MUNTERS Year-end report 2019 Klas Forsstrm, President and CEO - PowerPoint PPT Presentation

MUNTERS Year-end report 2019 Klas Forsström, President and CEO Annette Kumlien, GVP and CFO

Agenda Highlights Q4 2019 Q4 and January – December 2019 results Strategic direction Summary 2

2019 – Platform strengthened for the future Strategic review of Launch of Action New organizational structure Data Centers & Mist Elimination, Munters Full Potential Program with two business areas close down of factory in to improve Group earnings Dison, Belgium Outcome Good operational improvements & Significantly reduced overhead Simplified, leaner and more development in costs performance oriented Data Centers US and Mist Elim. 3

Stable demand in 2019 Americas EMEA APAC Americas: % of total order intake, 2019 43% 36% 22% • Strong order intake in Data Centers, US • Order intake in commercial segment, US, strong in fourth 2019 change in % vs. 2018 6% 6% -8% quarter Q4 2019 vs Q4 2018 15% -9% -17% • Continued low level of investments in swine farms, US, driven by overcapacity and uncertainty about the consequences from new trade tariffs and the African Swine Fever (ASF) EMEA: • Increased order intake for Services and Mist Elimination • European industrial market weakening demand Asia: • Lower demand from lithium battery industry • High demand from the poultry and layer segment • Weak swine market due to the ASF and uncertainties about effects from trade tariffs 4

2019 – Profitable growth and improved leverage * • Net sales increased in AirTech; declined in FoodTech, despite good growth in Asia Q4 2019 Net sales +5% • Adjusted EBITA margin slightly lower, on the back of a strong fourth quarter 2018, a changed product mix and temporarily higher labor costs in areas with good growth Adj. EBITA-margin 12.5% (12.8) * • Net sales growth driven by: FY 2019 Net sales +12% ‒ growth in Data Centers US, Mist Elimination and Services; offset by decrease in FoodTech Adj. EBITA-margin 12.2% (11.3) • Services grew by 8% organically; 13% of total net sales end of December • The adjusted EBITA increased 20% driven primarily by cost savings from the FPP Leverage 2.9x (3.7) program • Significantly improved cash flow from operating activities • Net loss for the year, mainly resulting from charges for FPP-program • The Board of Directors propose no dividend for 2019 *Financial numbers are actual reported numbers and not currency adjusted. 5

Moving in a new direction for Munters Phases of the FPP-program launched in February 2019: PHASE 3: GROWTH Growth in attractive seg. geographies PHASE 2: PROFITABILITY Refined strategic direction Improve performance PHASE 1: STABILITY Secure stable and profitable platform • Focus in 2019 has been to secure a stable and profitable • As of 2020, Munters strategic direction has been platform, including an analysis of the current situation: refined ‒ Incl. business mix, product development, manufacturing footprint, • Focus in 2020: securing a stable and profitable go-to-market models platform, in parallel to continuous improvements and • Strategic evaluation of Data Centers and Mist Elimination to accelerate growth 6

Solid opportunities for value creation in Data Centers US and Mist Elimination Going forward Data Centers US Mist Elimination Strong market Good market Underlying market growth in the years growth in the years growth Solid opportunities for All units within Munters to come to come growth & will continuously be value creation for evaluated to ensure Munters value creation Competitiveness of Leading technological solutions Munters business *The decision was taken in 2019 to close down the Data Center factory in Dison, Belgium. This is now reported as discontinued operations in line with IFRS 5. 7

Agenda Highlights Q4 2019 Q4 and January – December 2019 results Strategic direction Summary 8

Q4 and YE 2019 vs. Mid-term targets Mid-term Q4 2019 YE 2019 targets 1 Net sales growth Annual growth in organic net sales -1% 5% 6% starting in 2019, supplemented with add- on acquisitions. 2 Adjusted EBITA-margin 12.5% 14% 12.2% An adjusted EBITA-margin in the medium term. 3 Capital structure A ratio of net debt to adjusted EBITDA, 2.9x 1.5x-2.5xx 2.9x which may temporarily exceed this level (e.g. as a result of acquisitions.) 9

1 Net sales growth Group: Stable demand 2019 Order intake Order intake Order backlog Q4: SEKm SEKm +9% 8000 7,302 8000 • Mixed market demand in fourth quarter, order intake 6%, currency 6,698 7000 7000 effects 6% 6000 6000 5000 5000 Full year: 4000 4000 +6% • Order intake growth for the full year driven by Data Centers US, Mist +6% 2,307 3000 3000 2,170 1,845 1,735 Elimination and Services; partly offset by FoodTech 2000 2000 1000 1000 • Weaker market demand in industrials, swine market lower demand 0 0 driven by overcapacity and uncertainty about the consequences from Q4 2018 Q4 2019 2018 2019 2018 2019 new trade tariffs and ASF, weak demand in lithium battery industry in Net sales Net sales growth, LTM China SEKm +12% Net sales 8000 7,153 6,412 6% 7000 Q4: 6000 5% • Net sales growth of 5%, currency effects 6%. Strong fourth quarter 5000 4% 2018 4000 3% +5% 3000 Full year: 1,842 2% 1,757 2000 1% • Net sales growth for the full year driven by Data Centers US, Mist 1000 0% 0 Elimination and Services; partly offset by FoodTech Q2 2019 Q3 2019 Q4 2019 Q4 2018 Q4 2019 2018 2019 • Services amounted to 13% of total net sales 10

