Q1
2019

Munters Group AB (publ)“Strong order intake and Full Potential Program on track”.
FIRST QUARTER 2019•

Order intake increased by 19% to SEKm 1,949 (1,635).

•

Net sales increased by 4% to SEKm 1,663 (1,601).

•

Operating profit (EBIT) amounted to SEKm 14 (76), including items affecting comparability amounting to SEKm -61 (0) related to
Munters Full Potential Program.

•

Adjusted EBITA decreased by 7% to SEKm 107 (115) due to loss in the Data Center business of SEKm -26 (6), corresponding to an adjusted
EBITA margin of 6.4% (7.2).

•

Net income was SEKm -22 (42).

•Cash flow from operating activities was SEKm 14 (-0).

•

Net debt increased by SEKm 449 and leverage increased by 0.4 as a consequence of the new accounting standard for leases, IFRS 16.

•

Earnings per share was SEK -0.12 (0.22).

•

Munters Full Potental program was launched in February and is running according to plan.

•

Effective from the first quarter 2019, Munters is organized in two business segments, AirTech and FoodTech. Former Air Treatment has changed
name to AirTech and now also includes the business segments Data Centers and Mist Elimination. Historical financial numbers have been restated. AgHort has changed name to FoodTech.

EVENTS AFTER PERIOD END•

Klas Forsström was appointed as new President and CEO and will assume his new role no later than mid-October 2019.

FINANCIAL SUMMARY
Q1

LTM

Full year

SEKm

2019

2018

∆%

Apr-Mar2018

Order intake

1,949

1,635

19

7,228

6,914

Net sales

1,663

1,601

4

7,184

7,122

Operating profit (EBIT)

14

76

-82

71

134

Adjusted EBITA

107

115

-7

667

676

Adjusted EBITA margin, %

6.4

7.2

9.3

9.5

Net income

-22

42

-158

-94

Earnings per share before and after dilution, SEK

-0.12

0.22

-0.92

-0.57

14

-0

455

441

3,411

2,755

3,411

2,843

4.3

3.7

Cash flow from operating activities
Net debt
Net debt/adjusted EBITDA, LTM

Munters Group AB, first quarter 2019

24

1

Q1
2019

Comments from the CEO
I am pleased to see that the three-step plan to take Munters to its full potential, launched in February, is on track with first step efficiency measures andsavings being realized as projected. This gives us further confidence that we are well-positioned to meet our medium-term objectives for our shareholders,
and that our plans are in good order. The new leadership team is now in place and leading the transition towards a leaner and more decentralized organization based on two strong business areas, AirTech and FoodTech. We are well under way in our work to secure a stable and efficient platform from which wewill be able to increase profitability and growth over the years to come.
During the first quarter we report a solid increase in orders and with net sales and earnings in line with our expectations. Group adjusted EBITA were lower
year-over-year impacted by the anticipated loss in the Data Centers sub-segment in AirTech. Excluding Data Centers, AirTech reported healthy increases inboth net sales and adjusted EBITA. Strong net sales growth was noted in the Industrials, Data Centers and the Mist Elimination sub-segments as well as in
Services.
As communicated earlier, our intention is to close our European Data Center factory. We highlighted that this is subject to union negotiations, and that theprocess is well under way. At this early stage we have no further update or new information to release. Going forward, we will focus on the US Data Center
market and we are pleased to have won a fairly large data center cooling order for a co-location customer in the US during the quarter.
In FoodTech, our business in China continued to be affected by the uncertainty in the market caused by the African Swine Fever. Although we saw some
growth in the US and in Europe, total order intake was lower compared with the first quarter last year. Net sales grew slightly and adjusted EBITA were at
the same level as last year.
Cash flow in the quarter was in line with our expectations and included costs related to the Munters Full Potential Program.The program will temporarily
increase leverage during the year and we have negotiated terms with our lending banks around this expectation. As an effect of IFRS 16 our liabilities increased with SEKm 449 as per the end of the quarter. When calculating the leverage in line with the agreement with our lending banks this effect is adjusted
for. The headroom versus our bank covenants is satisfactory. As previously communicated, we expect Group leverage to be in line with our mid-term financial leverage target in 2020.
As a result of the Munters Full Potential Program, we expect significantly improved adjusted EBITA for full year 2019. The program provides a firm path
towards increased earnings over the following years and we are confident that we will be able to get back on track towards achieving our mid-term growthtarget of annual organic net sales growth of 5% an adjusted EBITA margin of 14%.
Johan Ek, President and CEO

Munters Group AB, first quarter 2019

2

Q1
2019

Financial performance
Q1

LTM

Full year

Order intake (SEKm)

