CAPITAL MARKETS DAY 2019
Towards Full Potential

1Agenda – platform for today and the future
CEO – Munters Towards Full Potential•

A strong company – but disappointing performance since IPO•

Global player in niche markets•

Full Potential Program to seize opportunities

Global Operations – Building a customer-oriented and scalable platform
AirTech – Sustainable solutions for demanding industrial applications
FoodTech – Sustainable solutions for demanding agricultural applications
CFO – Delivering the numbers
CEO wrap-up – Confident in our targets
2Disappointing development since the IPO in 2017
Net Sales – solid growth over period

EBITA – weak performance since 2017

bSEK

mSEK

8.000

+9%

7.000

6.604

+20%

6.000
5.000

6.040

5.399

+59%

675

676

2017

2018

585

600

4.216

500
400

3.000

300

2.000

200

1.000

100
2014

801

800
700

4.000

0

-8%

900
7.122

Share price development below peers

2015

2016

2017

2018

0

316

2014

2015

2016

Jul 2017

Jan 2018
Munters3

Jul 2018
OMX Sthlm 30

Jan 2019 Apr 2019
Industrial Goods

In Munters, I saw a company with a great proposition, and potential…
AirTechFoodTechSize of core markets (CAGR):

Size of core markets (CAGR):

+5%

+6-7%

2018

4

2021

2018

2021

#1

Lithium#1

Processing (food etc.)#1

Broiler

#1

Layer

#1

Supermarkets#2

Pharma#1

Food chain SW

#2

Swine

...however a number of internal constraints hindered our performance5

Suboptimal prioritization of
resources and capital

Suboptimal organizational structure

Dispersed product portfolio

Insufficient customer focus

Unclear performance culture

Overly centralized structures

Executing the Full Potential Program our top-most priority

6

PHASE 1: STABILITY

PHASE 2: PROFITABILITY

PHASE 3: GROWTH

Secure stable and profitable
platform

Improve performance

Accelerate growth inattractive segments andgeographies

Agenda – platform for today and the future
CEO – Munters Towards Full Potential•

A strong company – but disappointing performance since IPO•

Global player in niche markets•

Full Potential Program to seize opportunities

Global Operations – Building a customer-oriented and scalable platform
AirTech – Sustainable solutions for demanding industrial applications
FoodTech – Sustainable solutions for demanding agricultural applications
CFO – Delivering the numbers
CEO wrap-up – Confident in our targets
7

Sustainable climate solutions
for demanding industrial andagricultural applications8

9

Sustainable climate
solutions

Criticaltocustomers’
Sustainable Climate
success
Solutions

Our goal is to provide energy-efficient, safe andreliable climate solutions where control of moisture
content and temperature in production are mission
critical.

Munters’ customers operate in complex,
demanding environments. We provide the rightconnected products and the solutions that are
critical to our customers’ success.

Munters helps leading companies around the world
maximize their opportunities while minimizing theirglobal carbon emission footprint.

We make sure that our customers’ industrial or
agricultural applications are in line withproduction requirements while creating value
and contributing to society at large.

We make a difference for the world“2 of every 3 stents used torelieve heart conditions are
manufactured in stableenvironments enabled by
Munters technology

10“Munters climate solutions
contribute to more than 1 of 7
meals around the world“Munters’ climate solutions
are behind half of the world’s
batteries for electric vehicles

Munters' growth opportunity is fuelled by strong megatrends forsustainability
Energy andresource efficiency

Munters
solutionspromote• Electricity consumption
reduction• Energy recovery

Sustainable food

• Food traceability• Hygienic processing• Waste reduction

Clean Air• Sulphur oxides pollution
elimination• Volatile Organic Compound
pollution elimination• Animal health 5% market growth expected in core AirTech markets
 6-7% market growth expected in core FoodTech markets
11Agenda – platform for today and the future
CEO – Munters Towards Full Potential•

A strong company – but disappointing performance since IPO•

Global player in niche markets•

Full Potential Program to seize opportunities

Global Operations – Building a customer-oriented and scalable platform
AirTech – Sustainable solutions for demanding industrial applications
FoodTech – Sustainable solutions for demanding agricultural applications
CFO – Delivering the numbers
CEO wrap-up – Confident in our targets
12Full Potential Program in three phases – focus on the first

13

PHASE 1: STABILITY

PHASE 2: PROFITABILITY

PHASE 3: GROWTH

Secure stable and profitable
platform

Improve performance

Accelerate growth inattractive segments andgeographies

Phase 1: Secure a stable and profitable platform Strengthen leadership team

STABILITY
Secure stableand profitable
platform

 Simplify Munters structure into two decentralized Business Areas Drive leaner structures and cash efficiency
 Drive Data Center performance uplift through focus towards US market

