Earnings call transcript: Munters Group Q2 2025 sees growth amid challenges

Munters Group AB reported its second quarter 2025 earnings, highlighting a significant 22% growth in order intake despite facing currency headwinds and increased net debt. The company’s stock price fell by 2.14% to 128.3 in pre-market trading following the earnings announcement. According to InvestingPro data, the stock has declined 31.61% over the past six months, though analysis suggests the company is currently undervalued based on its Fair Value model. With a market cap of $2.4 billion, Munters maintains a GOOD financial health score of 2.85 out of 5. The adjusted EBITA margin decreased to 13.6% from 18.2% last year, reflecting operational challenges. Munters remains optimistic about future growth, particularly in its Data Center Technology and FoodTech segments.

Key Takeaways

• Munters achieved a 22% increase in order intake, signaling strong demand.
• Adjusted EBITA margin dropped to 13.6% from 18.2% due to currency headwinds.
• Stock price decreased by 2.14% pre-market, reflecting investor caution.
• Data Center Technology segment reported one of its strongest first halves historically.
• The company is targeting long-term growth in software and digital solutions.

Company Performance

Munters Group AB demonstrated robust performance in the second quarter of 2025, with a notable 22% growth in order intake. The company’s organic growth was 12%, but it faced a 10% currency headwind that impacted overall financial performance. The Data Center Technology segment reported one of its strongest first halves in history, driven by energy-efficient innovations. However, the adjusted EBITA margin fell to 13.6% from 18.2% the previous year, highlighting operational challenges.

Financial Highlights

• Order Intake: Increased by 22%
• Organic Growth: 12%
• Adjusted EBITA Margin: 13.6% (down from 18.2% last year)
• Operating Working Capital to Net Sales: Improved to 9.1%
• Net Debt: Increased due to lease liabilities and acquisitions
• Leverage: 2.8x (up from 2.0x last year)

Market Reaction

Following the earnings release, Munters’ stock price fell by 2.14% in pre-market trading, reaching 128.3. This decline reflects investor concerns over the decreased EBITA margin and increased net debt. Trading at a P/E ratio of 24.77 and a P/B ratio of 4.36, analysts maintain an optimistic outlook with an average 18% upside potential from current levels. InvestingPro’s comprehensive research report provides detailed valuation analysis and growth projections for informed investment decisions.

Outlook & Guidance

Munters remains optimistic about future growth, particularly in the Data Center Technology and FoodTech segments. The company plans to focus on software and digital solutions, aiming for long-term growth. With a five-year revenue CAGR of 17% and analysts forecasting continued profitability, Munters demonstrates strong fundamentals despite near-term challenges. Discover more detailed growth metrics and industry analysis with InvestingPro’s exclusive research tools. It expects gradual margin improvements in the AirTech segment and is confident in the Data Center market’s potential for 2026.

Executive Commentary

Klaus Vostrom, CEO of Munters, expressed confidence in the company’s strategic direction, stating, "We are positioned for the next phase of sustainable and profitable growth." He highlighted the strong order intake in the FoodTech segment as a key driver of future performance, noting, "We have reset it. A very strong order intake and the best order intake in history."

Risks and Challenges

• Currency Headwinds: A 10% negative impact on financial performance.
• Increased Net Debt: Resulting from lease liabilities and acquisitions.
• Margin Pressure: The decline in adjusted EBITA margin to 13.6%.
• Market Volatility: Stock close to its 52-week low, reflecting cautious investor sentiment.
• Competition: Need to maintain competitive advantage in energy-efficient solutions.

Q&A

During the earnings call, analysts focused on the stabilization of the battery market and the positive outlook for the Data Center segment. Questions also addressed the impact of Amazon’s liquid cooling technology, which Munters does not see as direct competition.

Full transcript - Munters Group AB (MTRS) Q2 2025:

Lina Devann, Head of Investor Relations, Mundtash: Warm welcome to today’s presentation of Mundtash Q2 results 2025. My name is Lina Devann, and I’m Head of Investor Relations, joined here by our CEO, Klaus Vostrom and our CFO, Katarina Fischer. So we will, as always, start with a presentation from Klaus and Katarina, and then we will open up for Q and As at the end. If you are listening to the webcast, I will remind you that you can ask questions throughout the presentation, and we will address them

Katarina Fischer, CFO, Mundtash: at the end. So Claus, please go ahead.

Klaus Vostrom, CEO, Mundtash: Thank you, Lina, and good morning. Let me open up with some opening remarks and a few words about a quarter that has passed, a solid quarter, really showing our capabilities. And I feel that we delivered growth across all business areas, generating order intake growth of 22% and an overall robust margin of 13.6 Both Data Center Technology and FoodTech delivers on all aspects, and AirTech takes a step forward as planned. Extra pleasing to see that is that our latest M and As are delivering growth and profit really from day one. FoodTech has now repositioned their portfolio from an equipment driven company to a 100% software and control and IoT driven entity, a portfolio shift that I feel is quite unique.