SEKm
Order intake

2019
1,949

2018
1,635

Apr-Mar
7,228

2018
6,914

2,5 00Growth

19%

-1%

1%

-4%

1,500

Net sales

1,663

1,601

7,184

7,122

1,000

4%

5%

7%

8%

50 0

Growthof which organic growth8%of which structural effects

0%

2,000
0
Quarter

14

76

71

134

107

115

667

676

-7%

-22%

6.4

7.2

0%

9.3

9.5

ORDER INTAKE

Order intake in the first quarter increased by 19% to SEKm 1,949 (1,635) and by 11% organically as currencytranslation effects impacted positively compared to first quarter last year.
The new AirTech segment, including the previous business segments Data Centers and Mist Elimination, experienced a strong order intake amounting to SEKm 1,460 (1,123), corresponding to an organic increase of 22%. Region EMEA grew organically, except for the sub-segment Data Centers where order intake were slightly down. In
Americas, the low demand in Supermarkets continued but the decline was more than offset by an accelerating
growth in other commercial applications and in several customer projects within the sub-segment Data Centers. In
APAC, order intake increased slightly. Sub-segment Mist Elimination showed good growth troughout all regions,mainly in the Marine end-market. Service order growth was strong in the quarter.
Order intake in FoodTech in the first quarter declined to SEKm 500 (520) which corresponded to -11% organically.
Orders in China declined due to the African swine fever. The US was also weak due to a market slow-down in the
Broiler and Swine sub-segments, while the outlook for Layer continue to be positive. EMEA showed good growth,
driven by currency effects as well as strong order intake in Denmark. The positive trend in Germany continued.

NET SALES

4,000

Q1 Q2 Q3 Q4 Q1

Adjusted EBITA
Adjusted EBITA margin, %

6,000

0

Operating profit (EBIT)
Growth2,000-4%of which currency effects

8,0 00LTM

Net sales (SEKm)
2,500

8,000

2,000

6,000

1,500

4,000

1,000

2,000

500
0

0
Q1 Q2 Q3 Q4 Q1
Quarter

LTM

Adjusted EBITA (SEKm)
250

800

200

600

150

400

10 0

200

50
0

0
Q1

Net sales for the first quarter increased by 4% to SEKm 1,663 (1,601) and decreased by 4% organically as
currency translation effects impacted positively.

Q2

Q3

Quarter

Q4

Q1
LTM

Net sales for AirTech in the quarter was SEKm 1,208 (1,160). Organically, net sales decreased by 4%. Sub-segment Data Centers contributed negatively
where sales in EMEA declined sharply. The Industrial sub-segment generated solid net sales. Sub-segment Mist Elimination showed strong growth, driven
by EMEA and the Marine end-market. Services revenues were also higher than in the previous year, while deliveries in the sub-segment Commercial were
down.
In FoodTech, net sales for the first quarter increased to SEKm 466 (448). Organically, net sales decreased by 3%. Americas and EMEA were in line withlast year, while APAC declined. The African swine fever continued to impact net sales in China. The positive development from last year in South Africa andTurkey continued during the first quarter 2019.
Services net sales increased by 17% during the first quarter 2019, supported by 8% from positive currency translation effects.

OPERATING PROFIT (EBIT)

Operating profit (EBIT) in the first quarter amounted to SEKm 14 (76), including depreciations of SEKm -56 (-22) and amortizations and write-downs of
SEKm -32 (-39), whereof SEKm -24 (-33) was related to amortization of surplus values derived through acquisitions. Depreciations in the first quarter was
impacted by SEKm -28, due to depreciations of leased assets (see specification of IFRS 16 impacts on page 18). The operating profit was also negatively
impacted by SEKm -61 due to IAC´s, see separate section below.

ADJUSTED EBITA
Adjusted EBITA in the first quarter decreased by 7% to SEKm 107 (115), corresponding to an adjusted EBITA margin of 6.4% (7.2).
Adjusted EBITA in AirTech was SEKm 86 (88). Excluding the loss in the Sub-segment Data Centers related to underabsorption of costs in the Dison factory,
adjusted EBITA improved significantly compared to last year. The improvement was seen in all regions. Sub-segment Mist Elimination showed a significant
profitability improvement in EMEA.

Munters Group AB, first quarter 2019

3

Q1
2019
Adjusted EBITA in FoodTech increased to SEKm 46 (43). The increase was mainly volume related and supported by currency effects. Gross margins in
APAC decreased due to lower sales volumes and was offset by higher gross margins and lower indirect costs in EMEA and Americas.

FINANCIAL ITEMS

Financial income and expenses for the first quarter amounted to SEKm -44 (-27). The financial expenses were negatively impacted by higher USD interest
rates, higher margins on loans and increased interest expenses due to the new accounting standard for leases, IFRS16. Further information of the IFRS 16
impact is found in the section Accounting Principles, page 16. The average weighted interest rate including fees per end of the quarter was 4.7% (3.9).

TAXES

Income taxes for the first quarter amounted to SEKm 8 (-6). The effective tax rate in the first quarter was 27% (13%).

EARNINGS PER SHARE
Net profit per share, before and after dilution, in the first quarter 2019 amounted to SEK -0.12 (0.22). Income attributable to Parent Company’s ordinary
shareholders amounted to SEKm -21 (40) for the first quarter.
The number of outstanding ordinary shares as per March 31, 2019, was 183,597,802 before and after dilution, whereof 1,467,000 was held in own
custody.

DIVIDEND

As announced in the 2018 Year-end report in February, the board proposes no dividend to be paid for 2018.

