implementation of the Munters strategy. The
step is related to a sharpening of the customer offering and footprint
optimization. The total cost for this step is estimated to MSEK 188. In Q2 MSEK
136 was booked as items affecting comparability (IACs). The remaining cost of
MSEK 52 will be booked as incurred. Estimated savings of approximately MSEK
70 from these measures will reach full annual run-rate once the program is
implemented.

■

The outbreak of Covid-19 had a mixed impact on Munters in the first half-year.
All production units, except for one minor unit, have been operational throughout
the period with only minor disturbances.

■

Order intake decreased -2%, currency adjusted -3%.

■

Net sales declined -5% ,currency adjusted -6%, with lower net sales in bothbusiness area AirTech and FoodTech.

■

The adjusted EBITA-margin improved slightly to 11.7% (11.2) because of
mitigating actions related to the Covid-19 outbreak and production efficiency
improvements. This resulted in an improved gross margin and lower indirect
costs.

■

Leverage (net debt/adj. EBITDA, LTM*) decreased to 2.7x from 2.9x at the endof December 2019. The decrease was mainly driven by a strong cash flow anda positive exchange rate effect on outstanding borrowings.

Events after period end

Munters has established a new Revolving Credit Facility (RCF) as a precautionary measure in the current challenging business environment. The purpose of the RCF is toserve as a back-up facility. It amounts to MSEK 750 and is secured by a guarantee from EKN, the Swedish Export Credit Agency. Five banks are participating in the syndicate for this RCF with a maturity in 2023.
On 16 July, 2020, the Board of Directors of Munters resolved pursuant to the authorisation granted by the annual general meeting held on 7 May 2020, to repurchase
Munters shares on Nasdaq Stockholm. The purpose of the repurchase is to secure the delivery of shares to the participants of Munters’ long-term incentive programme
which was resolved by the 2020 annual general meeting, and to cover costs related to the programme.

Financial summary

Jan-JunQ2

LTM*

Full year

MSEK

2020

2019

∆%

2020

2019

∆%

Jul-Jun2019

Order intake

1,870

1,840

2

3,719

3,777

-2

7,243

7,302

Net sales

1,773

1,877

-6

3,340

3,498

-5

6,995

7,153

Operating profit (EBIT)

103

185

-45

212

223

-5

545

556

Adjusted EBITA

260

262

-1

390

393

-1

868

871

Adjusted EBITA margin, %

14.7

13.9

11.7

11.2

12.4

12.2

Net income

39

104

Earnings per share before dilution, SEK

0.21

0.57

Earnings per share after dilution, SEK

-62

96

107

0.53

0.59

-10

272

283

1.49

1.55

0.21

0.57

0.53

0.59

1.49

1.55

Average number of outstanding shares before dilution

181,745,802

182,130,802

181,745,802

182,130,802

181,790,844

181,983,219

Average number of outstanding shares after dilution

181,745,802

182,130,802

181,745,802

182,130,802

181,790,844

181,983,219

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

38

84

95

63

-132

-164

Earnings per share before dilution, SEK

0.20

0.46

0.52

0.34

-0.74

-0.91

Earnings per share after dilution, SEK

0.20

0.46

0.52

0.34

-0.74

-0.91

Cash flow from operating activities

286

168

319

211

778

669

Net debt

2,895

3,310

2,895

3,310

2,895

3,062

2.7

3.8

2.7

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 is defined 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 during 2020. All income statement items in this report refers to Munters continuing operations, if nototherwise stated. See more information on page 22.

Second quarter, 2020»

CEO comments
Robust performance in a challenging business environment

During the first six months the Covid-19 outbreak had a mixed impact on Munters. In the second quarter we haveexperienced that some customers delayed investments and also delays in deliveries. At the same time we haveseen pockets of increased demand in industries such as pharma and data centers. Throughout the first six
months, all our production units, except one minor unit, upheld production with only minor disturbances. We havecontinuously been implementing mitigating actions and adjusting our cost base and investments as well as our
supply chain. So far we have not had any major disturbances.

Mitigating
actions of theCovid-19
outbreakcontributed toa robust
performance

Order intake increased organically by 1% in the second quarter, primarily because of an increase in Data Centers US within business area AirTech and a strong demand in the swine segment in China for business area
FoodTech. Net sales decreased organically by -6% in the second quarter, mainly driven by lower net sales in theindustrial segment in business area AirTech and a weak marine market for Mist Elimination. This was offset by astrong increase in the swine segment for business area FoodTech in China.
The adjusted EBITA-margin improved in the second quarter, driven by a very strong performance in businessarea FoodTech and a continuous focus by all parts of the organization to streamline indirect costs together withan active mitigation of the effects from the outbreak. We managed to lower our net debt to EBITDA to a leverageof 2.7x. We proactively re-negotiated the current financing during the second quarter, which created more headroom for strategic actions. Together with the additional RCF of MSEK 750 established at the beginning of July
we have secured a solid financial position to support the implementation of the refined strategy in the current unstable business environment.
Klas Forsström, President and CEO

Next step for implementation of strategy has been decided

We continue the implementation of the strategy for Munters and now take a further step focused on sharpening
the customer offering and footprint optimization measures. We have decided to exit the non-core part of the commercial business of business area AirTech in the US. We expand part of the Data Center US manufacturing in
Texas because of their current strong order backlog. In the Netherlands we consolidate operations. In addition,other measures will be taken to ensure execution of the strategy.
The measures are expected to be implemented within the next 18 months and costs are estimated to MSEK 188,
of which MSEK 159 will have cash flow impact. In Q2, MSEK 136, of which MSEK 107 will impact cash flow,
have been booked as items affecting comparability (IACs). Additional MSEK 52, all cash items, will be booked as
incurred going forward. Estimated savings of approximately MSEK 70 from these measures will reach full annual
run-rate once the program is implemented.
Continued low visibility of market demand

We expect a continued challenging business environment with a limited visibility of the effect from the Covid-19
outbreak. We have managed the first six months 2020 in a good way and I I truly want to thank our employees
for their dedication and hard work.
Klas Forsström, President and CEO

Mid-term financial targets

Net sales growth: Annual growth in organic net sales of 5 per
cent, as of 2019, supplemented with selected add-on acquisitions.
Adjusted EBITA-margin: An adjusted EBITA-margin of 14 per
cent.
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
2019, page 18.