14

STABILITY – Secure stable and profitable platform

New organization and leadership team in place• Klas Forsström appointed new President and CEO effective nolater than mid-October 2019–20 years of senior management positions at Sandvik (including President of
Sandvik Hard Materials and Sandvik Coromant.)–

M.Sc. in Materials Physics and an MBA from Uppsala University Advanced
management studies at INSEAD• New organization and management team in place

15–

Two strong business areas–

New group management (6 members vs. previously 13)

STABILITY – Secure stable and profitable platform

2 Business Areas – under 1 vision – with a shared operations platform
CEO“Sustainable climate
solutions for demanding
industrial andagricultural applications”

AirTechGlobal Operations
HR, Communications
and CSR

16

FoodTech

Finance, IT, IR
and Strategy

STABILITY – Secure stable and profitable platform

Governance and accountability strengthened in Business Areas
Strengthened regional management teams
Clarified strategic priorities and strengthened
accountability
Launched quarterly follow-up on Business Unit level(i.e. country organization) with senior management
Strengthened team in key positions, e.g. new Sales VPs
AirTech Americas and EMEA

17

More result-oriented and effective
Business Area organizations

STABILITY – Secure stable and profitable platform

Full program target EBITA improvement of 210 mSEK run-rate 2019E
Full Potential Program EBITA run-rate impact (mSEK)
AirTechFoodTechGroup Overhead
Total savings

Data Center (AirTech)performance uplift
Total program

18

95

40

1
25
160

2

50
210

STABILITY – Secure stable and profitable platform

Full impact expected in 2020
Program

Total program impact

2019 adj. EBITA impact 2020 adj. EBITA impact– equals ongoing
annual run-rate

mSEK +105mSEK +210

One-time costs

Cash pay-back timemSEK -350 costs

Approx.
2 years(60% during H1 and 40%
during H2 2019)

Timing and ultimate cost of program may vary from current estimates based on final timetable and subject to information and consultation with therelevant employee representative bodies.

19

1

STABILITY – Secure stable and profitable platform

Savings progressing according to plan
Full Potential Program Savings

2019 end-of-yeartarget = 160 mSEK

Run-rate savings(mSEK)• FTE reductions and other costsavings according to plan
• One-time costs of 61 mSEK
according to plan

Actuals
Planned

Feb
20

End
Mar

Dec

2

STABILITY – Secure stable and profitable platform

Data Center profit uplift progressing according to plan
EuropeAmericas• Union consultations ongoing according to the socalled “Renault process” regarding intended closure of
Dison plant• Order backlog in Americas is 139% higher than at theend of Q1 last year

• Production in the Dison factory following schedule withminor and manageable delays• Orders come for a wider range of customers and from awider range of solutions – which caters for morestability in the business• Production in the first quarter following schedule

21

STABILITY – Secure stable and profitable platform

Strategic alternatives for ME and DC being evaluated
Data Center
Underlying market
growth?
Competitiveness of
Munters business?
Munters being the“best” owner for thebusiness?

?

10-15% expected CAGR in years tocomeLeading technological solution and oneof the leading players in economizer
solutions
A range of operational issues over thelast years

Mist Elimination

Up to 10% expected CAGR in years tocomeLeading technological solutions and theleader in FGD and Marine markets?

Business of limited scale and relatively
non-adjacent from rest of Munters

We will only invest in businesses where we optimise our deployment of
capital – to be determined if DC and ME fulfil that criteria
22

Full Potential Program – starting to look into future phases

23

PHASE 1: STABILITY

PHASE 2: PROFITABILITY

PHASE 3: GROWTH

Secure stable and profitable
platform

Improve performance

Accelerate growth inattractive segments andgeographies

Our aspiration for 2021
• World leading position in selected growing markets where the Perfectindustrial and agricultural Climate is mission-critical• Customer see us as the most innovative partner of energy-efficient solutions– built around deep application expertise, leading technologies, a combined
service and equipment offering and new generations of digital solutions• Effective organization with clear governance and focus on the customer– securing stability in performance over time
• Employees with a passion for creating the Perfect Climate for our customers– and for being part of solving some of the worlds biggest challenges

24

We are confident we can deliver on our financial targets•

We operate in attractive markets driven by strong
sustainability oriented global trends•

We pursue leading positions in selected market segments•

25

We have a plan to turn around the company short-term with
the Full Potential Program – and a strategy for longterm profitable growth