CASH FLOW AND CAPITAL EMPLOYEDCash flow before interest and tax amounted to SEKm 75 (138). The decline was attributable to lower operating profit (EBIT). Cash flow from operating activities was SEKm 14 (-0) in the first quarter and was affected by an increase of working capital of SEKm -21 (-105) and financial items of SEKm -43 (-22).
Average capital employed for the last twelve months was SEKm 7,147 (6,531). Return on capital employed (ROCE) for last twelve months was 1% (7).
Return on capital employed, where EBIT is adjusted for items affecting comparability and capital employed adjusted for goodwill, for the last twelve months
was 6% (20). EBIT was affected by an write-down of goodwill amounting to SEKm 323 in the fourth quarter of 2018.

FINANCIAL POSITION AND LIQUIDITY

Munters primary financing facilities consists of a term loan of USDm 250 and a revolving credit facility of EURm 185. The facilities have no mandatory amortization requirement. The final maturity date is May 2022. The loan agreement has one financial covenant (consolidated net debt in relation to adjusted
EBITDA). The new accounting standard for leases, IFRS 16, does not affect the covenant calculation according to the loan agreement definition. Available
unutilized credit facilities as of March 31 amounted to SEKm 889 (837). Interest-bearing liabilities amounted to SEKm 3,635 (2,930). For further informationon the IFRS 16 effect, see section Accounting Principles on page 16. Cash and cash equivalents amounted to SEKm 460 (386) as of March 31, 2019.
At quarter end the term loan was fully drawn with USDm 250 and EURm 100 of the total revolving credit facility were utilized in EUR, USD and SEK. Alongwith the main loan facility, an amount of SEKm 52 (10) in local debt is outstanding in i.a. China, India, and Brazil.
On April 1, 2019, Munters was granted a RCF increase of 19 EURm valid until December 31, 2019.

ITEMS AFFECTING COMPARABILITY (IAC)

In the first quarter, costs amounting to SEKm -61 (0) were reflected as items affecting comparability and incurred due to the Full Potential Program. The
costs consisted of severance costs and consulting fees.

PARENT COMPANY AND OWNERSHIP

Munters Group AB offers group supporting functions. The Company holds shares in subsidiaries, cash and accounts payables. The Parent Company does
not engage in sales of goods and services to external customers. Cash and cash equivalents at the end of the period amounted to SEKm 76 (196).
As of March 31, Nordic Capital was the biggest shareholder (50.1%) followed by FAM (11.4%), Första AP-fonden (6.2%), AMF (5.6%) and Swedbank Robur
Fonder (4.8%).

SIGNIFICANT EVENTS DURING THE PERIOD
Three phase plan to capture the full potential of Munters

A three-phase plan was launched in February to capture Munters full potential, to increase customer focus and to improve Group earnings.
As part of the first phase of the program, Munters has the intention to close down its´ European Data Center factory in Dison, Belgium. This is subject tounion negotiations. Focus going forward will mainly be on the US Data Center market where Munters has a more commercially viable base for achieving
profitable growth. This include established customer relations and proven record of accomplishment in the US market, which provides a good platform.
The overhead cost saving from the program is SEKm 160. In addition, the intended closure of our Data Center factory in Europe, subject to union negotiations, will give an estimated profit improvement of SEKm 50, this in spite of Data Center net sales drop of SEKm 600 of which approximately 50% in 2019. In
total, Munters expects a positive Group adjusted EBITA effect of SEKm 105 in 2019 and SEKm 210 in annual effect from 2020.

Munters Group AB, first quarter 2019

4

Q1
2019
Nonrecurring charges for the Munters Full Potential Program of SEKm 350 will be incurred, with 60% to be recognized during the first six months of 2019,
and the remaining 40% in the last six months of the year. The Munters Full Potential Program will temporarily increase the leverage during 2019 and necessary consent from the lending banks has been received. Group leverage is expected to be in line with our mid-term financial leverage target in 2020.

EVENTS AFTER PERIOD END
Management changes

The Board of Directors has appointed Klas Forsström as President and CEO of Munters Group AB, effective no later than mid-October 2019. Klas
Forsström is 51 years old and is currently the President of Sandvik Machining Solutions Business area, a position he has held since 2017. Prior to that, he
has more than 20 years of experience holding different senior management positions at Sandvik, including positions such as President of Sandvik Hard
Materials and Sandvik Coromant. Klas has a M.Sc. in Materials Physics and an MBA from Uppsala University as well as advanced management studies at
INSEAD.
Johan Ek, the interim President and CEO of Munters since December 2018, will after handing over responsibilities to Klas Forsström remain in his current
role as a member of the Board of Directors of Munters.