2

Sustainability

Throughout 2020 Munters will prioritize sustainability issues aiming at setting more ambitious goals in 2021. The framework for
Munters’ sustainability agenda is divided into three parts:
resource efficiency, responsible business practices and people &society.
Examples of key sustainability ratios FY 2019:•
Proportion women in management
25% (20)•
Total Recordable Incident Rate
2.7 (3.4)•
Code of Conduct for suppliers
92% (66)•
Green electricity
40% (31)
Please see the Munters Annual and Sustainability report 2019, page 46-55, for further information on goals and outcome.

Second 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 22. All income statement items in this report refers to Munters continuing operations, if
not otherwise stated.

Q2
MSEK
Order intake

AirTechFoodTech
Other and eliminations

Net sales

AirTechFoodTech
Other and eliminations

Adjusted EBITA

AirTechFoodTech
Other and eliminations

Adjusted EBITA margin, %AirTechFoodTech

2020
1,870
1,231
656
-17
1,773
1,207
575
-8
260
181
98
-19
14.7
15.0
17.1

Jan-Jun
2019
1,840
1,264
582
-7
1,877
1,324
563
-9
262
199
85
-23
13.9
15.1
15.2

2020
3,719
2,574
1,172
-27
3,340
2,334
1,023
-18
390
281
150
-41
11.7
12.0
14.6

LTM Full year
2019
3,777
2,713
1,083
-18
3,498
2,490
1,028
-20
393
310
132
-48
11.2
12.4
12.8

Jul-Jun
7,243
5,115
2,176
-48
6,995
5,003
2,027
-36
868
633
296
-61
12.4
12.7
14.6

2019
7,302
5,253
2,087
-38
7,153
5,159
2,032
-38
871
662
278
-69
12.2
12.8
13.7

Order intake,currency adjusted change

1%Adj. EBITA-margin

14.7%

ORDER INTAKE
April-June 2020

The order intake in the quarter increased by 2%, currency adjusted increase of 1%. This was driven by a decline
in AirTech, which was offset by a good development in FoodTech. The impact on demand from the Covid-19 outbreak was mixed. Some customers postponed deliveries and also choose to delay investments. At the sametime we have seen pockets of increased demand in industries such as pharma and data centers.

Order intake Q2, 2020 (MSEK)Business area AirTech order intake decreased by -3%, currency adjusted decrease of -3%. Mist Elimination had
weak order intake in all regions driven by the low demand in the marine market globally. Also, the lockdown inIndia due to the Covid-19 outbreak had a negative impact on order intake. This decline was partly offset by agood order intake from Data Centers US as well as the Industrial segment where the Lithium battery sub-segment had a strong development. Also Pharma had a positive order intake development. Services had a slightincrease in order intake.
Business area FoodTech order intake increased by 13%, currency adjusted increase of 13%, primarily becauseof a strong increase in the swine segment in China. Investments in production capacity in China continued toincrease in the swine segment on the back of a weak 2019 when it was negatively impacted by the African
Swine Fever (ASF). Region EMEA had softer order intake, partly offset by Germany had a good order intake
based on a strong demand in the swine segment in Russia. In region Americas, the US had a weaker development mainly due to a decline in the swine segment.

2,000

8,000

1,500

6,000

1,000

4,000

500

2,000

0

Q2

Q3

Q4

Quarter

Q1

Q2

LTM

Order intake Q2, 2020 (MSEK)

24%

39%

January-June 2020

The order intake in the first six months decreased by -2%, currency adjusted decrease of -3%. This was driven
by a decline in business area AirTech, which was partly offset by a good development in business area
FoodTech. The impact on demand from the Covid-19 outbreak was mixed in the first quarter with a robust orderintake in January and February, except in China in February. In March order intake was negatively impacted inEurope and Americas, whereas demand in China somewhat recovered. In the second quarter the impact fromthe outbreak was mixed.
Business area AirTech order intake decreased by -5%, currency adjusted decrease of -7%, mainly due to a
weaker order intake in Mist Elimination. This was partly offset by a strong development in Data Centers US.The
industrial segment had weaker order intake in the period. Services had a slight positive development of orderintake.
3037%Americas

EMEA

APAC

Second quarter, 2020

Business area FoodTech order intake increased by 8%, currency adjusted increase of 7%. The increase wasmainly because of a very good development of order intake in Asia, driven by China. Also, good growth wasachieved in the layer and broiler segment in China. In Europe, demand was softer, despite a good developmentin Germany. In Americas order intake was softer mainly due to a weak swine segment.

NET SALES

April-June 2020

Net sales Q2, 2020 (MSEK)

Net sales in the quarter decreased by -6%, currency adjusted decrease by -6%, with a decrease of net sales in
AirTech partly offset by an increase of net sales in FoodTech. Services net sales amounted to 14% of total net
sales.

