Munters AB: Interim report, 1 January - 31 March 2002

Stockholm, SWEDEN


STOCKHOLM, Sweden, April 25, 2002 (PRIMEZONE) --


MUNTERS AB

INTERIM REPORT, 1 January - 31 March 2002
                                2002       2001     
                                Jan -Mar   Jan-Mar  Change
Order intake, SEK M             1 144      960      + 19 %
Net sales, SEK M                1 052      851      + 24 %
Operating earnings, SEK M       86         72       + 19 %
- as a percentage of net sales  8.2        8.5      -
Earnings before taxes, SEK M    81         67       + 21 %
- as a percentage of net sales  7.7        7.9      -
Earnings per share, SEK         1.97       1.62     + 22 %

-    Operating earnings increased by 19 per cent to SEK 86M
-    Acquisition of Polygon, Norway and Glacier-Cor, USA added net 
     sales of SEK 124M in the quarter
-    Strong growth within HumiCool
-    Earnings per share rose by 22 percent to SEK 1.97

MUNTERS OPERATIONS

Munters is the world leader in humidity control with products and services for dehumidification, humidification, air cooling and water damage control. Munters' business objective is to be a global applications and service oriented niche company within air treatment from a base in dehumidification and humidification. Operations are divided into three geographic regions -- Europe, the Americas and Asia. In each region, operations are subdivided into the divisions: Dehumidification, Moisture Control Services (MCS) and HumiCool. Manufacturing and sales are carried out via the Group's own companies in more than 25 countries. The Group had 2,916 employees at the quarter end.

MARKET TRENDS

A large proportion of Munters' customers are relatively 'trend- insensitive', which means that demand for the Group's products, systems and services has remained high despite the current recession. The market in Europe continued to improve, especially within the HumiCool and MCS operations. The markets in America showed continued high growth within the Dehumidification division, especially for industrial applications, and HumiCool, despite the negative economic development in general. Munters' Zeol systems, which are dependent on demand from the semiconductor industry, had a strong negative development. Demand was high in Australia and Thailand, whereas demand in Japan and South-East Asia remained low.

GROUP ORDER INTAKE, NET SALES AND EARNINGS

During the first three months, order intake increased by 19 per cent to SEK 1,144 M (960) and the backlog rose by SEK 83M to SEK 676M during the period. Net sales of the Munters Group rose by 24 per cent to SEK 1,052M (851). When adjusted for currency fluctuations, the sales increase for comparable units was 5 per cent. Distributed by region, net sales increased by 39 per cent in Europe, 10 per cent in the Americas and fell by four per cent in Asia. Consolidated operating earnings amounted to SEK 86M (72), an improvement of 19 per cent. Operating earnings were affected positively by exchange rate fluctuations, by just under SEK 4M. The operating margin, including goodwill amortisation, amounted to 8.2 per cent (8.5). For comparable units, the operating margin was 8.7 per cent. Consolidated earnings before taxes increased by 21 per cent to SEK 81M (67). Net earnings for the period improved by 22 per cent to SEK 49M (41) after an effective tax rate of just over 39 per cent (39). Earnings per share increased to SEK 1.97 (1.62). Net sales increased through organic growth within all divisions and through acquisitions within MCS and HumiCool. In addition, sales increased as a result of the launch of new products and increased value content of shipments during the quarter. The earnings improvement is due to increased net sales, a favourable product mix and implemented rationalisation, especially relating to indirect costs.

FINANCIAL POSITION

The equity ratio fell during the first quarter of the year and amounted to 42.1 per cent (42.6) on 31 March, due to acquisitions. Liquid funds were SEK 151M (98) and interest-bearing liabilities (including PRI pensions) were SEK 496M (413). During the year, the net debt increased by SEK 149M and amounted to SEK 345M at the quarter end. The financing of acquisitions represents SEK 145M of this debt. The Group has unutilised loan facilities of approximately SEK 150M.

INVESTMENTS

The Group's capital expenditure amounted to SEK 40M (31). The majority relates to investment in MCS, production and IT equipment. Depreciation amounted to SEK 36M (28) during the period, of which goodwill amortisation accounted for SEK 6M (3). During the period, a new production plant was completed in China. At the quarter end, SEK 21M of the total investment of SEK 24M had been implemented.

PERSONNEL

At the period end, the number of staff was 2,916, an increase of 337 during the quarter. Within Europe, the number increased by 310; within the Americas by 22; and within Asia by 5. The MCS product area reported the largest increase in the number of staff, up by 280, of which 236 relate to personnel in the acquired company Polygon.