The data center market is strong, and I enter the 2025 with a strong comfort in our offering and having market that also show robust strength. The quarter also showed continued delivery on our operating working capital, now clearly down below the target of 10%. So if that was the very high level, let us move into the details then. As I said, solid growth and a robust margin. Increased order intake, steady net sales growth and the robust profitability.

And to go into some more details here, 22% growth order intake with a 10% headwind in currency. Organically, 12% and structurally, the new M and A is really showing strong growth. Airtech, organic growth, very positive sign and a positive development in APAC when it came to order intake. DCT continued to increase, one of the strongest first half years, I would say. Strong demand in Americas.

FoodTech, as I said, overall strong overall performance. The order backlog decreased from 13%. Please remind yourself on here, we also have a currency effect. Book to bill, slightly above 1% this quarter. Coming into sales then, 11%, whereof 10% is organic and a headwind of currency here that is also about 10%.

AdTech declined, lower sales in the battery market, but I would like to say that the battery market now has started to really reach the bottom. DCT increased very much so and the execution of backlog in Americas continued. FoodTech grew driven by controllers. Moving over to the robust profitability. I mean in a fairly complex global environment, I’m very pleased to see that we delivered a margin of 13.6%.

Solid volume growth driving margin in DCT, production efficiency, product mix and lean improvements, pretty much the same story as we now have established quarter by quarter. AdTech, lower volumes as well as product and regional mix, but the cost saving measurements are progressing as planned then. And coming back to FoodTech, then healthy contribution from all the aspects, although impacted by product mix and investments. And as I mentioned and you all are aware, this was done in a currency headwind. If I take a look upon the regions, the very short summary that is strong in DCT, strong in FoodTech and unchanged in AirTech.

But a little bit more detail, regional and end market dividends then. And if you take a look into Americas, I mean, now represented some 60% of our total order intake EMEA, 26% and APAC then around 15 This story is very much as in the past. There are some uncertainties in Air Tech in Americas, but there are also pockets of growth that we see is picking up. DCT continued strong underlying market. Schiller’s is really starting to gain traction.

FoodTech, a strong market. The avian bird flu is now controlled in the marketplace. The pickup will come time after time over the coming months and quarters. Moving to EMEA, continued mixed sentiment across the but I mean nothing that has become worse on the contrary pretty much as in the past. DCT, there is an active chiller market, but I reiterate that the market in Europe is definitely slower than in Americas.

And FoodTech then, a positive market outlook, very much driven by regulations and push for better practices. APAC, AirTech, here we saw improvements in China when it came to battery. And we also saw some growth in the Southeast Asian and Indian markets. We are not large in DCT when it comes to Asia, but we can see that when we now slowly start to enter, the market is definitely strong. And when it comes to FoodTech, China is a market that is mature and there is high competitiveness in the market, but we make good strides into that market.

AgTech then, as I said, stable quarter with organic growth, very pleasing to see. And if I go down to the different subsegments then and highlight a few then, I said several times that I expected that battery would be in between 10% to 20% of the total Air Tech order intake and it was this quarter at 11%. I also have indicated and I still have that view that it could be quarters ahead of us where it will pick up to be perhaps about 25%. But our outlook that is now the battery has reached the bottom and then continued, I’m cautiously pessimistic that I don’t see a pickup, but in reality no real change. Long term, I definitely I am more optimistic.

Also to mention here, you can see Clean Technology and Service and Composite components are definitely showing that the market has underlying growth traction here. Worth to mention when it comes to components, it is a steady strong underlying growth, but it has been a mix change there. So in the past, we had more desiccant wheel, I. E. Than agtech or battery and dehumidification type of components.

Now it is more pads than wet pads, more data center driven, just so you are aware of that. And all in all, I mean, I will come into the details, but a book to bill pretty much on one then. Battery, and I will not go through all those details, but if I sort of summarize it in the bottom left corner, there is, from now until 02/1930, a continued strong belief that the market will grow in a CAGR in between 10% to 15%, picking up more in the coming years, but now being slow. In the regions, there are differences. I don’t see any differences compared to when we talked last quarter, but it is competitiveness in APAC, but signs of a recovery.

It is pockets of activities in EMEA and Americas, especially in labs and smaller projects, and this is really our sweet spot when it comes to that. At the end, I would sort of summarize it that this is a market where the fittest will survive. I can see clear signs in definite Americas and to some extent in EMEA that weaker competitors are now being moved out from the market and leaving the market as such. This you have seen and I have a couple of comments on this. One pattern that is clear, that is you can see that there is a somewhat a seasonal effect in between a little bit lower in Q3 due to the different, call it, buying patterns and Europe being closed.

So that is one, call it, sign. Another sign that is take a look once again on what I call then the blue and below. We have a very stable and strong, call it, base market outside battery. And when I look upon this, I see a continuous steady uptick, not quarter by quarter, but the general trend. So I go in then and saying we have a stable base market and then we will balance the battery on top of that then.