2,000

8,000

1,500

6,000

Net sales in business area AirTech decreased by -9%, currency adjusted decrease by -10%. The decrease wasmainly driven by weaker net sales in the industrial segment and in Mist Elimination. Mist Elimination declined as
the marine sub-segment was weak in all regions and the power subsegment in India was weak, impacted by the
Covid-19 outbreak. This was partly offset by a positive development in Data Centers US and the pharma segment. Services showed a slight positive development helped by the launch of Munters remote service offering.

1,000

4,000

500

2,000

0

Q2

Net sales in the first six months decreased by -5%, currency adjusted decrease by -6%, with decreased net
sales in both AirTech and Foodtech. Services net sales amounted to 14% of total net sales.
Net sales in business area AirTech decreased by -6%, currency adjusted decrease by -8%. The decrease wasmainly driven by weaker net sales in Mist Elimination where the marine sub-segment and the power sub-segment in India had a weak development. The industrials segment, especially within the food-subsegment, were
impacted by the Covid-19 outbreak and had weak development. In Americas Data Centers US had strong
growth. Services had good growth driven by the US, whereas sales in Europe and APAC was weaker.
Net sales in business area FoodTech declined by -1%, currency adjusted decrease by -2%, with a good growthin Asia, offset by a decrease in the Americas and Europe. Net sales in all regions was impacted from the Covid19 outbreak. This affected net sales negatively in Asia early in the year and had a negative impact later in theyear in Europe and Americas.

4

Q4

Q1

0

Q2

LTM

Quarter

Net sales in business area FoodTech increased by 2%, currency adjusted by 2%, driven by a good growth inChina with a strong development in the swine subsegment. The US had a negative development especially inthe swine segment due to an overcapacity in the market. The Americas and the EMEA region had a negative
development impacted by the Covid-19 outbreak in the quarter.

January-June 2020

Q3

Net sales Q2, 2020 (MSEK)

23%

44%

33%
Americas

EMEA

APAC

Second quarter, 2020

RESULTS

Gross margin development

Adjusted EBITA excludes Items Affecting Comparability, IAC.

40%

April-June 2020

35%

The gross margin increased to 35.6% (34.2) with a strengthened gross margin in both business areas AirTech
and FoodTech driven by efficiency improvements.
Adjusted EBITA was flat at MSEK 260 (262), corresponding to a slightly higher adjusted EBITA-margin of 14.7%(13.9). Depreciation amounted to MSEK -53 (-57), whereof depreciation of leased assets was MSEK -25 (-29).
Adjusted EBITA for business area AirTech amounted to MSEK 181 (199), corresponding to a slightly lower
adjusted EBITA margin of 15.0% (15.1). The slightly lower EBITA-margin was a result of a lower demand
impacted by the Covid-19 outbreak which was offset by a stable gross margin and lower indirect costs.

30%
25%

Q2

Q3

Q4

Q1

Q2

Adjusted EBITA (MSEK)
300
200

Adjusted EBITA in business area FoodTech increased to MSEK 98 (85), corresponding to an adjusted EBITA
margin of 17.1% (15.2). The improvement was due to a slight improvement in gross margin driven by efficiency
improvements and lower indirect costs.

100

Operating profit (EBIT) in the second quarter was MSEK 103 (185), corresponding to an operating margin of
5.8% (9.9). In the second quarter 2020 Munters incurred IACs related to the implementation of the strategy of
MSEK 136 that had a negative impact on the EBIT-margin in the quarter. Amortization and write-downs on intangible assets in the second quarter was MSEK -20 (-41), where MSEK -10 (-25) was related to amortization of
intangible assets from acquisitions.

Operating profit (EBIT) (MSEK)

January-June 2020

The gross margin was slightly above 2019 at 34.1% (33.5) with a flat margin development in both AirTech andFoodTech.
Adjusted EBITA was flat at MSEK 390 (393), corresponding to a slightly higher adjusted EBITA-margin of 11.7%(11.2). Depreciation amounted to MSEK -110 (-113), whereof depreciation of leased assets was MSEK -56 (-57).
Adjusted EBITA for business area AirTech amounted to MSEK 281 (310), corresponding to a slightly lower
adjusted EBITA margin of 12.0% (12.4). The slightly lower EBITA-margin was a result of the effects from theCovid-19 outbreak and a slight change in product mix. This was somewhat offset by lower indirect costs.
Adjusted EBITA in business area FoodTech increased to MSEK 150 (132), corresponding to an adjusted EBITA
margin of 14.6% (12.8). The improvement was driven by lower indirect costs.
Operating profit (EBIT) for the first six months was MSEK 212 (223), corresponding to an operating margin of
6.4% (6.4). Amortization and write-downs on intangible assets for the first six months was MSEK -40 (-73),
where MSEK -21 (-48) was related to amortization of intangible assets from acquisitions.

5

0

Q2

Q3

Q4

Q1

Q2

200
100
0

Q2

Q3

Q4

Q1

Q2

Second quarter, 2020

ITEMS AFFECTING COMPARABILITY (IAC)

During the second quarter 2020 Munters incurred IACs related to the implementation of the strategy of MSEK
136, mainly within business area AirTech. The major part of the cost is recorded as a restructuring provision andrelates to severance, warranty claims and winding down activities related to the exit of the non-core part of thecommercial business in the US. A part of the cost relates to write-downs of inventory. The full amount has been
expensed to other operating expenses in the P&L. In addition a provision of MSEK 6 for regulatory fines andfees related to a ten year old dispute regarding a potential liability under ISRA (Industrial Site Recovery Act) has
been recorded and the full expense is regarded as an IAC. During the second quarter Munters has also incurred
Covid-19-related IACs, a net of identified strictly Covid-19-related expenses and received government grants fore.g. social security contributions.
During the second quarter 2019 Munters Full Potential Program (FPP), launched in February 2019, resulted in in
IACs of MSEK 36 in the continuing operations as outlined below.

