Earnings call transcript: Munters Q2 2025 shows strong order intake and innovation

Munters Group AB, a leader in energy-efficient air treatment and climate solutions and a prominent player in the Building Products industry according to InvestingPro, reported its Q2 2025 earnings, showcasing significant growth in order intake and net sales. Despite a dip in EBITDA margin, the company demonstrated robust performance driven by strategic acquisitions and innovation in its product lines. Trading at $11.85, analysis from InvestingPro suggests the stock is currently undervalued, with analysts setting price targets between $14.13 and $20.93. The stock price saw a slight decline of 0.35% following the release.

Key Takeaways

• Order intake increased by 22%, with a notable 12% organic growth.
• Adjusted EBITDA margin decreased to 13.6% from 18.2% the previous year.
• Net sales grew by 11%, supported by a 10% organic increase.
• Munters launched a new factory in Amesbury, enhancing its Data Center Technologies segment.
• The company is investing heavily in digital solutions and global expansion.

Company Performance

Munters reported a strong quarter with significant improvements in order intake and net sales. The company has focused on expanding its product offerings, particularly in Data Center Technologies and FoodTech, which has contributed to its growth. The strategic shift towards software and IoT-driven solutions in FoodTech has positioned Munters as a market leader in digital solutions. However, the decline in EBITDA margin indicates challenges in managing operational costs or pricing pressures.

Financial Highlights

• Revenue: Increased by 11% compared to the same quarter last year.
• Adjusted EBITDA margin: Fell to 13.6% from 18.2% year-over-year.
• Net debt: Increased to a leverage ratio of 2.8 times, up from 2.0 times last year.

Outlook & Guidance

Munters remains optimistic about its future growth, particularly in the Data Center Technologies sector, where demand is strong. The company expects gradual margin improvements in its AirTech division and continues to invest in strategic initiatives aimed at long-term growth in software and service segments. With an overall financial health score of "GOOD" from InvestingPro, and analysts maintaining a strong buy consensus, the company’s outlook appears promising. EPS forecasts for upcoming quarters and years suggest steady growth, with analysts projecting EPS of $0.53 for FY2025.

Executive Commentary

CEO Klas Forsström expressed confidence in the company’s growth trajectory, stating, "We are positioned for the next phase of sustainable and profitable growth." He highlighted the success of recent mergers and acquisitions, noting, "Our latest M&As are delivering growth and profit from day one." Forsström also emphasized the company’s ambitious goals, saying, "We are closer to a potential of $10 billion than $5 billion."

Risks and Challenges

• Declining EBITDA margin suggests potential cost management issues.
• Increased net debt could impact financial flexibility.
• Market competition in energy-efficient solutions remains intense.
• Economic fluctuations could affect demand in key markets.
• Regulatory changes in the FoodTech sector could pose challenges.

Munters’ Q2 2025 earnings call highlighted a mix of strong growth and challenges, with the company focusing on innovation and strategic expansion to drive future success.

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

Line Dovärn, Head of Investor Relations, Munters: Warm welcome to today’s presentation of Munters Q2 results 2025. My name is Line Dovärn and I’m Head of Investor Relations joined here by our CEO Klas Forsström and our CFO Katharina Fischer. We will as always start with a presentation from Klas and Katharina and then we will open up for Q&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 at the end. Klas, please go ahead.

Klas Forsström, CEO, Munters: Thank you, Lina, and good morning. Let me open up with some opening remarks and a few words about a.

Klas Forsström, CEO, Munters: Quarter that has passed.

Klas Forsström, CEO, Munters: A solid quarter really showing our capabilities, and I feel that we deliver growth.

Klas Forsström, CEO, Munters: Across all business areas, generate an order intake growth of 22% and an overall robust margin of 13.6%.

Klas Forsström, CEO, Munters: Both Data Center Technologies and FoodTech delivers.

Klas Forsström, CEO, Munters: On all aspects, and AirTech takes a step forward as planned. Extra pleasing to see that is that our latest M&As are delivering growth and profit, really, really from day one.

Klas Forsström, CEO, Munters: FoodTech has now repositioned their portfolio from an equipment driven company to a 100%.