Munters Group AB, first quarter 2019

5

Q1
2019

AirTech•Strong order intake in the quarter, up 30% year-on-year•

Net sales growth in sub-segments Industrials and Mist Elimination, but negatively impacted bydecreased sales in the sub-segment Data Centers•

Excluding the loss related to the Data Center factory in Dison, Adjusted EBITA increased significantly

FINANCIAL SUMMARY
Q1

LTM

Full year

SEKm
Order intake

2019
1,460

2018
1,123

Apr-Mar
5,174

2018
4,837

Growth

30%

-7%

-2%

-10%

Net sales

1,208

1,160

5,184

5,136

4%

2%

7%

7%

Growthof which organic growth-4%of which currency effects

8%of which structural effects

0%

Operating profit (EBIT)

58

83

81

107

Adjusted EBITA

86

88

468

469

-2%

-32%

7.1

7.5

GrowthAdjusted EBITA margin, %9.0

Order intake (SEKm)

-5%

2,000

9.1

1,500

6,000
5,000
4,000

1,000

Order intake

In the first quarter, AirTech experienced a historically strong order intake with an increase of 30% of which 22%
was organic growth. Region EMEA had an exceptionally strong organic growth in all sub-segments, except in
Data Centers where order intake were slighly down. In Americas, the low demand in the Supermarket end-user
market continued but the decline was offset by accelerating growth in other commercial applications and within
the sub-segment Data Centers where order intake increased substantially. In region APAC, order intake increased slighly. Sub segment Mist Elimination showed strong growth troughout all regions and mainly in the Marine end-market. Service order growth was strong in the quarter.

Net sales

Organic net sales growth was negative in the quarter. Sub-segment Data Centers was the main contributor to
the negative development, whereas sales in EMEA declined sharply. The Industrial sub-segment generated
strong net sales growth with high volumes in Americas and in APAC, where China recognized a partial delivery
on the large lithium battery project secured in the fourth quarter of 2018. Sub-segment Mist Elimination showedstrong growth, driven by EMEA and the Marine end-market. Services revenues were also higher year-on-year.

2,000

500

1,000

0

0
Q1 Q2 Q3 Q4 Q1
QuarterLTM

Net sales (SEKm)
1,600

6,000
5,000

1,200

4,0 0080 0

3,0 00

2,000

40 0

1,000

0

Adjusted EBITA

Adjusted EBITA declined marginally compared to the first quarter last year. Except for a loss of SEKm -26 (6) in
the Sub-segment Data Centers, related to the underabsorption of costs in the Dison factory, adjusted EBITA
improved by 26% organically compared to last year. The improvement was seen in all regions and was primarily
volume related, but currency translation effects and margin increases through increased operational leveragealso contributed positively. Sub-segment Mist Elimination showed a significant profitability improvement in
EMEA, which was partly volume driven and partly a result of good cost control.

3,000

0
Q1 Q2 Q3 Q4 Q1
Quarter

LTM

Adjusted EBITA (SEKm)
200

600
50 0

15 0

400

100

300
20 0

50

100

0

0
Q1

Q2

Q3

Quarter

Q4

Q1
LTM

Munters Group AB, first quarter 2019

6

Q1
2019

FoodTech•

Organic order intake and net sales declined in the quarter, impacted by the Africanswine fever in China•

Continued uncertainty in the market in China•

EBITA margin was at the same level year-on-year

FINANCIAL SUMMARY
Q1

LTM

Full year

SEKm
Order intake

2019
500

2018
520

Apr-Mar
2,087

2018
2,107

Growth

-4%

11%

9%

13%

Net sales

466

448

2,035

2,018

Growth

4%

11%

8%

10%

41

227

244

252

249

of which organic growth-3%of which currency effects

7%

of which structural effects

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

0%

24
46

43

6%

54%

9.9

9.7

6%

12.4

12.4

Order intake (SEKm)
800

2,400
2,000

600

Order intake

Order intake for the first quarter declined by 4% and decreased by 11% organically. The majority of the decline
was seen in China, where several customers postponed investments as a consequence of the African swine
fever. The quarter was also fairly weak in the US due to a market slow-down seen in the Broiler and Swine subsegments. However, we saw a positive development in the US Layer sub-segment. Order intake grew in EMEA,
driven by currency effects as well as strong order intake in Denmark with some large projects confirmed after aperiod of weak order intake. The positive trend in Germany continued with some positive signs for the Russian
market.

Net sales

Net sales for the first quarter declined organically by 3%. Americas and EMEA were in line with last year, while
APAC declined significanty. The African swine fever continued to impact net sales in China negatively. Sales ofcontrollers dropped in the quarter but the outlook for the year is positive.

Adjusted EBITA

Adjusted EBITA increased by 6% to SEKm 46 (43) supported by currency effects, corresponding to an adjusted
EBITA margin of 9.9% (9.7). The increase was mainly volume related. The regions showed some variations
where gross margins in APAC decreased due to lower sales volumes offset by higher gross margins and lower
indirect costs in EMEA and Americas.