Net Sales growth of 5%
Adjusted EBITA Margin of 14% mid-term

Net Debt/adjusted EBITDA ratio of 1.5-2.5
Dividends of 30-50% of Net Income

Agenda – platform for today and the future
CEO – Munters Towards Full Potential•

A strong company – but disappointing performance since IPO•

Global player in niche markets•

Full Potential Program to seize opportunities

Global Operations – Building a customer-oriented and scalable platform
AirTech – Sustainable solutions for demanding industrial applications
FoodTech – Sustainable solutions for demanding agricultural applications
CFO – Delivering the numbers
CEO wrap-up – Confident in our targets
26

Operations - Global scale and regional agility
Tobo, SE• 18 plants and spare part
distribution centers

Horstmar, DE

Dison, BE• 7 assembly and logistic hubs
Lansing
Selma

Beijing
Jiang Yin

Amesbury

Hrusky, CZ
Buena Vista Chiusavecchia/Pieve, IT
Tel Aviv, IS• ~1800 Employees• Global leverage and regionallyoptimized supplier base

Ft MyersMonterrey, MX

ChashanMumbai, IN

Araucaria,
BR

Manufacturing Site

27

Our improvement journey continues
1955-20112011-20182019  future

Distributed Manufacturing
and Sourcing

Global Operations
Reduce Cost

Enable Business
OPERATIONAL PERFORMANCE Local optimization and local
processes

 Growth through acquisitionsA.
A Customer needs comes first!

 Scattered Supplier-base Global sourcing - Category wave
execution

 Common IT platforms initiated Capacity investments

B.
B Scalability to support Profitable Growththrough Stability in Performance, Solid
processes supported with IS/IT, Sourcing andManufacturing leverage

 Lean Journey started (MPS) Main focus on Ad Hoc Cost reduction,
sometimes increasing Loss andWaste.

28

C.
C Towards World Class performance withMunters Production System
D.
D Working Capital Excellence

A

Customer needs come first• Quality ZERO defect mindset to protect Customers• Customization excellence - supporting full product lifecycle‒ Product project readiness and early involvement in projects – Right from start!
‒ Optimized workflow for Standard, Configured and Customer Engineered products• Optimized Supply-chain based on well defined customer and market needs(e.g. lead-time) supported by S&Op process• Determined to deliver according to customers expectations• Clear, honest, immediate and fact based communication
29

B

Create operational scalability to support profitable growth
PHASE 1: STABILITY

•
•
•
•
•

30

Define and implement known
best practice with rigor
Secure quality improvements
and production stability
Define clear roles andresponsibilities
Ensure Master Data Quality
Synchronized demand and supply(S&Op)PHASE 2: PROFITABILITY•••

Leverage volume of scale in
Sourcing and Manufacturing
Extensive supplier and partnumber reduction
Digitalized End to End Supply
Chain - One Information Chain

PHASE 3: GROWTH••

Leverage improvements acrosslarger volumes
Implement prioritized Expansion
and Localization projects

C

Towards World Class: Focused improvements targeting cost savings
to counter inflation and more every year
Munters product cost structure
Direct material

Variable costs

Fixed costs

Warranty

Total product costs

31~4B SEK

Negotiations and category wave execution• Supplier days with focus on the most important suppliers andcomponent categories (First wave)• Volume leverage – reduced parts• Reduced number of suppliers• Technical improvements
Continuous Improvements• Improvements in Logistics and in Plants supported by
Munters Production System (MPS)
Quality improvements• Protect the customer• Internal loss-cost improvements

C

We are aiming towards world-class level of manufacturing
Manufacturingperformance(from low to high)Wide spread
between low
and high
performing
factories
today

Primarily raise
performance of
low-performing
factories

Munters201832

Munters2021

Improve acrossfactories – withthe best ones
reaching“world-class”
level

Munters2025

World-classmanufacturers

Agenda – platform for today and the future
CEO – Munters Towards Full Potential•

A strong company – but disappointing performance since IPO•

Global player in niche markets•

Full Potential Program to seize opportunities

Global Operations – Building a customer-oriented and scalable platform
AirTech – Sustainable solutions for demanding industrial applications
FoodTech – Sustainable solutions for demanding agricultural applications
CFO – Delivering the numbers
CEO wrap-up – Confident in our targets
33

AirTech – Energy-efficient,safe and reliable climate
solutions in which control ofmoisture content andtemperature is mission-critical
34

AirTech is a global leader with a blue-chip customer baseBusiness Area overview

Selected customers

Global leader in dehumidification and cooling solutions fordemanding industrial applications#1 position in markets representing majority of AirTech
FY2018 net sales

Financial performance (Net Sales, mSEK)CAGR +8%
CAGR +18%

Multi-year relationships with diverse blue-chip customer base

6000

11%

14%

15%

12%
10%

4000

9%

2000

Strong Net Sales growth

0

5%

2014

2015

2016

Net sales, mSEK

35

10%

2017
Adjusted EBITA margin

2018

0

Getting the perfect, sustainable climate is mission-critical across a
range of industries
Poor humidity and climate control cause…

With perfect climate…



Lithium
Battery mfg.