Continuing operations

2020

2019

2020

2019

MSEK
AirTechMunters Full Potential Program
Covid-19 related items
Implementation refined strategy
Other items affecting comparability
FoodTech
Munters Full Potential Program
Covid-19 related items
Implementation refined strategy
Other items affecting comparability

Q2
-125
4
-123
-6
-6
-0
-5
-

Q2
-14
-12
-2
-8
-8
-

Jan-Jun
-125
4
-123
-6
-6
-0
-5
-

Jan-June
-37
-35
-2
-27
-27
-

Full year
-67
-64
-3
-36
-36
-

Other
Munters Full Potential Program
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

-7
1
-8
-138
4
-136
-6

-14
-3
-12
-36
-23
-14

-7
1
-8
-138
4
-136
-6

-33
-9
-24
-97
-71
-26

-78
-50
-28
-181
-150
-31

FINANCIAL ITEMS

Financial income and expenses for the second quarter amounted to MSEK -50 (-51). The financial expenses
were positively impacted by a lower USD interest rate compared to same quarter last year. This was offset byforeign exchange losses. Interest expense on lease liabilities amounts to MSEK -4 (-5). The average weighted
interest rate including fees per end of the quarter was 3.1% (4.7).
Financial income and expenses for the first six months amounted to MSEK -80 (94).

TAXES

Effective tax rate, %25%

Income taxes for the second quarter was MSEK -13 (-30) and the effective tax rate was 25% (22). Income taxes
for the first six months was MSEK -35 (-22) and the effective tax rate was 27% (17).

EPS, SEKEARNINGS PER SHARE

Net income, including the discontinued operation, attributable to Parent Company’s ordinary shareholders
amounted to MSEK 37 (-84) for the second quarter. Earnings per share, before and after dilution, in the second
quarter 2020 was SEK 0.20 (0.46).
6

0.20

Second quarter, 2020

Net income, including the discontinued operation, attributable to Parent Company’s ordinary shareholders
amounted to MSEK 94 (62) for the first six months. Earnings per share, before and after dilution, for the first six
months was SEK 0.52 (0.34).
The average number of outstanding ordinary shares in the second quarter as well as for the first six months, forthe purpose of calculating earnings per share, was 181,745,802 before and after dilution.

FINANCIAL POSITION

Interest-bearing liabilities amounted to MSEK 3,440 (3,591). Cash and cash equivalents amounted to MSEK 827(521) as of June 30.
Munters primary financing facilities consists of a term loan of MUSD 250 and a revolving credit facility (RCF) of
MEUR 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, 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. In order for Munters to ensure room forexecution on the strategy in the current challenging business environment an amendment of the loan agreementwith the bank group was signed in May 2020 as a precautious measure. The financial covenant is temporarily
eased as part of this agreement. Until the first quarter 2021, the leverage ratio, as mentioned above, is set to
5.5x.
Net debt as of June 30 amounted to MSEK 2,895 compared to MSEK 3,338 at the end of March 2020. The decrease in net debt was driven by a positive cash flow development and a positive exchange rate effect on outstanding borrowings related to USD/SEK of MSEK 209. See more information about reconciliation of net debt
and leverage on page 23.
The leverage ratio per end of June was 2.7 compared to 3.1 at the end of March and 2.9 at the year end 2019.
At quarter end the term loan was fully drawn with MUSD 250 and MEUR 83 of the total revolving credit facility
were utilized in EUR, USD and SEK. Available unutilized credit facilities as of June 30 amounted to MEUR 102(113). Along with the main loan facility, an amount of MSEK 26 (60) in local debt is outstanding in i.a. Brazil andIndia.
Average capital employed for the last twelve months was MSEK 7,208 (7,271). Return on capital employed(ROCE) for last twelve months was 2% (1).
Return on capital employed, where EBIT is adjusted for items affecting comparability (IAC) and average capital
employed adjusted for goodwill, for the last twelve months was 22% (7). EBIT was affected by a write-down of
goodwill amounting to MSEK 323 in the forth quarter of 2018, impacting the last year period return.

CASH FLOW

Cash flow from operating activities was MSEK 286 (168) in the second quarter and MSEK 319 (211) for the first
6 months of 2020. Cash flow improved because of ongoing focus to improve operating working capital.
Cash flow from changes in working capital had a positive impact on the cash flow with MSEK 85 (-6) in the second quarter and with MSEK 28 (-53) in the first six months. The positive effect on cash flow from working capitalin the second quarter and for the first six months was mainly driven by a good performance in business area
FoodTech.
Cash flow for the period for the second quarter amounted to MSEK -53 (64) and MSEK 115 (109) for the first six
months of 2020. Cash flow for the period was negative mainly due to a repayment of outstanding RCF drawingsof MSEK 240.

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 13 (56).

7

Second quarter, 2020

EMPLOYEESThe number of FTEs (Full Time Equivalents) at June 30, 2020 was 3,149 (3,341). The lower level of FTEs ismainly due to the initiatives that were part of the FPP-program in 2019. The single most contributing factor to thelower number of FTEs was the decision to close the Data Centers factory in Dison, Belgium in September 2019.
The amount of FTEs at June 30, 2020 in business area AirTech was 2,245 (2,413), in FoodTech 838 (842) andat Group functions 65 (86).