Worth highlighting, I will come back to CT. I mean, CT, I see more and more activities happening in that type of market. Pleasing to see that we have delivered what we put ahead of us to deliver, a gradual improvement of the margins step by step. And also pleasing to see that is, as I talked about, the net sales that is slightly organic. And then when it comes to or order intake, I should say.

And when it comes to net sales, yes, it is a decline, but I mean very soon that is compensated and reached the average of order intake. The adjusted EBITA margin declined, but pretty much on what we expected. And as you can see there on the dots on the bars, it has started now to turn around when it comes to margins. Margins. And our view forward is very much a continued step by step improvements on the margins moving forward.

Super important, super happy. We have now a state of the art factory manufacturing flagship inaugurated in the Boston region, Amesbury. Why is that so important? First of all, it’s a modern facility, up to date when it comes to smart manufacturing, how we use electrification, how we use solar panels, etcetera, really a green factory. You can say it generates, as we’ve talked about, some short term hurdles because we have had and we will have a little bit into the second part also some dual production with other factories before we have closed them fully.

But it generates a fantastic opportunity for the future, being in America, delivering and selling and producing for America. I talked about key in technology. I talked about innovation. And I think this is something that excites me very much. We talk about DAC, direct air capturing of carbon dioxide.

Here, we have one in U. S, a first project of hopefully several more to come. It is our products, the components that we deliver. And by using those components, the total capturing of carbon dioxide is 500,000 tons, the equivalent of 110,000 petrol powered passenger vehicles. And why do I talk about this then?

If I take a look upon this customer, not only this installation, but this customer, what the potential could be? The potential if they implement it in all their facilities, it could be a SEK 7,000,000,000 potential. Of course, that will not come immediately, but I think it sends the clear signal. Manters and Airtech have many different growth vehicles to come. If I would add then other facilities or other companies across the globe, I mean, then we are closer to a potential of €10,000,000,000 than €5,000,000,000 So very exciting for the future.

I think a first strong proof point that even in today’s America, we can generate wins in the green area. Moving in then to data center, the short one that is order intake increased. It has been one of the best first half years in our history. Yes, order backlog decreased. Some of it is, of course, driven by currency.

I continue to reiterate that I’m very comfortable with us moving forward into 2026, and I will talk more about that. And as you can see, it’s also pleasing when it comes to product mix that what we have said we should develop, what we have acquired, that is also the type of products that are growing in demand. Data center really delivered on all different cylinders. I mean strong net sales, one of the best order intakes for the first half year, substantially above last year, drop through to the bottom line, then I can also say I’m impressed at how they handle capital then. All in all, when it comes to the sales the increase there, it is the backlog, strong execution in Americas.

Really good to see that the demand for chillers through EIOCLIMA has really started to pay off from day one. The adjusted EBITA margin came out about 20% and that makes me very comfortable in saying that we will be in this high teens moving forward. Then with that said, we continue to invest. There are some challenges across the globe. But all in all, I go into the next quarter with a lot of comfort.

This slide you have seen, and I think you used it, it indicates when are the more the larger orders to be delivered. We have added one at the bottom here. That is a $47,000,000 chiller order to be delivered during 2026. And the rest of the backlog and don’t take this as an exact number, but a backlog that you cannot see here, about 50% so far is then for 2026. And that’s the reason why I feel so comfortable that we will go into 2026 with a strong backlog fill moving forward.

I already talked about chillers then. You may remember, the day or very soon after we announced that we acquired Yoklima, we also announced that we will put up an expanded manufacturing facility in Virginia, call it a smaller twin to what we have then, directed into chiller manufacturing. And now we have started to do that. It is set to start to deliver in the second parts of the first quarter twenty twenty six. And what we will produce there is very much some of the chillers that you can see here.

Here, we talk about really high performing chillers. When I listen around in the market environment, when I hear feedback from customer, up to 20% more energy efficient than any competitors in the marketplace. That gives me comfort that we are in the premium segment when it comes to chillers as well. Going to FoodTech. Before I start to talk about what they deliver, I would like to reiterate what a tremendous execution by our team doing a portfolio shift.

Being a company that is driven by old fashioned type of equipment, now being fully digitalized and software driven. Many talks about doing this shift. Pia and her team has really delivered on that. So we have reset it. A very strong order intake and the best order intake in history for this type of segments.

Controllers and software, book to bill 1.45. The ARR increased 11%. If we would adjust it for currency, because the large majority of this is in U. S. Dollars, it would be 18%.

So that gives me the comfort to say we will continue to deliver not quarter by quarter, but in the long run what we have done in the past, 20% to 40% on average then on CAGR over the years. Also very pleasing here to see, in the same way as Euclima started to deliver growth from day one, also our controllers, especially Hotraco, their latest addition, from day one generating growth and generating profitability. Of course, a lower profitability than software, but still above the average of mounters. You can talk about, I mean, organic growth and you can talk about what a new M and A drives when it comes into a company. What is interesting here, both in DCT and in FoodTech, it is our strength in Mantors, the receiving end that supports the newcomer, the new family members in driving order intake.