-

Low battery performance
Production safety issues-

High quality batteries
Low energy consumption and safe production

Pharmamfg.

-

Clogging of powder
Non-compliant production (scrap batches)-

Consistently high product quality
Efficient and sustainable production

Processing(food etc.)-

Mould and bacteria growth
Low product quality and scrap-

Food safety assurance
Efficient and sustainable production

Munters stand out among competitors by having leading, energyefficient technologies and superior application expertise36

We provide a broad offering of sustainable solutions

VOC elimination rotors

Portable / Small

Dedicated Outdoor Air
Systems

Spare parts

Dehumidification rotors

Stand-Alone

Dehumidification
Systems

PrimaCaire
maintenance contracts

Mobile (rental)

Dehumidification
systems with controls
and piping

Retrofits / Upgrades

Systems for humidity &temperature control

Services

GlasDek humidification
pads and sub-systems

Components
Sold to OEMs

37

Dehumidifiers andother units

Typically sold to end customers

Strong underlying demand growth – in niches where we are leaders
Key end Market Growth CAGR in 2018-2021

Key end market Outlook

Munters position

5%• Industrial: Lithium-ion Batteries – Investment in R&D
and production facilities to support Electric Vehicles,
Energy Storage and consumer goods#1• Industrial: Processing of e.g. food – Stable growth tied
to population increase, urbanisation and affluence acrossAsian countries#1• Industrial: Pharma – Stable growth from increased life
expectancy and developing countries trending towards
Western medicine#2• Industrial: Other – Continued stable growth with acontinued demand for production efficiency#1• Commercial: Supermarkets – Main growth driver will
come from retrofit and replacement business with supportof DOAS technology and trends

#1

2018
38

2021

Note: Graph does not cover areas under strategic evaluation (i.e. former Mist Elimination and Data Center Business Areas)

Business portfolio overview – AirTech with several strong positions
Business
Industrial

Commercial/Supermarkets
Components to OEMs
Services

39

Size inMunters
XL
M
M
L

Our
performanceMarketattractiveness

Opportunities-

Drive growth globally, with a focus on niches and geographieswith a special potential-

Business is almost a “US-only” business
Secure profitability as top-most priority-

Supported by strong underlying growth (e.g. LiBat for rotors
and Data Center for pads) – continue to drive growth-

Continue to drive growth globally

Note: “Size in Munters” (XL: >1500 mSEK, L: >750 mSEK, M: >500 mSEK, S: <500 mSEK), “Our Performance” reflects margin realization and market position,“Market attractiveness” reflect overall growth and other attractiveness factors

Strategic priorities/opportunities for the future

1

Continue pursue Service growth

2

3

40

Prioritize resources to attractive and growing markets and segments– e.g. LiBat and China

Improve offering with a priority to Munters core technologies, service and know-how

We have successfully grown the Service
business – and we see more growth opportunities
We have proven success

We are confident we cando much more…
• Installed base penetration is still
relatively modest

Service Net Sales (mSEK)+14%• Customers increasingly see benefit of“peace-of-mind” and reliability

2015

2016

2017

2018

Installed base penetration (%)
22%

41

18%

19%

2016

2017

2018

Note: Growth number in circle refers to annual CAGR

• Opportunities for new services withconnected products

1

Continue pursue Service growth…and we have actions in place to pursue
profitable growth
1. Grow the core
• Continue Service technicians hiring• Roll out Service sales training
2. Transform the core
• Implement new Field Service Management(FSM) system• Product Management to improve customer
centric positioning• Implement separate Spare Parts inventory
3. Scale the New• Develop new Service products including
connected/IoT offerings and upgrades of nonMunters equipment• Capture the rental and Climate as a Service(CaaS) market

Prioritize resources to attractive and growing
markets and segments

2

Identify and pursue growth in markets with attractive opportunities
Market (example)

Current performance

Why we find it attractive

Net Sales (mSEK)• Market growth at double-digit
pace driven by battery boom
• Strict humidity requirements –and need for reliable andsustainable solutions• Munters already a leading player
with strong customer base•••