SHARE REPURCHASES

Munters held 1,852,000 treasury shares as of June 30, 2020 of the total 183,597,802 outstanding shares.
The Annual General Meeting in May 2020 authorised the Board of Directors to repurchase of shares in the company in relation to the Long Term Incentive Programme 2020 (LTIP 2020). Acquisitions may be made of no morethan 685,000 shares in order to secure the delivery obligations of shares to participants in the LTIP 2020 and for
subsequent transfers on a regulated market to cover cash-flow effects associated with the Programme, primarilysocial security charges and cashsettled employee stock options. The shares may only be acquired on Nasdaq
Stockholm. The authorisation may be exercised on one or more occasions, until the 2021 annual general meeting. The shares may only be acquired at a price per share within the from time to time registered trading interval.

Ten largest shareholders%
FAM AB
Swedbank Robur Funds
First Swedish National Pension Fund
ODIN Funds
Fourth Swedish National Pension Fund
Handelsbanken Funds
Columbia Threadneedle
Kuwait Investment Authority
La Financière de l'Echiquier
Vanguard

30 Jun
Total
26.4
9.4
8.7
8.0
5.4
4.1
3.5
3.0
1.9
1.7

Source: Modular Finance

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 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 – 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 will bechanged 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 andCommercial excellence, with focus on coordinating sales training, drive practice of value selling, pricing strategies and go-to-market methods.
New President business area FoodTech announced – In February, it was announced that Pia Brantgärde
Linder, currently Senior Vice President and Business Unit Manager of High Voltage Products in Northern Europe
at ABB, had been appointed President of Business Area FoodTech as of 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.

EVENTS AFTER PERIOD END

Munters has established a new Revolving Credit Faciltiy (RCF) as a precautionary measure in the current challenging business environment. The purpose of the RCF is to serve as a back-up facility. It amounts to MSEK 750
and is secured by a guarantee from EKN, the Swedish Export Credit Agency. Five banks are participating in the
syndicate for this RCF with a maturity in 2023.
On 16 July, 2020, the Board of Directors of Munters resolved pursuant to the authorisation granted by the annual
general meeting held on 7 May 2020, to repurchase Munters shares on Nasdaq Stockholm. The purpose of the
repurchase is to secure the delivery of shares to the participants of Munters’ long-term incentive programme
which was resolved by the 2020 annual general meeting, and to cover costs related to the programme. The purchases may be carried out between 18 July 2020 and 21 September 2020 and will be managed by Nordea Bank
Abp. The purchases shall in total comprise a maximum of 685,000 shares.

8

In April, Munters turned 65 years old.
Founded by Carl Munters in 1955, hebrought with him innovative solutions
for creating the best indoor air for people and industries. Today, his air treatment solutions are more critical thanever.

Second 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 second quarter mainly due to weak development in Mist Elimination. This was partly compensated by a good growth inData Centers US and the industrial segment. Services had a slight increase in order intake.
■ Net sales decreased mainly driven by weaker net sales in the industrial segment and in Mist Elimination. This was partly offset by a positive
development in Data Centers US and the pharma segment. Services showed positive development helped by the launch of Munters remote service
offering in the quarter.
■ The adjusted EBITA-margin was in line with previous year as a result of a stable gross margin and lower indirect costs.
Q2
MSEK
Order intake
GrowthNet sales
Growthof which organic growthof which currency effectsof which structural effects

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

2020
1,231
-3%
1,207
-9%
-10%
1%
51
181
-9%
15.0

Jan-JunLTM Full year

2019
1,264
10%
1,324
16%

2020
2,574
-5%
2,334
-6%

2019 Jul-Jun
5,115
2,713
11%
20%
5,003
2,490
13%
18%

2019
5,253
14%
5,159
17%

173
199
47%
15.1

146
281

255
310

12.0

12.4

565
662
27%
12.8

456
633
16%
12.7

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 increased in the quarter primarily because of a strong increase in the swine segment in China. Region EMEA had softer order intake,partly offset by Germany. In region Americas, the US had a weaker development mainly due to a decline in the swine segment.
■ Net sales increased slightly driven by a good growth in China with a strong development in the swine subsegment. The US had a negative development
especially in the swine segment. The Americas and the EMEA region had a negative development impacted by the Covid-19 outbreak in the quarter.
■ The EBITA-margin improvement was driven by a slightly higher gross margin and lower indirect costs.
Q2
MSEK
Order intake
GrowthNet sales
Growthof which organic growthof which currency effectsof which structural effects

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

9

2020
656
13%
575
2%
2%
-0%
87
98
15%
17.1

Jan-JunLTM Full year

2019
582
-5%
563
1%

2020
1,172
8%
1,023
-1%

2019 Jul-Jun
1,083
2,176
4%
-4%
2,027
1,028
2%
-0%

2019
2,087
-1%
2,032
1%

74
85
6%
15.2

134
150

97
132

14.6

12.8

226
278
11%
13.7

263
296
17%
14.6

Second 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

■
■
■
■
■

3,100 employees
30 countries with sales and manifacturing
18 production units
25% female leaders
Two business areas: AirTech and FoodTech

In 2019 AirTech generated 72% of the total net
sales of Munters and FoodTech 28%.

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.
MissionMunters is a global leader in innovative, energyefficient and sustainable climate solutions formission-critical processes.

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.
.