They could not have done this by themselves. So a fantastic new family member coming into Manters then. The two legs, controllers and software. Here I have two examples of the progress that we are doing here. One is from China, a major egg producer in China.

We talk about controllers. A contract signed for the future is 100% delivered controllers installed within active connectivity, I. Completely connected for the future. Now those are not combined, but I think it gives you the two orders that I talked about here, but I think it gives you an example how well this connectivity, capturing data, use in software. Also super happy to see that during the quarter, signed a contract with one of the world’s largest leading egg producers with MTech then.

And this is also, call it, a breakthrough in that area. So I reiterate it. In the last five years, FoodTech have evolved from a traditional ventilation equipment business into a global leader in optimizing the food supply chain with digital solutions. With that, let’s dig in a little bit more to the numbers, Katharina.

Katarina Fischer, CFO, Mundtash: Yes. Thank you, Klaus. So I would like to start by saying that I am very pleased with the strategic acquisitions we made across business areas last year. They have really further strengthened our market positions. The integration is going swiftly, and we already now see clear synergies contributing both to growth and to operational momentum.

In the second quarter, the strategic acquisition had a significant impact, so they added 21% to the order intake and 10% to the net sales. And this was also complemented by solid organic growth that complemented then 12% to order intake and 10% to net sales. However, then we also had the negative currency impact of minus 10%. The adjusted EBITA margin remained robust at 13.6%, albeit lower exceptionally strong margin that we had last year of 18.2%. Data center continued to develop a very solid profitability.

And then also FoodTech delivered a very healthy margin despite ongoing investments. And I think this really demonstrates resilience and operational discipline in FoodTech. The Altek margin improved sequentially, so it improved versus Q1 margin, although the margin in this quarter then was, of course, lower And this was mainly driven by the lower volume in Americas and also an unfavorable mix impact from regional and product mix. And here, there was an impact from the competitive market in APAC.

Moving then to a major achievement in the quarter is the operating working capital to net sales. So here, we have improved our ratio down to 9.1%, which is now below our target range of 13% to 10%. And this is really a result of a strong focus that we have and really diligent execution by all our employees across the organization. Our net debt increased, and this was then due to the higher lease liabilities, especially the new Amesbury factory that Klaus talked about, but also due to the recent acquisitions then that have been financed through debt. Looking at the margin then, it is a robust margin, although it was a very tough comparison, of course, compared to last year.

We had volume growth, especially in Data Center and FoodTech, whereas we had lower volumes in AirTech than in Americas. Very pleasing to see that we continue to have positive net price increases in data center. However, then what we did see was this negative product and regional mix. So for Airtek, there was a negative regional mix and that is due to a shift towards more Asia Pacific sales than in prior year. And for FoodTech, it was about the product mix, where we had more a higher share of the controller sales in the quarter compared to prior year.

And this is due to the acquisition of the Hautrako company. From an operational excellence aspect then, the under absorption in Airtek weighed on the margin, while the factory utilization in data center was very strong, so that provided some offset. Another offset was the continued strong lean improvements across all the business areas. And then as discussed in prior quarters, we continue to invest in our strategic initiatives to scale the business really for the future. So there are many examples within FoodTech and also in data center for this, how we continue to invest in digitalization and automation and so on and also in our global footprint.

And then finally, as Klaus also mentioned, we also had a negative currency impact in the quarter. Yes, looking at cash flow then. If we look at the bigger picture here on the year to date movements, You can see that the operating cash flow was lower than in prior year, and this was then mainly due to the lower earnings and also a less favorable impact from the changes in working capital. And that effect was really strong in last year. As I want to point out, it’s not it’s still a healthy level that we have, but last year was extremely strong.

From a business area perspective, Data Center continued to deliver very strong cash flow positive cash flow, whereas ATEC had a negative cash flow impacted by the battery market and then also the under absorption. The cash flow from investments, the SEK 1,300,000,000.0 here is, of course, a significant number. And the increase here compared to last year is driven by our acquisition of the remaining shares in MTECH and is also a result of the increased investments in Amesbury and Cork. It’s also important to note here that we had the proceeds from the divestment of equipment also, but that is reported under discontinued operations. This slide is only showing the continuing operations.

Yes, so of course, we continue to have a very high focus on cash management. That is always very important, and I’m very pleased to see the progress we are making with operational efficiency and also the capital discipline across the business. If we look at investments, so our capital allocation strategy remains highly focused. And of course, we direct investments towards those areas that drive growth and value for the future. In the second quarter, the CapEx to net sales was 5.5%, and that was then a little bit lower than in prior quarters.

But I would like to say that going forward, we will maintain a somewhat higher level of CapEx in the near future. And looking at the rolling 12, we are at the 7.9% of net sales, as you can see in the graph. And this further points to this, that we remain very committed to our strategic priorities and we will continue to invest in those areas that will further strengthen our competitive position and drive the long term growth. And one good example was when Klaus talked about the expansion in the Virginia factory, where we will then be able to support the chiller production in The U. S.