1,600
400

1,200
800

200

400

0

0
Q1

Q2

Q3

Q4

Q1

QuarterLTM

Net sales (SEKm)
600

2,500

500

2,000

40 0

1,5 00

30 0

1,000

200

500

100
0

0
Q1

Q2

Q3

Q4

Quarter

Q1
LTM

Adjusted EBITA (SEKm)
100

300

80

250
200

60

150

40

10 0

20

50

0

0
Q1

Q2

Q3

Quarter

Q4

Q1
LTM

Munters Group AB, first quarter 2019

7

Q1
2019

Quarterly overview Group and Segments
Group
2019
SEKm

Order backlog
Order intake
Net sales
Operating profit (EBIT)
Net income
Amortization and write-down (including surplus values)
Items affecting comparability (IAC)
Adjusted EBITA
Adjusted EBITA margin, %

2018

Q1

Q4

Q3

Q2

2,664
1,949
1,663
14
-22
32
61
107
6.4

2,317
1,753
1,834
-256
-321
380
31
154
8.4

2,388
1,701
1,748
144
62
43
8
195
11.1

2,477
1,826
1,939
170
122
41
−
211
10.9

2017
Q1 Full year
2,516
1,635
1,601
76
42
39
−
115
7.2

2,317
6,914
7,122
134
-94
503
39
676
9.5

Q4

Q3

Q2

Q1

2,365
1,821
1,811
127
152
47
0
174
9.6

2,332
1,489
1,552
108
51
54
2
164
10.6

2,449
2,234
1,723
143
11
56
-9
190
11.0

1,998
1,654
1,519
75
-41
53
20
147
9.7

AirTech2019
SEKm

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

2018

Q1

Q4

Q3

Q2

2,103
1,460
1,206
2
58
5
24
−
86
7.1

1,799
1,307
1,343
2
-229
349
8
-16
112
8.3

1,837
1,184
1,239
1
112
4
8
−
124
10.0

1,920
1,223
1,391
1
142
4
−
−
146
10.5

2017
Q1 Full year
2,018
1,123
1,158
2
83
4
−
−
88
7.5

1,799
4,837
5,131
5
107
361
16
-16
469
9.1

Q4

Q3

Q2

Q1

1,997
1,439
1,367
3
134
4
0
6
144
10.5

1,889
1,055
1,079
3
99
4
0
−
103
9.5

1,959
1,680
1,222
3
167
4
-53
−
118
9.6

1,544
1,202
1,128
6
132
4
-7
−
129
11.4

FoodTech
2019

2018

2017

SEKm

Q1

Q4

Q3

Q2

Q1 Full year

Q4

Q3

Q2

Q1

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

561
500
456
9
24
4
19
−
46
9.9

518
452
491
6
53
3
−
-7
49
9.9

552
524
510
8
73
3
−
−
76
14.7

557
610
548
7
77
3
−
−
81
14.5

498
520
442
6
41
3
−
−
43
9.7

368
394
443
7
51
2
−
-0
52
11.6

442
442
473
9
74
3
−
−
77
16.0

490
561
500
1
75
3
−
−
78
15.6

454
469
391
13
25
3
−
−
28
7.0

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

Other and eliminations
2019

2018

2017

SEKm

Q1

Q4

Q3

Q2

Q1 Full year

Q4

Q3

Q2

Q1

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

-11
-11
-67
23
18
−
-25

-6
-8
-80
28
22
23
-7

-8
-8
-41
36
−
−
-5

-7
-8
-48
33
−
−
-15

-8
-8
-48
32
−
−
-16

-12
-10
-58
41
−
-5
-22

-9
-12
-64
47
2
−
-16

-8
-4
-99
48
44
−
-7

-18
-19
-82
46
27
−
-10

Munters Group AB, first quarter 2019

-30
-32
-217
130
22
23
-43

8

Q1
2019

Restatement of AirTech
2018

2017

Q4

Q3

Q2

Order intake AirTech
Order intake AirT
Order intake DC
Order intake ME
Transactions between segments

1,307
979
225
117
-13

1,184
906
188
106
-16

1,223
951
167
125
-19

1,123
963
80
97
-18

External net sales AirTech
External net sales AirT
External net sales DC
External net sales ME

1,343
1,060
160
123

1,239
924
224
91

1,391
963
341
86

EBIT AirTech
EBIT AirTEBIT DCEBIT ME

-229
176
-427
22

112
121
-24
15

Adjusted EBITA AirTech
Adjusted EBITA AirT
Adjusted EBITA DC
Adjusted EBITA ME

112
170
-80
22

124
124
-15
15

SEKm

Munters Group AB, first quarter 2019

Q1 Full year

Q4

Q3

Q2

Q1

4,837
3,798
660
445
-66

1,439
862
519
83
-25

1,055
938
20
100
-2

1,680
1,037
558
111
-26

1,202
950
165
101
-13

1,158
775
294
89

5,131
3,723
1,019
389

1,367
983
278
106

1,079
872
114
92

1,222
927
192
104

1,128
787
249
92

142
126
7
9

83
73
5
6

107
496
-440
52

134
129
-9
14

99
115
-22
6

167
173
-14
8

132
94
32
6

146
129
8
9

88
75
6
6

469
497
-80
52

144
136
-8
15

103
116
-20
6

118
123
-13
8

129
90
32
6

9

Q1
2019

Consolidated accounts
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Q1

LTM

Full year

SEKm

2019

2018

Apr-Mar2018

Net sales
Cost of goods sold
Gross profit

1,663-1,146517

1,601-1,098503

7,184-4,8992,285

7,122-4,851
2,271

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

-292
-164
-54
7
14

-248
-138
-47
5
76

-1,406
-594
-223
10
71

-1,362
-567
-217
8
134

Financial income and expenses
Profit/Loss after financial items

-44
-30

-27
49

-143
-72

-127
7

Tax
Net income for the period

8
-22

-6
42

-87
-158

-101
-94

-21
-0
182,130,802
182,130,802
-0.12
-0.12

40
2
183,597,802
183,597,802
0.22
0.22

-167
9
182,130,802
182,130,802
-0.92
-0.92

-105
11
183,165,852
183,165,852
-0.57
-0.57

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

105

108

189

193

Other comprehensive income not to be reclassified to profit or loss 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