10Second quarter, 2020¨

11Second quarter, 2020

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

2020

2019

2018

2019

2018

Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Full year

Full year

2,653
1,870
1,773
103
39
-20
-138
260
14.7

2,808
1,849
1,566
110
57
-20

2,432
1,680
1,813
174
100
-32
-42
248
13.7

2,453
1,840
1,877
185
104
-41
-36
262
13.9

2,443
1,938
1,620
38
3
-32
-61
131
8.1

2,023
1,735
1,757
158
93
-36
-31
225
12.8

2,056
1,590
1,559
136
80
-43
-8
186
12.0

1,977
1,748
1,686
161
114
-40

1,678
1,626
1,410
74
40
-38

130
8.3

2,304
1,845
1,842
159
76
-29
-42
229
12.5

201
11.9

113
8.0

2,304
7,302
7,153
556
283
-134
-181
871
12.2

2,023
6,698
6,412
529
327
-157
-39
725
11.3

AirTech

2020

2019

2018

MSEK

Q2

Q1

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)

1,997
1,231
1,205
2
51

2,186
1,343
1,127
0
94

1,778
1,361
1,378
4
159

1,878
1,179
1,286
1
151

1,883
1,264
1,323
1
173

1,882
1,449
1,164
2
82

1,505
1,289
1,265
2
185

1,505
1,073
1,049
1
104

1,420
1,145
1,138
1
132

1,179
1,114
968
2
82

1,778
5,253
5,151
8
565

1,505
4,621
4,421
5
503

Amortization and write-down
Items affecting comparability (IAC)
Re-allocation of internal services
Adjusted EBITA
Adjusted EBITA margin, %

-5
-125
−
181
15.0

-5

-9
-19
-1
186
13.4

-5
-11

-13
-14

-5
-23

-4
-8

-3

-3

167
12.9

199
15.1

110
9.4

-5
-8
-13
185
14.6

116
11.0

135
11.9

85
8.8

-31
-67
-1
662
12.9

-15
-16
-13
522
11.8

2019

2018

FoodTech

2019

100
8.8

2020

2018

2019

2018

MSEK

Q2

Q1

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)

656
656
568
7
87

622
515
440
9
47

526
491
464
5
55

554
513
527
7
75

570
582
554
8
74

561
500
456
9
24

518
452
491
6
53

552
524
510
8
73

557
610
548
7
77

498
520
442
6
41

526
2,087
2,002
31
226

518
2,107
1,991
27
244

Amortization and write-down
Items affecting comparability (IAC)
Re-allocation of internal services
Adjusted EBITA
Adjusted EBITA margin, %

-5
-6
−
98
17.1

-5
−
−
52
11.5

-4
-3
−
61
13.0

-4
-6
−
85
15.9

-4
-8
−
85
15.2

-4
-19
−
46
9.9

-3
−
-7
49
9.9

-3
−
−
76
14.7

-3
−
−
81
14.5

-3
−
−
43
9.7

-15
-36

-12

Other and eliminations

2020

2019

2018

278
13.9

-7
249
12.5

2019

2018

MSEK

Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Full year

Full year

Order intake
Transactions between segments
Operating profit (EBIT)

-17
-8
-36

-10
-9
-32

-8
-9
-55

-13
-9
-52

-7
-9
-62

-11
-11
-67

-6
-8
-80

-8
-8
-41

-7
-8
-48

-8
-8
-48

-38
-38
-236

-30
-32
-217

Amortization and write-down
Items affecting comparability (IAC)
Re-allocation of internal services
Adjusted EBITA

-10
-7
−
-19

-10
−
−
-22

-16
-21
1
-17

-24
-24
−
-3

-24
-14
−
-23

-23
-18
−
-25

-28
-22
20
-10

-36
−
−
-5

-33
−
−
-15

-32
−
−
-16

-88
-78
1
-69

-130
-22
20
-46

12

Second quarter, 2020

Discontinued operation
2019

2018

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Full year

Full year

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

166
111
190
8
-1

250
79
252
9
-1

419
9
190
2
-1

-71

8

10

3

2
15
176
-450
3
-373
-80

147
216
710
-396
-346
−
-49

2020
MSEK

Q2

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

−
1
3
-1
−
−
-1

13

2019
Q1

-0
0
0

2018

Second quarter, 2020

Condensed income statement
Q2

Jan-JunLTM

Full year

MSEK

2020

2019

2020

2019

Jul-Jun

2019

Net sales
Cost of goods sold
Gross profit

1,773-1,141632

1,877-1,235643

3,340-2,1991,140

3,498-2,327
1,171

6,995-4,694
2,301

7,153-4,822
2,331

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

-220
-135
-43
-132
103

-254
-156
-48
-0
185

-430
-276
-91
-132
212

-541
-315
-99
7
223

-859
-571
-190
-136
545

-970
-610
-197
2
556

Financial income and expenses
Profit/Loss after financial items

-50
53

-51
134

-80
132

-94
129

-175
369

-189
367

Tax
Net income for the period from continuing operations

-13
39

-30
104

-35
96

-22
107

-97
272

-83
283

Net income from discontinued operations

-1

-20

-1

-45

-404

-448

Net income for the period

38

84

95

63

-132

-164

Attributable to Parent Company shareholders
Attributable to non-controlling interests

37
1

84
1

94
1

62
0

-134
2

-166
2

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

181,745,802 182,130,802
181,745,802 182,130,802

181,745,802 182,130,802
181,745,802 182,130,802

181,790,844 181,983,219
181,473,053 181,983,219

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

0.21
0.21

0.57
0.57

0.53
0.53

0.59
0.59

1.49
1.49

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

0.20
0.20

0.46
0.46

0.52
0.52

0.34
0.34

-0.74
-0.74

-0.91
-0.91

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 orloss in subsequent periods:
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

-226

12

-16

117

-11

122

-4
0
-230

12

11
-3
-8

-1
116

-33
7
-37

-44
9
87

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

-192
-192
0

96
96
1

87
87
0

179
178
0

-169
-171
2

-77
-79
2

*Excluding shares held in own custody.