And also have a test lab that will support the fast growing DCT market in Americas. Looking at leverage. The leverage at the end of the second quarter was 2.8. So that is a higher level than last year when it was two point zero. And as I commented earlier, this is then due to the increased lease liabilities for the new factories, but also the acquisitions made in the 2024 and also in the beginning of this year.

And while we do not have any fixed leverage target, we have an ambition to be in a range of 1.5x to 2.5x. And while we are now a little bit above, we are not concerned about that because we know the reasons for us being there is due to these very important strategic investments that are really building us for the future. I would also like to mention that we, during the quarter, have taken many steps towards a diversification of our funding base and really strengthened that. So we have refinanced our sustainability linked loans. We have also issued commercial paper.

And we have established a medium term note program for the Swedish market. So I think this is a very important strategic step for us and for us also to have it linked and backed by the green bond framework is very important. Yes. And then if we move into service, this is, of course, a very important area for us and every business area has this as a very important priority to continue to scale this and grow our installed base. And you know that we define this as the aftermarket service in all regions, and then we also add the Software as a Service in FoodTech, the ARR.

And then we also measure components closely. And the components are what Klaus talked about earlier. It’s the dehumidification rotors and also the evaporative pads. So all of this, we measure closely, and we have an ambition for the group to for those two combined, service and components, to be above onethree of group net sales. And in the quarter, the number was 25%.

And if you look at the rolling 12, it was 24%. And this then represents an organic growth for Service of four percent and for Components of 5%. So we remain focused on driving this further. So for Attic, of course, really growing the global installed base, making the continuous improvements, having more AI enabled controls, enhanced connectivity and also, of course, making sure our products are much more energy efficient. And we are also improving our system, where we increased the monitoring capabilities, the remote support and also make sure that it all runs much smoother.

So the whole thing is, of course, to make sure we have higher reliability and create more value for our customers. Turning then to sustainability. So here, I’m very pleased to report that we are making very good step towards our strategic agenda in sustainability. So I talked a little bit about the MTN program that was established. The size of the framework is SEK 5,000,000,000.

And then in the June, we issued our first bond, and those are then green bonds. And that framework is aligned with the IKMA green bond principles. So we issued SEK 1,000,000,000, and it was a three year bond of SEK 200,000,000 and a five year bond of SEK 800,000,000. So this really supports us going forward, and we will also then direct the capital towards more sustainable investment, which is very much in line with our strategy, of course, to make Mantors a very sustainable company for the future. So the green framework will enable how we finance things, but then, of course, what really makes the difference is how we operate in our facilities.

So one very good example during the quarter is our FoodTech Innerbrum entity in Brazil. They are the first ones to be zero CO2 emissions. So they have a very high share of solar panel energy, and then they complement that with renewable energy. So I think that is a very good example where that entity has had a good planning, long term strategy to really improve their and reduce their energy consumption. Then we have also been engaged in other industry conversations, so to say.

So we participated in the International Energy Agency Annual Conference, and that focused on industrial decarbonization and also scaling the global energy efficiency. But rather than me talking about this, I would like to hand it over to Klaus, who attended the comments conference for a few comments.

Klaus Vostrom, CEO, Mundtash: Thank you, Katharina. And what is this all about then? If I divide it into two different areas, one area that is to drive the green transition. And when inventors, you can say, we do it in our operations, as Katharina talked about, we do it with our offer. A typical example is the carbon capture that I talked about, that is green solutions.

Beside that, earlier everyone talked about productivity. Productivity and energy efficiency is pretty much the same type of process. It is about bringing forward products that are more energy efficient. Remember what I said about our chillers? 25% more energy efficient than the majority of our competitors.

By doing this, both work with the green energy and work with energy efficiency across the globe, then we really participate in making a better world for the planet, so to speak. So that’s the reason why I signed on behalf of Manters the commitment letter to doubling the global energy efficiency progress during this decade, and that is through our products and how we operate. Good. Let us move then to something else here, I think. Let’s see.

To the summary, you see, here it comes. And if I sum this up then and start to talk about our financial targets. On the numbers, that is what took place during the quarter. And on the graph, that is what has taken place then as you can see on these separate time periods. But in the quarter, 21% growth, 13.6% adjusted EBITA and 9.1% operating working capital through net sales.

So 2% above and 1% very, very close. I’m very pleased that we have this in this more unpredictable environment. And for me, it shows that we have targeted the right areas to grow and we have executed in the right way within the company. So moving forward, I think that if we continue step by step to deliver more and more efficiency, more and more growth, I mean, in the long run, we will definitely be able to hit the home run on all three targets as such. But if I go more into the quarterly highlights then, very pleased with the continued good momentum in the quarter across all different areas.