Dedicated expert supporting all countries
Development of new products
R&D development of new technology• Above market-average growth• Increasing understanding ofimportance of humidity control• Scattered market where Muntersholds a leading position••

Local management team focused on China
Development of new products for specificregionProduct Management and Marketing focus
for specific region+34%

Lithium battery
manufacturing
2015

2016

2017

2018

Net Sales (mSEK)
+19%

China

2015

2016

2017

Key activities to drive growth

•

2018

We continuously monitor markets to identify upcoming
opportunities in our end markets
42

Note: Growth number in circle refers to annual CAGRImprove offering with a priority to Munters coretechnologies, service and know-how

3

We are continuously investing in R&D to stay ahead of competition
Prioritizing key R&D areas
1.

Launch next generation of core components
within pads and rotors

2.

Launch connected offerings

3.

Launch smarter products through new hardware
platform and future-proof software

A range of important product launches

A combination of desiccantdehumidification and totalenergy recovery leading to
reduced cool and re-heat.

Newly designed air-handler
with double wall construction
providing hygienic interior.

43

A new and improved desiccantsystem with a range of pre andpost treatment options.

A new and improved unit
specifically designed for icerinks.

This is Munters newest addition in thedigital world. It enables our units to beconnected to the cloud and to control
our units remotelyWe are confident about the future for AirTech• Active in markets with solid growth driven by pursuit for sustainability andproductivity• Market leading position in most of our customer industries with a strong brandand blue-chip customer base
• Strengthened organization and improved governance with clearer
responsibility for the regions to drive the business• Prioritizing resources to identified markets and sub-segments where we see
the highest growth – including continued focus on our service business

44

Agenda – platform for today and the future
CEO – Munters Towards Full Potential•

A strong company – but disappointing performance since IPO•

Global player in niche markets•

Full Potential Program to seize opportunities

Global Operations – Building a customer-oriented and scalable platform
AirTech – Sustainable solutions for demanding industrial applications
FoodTech – Sustainable solutions for demanding agricultural applications
CFO – Delivering the numbers
CEO wrap-up – Confident in our targets
45

46

FoodTech –47

Leading industry player with a solid growth over last years
Business Area overview

Selected customers

The only global supplier offering a full suite of climate control
solutions for poultry, greenhouse, dairy and swine industry

Global leader in markets that accounted for almost 2/3 of Net Sales
in FY2018

Financial performance (Net Sales, mSEK)CAGR +9%

Industry-leading solutions for connecting the supply chain andsoftware offering for food producers across the globe

CAGR +30%

2500
2000
1500

11%

13%

20%

16%
13%

12%

10%

1000

5%

500

Global reach through extensive network of distributors

48

0

15%

2014

2015
2016
2017
Net sales, mSEK
Adjusted EBITA margin

2018

0

Supporting our customers with climate and data-based optimizationA

Create the perfectclimateOffer equipment and solutions to create the optimal climate forlivestock and greenhouse production, including both hardware andknow-how/design

B

Guide customers
through data

Offer services and software to support food producers to optimize
their whole value chain, including both live operations andprocessing49

A

We create the perfect climate with the help of a broad product portfolio

Cooling

Environmental

ClimateControllers

Heating

Air
Circulators

Light Filter

Inlet
Air Entry

50

OutletAir Extraction

B

We guide our customers with the help of world leading software
Software for managing the supply chain of food producers• Software for integrators covering the whole supply chain includinge.g., production of feed, genetics, processing, and logistics• Software modules include e.g., functionality for• Managing inventory (e.g., eggs, feed)• Forecast input and output• Production planning• Cost calculations• Analyzing real-time farm data
• Projects often include software, implementation and maintenance andinclude the sharing of best practice from the industry• Ongoing shift from perpetual licenses and on-site installations
towards cloud-based solutions and Software as a Service
51

Global trends supporting the growth in the FoodTech market
Key end Market Growth CAGR in 2018-2021

Key end market Outlook

6-7%• Underlying megatrends drive demand• A growing world population• Increasing GDP (richer people eat moremeat and vegetables)• Land scarcity – need for increased
efficiency with more advanced technology• Layer - Trend towards cage-free egg production• Within swine segment, low growth in consumer
demand, but production moves to production withadvanced ventilation
2018

2021

• Greenhouse segment is growing >10% with shift
to more advanced technology / climate control

Munters stand out among competitors by having leading, energy-efficient technologies
and superior application expertise52