14

Second quarter, 2020

Condensed balance sheet
2020-06-30

2019-06-30

2019-12-31

4,366
1,471
239
545
153
45
18
251
7,088

4,346
1,481
287
554
193
69
16
242
7,188

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

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

386
143
300
8
24
1,021
387
0
40
99
827
3,234

462
128
302
7
28
1,138
271
4
43
153
521
3,057

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

TOTAL ASSETS

10,323

10,245

10,093MSEK
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

15

9Second quarter, 2020

Condensed balance sheet
MSEK

2020-06-30

2019-06-30

2019-12-31

Shareholders' equity
Non-controlling interests
Total equity

3,715
0
3,715

3,896
-2
3,894

3,628
-0
3,627

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

3,323
279
38
138
406
4,184

3,426
235
27
144
413
4,244

3,371
282
24
134
409
4,221

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

117
536
568
727
1
37
144
9
283
2,423

165
278
563
714
−
36
209
9
134
2,108

126
374
556
716
−
32
153
9
278
2,244

TOTAL EQUITY AND LIABILITIES

10,323

10,245

10,0932020-06-30

2019-06-30

2019-12-31

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

3,627
87
0
-2
−
2
3,715

3,716
179
-0
-2
−
1
3,894

3,716
-77
0
0
-16
4
3,627

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

3,715
0

3,896
-2

3,627
-0

EQUITY AND LIABILITIESEQUITYCONDENSED STATEMENT OF CHANGES IN EQUITY
MSEK

16

Second quarter, 2020

Condensed cashflow statement
Q2
MSEK

Jan-JunLTM

Full year

2020

2019

2020

2019

Jul-Jun

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

102

165

211

179

138

105

73
10

97
1

151
12

185
13

374
63

408
63

82
267

-1
262

22
396

16
393

164
739

158
735

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

-52
-13

-47
-40

-80
-25

-90
-37

-166
-98

-177
-111

201

175

291

265

475

448

Cash flow from changes in working capital

85

-6

28

-53

303

221

Cash flow from operating activities

286

168

319

211

778

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

1
0
-34
-24
-56

1
0
0
-33
-15
-47

-7
1
-62
-39
-106

0
2
1
-62
-31
-90

-9
17
0
-117
-84
-193

-0
18
2
-118
-76
-174

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

29
-280
-32
-284

16
-44
-30
-58

321
-354
-65
-98

113
-68
-60
-15

496
-623
-128
-16
-268

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

-53
900
-20
827

63
460
-2
521

115
722
-10
827

107
404
10
521

317
521
-11
827

310
404
7
722

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

17

Second quarter, 2020

Parent company
CONDENSED INCOME STATEMENT
Q2
MSEK

Jan-JunLTM

Full year

2020

2019

2020

2019

Jul-Jun

2019

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

−
−
-3
-6

−
−
-7
-7

−
−
-14
-17

−
−
-21
-21

−
−
-37
-41

−
−
-44
-44

Financial income and expenses
Profit/Loss after financial items

-0
-6

0
-7

0
-17

0
-21

-0
-41

-0
-44

Group contributions
Profit/Loss before tax

−
-6

−
-7

−
-17

−
-21

43
2

43
-1

Tax
Net income for the period

−
-6

0
-7

−
-17

0
-21

0
3

0
-1

CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Q2
MSEK
Profit/Loss for the period
Other comprehensive income, net after tax
Comprehensive income for the period

18

Jan-JunLTM

Full year

2020

2019

2020

2019

Jul-Jun

2019

-6
−
-6

-7
−
-7

-17
−
-17

-21
−
-21

3
−
3

-1
−
-1

Second quarter, 2020

Parent company
CONDENSED BALANCE SHEETMSEK

2020-06-30

2019-06-30

2019-12-31

4,093
0
4,093

4,086
0
4,086

4,086
0
4,086

−
1
0
47
13
61

1
0
0
4
56
61

−
0
0
45
28
74

4,154

4,147

4,160

2020-06-30

2019-06-30

2019-12-31

6
4,074
67
-17
4,129

6
4,074
76
-21
4,135

6
4,074
60
-1
4,139

4
14
0
3
3
25

4
5
0
2
2
12

3
11
0
2
5
21

4,154

4,147

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 ASSETSMSEKEQUITY 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

19

Second 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 support to cover e.g. social security
contributions, in order to reduce the financial effects of the pandemic.
When it is reasonably certain that this support is being received, thegrant is recognised as other operating income in the period in which therelated costs arise. Received grants amounts to approx. MSEK 9 for thesecond quarter, and are reported as items affecting comparability.
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 beenabandoned constituting the European Data Center factory in Dison,
Belgium. The production has ceased but minor installation services
remains at customer sites running into 2020. According to IFRS 5 Noncurrent 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 fromoperating activities related to the discontinued operation.
The 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.

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
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

20

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.

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.
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 has been booked as of Q2 2020, which is reported
as an item affecting comparability.