−
-1
104

−
−
108

-17
3
176

-17
4
179

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

83
83
-0

151
149
2

17
9
9

85
75
10

Attributable to Parent Company shareholders
Attributable to non-controlling interests
Average number of outstanding shares before dilution
Average number of outstanding shares after dilution
Earnings per share before dilution, SEK
Earnings per share after dilution, SEK

Munters Group AB, first quarter 2019

10

Q1
2019

Consolidated accounts
CONDENSED STATEMENT OF FINANCIAL POSITION
SEKm

2019/03/31

2018/03/31

2018/12/31

4,335
1,504
292
564
191
73
15
250
7,222

4,352
1,464
156
229
145
53
14
247
6,660

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

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

453
121
320
19
21
1,113
275
−
37
114
460
2,932

398
137
312
29
19
1,195
113
2
38
125
386
2,753

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

TOTAL ASSETS

10,155

9,414

9,268

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

Munters Group AB, first quarter 2019

14,15

9,13

11

Q1
2019

Consolidated accounts
CONDENSED STATEMENT OF FINANCIAL POSITION
SEKm

2019/03/31

2018/03/31

2018/12/31

Shareholders' equity
Non-controlling interests
Total equity

3,801
-3
3,798

3,899
-2
3,897

3,720
-4
3,716

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

3,478
233
27
143
432
4,313

2,923
209
19
139
410
3,700

3,002
230
16
137
421
3,805

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

157
352
570
660
1
31
131
9
133
2,044

7
345
578
542
4
44
170
8
119
1,817

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

TOTAL EQUITY AND LIABILITIES

10,155

9,414

9,268

2019/03/31

2018/03/31

2018/12/31

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

3,716
83
-0
-1
−
−
0
3,798

3,748
151
−
-1
−
−
−
3,897

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

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

3,801
-3

3,899
-2

3,720
-4

EQUITY AND LIABILITIESEQUITYCONDENSED STATEMENT OF CHANGES IN EQUITY
SEKm

Munters Group AB, first quarter 2019

Note

12

Q1
2019

Consolidated accounts
CONDENSED CASHFLOW STATEMENT
Q1
SEKm

LTM

Full year

2019

2018

Apr-Mar

2018

14

76

71

134

88
-10
-17
75

61
-1
2
138

628
-23
0
677

602
-15
19
740

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

-43
2

-22
-12

-131
-109

-109
-123

34

104

437

507

Cash flow from changes in working capital

-21

-105

18

-67

Cash flow from operating activities

14

-0

455

441

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

−
2
1
−
-29
-16
-42

−
0
0
-0.01
-29
-16
-45

-37
4
2
-0
-148
-84
-263

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

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

97
-25
−
−
72

114
-94
−
−
20

391
-404
-59
-55
-127

407
-472
-59
-55
-180

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

44
404
12
460

-25
402
10
386

65
386
10
460

-5
402
8
404

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

Munters Group AB, first quarter 2019

13

Q1
2019

Parent company
CONDENSED INCOME STATEMENT
Q1

LTM

Full year

SEKm

2019

2018

Apr-Mar2018

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

−
−
-14
-14

−
−
-2
-2

−
−
-23
-23

−
−
-11
-11

Financial income and expenses
Profit/Loss after financial items

−
-14

-0
-2

-0
-23

-0
-11

Group contributions
Profit/Loss before tax

−
-14

−
-2

−
-23

−
-11

Tax
Net income for the period

-0
-14

-0
-2

0
-22

0
-11

CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Q1

LTM

Full year

SEKm

2019

2018

Apr-Mar2018

Profit/Loss for the period
Other comprehensive income, net after tax
Comprehensive income for the period

-14
−
-14

-2
−
-2

-22
−
-22

-11
−
-11

Munters Group AB, first quarter 2019

14

Q1
2019

Parent company
CONDENSED BALANCE SHEET
SEKm

2019/03/31

2018/03/31

2018/12/31

4,086
0
4,086

4,086
−
4,086

4,086
0
4,086

0
1
0
76
76

−
1
0
196
197

−
0
0
77
77

4,162

4,283

4,163

2019/03/31

2018/03/31

2018/12/31

6
4,074
76
-14
4,142

6
4,074
201
-2
4,278

6
4,074
87
-11
4,155

6
7
2
2
3
20

1
2
−
1
−
4

0
2
3
2
−
8

4,162

4,283

4,163

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
Cash and cash equivalents
Total current assets
TOTAL ASSETSSEKm
EQUITY AND LIABILITIESEQUITY
Share capital
Share premium reserve
Profit brought forward
Income for the period
Total equity
CURRENT LIABILITIES
Accounts payable
Accrued expenses and deferred income
Liabilities to subsidiaries
Other liabilities
Other provisions
Total current liabilities
TOTAL EQUITY AND LIABILITIES