REGIONS EUROPE During the quarter, order intake in Europe increased by 32 per cent to SEK 639M (485). Net sales rose by 39 per cent to SEK 605M (435). When adjusted for currency fluctuations, the sales increase was nine per cent for comparable units. Operating earnings improved by 41 per cent and amounted to SEK 47M (33). Of this, the acquisition of Polygon contributed SEK 7M, excluding goodwill amortisation. Earnings were affected positively by increased net sales within HumiCool and MCS, and positive currency effects. The Dehumidification division reported a normal start to the year for order intake, sales and operating earnings. Growth was high in Northern Europe, whereas Southern Europe reported weak growth. Growth is mainly driven by strong demand in the food industry. The MCS division enjoyed a continued positive trend. Order intake, sales and operating earnings improved compared with the corresponding period in the previous year. During the year, Munters acquired Polygon AS, which has its head office in Oslo, Norway. During the period, the company contributed net sales of SEK 110M. The HumiCool division reported increased sales and an improved operating margin. Growth remains high in cooling systems for the poultry industry and for mist eliminators. The water treatment operation reported a negative trend. AMERICAS During the quarter, order intake in the Americas rose by six per cent to SEK 400M (377). Net sales increased by 10 per cent to SEK 364M (331) during the reporting period. When adjusted for currency fluctuations and for comparable units, net sales were unchanged. Operating earnings during the period amounted to SEK 40M (32). Earnings during the quarter were influenced by a positive product mix. The Dehumidification division reported continued strong order intake, sales and earnings despite a significant weakening within the Zeol operation, which mainly sells to the semiconductor and automotive industries. Order intake for dehumidification units for industrial applications and department stores showed continued high growth. The MCS division reported a significant fall in order intake due to the mild winter and dry spring in the USA. However, industrial applications for temporary dehumidification enjoyed a continued positive trend. Thanks to a large backlog at the start of the year, net sales were maintained on par with the previous year despite the low order intake. However, operating earnings fell compared with the previous year. The HumiCool division reports an improving trend. Order intake, net sales and operating earnings improved significantly compared with the previous year. The negative trend for the American poultry industry during the previous year show signs of an upturn. During the period, Munters acquired the assets of the American competitor, Glacier-Cor, for the production of evaporative cooling components used by the poultry and power industries. Sales of components for mist eliminators also showed significant growth. ASIA Munters' operations in Asia reported a positive trend in order intake whereas net sales and earnings showed a slightly negative trend. The negative trend is mainly due to the generally low level of activity in Japan and the negative effect of moving the plant in China. Production was not operational throughout March but re-started in early April. During the quarter, order intake increased by five per cent to SEK 121M (115). Net sales fell by four per cent to SEK 96M (100). When adjusted for currency fluctuations it represented a decrease of five per cent. Operating earnings fell to SEK 9M (13). The Dehumidification division reported a fall in order intake and net sales, and reduced earnings, mainly due to problems at the start-up of the new production unit in China. The MCS division reported continued growth in order intake and earnings, whereas operating earnings developed marginally negatively. Measures have been implemented to improve profitability. These are expected to make an impact in the second quarter. The HumiCool division enjoyed a significant increase in order intake, sales and operating earnings. The HumiCool operations in Thailand and Australia, in particular, reported a strong trend. The strong development of the poultry industry in Thailand and China has a positive effect on the HumiCool operation. The ventilation sector showed a positive trend in Australia.

ACQUISITIONS DURING THE FIRST QUARTER OF 2002

In January, Munters acquired the assets, liabilities and the operations of its American competitor, Glacier-Cor. The company is one of the three largest manufacturers of components for evaporative cooling and reported sales of approximately SEK 50M in 2001. The acquisition price, USD 1.9M, does not give rise to any goodwill. Munters is already the largest company in the world in this sector and the acquisition is aimed at further strengthening Munters' HumiCool operation in the American market. Glacier-Cor's order intake for the first quarter amounted to SEK 14M and net sales were SEK 8M. During the period, Munters acquired the Norwegian company, Polygon AS which has MCS operations in Norway and Denmark. Polygon is the leading supplier of water and fire damage restoration services to the Norwegian insurance industry. Munters has owned one third of Polygon since 1986. In 2001, Polygon's net sales amounted to SEK 450M and the number of employees to 230. In addition to its own organisation, Polygon has built a network of agents in the Norwegian market. These agents have an additional 180 employees. The acquisition is aimed at making Munters the leading water and fire damage restoration company in the Nordic countries. The acquisition is based on a value of NOK 230M for Polygon. Munters has acquired the remaining two thirds of the shares. Payment for these shares will be made in two stages. 70 per cent, NOK 107.3M, was paid when the agreement was entered into and the remaining 30 per cent will be paid on the basis of Polygon's earnings development during 2002- 2004. The acquisition gives rise to goodwill and surplus values in buildings and machinery totalling SEK 105M. Polygon is included in the consolidated accounts from 1 January. In the first quarter order intake and net sales amounted to SEK 110M and operating earnings were SEK 7M.


FUTURE INFORMATION DATES
13 August 2002 - Interim Report
 January-June 2002
28 October 2002 - Interim Report
 January-September 2002
February 2003 - Year-End Report 2002
April 2003      - Annual General Meeting and
Interim Report January-March 2003

Stockholm, 25 April 2002 Munters AB (publ)


For further information, please contact:
Lennart Evrell, CEO Tel: +46 8-626 63 03 E-mail address: lennart.evrell@munters.se
Bernt Ingman, CFO Tel: +46 8-626 63 06
E-mail address: bernt.ingman@munters.se
Munters AB (publ) Box 430 SE-191 24 SOLLENTUNA Sweden
Tel: +46 8-626 63 00 Fax: +46 8-754 68 96
Website on the Internet: www.munters.com

Comments on the accounting

Applied accounting principles and methods of calculation corresponds to the latest annual report in addition to recommendations from the Swedish Financial Accounting Standards Council which became effective from 1 January 2002. The application of these has not had any material effect on the company's earnings and balance. The alternative to recount goodwill according to transitional regulations in RR 1:00 has not been used since such recount would not lead to any significant change.

The interim report has not been reviewed by the company's auditors.

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