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 theSecond quarter, 2020

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 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.
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.
In late 2019, a corona virus was found in China that can spread to humans, referred to as Covid-19. In early 2020, the global spread of thecorona virus escalated. During the first six months the Covid-19 outbreak had a mixed impact on Munters. In the second quarter we haveexperienced that some customers delayed investments and also delays
in deliveries. At the same time we have seen pockets of increased demand in industries such as pharma and data centers. Throughout thefirst six months, all our production units, except one minor unit, upheld

production with only minor disturbances. We have continuously been implementing mitigating actions and adjusting our cost base and investments as well as our supply chain. So far we have not had any major
disturbances. We expect a continued challenging business environment
with a limited visibility of the effect from the 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.

Q2 2020MSEK
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-Jun 2020

AirTechFoodTech

Total

AirTechFoodTech

Total

742
388
78
1,209
3
1,205

522
15
31
569
−
568

1,264
403
110
1,777
3
1,773

1,513
674
148
2,335
3
2,332

904
35
68
1,008
0
1,008

2,418
709
216
3,343
3
3,340

Q2 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-Jun 2019

AirTechFoodTech

Total

AirTechFoodTech

Total

964
348
97
1,410
87
1,323

517
0
36
553
−
553

1,481
348
133
1,963
87
1,876

1,796
645
175
2,616
129
2,487

940
3
67
1,011
−
1,011

2,736
648
242
3,627
129
3,498

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 (4) in financial assets and to SEKm 1 (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
hiearchy. The opening balance for the period was related to the put/call
option from the acquisition of MTech Systems in 2017 and a contingent

21

consideration related to the acquisition of Humi-Tech Services Ltd in
July 2018. The put/call option related to MTech Systems matures in 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 och 2019 and has been payed during the year.
The remaining change relates to a discounting effect and currency translations on the put/call option in MTech.

Second quarter, 2020

MSEK

2020-06-30 2019-06-30

2019-12-31

Contingent considerations
and put/call options
Opening balance

142

137

137

Payments
Discounting
Exchange-rate differences forthe period
Closing balance

-9
-2

−
3

−
1

-4
136

4
143

5
142

Munters deems that the interest rate on interest-bearing liabilities are inline with market terms at June 30, 2020, and the fair value at the end of
the reporting period therefore in all material aspects corresponds to thecarrying amount. Munters deems that the interest.

DISCONTINUED OPERATIONS

is classified as a discontinued operation. All income statement items inthis report have been restated and relates to Munters continuing
operations if not otherwise explicitly stated.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.

On September 9, 2019 Munters decided to close its European Data
Center factory in Dison, Belgium, following the finalization ofnegotiations with the unions. The production has ceased but minor
installation services remains at customer sites. Therefore, this business

Q2

Jan-JunLTM

Full year

2020

2019

2020

2019

Jul-Jun

2019

Net sales
Cost of goods sold
Gross profit

3
-5
-2

87
-84
2

3
-5
-1

129
-138
-9

51
-294
-244

176
-427
-251

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

0
0
0
-0
-1

-10
-9
-4
0
-20

0
0
0
−
-1

-14
-15
-6
0
-44

-24
-23
-3
-113
-407

-39
-39
-9
-113
-450

Financial income and expenses
Profit/Loss after financial items

-0
-1

-1
-21

-1
-1

-2
-46

-4
-410

-5
-455

Tax
Net income for the period from discontinued
operations

−

1

−

1

6

8

-1

-20

-1

-45

-404

-448

Cash flow from operating activities

62

-142

4

-160

-160

-431

MSEK

22

Second quarter, 2020

RECONCILIATION OF NET DEBT
AND LEVERAGE
MSEK

2020-06-30

2019-06-30

2019-12-31

CURRENT ASSETS
Cash and cash equivalents

-827

-521

-722

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

0
3,037
286
263

0
3,103
323
220

0
3,057
314
268

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

0
26
92
12
6

0
58
106
14
6

0
24
102
12
6

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

2,895
138
-275
-99
512
-563

3,310
66
-165
-496
727
-138

3,062
105
-277
-131
514
-525

Adjusted EBITDA

1,075

865

1,039

2.7

3.8

2.9

Net debt

Net debt/Adjusted EBITDA, LTM

23

Second quarter, 2020

The Board of Directors and the President and CEO certify that the Interim Report gives a true and fair overview of the Parent Company’s and Group’s
operations, their financial position and results of operations, and describes the significant risks and uncertainties facing the Parent Company and othercompanies in the Group.

Stockholm, July 17 2020

24

Magnus Lindquist
Chairman of the Board

Klas Forsström
President CEOHåkan Buskhe
Board Member

Helen Fasth Gillstedt
Board Member

Per Hallius
Board Member

Lena Olving
Board Member

Kristian Sildeby
Board Member

Juan Vargues
Board Member

Anna Westerberg
Board Member

Simon Henriksson
Board Member,
employee representative

Pia Nordqvist
Board Member,
employee representativeSecond quarter, 2020

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

INFORMATION AND REPORTING DATESContact person:

Ann-Sofi Jönsson, Head of Investor Relations and Enterprise Risk Management
Phone: + 46 (0)730 251 005
Email: ann-sofi.jonsson@munters.se
On 17 July, 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/12366
Link to Audiocast: https://tv.streamfabriken.com/munters-q2-2020
Dial-in number for the telephone conference:
SE: +46850558358
UK: +443333009271
US: +18335268384
This interim report, presentation material and a link to the audiocast will be available on https://www.munters.com/en/investor-relations/____________________________________________________________________________________________________________________________
Financial calendar:
October 22, 2020, January-September interim report 2020
February 4, 2021, Full year 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 July 17, 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 reported annual net sales of more than SEK 7 billion in 2019 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