Solid execution from DCT and FoodTech from top line all the way down to bottom line. Really good to see that volume and margin enhancing actions are underway in AirTech and they deliver what we said they should deliver. And then at the end, I mean, it is not each and every quarter, it is about the quarters that builds up years and builds up the future. So we are really positioned for the next phase of sustainable and profitable growth moving forward. Thank you.

So with that, I think we move over to Q and A. And welcome back, Lina.

Lina Devann, Head of Investor Relations, Mundtash: Thank you. Absolutely. We are ready for Q and A. And I will ask those of you calling into the telephone conference to please limit yourself to two questions so we have time to hear from all of you. And you’re welcome to join the queue again, of course.

So I will hand over to the telephone conference.

Conference Operator: The next question comes from Adela Dashian from Jefferies.

Adela Dashian, Analyst, Jefferies: Two questions from me then. The first one on the battery market outlook. Charles, I think you mentioned here that you believe that the weakness in the battery market has somewhat bottomed out. But could you please elaborate on what specific indicators that support that view and whether you’re already seeing signs of a recovery in customer sentiment?

Klaus Vostrom, CEO, Mundtash: But thank you, Adele, for that question. And that is, first of all, I mean, we can see that there is still a weak market, but I don’t see a declining market and a few further declining market and a few, call it, proof points on that then. One that is clearly seen, that is it started to pick up in Asia. Let’s see for the future or China, let’s see for the future if this is a more temporal uptick, but it’s definitely not going in the opposite direction then. And when it comes to EMEA and Asia, it’s Americas, it’s very pleasing to see that what I call then labs and what I call smaller projects, they are still there and we are very much in our sweet spot.

I mean here, customers would like to team up with a company like Mantis that has a strong support function and application knowledge. On the other side then, that is medium sized projects. We continue to see a hesitation to call it put on the green button, so to speak, and say yes, we go for it. But what makes me very pleased that is, I know that we are definitely, if not front runners or the finalists in quite a few of those. So when that comes eventually, I mean, then we will have a good chance.

So you can say, if I balance it out, more activities in Asia and not less activities in the two other markets.

Adela Dashian, Analyst, Jefferies: Great. That’s good color. And then on the data center market, if I may, it would be great to hear your views on the recent developments here, especially with Amazon launching a proprietary liquid cooling solution. Could you I mean, I’m appreciative of the fact that you don’t get specific customer exposures, but could you mention whether Amazon is a customer to Mentors and how you view this shift to the new competitive set?

Klaus Vostrom, CEO, Mundtash: Now if I elaborate then, without saying that Amazon is a customer, the majority of the hyperscalers we have installments with. But as you know also, the larger wins that we’ve done the last couple of years that have been towards what we call co locators, but then of course co locators provide then what they build to many hyperscalers. So my general comment on this, first of all, it is it shows that we are in a very attractive market. Many are working with different type of technologies. Secondly, this is not in competition with us, if I may say so.

Our, call it, solutions, are in and you know what I mean when I say step two, step three and step four, this is closer to step one. And with that said, it’s also so that similar solutions has been on the market. So I don’t like to look upon this as a, call it, a fantastic innovation with all due respect. So in summary, this is not worrying me. I think that everything that happens in the marketplace that drives energy efficiency, that makes our products connect easier into whoever works closer to the ship, so to speak, that is great for everyone.

Lina Devann, Head of Investor Relations, Mundtash: Could add more Yes, towards

Klaus Vostrom, CEO, Mundtash: perhaps also, yes. I should also say thank you, Lina. I mean this is more to the retrofit than really what we are into. That is not retrofitting, if I call it, installations, that is to upgrade it to the latest and best type of forward looking solutions, but it’s a great addition. Thank you, Lina.

Adela Dashian, Analyst, Jefferies: Thank you both. But can I just clarify the comment that you made about some of the colocation orders also going to hyperscalers? Would it be fair to say that a potential customer like Amazon could also be fulfilling orders within the colocation space then?

Klaus Vostrom, CEO, Mundtash: The simple answer is yes. So colocators, they are building call it, they are handling two type One, that is someone that they are building for on behalf of them and they hand over a data center to a specific customer. If I generalize a large customer, quite often hyperscalers. And then other type of customers, that is that they operate them on their own or hand it over to someone that operates with many different customers within the same location.

And I think we’ve talked about hyperscalers and co locators earlier. And then I have alluded to about 50% of the historical co location end customers have come from what we call hyperscalers.

Adela Dashian, Analyst, Jefferies: Perfect. Thanks a lot.

Lina Devann, Head of Investor Relations, Mundtash: Thank you. We’ll take another call from the telephone conference.

Conference Operator: The next question comes from Gustav Bernablade from Nordea. Please go ahead.

Gustav Bernablade, Analyst, Nordea: Good morning. It’s Gustav Birnablat from Nordea. I thought maybe just to build on the DCT here and sort of the larger order you have within cycle that you deliver on here. It looks to be finalized here in Q3. But would you say that roughly onethree of that order is still left?

