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Introduction & Market Context
Munters Group AB (STO:MTRS) presented its Q1 2025 results on April 29, showing mixed performance across its business segments. Despite missing analyst forecasts with an EPS of $1.05 (versus expected $1.30) and revenue of $3.56 billion (versus expected $3.81 billion), the company’s stock surged 9.34% to 120.6 SEK. This positive market reaction appears to reflect investor confidence in Munters’ strategic direction, particularly its strong performance in the data center segment.
The quarter was marked by the announcement of a significant strategic move: an agreement to divest the FoodTech Equipment offering to Grain & Protein Technologies, owned by American Industrial Partners, with closing expected in Q2 2025. This divestment aligns with Munters’ strategy to focus on higher-margin, technology-driven offerings.
Quarterly Performance Highlights
Munters reported mixed financial results for Q1 2025, with order intake increasing by 27% (8% organic growth) while adjusted EBITA margin declined to 13.5% from 15.0% in Q1 2024. Net sales grew by 18% (5% organic growth), reaching MSEK 3,714. The book-to-bill ratio stood at 0.96, while the order backlog decreased by 10%.
As shown in the following comprehensive performance overview:
Performance varied significantly across business segments. Data Center Technologies (DCT) showed robust growth, particularly in the Americas, which accounted for 87% of DCT’s order intake. Meanwhile, AirTech faced challenges with declining order intake, especially in the battery segment, which remained weak across all regions.
The regional distribution of order intake across segments illustrates Munters’ exposure to different markets:
Detailed Financial Analysis
AirTech Segment
AirTech experienced declining order intake, particularly in EMEA, with the battery segment remaining weak across all regions. The segment’s adjusted EBITA margin declined due to reduced production utilization following lower battery and service volumes in the Americas, as well as unfavorable product and regional mix.
The following chart illustrates the decline in AirTech’s order intake:
The segment’s financial performance shows the impact of these challenges:
Despite these challenges, Munters highlighted some positive developments within AirTech, including growth in the commercial segment driven by increased supermarket demand in the Americas, and growth in Clean Technologies with a new project in EMEA.
Data Center Technologies (DCT)
DCT emerged as the standout performer in Q1 2025, with strong order intake driven by robust demand for chillers and CDUs, particularly in the Americas. The segment benefited from solid orders from both colocators and hyperscalers, with a notable rise in small to mid-sized orders with shorter lead times.
The segment’s strong profitability was supported by volume growth:
Munters emphasized the strength of DCT’s order backlog, which is scheduled for delivery throughout 2025 and 2026:
FoodTech
Following the announced divestment of its Equipment offering, Munters is repositioning FoodTech as a focused digital offering with controllers and software solutions. The segment saw increased order intake in Q1 2025, driven by strong controller demand.
The following chart shows FoodTech’s order intake growth:
Despite growth in net sales, FoodTech’s adjusted EBITA margin declined due to continued high investment levels:
Strategic Initiatives
FoodTech Divestment
A key strategic move announced during the quarter was the agreement to divest the FoodTech Equipment offering to Grain & Protein Technologies. This divestment allows Munters to focus on its digital offerings in the food production sector, connecting and optimizing the global food supply chain through controllers and software solutions.
New Product Launch: M300
Munters introduced the M300, a new benchmark in dehumidification technology that won the prestigious Red Dot Award 2025. The product offers enhanced capacity, superior energy efficiency, and advanced control and connectivity features, positioning Munters competitively in the compact dehumidifier segment.
The M300 represents an important addition to Munters’ product portfolio:
Regionalized Manufacturing Strategy
Munters highlighted its regionalized manufacturing strategy as a key strength in mitigating risks related to tariffs, trade restrictions, and supply chain pressures. The company indicated that earlier initiatives have largely addressed trade and tariff-related risks, positioning it well in the current global trade environment.
Financial Summary
The comprehensive financial summary for Q1 2025 shows the overall performance across key metrics:
Munters’ leverage ratio increased to 3.1, though the company expects improvement to 2.6 by Q2 2025. The operating working capital stood at 10.2%, and the company plans a dividend of 1.6 per share.
Forward-Looking Statements
Looking ahead, Munters expects gradual improvement in AirTech margins and sustained high-teens margins in Data Center Technology. The company continues to invest in digital capabilities and aims for 14% group growth in its Data Center segment.
CEO Klas Forsström expressed cautious optimism for the remainder of the year, emphasizing the company’s shift towards segments beyond the battery market. The company’s financial targets remain unchanged:
Munters also reaffirmed its commitment to sustainability, with climate targets validated by the Science Based Targets initiative. The company emphasized the positive impact its products will have on improving sustainability across various industries.
In conclusion, while Munters faced challenges in certain segments during Q1 2025, the strong performance in Data Center Technologies and strategic repositioning through the FoodTech Equipment divestment appear to have resonated positively with investors, as evidenced by the stock’s strong performance despite the earnings miss.
Full presentation:
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