Munters Group AB, first quarter 2019

15

Q1
2019

Other disclosures
ACCOUNTING POLICIESThis report has been prepared, with regards to the Group, in accordance with IAS 34 Interim Financial Reporting, recommendation RFR 1 of the Swedish
Financial Reporting Board and the Swedish Annual Accounts Act and, with regards to the Parent Company, in accordance with recommendation RFR 2 of
the Swedish Financial Reporting Board and the Swedish Annual Accounts Act. The accounting principles applied correspond to those presented in the
Annual Report 2018 (Note 1). Since January 1, 2019, Munters has applied the new accounting standard for leases, IFRS 16 Leases. For transition purposes
the simplified transition approach has been used and therefore there are no restate of comparative amounts for the year prior to first adoption. Right-of-use
assets are measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses). Munters has used the transision
exempt rule under IFRS 16 not to make a new assessment if a contract is or contains parts that constitute a lease and has therefore applied the standard for
all contracts that have previously been identified as leases. Munters has also applied the exempt rule to exclude intitial direct costs when calculating theright-of-use asset. As of January 1, 2019, Munters has recognised right-of-use assets of approximately SEKm 475, lease liabilities of SEKm 458 (after
adjustments for prepayments and accrued lease payments recognised as at December 31, 2018) and provision for dismantling expenses of SEKm 18. Net
profit after tax expects to decrease, provided no new agreements are added, by approximately SEKm 13 for the full year 2019 as a result of adopting to the
new rules. EBITDA is expected to increase with approximately SEKm 109 as the operating lease payments were included in EBITDA but the depreciation of
the right-of-use assets and interest on the lease liability are excluded from this measure. Adjusted EBITA is expected to increase by approximately SEKm 1,
as the operating lease payments were included in EBITA but the interest on the lease liability is excluded from this measure. Cash flow timings will not beaffected.
As of January 1, 2019 all new lease agreements will be accounted for according to the requirments under IFRS 16. This means that lease agreements arereported as right-of-use assets and a corresponding lease liability on the commencement day of the lease. Each lease payment is divided between arepayment of the debt and a interest expense. The interest expense is distributed over the lease term so that each accounting period is expensed with anamount corresponding to a fixed interest rate for the liability recognized during the respective period. The right-of-use asset is depreciated on a straight-line
basis over the shorter of the asset's useful life and the length of the lease. Assets and liabilities arising from leases are initially recognized at present value.
The lease payments are discounted with the implicit interest rate if that intrest rate can be determined, otherwise the incremental borrowing rate. The
incremental borrowing rate is decided based on contract length and contract transaction curency. Payments for short-term contracts and leases of low value
are expensed on a straight-line basis in the income statement. Short-term contracts are contracats with a lease term of 12 months or less. Contracts of low
value include various IT-equipment and smaller office furniture.
The Group presents certain financial metrics in the Interim report that are not defined in accordance with IFRS. The Group is of the opinion that these
metrics provide valuable complementary information for investors and the Group’s management, in that they enable an evaluation of the Group’s
performance. The financial metrics are calculated in accordance with the definitions presented on page 133 of the Annual Report 2018.

TRANSACTIONS WITH RELATED PARTIES
Munters’ largest shareholder, a Nordic Capital Fund VII entity, offered the Chairman of the Board of Directors, Magnus Lindquist, and the acting CEO, Johan
Ek, to acquire in total 6,000,000 call options for shares in Munters. The program entailed that Magnus Lindquist and Johan Ek was offered to acquire in total
6,000,000 call options (3,000,000 call options per person) at a total value of SEKm 13.8. The Chairman of the Board of Directors, Magnus Lindquist,acquired 3,000,000 call options and Johan Ek acquired 3,000,000 call options at February 20, 2019. Nordic Capital believes that the call option incentive
program contributes to creating a clear alignment of interests between these individuals and the other existing shareholders in Munters.

EMPLOYEESThe number of permanent employees at March 31, 2019 was 3,434 (3,440).

ENVIRONMENTAL IMPACT AND ENVIRONMENTAL POLICY

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

RISKS AND UNCERTAINTIESThe Group’s significant risks and uncertainties can be divided into four categories; strategic, operational, financial and regulatory risks. In these categories,
there are both risks due to political and macroeconomic trends and specific risks directly linked to the business carried out by the Group. A risk assessment
is carried out on an annual basis and the purpose is to identify and address the most important risks.
Munters’ products are used in complex customer processes. Quality and contract obligations are critical and could result in claims for damages The Groupdepends to some extent on key customers and key personnel. Considering that Munters is a company with geographically widespread operations and manysmall organizational units, there is a risk of failure to comply with relevant regulations in the business ethics area, e.g. anti-bribery rules. Financial risks
mainly consist of currency, interest and financing risks.

