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Investing.com -- Munters’ (ST:MTRS) shares dropped by 10% on Wednesday following the company’s release of its fourth-quarter results for 2024, which fell short of earnings expectations despite strong sales growth.
The Swedish climate solutions company reported net sales of SEK 4,364 million for the period, marking a 19% increase year-on-year and a 10% organic growth, driven primarily by strong performances in its DCT (Data Center Technology) and FoodTech segments.
However, the positive sales figures were overshadowed by a weaker-than-expected adjusted EBITA, which came in at SEK 548 million, a 17% increase compared to the same period last year, but 6% below analyst expectations.
This resulted in a slightly lower EBITA margin of 12.6%, down from 12.8% in fourth quarter of 2023 and well short of the 14.8% analysts had anticipated.
The key driver behind the earnings miss was the underperformance of Munters’ AirTech division, which posted an EBITA margin of just 9.4% — much below the consensus estimate of 12.6%.
AirTech’s margin was negatively impacted by ongoing challenges within the battery industry, where production utilization remained lower than expected.
Analysts at Jefferies noted that these headwinds within the AirTech division were a primary contributor to the company’s disappointing profit performance for the quarter.
Despite the challenges in AirTech, there were bright spots in other areas. The DCT segment, in particular, delivered a strong result, with net sales up 42% year-on-year and organic growth of 33%.
Analysts were encouraged by the 60% organic increase in base orders for DCT during the quarter, highlighting the resilience of this business line amidst broader market volatility.
FoodTech also posted solid results, with a 30% increase in net sales, driven by a 13% organic growth rate, and a remarkable 96% year-on-year increase in adjusted EBITA.
Munters’ order intake for the quarter totaled SEK 4,348 million, reflecting a 23% decline compared to the previous year, and a 29% drop on an organic basis.
This decline was largely driven by a weaker performance in the AirTech and DCT segments, though FoodTech saw an increase in orders, which contributed positively to the overall figures.
Analysts were reassured by DCT’s order intake of SEK 1,787 million, which came in 19% above expectations.
Munters has taken steps to address challenges in its AirTech division, including workforce reductions and efforts to streamline manufacturing processes.
Analysts at Jefferies remain cautious about the near-term outlook for AirTech, but the company has expressed confidence that margins will improve in the second half of 2025.