And also, if you can comment sort of on your comments regarding the positive pricing in the market as well.

Klaus Vostrom, CEO, Mundtash: Thank you, Gustav. I cannot say exactly if it’s one third or if it’s 20%, but let’s say in the ballpark of that then. And I think the most important thing that is we are now very, very close to have delivered everything of the larger cycle orders. So that is what we have referred to I have referred to earlier as a slight mix change then moving forward then. So that is the summary on that large order then.

And then when it comes to price, if I generalize, I mean, we have been on average in matters across, we have delivered a price effect of about 3% during the last quarter. I think that is the normal I always used to refer to when it comes to pricing and when it comes to productivity, you should compensate the inflation in two ways. You should compensate inflation with pricing, I. The 3% and then you should drive efficiency with at least as much then. So the pricing effect, if I analyze on monitors, is lower.

We peaked at about 7%, 8% a couple of years ago. And when it comes to data center, it is in some cases, we have a good price effect and in other cases, of course, we compete also on price. But on average, we are not selling on price. That is the best I can give you, Gustaf.

Gustav Bernablade, Analyst, Nordea: Yes, perfect. That’s very clear. And sorry, my last one here Regarding your comments on AVM bird flu that you expect sort of increased demand in the coming months and quarters, you say. Can you just elaborate a little bit on that statement?

Klaus Vostrom, CEO, Mundtash: Yes. And maybe I should clarify and maybe it was interpret. It is not that it will be a fast pickup, but it is controlled, contained in North America and that historically means that in a few months or quarters, then it will start to pick up. It is always a cleaning process, etcetera, but always after an outbreak of any type of flus. I mean, then you have also more of a push into the market and upgrades and retrofits and new builds.

But don’t expect it to be, I mean, next month then it will start to pick up.

Gustav Bernablade, Analyst, Nordea: Okay, that’s very clear. Thank you very much and have a nice summer.

Lina Devann, Head of Investor Relations, Mundtash: Thank you. We can take another caller from the telephone conference.

Conference Operator: The next question comes from Anders Rosland from Pareto. Please go ahead.

Anders Rosland, Analyst, Pareto: Yes. Good morning. I have two questions. One regarding AdTech. The order intake for the battery segment was down this year in the Q2, meaning that you had some growth in the other segments excluding the battery.

Could you elaborate how much down was the battery segment and how much up was everything else in the airtight business?

Klaus Vostrom, CEO, Mundtash: The order intake when it comes to battery represented 11% of the total order intake in Airtek then. And then, of course, that is in current run rate of currency, to speak. So you can say that as an example, what Katharina said that is when it comes to service and component, that was growing on and about 5%. So in simple terms, I don’t have sorry to call it disappointing, Anders, I don’t have the exact numbers, but you can say that it is around 5% if I sort of balance it out in the rest. But here we can come back to the, call it, more exact accurate number then.

And this all goes back to what we have talked about. If you take a look outside battery, I see a stable two picking up market, showing that our strength is also very much outside battery. And the highlights is that was to some extent components and service, but it was also what we referred to as commercials this quarter.

Anders Rosland, Analyst, Pareto: Okay. And my final second question is regarding data center. The SEK 1,400,000,000.0 was definitely better than expected, but it’s still below sales. And you have a run rate now on the sales level of SEK 1,500,000,000.0, indicating some SEK 6,000,000,000 for the full year. To grow the business in data center for 2026 and 2027, you need to have an order increase of above €1,500,000,000 and we haven’t seen that for a couple of years now.

We have to go back to 23,000,000,000 and we had one quarter fourth quarter with 1,800,000,000.0 So when will we see a little bit bigger order intake increases? Do you need larger orders? Or could you go up sort of gradually? Or how should we expect the order flow in Mantras to see growth coming 2026, 2027?

Klaus Vostrom, CEO, Mundtash: But it’s a fair question, Anders. And as you know, we tend not to say, I mean, this is exactly But if I elaborate on it, I give you two perspectives. First of all, I mean, I see a very, very strong, call it, interest and super pleasing to see that our recently acquired chillers, they are making a strong progress. So here I have high hopes or beliefs moving forward that, that will continue to grow.

And beside that also, the market is has an underlying growth. I’ve said a couple of times that if I use the word I’m not concerned or I’m not worried, I’m very confident that we in I don’t say next quarter, but in the coming quarters, have a book to bill that is definitely above one. And at current, we are starting to fill up, as I said earlier, one large order and about 50% of what we have then in the rest of the orders are already booked for 2026. So I’m not worried, but it’s a relevant question.

Anders Rosland, Analyst, Pareto: Okay. That was my two questions.

Klaus Vostrom, CEO, Mundtash: Thank you.

Lina Devann, Head of Investor Relations, Mundtash: Thank you, Anders. We will take another caller from the telephone conference.

Conference Operator: The next question comes from Karl Bochvist from ABG Sundal Collier.