Munters position#1

Broiler

#1

Layer

#1

Food Chain SW

#2

Swine

Business portfolio overview – FoodTech with several strong positions
Business
Poultry(broiler and layer)
Create Your
Perfect
ClimateSize inMunters

Our
performanceMarketattractiveness

Opportunities•

Leverage strong position in layer segment
where there is an ongoing shift to cage-free egg
production requiring investments in new barns•

Shift to more advanced climate control including
use of positive pressure (where Munters ismarket leader)•

Grow share of wallet (develop more products
and/or acquisitions)•

Grow in new segment (small and medium size
customers) with the new generation cloud-based
software Amino

L

Swine

M
GreenhouseS
Guide
customers
throughdata

53

SoftwareS

Note: “Size in Munters” (XL: >1500 mSEK, L: >750 mSEK, M: >500 mSEK, S: <500 mSEK), “Our Performance” reflects margin realization and market position,“Market attractiveness” reflect overall growth and other attractiveness factors

Negative impact from African Swine Fever – but it can create
opportunities for Munters long-term
New cases of ASF still being discovered• The outbreak of African Swine Fever (ASF) in China officiallystarted in August 2018 and new outbreaks are still
confirmed even though less cases than in Q4 last year
• The outbreak is likely to reduce the Chinese pig
production with 30%, which is the largest in the world• The outbreak have lead to a sharp decrease ininvestments in infrastructure for Swine production in China

The impact is difficult to predict, but not only negative• Due to the reduced production in China, pig prices haveincreased rapidly since March• The impact from ASF could last for a long time andconsequences are difficult to predict – but changes in theindustry could be positive for Munters:– Industry consolidation - large modern farms replace small– Shift of trade with more export to China from other countries– Increase the demand for other protein in China, primarily
chicken

Negative outlook on short term, however medium to long term, the industry consolidation and shift tomore modern farms are likely to create opportunities for continued growth54FoodTech growth enabled through enlargement of the portfolio,
expansion into new geographies and by acquisitions
Key achievements over last five years•

Increased the share of sales from Asia from 14% to 25%, primarily in China••

Added new product lines, e.g., inlets, direct driven fans, heat exchangers etc.
Launched offering (next generation controllers, sensors and communication hubs) for
connecting the supply chain
Developed next generation software to be sold as Software as a Service

Geographic
expansion

Portfolio expansion••

Strategic
acquisitions

55

Acquired companies that strengthened our offering - Reventa (products for cold
climate), MTech Systems (software for integrators)

Strategic priorities for the future1

Create the perfect climate for our customers

2

3

56

Develop our distribution partner network

Guide our customers through data - Connect their whole supply chain

3

Guide our customers through data –Connect their whole supply chain

SonarEcho is fundamental for connecting (realtime) the whole supply chain for food producers effectively• Our existing software offering enables food producers to connect,
control and manage their supply chain, e.g., manage inventory offeed, medicine, and finished products, but also plan and forecast the
production• Adding our SonarEcho hardware (sensors and communication hubs) tofarms enable real-time data from the whole supply chain• Benefits for the food producers include• Reduced waste of feed
• Optimized logistics• More precise planning of production• Reduced need for farm visits• Benchmarking and better control of high and low performing farms

57

We are confident about the future for FoodTech• Active in markets with solid growth driven by the need for increased productivity,
food safety, animal welfare and sustainable food production• Over the last years, we have successfully expanded geographically andexpanded our offering• We are now in a market leading position with a comprehensive offering to control
the climate in a farm as well as software for managing and optimizing the whole
supply chain of food producers• We will further develop our offering and offer the Perfect Climate, and we see
opportunities to grow in the greenhouse segment, advanced climate control andthrough new services based on collected data from the supply chain
58

Agenda – platform for today and the future
CEO – Munters Towards Full Potential•

A strong company – but disappointing performance since IPO•

Global player in niche markets•

Full Potential Program to seize opportunities

Global Operations – Building a customer-oriented and scalable platform
AirTech – Sustainable solutions for demanding industrial applications
FoodTech – Sustainable solutions for demanding agricultural applications
CFO – Delivering the numbers
CEO wrap-up – Confident in our targets
59Attractive financial profile, but we have not met our financial targets
Strong Net Sales growthProfitability negatively impacted by DC

Consistent high cash generation

13%
8,000

800

CAGR = 13%

600
10%

10%

6,000

600

4,000

400

2,000

200

9%

9%

400

8%
200
0
-200

0

2014

2015

2016

2017

2018

Q1 2019
R12

0

2014

Net Sales, mSEK

60

2015

2016

Adjusted EBITA, mSEK

2017

2018

Q1 2019
R12

Adjusted EBITA margin

2014

2015

2016

CF bef.ch. in WC, mSEK•

Strong Net Sales growth over period•High cash generation•

Lower profitability caused by DC lumpiness, production inefficiencies and customer mix