Munters Group AB, first quarter 2019

16

Q1
2019
Munters works actively with insurance solutions, and group-wide insurances are governed by central guidelines. This includes for example coverage forgeneral liability and product liability, property, business interruption, transportation, the liability of Board members and the CEO and employment practices
liabilities. A more detailed description of the Group’s risks and how they are managed can be found in the Annual Report 2018.

ALLOCATION OF NET SALES

The majority of customer contracts within Munters business areas AirTech and FoodTech fulfill the requirements to recognize net sales at a point in time,
however there are a number of customer contracts within these business areas that requires to recognize net sales over time, especially in the sub-segment
Data Centers within AirTech, which is reflected in the below matrix. In addition to unit/equipment sales Munters provides different kinds of services tocustomers such as installation, commissioniong, startup and maintenance. Net sales from services are recognized over time as these services are
performed. The services transferred over time in the matrix below is not equivilent to the net sales from Services mentioned on the business area pages
earlier in this interim report. This is due to the fact that part of Services net sales are recognized at a point in time, such as spare parts, in the matrix below.

Q1 2019
SEKm

Q1 2018

AirTechFoodTech

Total

AirTechFoodTech

Total

859
270
78
1,206

423
1
32
457

1,282
271
110
1,663

801
291
67
1,158

412
1
30
442

1,212
291
97
1,601

Allocation timing of revenue recognition
Goods transferred at a point in time
Goods transferred over time
Services transferred over time
Total

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Group’s derivatives, recognized at fair value in the statement of financial position, are measured according to IFRS 9 and are categorized in level 2 in
the fair value hierarchy. The derivatives amounted to SEKm 0 (2) in financial assets and to SEKm 1 (4) in financial liabilities.
The Group’s contingent earn-outs and put/call acquisition options, recognized at fair value in the statement of financial position, are measured according to
IFRS 9 and are categorized in level 3 in the fair value hierarchy. The opening balance for the period was related to the put/call option from the acquisition of
MTech Systems in 2017 and a contingent consideration related to the acquisition of Humi-Tech Services Ltd in July 2018. The change in the period relates
to a discounting effect on the put/call option and currency translations.
SEKm

2019/03/31

2018/03/31

2018/12/31

136
−
−
2
5
143

136
−
−
1
2
139

136
8
-24
2
14
137

Contingent considerations and put/call options
Opening balanceContingent consideration
Excersied put/call option
Discounting
Exchange-rate differences for the period
Closing balance

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

Munters Group AB, first quarter 2019

17

Q1
2019

IMPACT OF THE NEW ACCOUNTING STANDARD FOR LEASES, IFRS 16

As of January 1, 2019 all lease agreements are accounted for according to the requirments under IFRS 16, Leases. If previous accounting principles forleases (IAS 17) would have been applied the reported EBIT would be SEKm 1.2 lower, financial expenses SEKm 5 lower and profit after tax SEKm 2.8
higher. IFRS 16 does not have an effect on reported cash flow. Below is a specification per segment on the effect of the new standard on the balance sheet
and income statement as of March 31, 2019.

Q1 2019
SEKm
Reported amounts in the balance sheet

AirTechFoodTech

Total

Right-of-use assets
Buildings, leased
Land, leased
Plant and machinery, leased
Equipment and tools, leased
Total

83
2
104
43
232

32
0
180
13
225

117
2
284
60
463

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

152
71
223

188
32
220

342
107
449

Reported amounts in the income statement
Depreciation on right-of-use assets
Interest expense on lease liabilities

-19
-3

-8
-2

-28
-5

Impact from IFRS 16 on net debt
Net debt including IFRS 16
Net debt excluding IFRS 16
Net debt/adjusted EBITDA, LTM, including IFRS 16
Net debt/adjusted EBITDA, LTM, excluding IFRS 16

Munters Group AB, first quarter 2019

3,411
2,962
4.3
3.9

18

Q1
2019
This report has not been subject to review by the company’s auditors.

INFORMATION AND REPORTING DATESContact persons:Johan Ek, President and CEO, Phone +46 (0)70 678 24 99
Jonas Ågrup, CFO, Phone +46 (0)70 626 01 83
John Womack, IR, Phone + 46 (0)70 678 24 99
Additional information may be obtained from Munters Investor Relations at phone +46 70 678 24 99 or by e-mailing info@munters.com.
The report will be presented at a webcast/teleconference on April 24 at 09:00 CET via http://www.financialhearings.com/event/11798

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 24 April 2019.
Munters Group AB, Corp. Reg. No. 556819-2321
Financial calendar:
08 May, Annual General Meeting held at 15.00 at Kista Entré Konferens, Knarrarnäsgatan 7 in Kista, Stockholm
18 July, Interim report, second quarter 201924 October, Interim report, third quarter 2019

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, the largest being the food, pharmaceutical and data center sectors. Munters has been defining the future of air
treatment since 1955. Today, around 3,700 employees (including temps.) carry out manufacturing and sales in more than 30 countries. Munters reports
annual net sales above 7.1 billion SEK. 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.

Munters Group AB, first quarter 201919