1 Net sales growth AirTech: Strong growth in 2019 Order backlog Order intake Order intake SEKm +14% SEKm Q4: 6000 8000 5,253 4,621 7000 5000 • Increased primarily driven by orders from Data Centers US and 6000 4000 a strengthening of the commercial segment 5000 3000 4000 +6% Full year: +8% 3000 2000 1,361 1,289 1,780 1,652 2000 • Strong demand in Data Centers US, Mist Elimination and 1000 1000 Services 0 0 Q4 2018 Q4 2019 2018 2019 2018 2019 Net sales Net sales Net sales growth, LTM Q4: SEKm 6000 +17% 6% • Increase mainly driven by Data Centers US and commercial 5,159 5% 5000 4,426 • Offset by lower demand in industrial segment 4% 4000 3% Full year: 3000 +9% 2% 2000 • Growth driven by Data Centers US, Mist Elimination and 1,382 1,267 1% 1000 Services 0% Q2 2019 Q3 2019 Q4 2019 0 Q4 2018 Q4 2019 2018 2019 11

1 Net sales growth FoodTech: Market decline in 2019 Order intake Order backlog Order intake Q4: SEKm SEKm -1% 2500 2500 • Good demand in the Asian broiler and layer market 2,107 2,087 2000 • In Americas demand was strong in the dairy market as well as for climate 2000 controllers 1500 1500 Overall softer demand softer in EMEA, with improved market demand in • 1000 1000 +2% +9% CIS-countries 518 526 491 452 500 500 Full year: 0 0 • The decline was primarily driven by weaker demand from the swine segment Q4 2018 Q4 2019 2018 2019 2018 2019 in China and the US, as a consequence of an overcapacity in the swine market in the US, uncertainties related to trade tariffs and ASF. Net sales Organic net sales growth Net sales SEKm +1% 2500 6% Q4: 2,032 2,018 2000 4% • Net sales declined in all regions, following lower order intake in previous three 1500 quarters. 2% • Partially offset by net sales growth in software solutions, an increase in the 1000 -6% 470 497 broiler segment in South East Asia as well as in the CIS countries. 0% 500 Q2 2019 Q3 2019 Q4 2019 Full year: -2% 0 Q4 2018 Q4 2019 2018 2019 • Net sales declined, primarily driven by a decline in China and the US following the weaker order intake. 12

2 Adjusted EBITA-margin 2019 Adjusted EBITA Adj. EBITA Adj. EBITA-margin Q4 2019 AirTech SEKm FoodTech 300 Improvement driven by: 229 16 14 13.0% 14.6% 250 225 AirTech: 14 13.4% 12 200 12 9.9% 10 • Savings from initiatives within the FPP 10 186 185 150 8 8 Improved utilization rates in Data Centers US • 6 6 100 4 and Mist Elimination 4 50 61 2 49 2 Growth in Services 0 • 0 0 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 • Strong Q4 2018 FoodTech AirTech YE 2019 AirTech FoodTech FoodTech: 1000 871 900 725 Savings from initiatives within the FPP 800 16 • 14 12.8% 13.7% 11.8% 700 14 12.4% 12 662 A changed product mix with more controllers • 600 12 10 522 500 10 sold 8 400 8 6 300 6 200 249 278 4 4 100 2 2 0 0 FY 2018 FY 2019 0 2018 2019 2018 2019 FoodTech AirTech * The income statement has been restated for 2019 and 2018 to reflect discontinued operations in line with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Discontinued operations is defined as the business within the Data Center operations in Dison, Belgium. All income statement items in this report refers to Munters continuing operations, if not otherwise stated. See more information in the Quarterly report on page 19.

2 Adjusted EBITA-margin FPP - Savings well in line with plan Full Potential Program savings 2019 end-of-year run-rate target = SEKm 210 • FTE reductions and other cost savings well in line with plan, SEKm 210 run-rate Run-rate savings • Non-recurring charges: (SEKm) • Actual YE 2019: SEKm 392 • Additional charges of SEKm 19 related to organizational changes and reviews in Q4 Actuals Planned Feb End End of Q2 End of Q3 Dec of Q1 14