2017

2018

Q1 2019
R12

CF from WC, mSEKFinancial profile is better when excluding Data Centers – moderate
slower sales growth but firmer margin
Net Sales growth 2 p.p. lower without DC

Margins 3 p.p. higher without DC (2018, Q1 2019)
14%
800

CAGR = 11%
6,000

600

4,000

2,000

0

2014

2015

2016

2017

2018

Net Sales excl. DC, mSEK

•

61

12%

11%

Q1 2019
R12

Label

12%

12%

Consistent high cash generation
600
400

9%

400

200

200

0

0

2014

2015

2016

Adjusted EBITA excl. DC, mSEK

2017

2018

Q1 2019
R12

-200

2014

Adjusted EBITA margin excl. DC

Large projects in DC EMEA with poor profitability and poor NWC profile, impacting
overall Munters performance

2015

2016

CF bef.ch. in WC, mSEK

2017

2018

Q1 2019
R12

CF from WC, mSEKServices is a high margin activity, with large potential to be captured
Service Net Sales 2014-2019
mSEK

%

850

11,8

800

11,6

750

11,4
11,2

700

11,0

650

10,8

600

10,6

550

10,4

500

10,2

450

10,0

400

9,8

350

9,6

300

9,4
9,2

250

9,0

200

8,8

150

8,6

Service Net Sales, mSEK

Service NS / Group NS

1902R12

1901R12

1812R12

1811R121810R12

1809R12

1808R12

1807R12

1806R12

1805R12

1804R12

1803R121802R121801R121712R121711R12

1710R121709R121708R12

1707R121706R121705R121704R121703R12

1702R12

1701R121612R121611R121610R121609R121608R121607R121606R121605R121604R121603R121602R121601R121512R121511R121510R121509R121508R121507R121506R121505R121504R121503R121502R128,01501R1201412R128,21411R128,450

1410R12

100

62

•

•

High growth of 17%
CAGR between 20142018:•

Consistent growth•

Resilient to Munters
lumpiness

Large potential still to
be captured in service
contract:•

Large installed base•

Still low penetration
rateFull potential program (FPP) - full impact expected in 2020
Program

Total program impact

2019 adj. EBITA impact 2020 adj. EBITA impact– equals ongoing
annual run-rate

mSEK +105mSEK +210

One-time costs

Cash pay-back timemSEK -350 costs

Approx.
2 years(60% during H1 and 40%
during H2 2019)

Timing and ultimate cost of program may vary from current estimates based on final timetable and subject to information and consultation with therelevant employee representative bodies.

63

Key costs / structure and early encouraging signs from FPP
Full Potential Program brings OH down
39%
2,800

36%

35%

2%
2%

1,600

3%

1,200

14%

0

64

37%
35%

3%

2,000

400

37%
3%

2,400

800

37%

13%

8%

12%

13%

2014

OH cost increases mainly driven
by Services, China and R&D•

FPP will generate Run-ratesavings of 160 mSEK

12%
8%

7%

15%

14%

2017

2018

8%

9%

13%

•

13%

13%

2015

2016

Manufacturing OH costs, mSEK

Selling OH costs, mSEK

Admin OH costs, mSEK

R&D OH costs, mSEK

Q1 2019 R12
OH costs / net sales (%)

Q1 2019 R12 (FPP)

Considerations to improve gross profit and EBITA
Gross margin flat since IPO

2500

33%

34%

Adjusted EBITA down since IPO

35%
32%

32%

32%

10%

9%

600

9%

8%

1500
400
1000
200

500

2015

2016

Gross profit, mSEK

65•

Different initiatives under implementationin order to improve gross margin and
EBITA:

800
10%

2014

Low performance mainly driven by DC,
but improvement potential across the
Group

13%

2000

0

•

2017

2018

Gross margin

Q1 2019
R12

0

2014

2015

2016

Adjusted EBITA, mSEK

2017

2018

Q1 2019
R12

Adjusted EBITA margin•

Pricing initiatives•

Capture of service potential•

Procurement and Cost Out
programmes•

Operations stability•

Scalability

Currency exposure largely naturally hedged
Currency Transaction exposure (2018)
3.0%
2.0%