Karl Bochvist, Analyst, ABG Sundal Collier: Thank you. Good morning. The first one on my end would be that if we look at the order intake in Airtek without batteries, it seems like in million SEAT that the order intake is now down to the kind of lower levels that we saw mid-twenty twenty four because during the last couple of quarters otherwise, we’ve been talking about an improving order trend for the remaining air tech, so to say. So I’m just curious here. Of course, currency is one thing, but are there other aspects that have kind of put a hold to the improving air take activity that you have been talking about, which also with three to six months extension was the aspect that should support a return to higher sales growth as well?

Klaus Vostrom, CEO, Mundtash: Thank you for the question. I mean exactly as you said, I mean we have in a substantial, call it, currency effect on and about 10% then across all the different sectors. If I look on it, yes, it is slightly below than last quarter. But really, when I look on the fill rates and moving forward, I see the same type of trend, because it is the number of, call it, systems, the number of components, etcetera, that is filling the factories. It is not the value per se then.

So it’s a continued strong underlying market in this. With that, I think and this goes outside also matters. In the general industrial sector, I would say, there is somewhat of a hesitation then related to the different, call it, tariffs on and off type of discussions. But I see still a very, very strong activity in the non battery sector then. And two clear evidence of that in this quarter or three, I would say, that is the components where it’s a shift towards more pads.

The second one is what we refer to commercials, and that is very much then driven in India. And the third one, that is also clean technology, where I highlighted one quite interesting product solutions.

Karl Bochvist, Analyst, ABG Sundal Collier: Understood. And then the follow-up question is also on ERTEC regarding the margin here that we’re going from around 5% at the start of the year to 7.5% roughly now in Q2. You inaugurated the new facility during Q2. And we understand the guidance you provided for like how we should think about the second half. But given that the factory is now least inaugurated, will we see a clear improvement already in Q3?

Or will it be more towards the end of 2025?

Klaus Vostrom, CEO, Mundtash: If I talk about the factory, two things to mention there. What will move into the factory later in the year, that is what I refer to as the process part, I. E, that is the desiccant wheels, media production, etcetera. So that is still to be moved in during the second part of the year. And then beside that, the majority has now either moved in or is in the up starting phase to move in.

You will not see a dramatic uptick in that from that part in this quarter, but you will see a gradual uptick as we talked about. By end of this year, I mean, everything will be moved. We are not running to operations in parallel, so to speak. So I go back to what I referred to earlier. I expect a gradual then improvements in AirTech for the remainder of the year.

Karl Bochvist, Analyst, ABG Sundal Collier: Understood. Thank you.

Lina Devann, Head of Investor Relations, Mundtash: Thank you. Another caller from the telephone conference.

Conference Operator: The next question comes from Mats Lis from Kepler. Please go ahead.

Mats Lis, Analyst, Kepler: Yes. Hi, thank you. Two questions. First, coming back to data center there. And as you probably talk about this cycle orders, which is on its final delivery phase.

And given it’s a long project related order, should we expect the profitability to be on the high side now when all the sort of safety related guarantees, etcetera, are phased out? Or is it sort of a normal contribution to data center EBIT in this quarter?

Klaus Vostrom, CEO, Mundtash: I mean, it is we have not had any, call it, negatives or positives in any type of provisions or call it miscalculations of the project, if you say like that then ups or downs. So what we have delivered that is what we get at the bottom line, so to speak, if I summarize it like that. What you can see that is, I reiterate that I feel that we will be moving forward not each and every quarter, but in the high teens and some quarters slightly above and some quarters slightly below then and high teens you can say that refers to about 19%. So I remain as call it forward looking as forward. We have established that, but I don’t foresee that we will be in the 2021 area moving forward.

And I think I’ve been very clear on that at least for more than half a year.

Lina Devann, Head of Investor Relations, Mundtash: Last Yes. Short question,

Mats Lis, Analyst, Kepler: And on FoodTech there, I mean order intake was pretty strong, I think. And could you say something about the margin mix there in the orders compared to what you deliver sales wise?

Klaus Vostrom, CEO, Mundtash: The order here, I mean, we both received substantial orders on the software side and on the controller side. The controllers do have slightly lower profitability compared to the software, but they have still above than what we have in Manters as an average. What is important to know when it comes to maximizing the software profitability for this year. We are sort of, call it, aiming for the future. But all in all, a little bit lower in controllers and a little bit higher in software.

But what we know that is if we will not invest in software, I mean, for future, we can deliver in the range of 30% on the software business.

Mats Lis, Analyst, Kepler: Okay, great. Thanks.

Lina Devann, Head of Investor Relations, Mundtash: Good. Thank you. We have run out of time. So I know we do have a few more questions that we have not had time to address, but we will reach out individually to you. So I would like to thank everyone for listening in.

Thank you to Klaus and Katarina for And feel free to reach out to us at Investor Relations if you have any further questions. I wish you a very lovely summer.

Klaus Vostrom, CEO, Mundtash: Take care. Thank you very much.

Katarina Fischer, CFO, Mundtash: Thank you.

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