1.0%
2.0%
2.0%

2.0%
3.0%

5,0%

1,0%
1,0%

1,0%
1,0%
1,0%

1.0%
3.0%

2.0%
2.0%

5,0%

7,0%
2.0%

12,0%

9,0%

28,0%

34,0%

38,0%

34,0%

Percentage of Revenue (%)

66

Currency Sensitivity Table

Percentage of Cost (%)

USD

CNY

SEK

GBP

KRW

THB

EUR

DKK

JPY

BRL

AUD

SGD

Other

`

Estimated effect on EBITSEK +10% compared with

mSEK

%

USD

-54.0

-11%

CNY

-27.6

-6%

DKK

-28.1

-6%

KRW

-6.5

-1%

THB

-5.0

-1%

AUD

-4.9

-1%

SGD

-1.5

0%

CAD

-1.0

0%

TRY

-2.3

0%

CZK

3.1

1%

ILS

6.8

1%

MXN

8.6

2%

EUR

28.1

6%

Other currencies

-3.3

-1%

Sum

-87.7

-18%

• Good balance between sales andexpenses in the various currencies(natural hedges)• Minimal hedging of transaction
exposure applied• Currency exposures occur in USD,
EUR and CNY• Significant net exposures arehedged• Operating exposure in USD and
EUR is mainly hedge throughGroup financing arrangements

Very strong cash flow dynamics
Increased focus on reducing NWC

High cash generation

16.1%
1200

600

15.3%

15.7%

15.2%

Munters is CapEx light, low CapEx levels in FPP
15.7%

13.7%

160

1000

400

140

800
200

80

400

60
40

200

-200
2014

2015

2016

2017

CF bef.ch. in WC, mSEK

67

120

600

0

2018

Q1 2019
R12

CF from WC, mSEK

0

180

20
2014

2015

2016

Operating WC, mSEK•

Growth in DC and China as increased NWC•

FPP focus on reducing NWC

2017

2018

OWC / net sales

Q1 2019
R12

0

2014

2015

2016

Depr, tangibles, mSEK

2017

2018

CapEx, tangibles, mSEKCapital structure allocations priorities
Current capital structure, mSEK
853

1 080
638
1 480

2 843

4 218

3 720

AssetsEquity and Liabilities

Goodwill
Other Intangible Assets
Tangile Assets
Operating Working Capital
EquityNet Debt
Other Working Capital Items

Facility`

US Term Loan

EUR multicurrency RCF

Commitment

250 000 000 USD

185 000 000 EUR

n.a.

19 MEUR (from 1st of April to 31st of Dec 2019)

3m US Libor

3m EURIBOR (floor at 0%)

250

230

n.a.

35 % of applicable margin on RCF facility on unutilized
amountTemporary increase of commitment

Base rate
Current margin (bps)Commitment Fee (%)
Covenant – Net debt Leverage ratio
68

Net Debt / LTM Adjusted EBITDA

Key priorities for Capital Allocation
1.

Achieve strong balance sheet –
deleverage

2.

Organic growth and cash flow tofund investments in the business

3.

Reinstate dividend as FCF grows

4.

Disciplined and selective M&A

Financial targets
Growth5%“Munters’ objective is to achieve an annual organic revenue growth of 5%,
supplemented by selective acquisitions”

EBITA
margin14%“Munters’ mid-term target is to have an adjusted EBITA margin of 14%”

1.5-2.5x“Munters’ target is to maintain a ratio of net debt to adjusted EBITDA of 1.52.5x, and may temporarily exceed this level e.g. as a result of acquisitions”

30-50%“Munters aims to pay an annual dividend corresponding to 30-50% of the net
profit for the period. The pay-out decision will be based on the Company’s
financial position, investment needs, acquisitions and liquidity position”

Capitalstructure

Dividend
policy69

Agenda – platform for today and the future
CEO – Munters Towards Full Potential•

A strong company – but disappointing performance since IPO•

Global player in niche markets•

Full Potential Program to seize opportunities

Global Operations – Building a customer-oriented and scalable platform
AirTech – Sustainable solutions for demanding industrial applications
FoodTech – Sustainable solutions for demanding agricultural applications
CFO – Delivering the numbers
CEO wrap-up – Confident in our targets
70

We are confident we can deliver on our financial targets•

We operate in attractive markets driven by strong
sustainability oriented global trends•

We pursue leading positions in selected market segments•

71

We have a plan to turn around the company short-term with
the Full Potential Program – and a strategy for longterm profitable growth

Net Sales growth of 5%
Adjusted EBITA Margin of 14% mid-term

Net Debt/adjusted EBITDA ratio of 1.5-2.5
Dividends of 30-50% of Net Income

Questions & Answers

72