Klas Forsström, CEO, Munters: Software and control and IoT driven entity. A portfolio shift that I feel is quite unique.

Klas Forsström, CEO, Munters: The data center market is strong, and I enter the second half of 2025 with a strong comfort in our offering.

Klas Forsström, CEO, Munters: Having a market that also shows robust strength.

Klas Forsström, CEO, Munters: The quarter also showed continued delivery on.

Klas Forsström, CEO, Munters: Our operating working capital now clearly down below the target of 10%.

Klas Forsström, CEO, Munters: If that was the very high.

Klas Forsström, CEO, Munters: Level, let us move into the details then.

Klas Forsström, CEO, Munters: As I said, solid growth and a robust margin, increased order intake, steady net sales growth, and robust profitability. To go into some more details here, 22% growth order intake with a.

Klas Forsström, CEO, Munters: 10% headwind in currency, organically 12%, and structurally the new MAS really showing strong growth.

Klas Forsström, CEO, Munters: AirTech organic growth, very positive sign and a positive development in APAC.

Klas Forsström, CEO, Munters: When it came to order intake, Data Center Technologies.

Klas Forsström, CEO, Munters: Continued to increase, one of the strongest.

Klas Forsström, CEO, Munters: First half years, I would say.

Klas Forsström, CEO, Munters: Strong demand in Americas FoodTech. As I said, overall strong overall performance. The order backlog decreased on 13%. Please remind yourself on here.

Klas Forsström, CEO, Munters: We also have a currency effect, book to bill slightly above 1 this quarter.

Klas Forsström, CEO, Munters: Coming into sales, then 11% whereof.

Klas Forsström, CEO, Munters: 10% is organic and a currency headwind here that is also about 10%.

Klas Forsström, CEO, Munters: AirTech declined lower sales in the battery market, but I would like to say that the battery market now has.

Klas Forsström, CEO, Munters: Started to really reach the bottom. Data Center Technologies increased very much so, and the execution on backlog in America has continued.

Klas Forsström, CEO, Munters: 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 deliver a margin of 13.6% solid volume growth driving margin in Data Center Technologies production efficiency.

Klas Forsström, CEO, Munters: Product mix and lean improvements.

Klas Forsström, CEO, Munters: Pretty much the same story as we.

Klas Forsström, CEO, Munters: Now have established quarter by quarter ad.

Klas Forsström, CEO, Munters: Tech lower volumes as well as product and regional mix. The cost saving measurements are progressing as planned, then coming back to.

Klas Forsström, CEO, Munters: FoodTech then healthy contribution from all the aspects, although impacted by product mix and investments.

Klas Forsström, CEO, Munters: As I mentioned, you all.

Klas Forsström, CEO, Munters: Are aware this was done in a currency headwind.

Klas Forsström, CEO, Munters: If I take a look upon the regions, the very short summary is that it’s strong in Data Center Technologies, strong in FoodTech.

Klas Forsström, CEO, Munters: Unchanged in AirTech but a little.

Klas Forsström, CEO, Munters: Bit more detail regional and end market.

Klas Forsström, CEO, Munters: Digital, and if you take a look.

Klas Forsström, CEO, Munters: Into America now represent some 60% of our total order intake, EMEA 26%.

Klas Forsström, CEO, Munters: APAC then around 15.

Klas Forsström, CEO, Munters: This story is very much as in the past. There are some uncertainties in AirTech in Americas, but there are also pockets of growth.

Klas Forsström, CEO, Munters: That we see is picking up.

Klas Forsström, CEO, Munters: Technologies continued strong underlying market.

Klas Forsström, CEO, Munters: Geoclima is really starting to gain traction.

Klas Forsström, CEO, Munters: FoodTech a strong market. The avian bird flu is now controlled in the marketplace.

Klas Forsström, CEO, Munters: The pickup will come time after time over the coming months and quarters, moving.

Klas Forsström, CEO, Munters: To EMEA continued mixed sentiment across the.

Klas Forsström, CEO, Munters: I mean nothing that has become worse on the country, pretty much as in the past.

Klas Forsström, CEO, Munters: DCT, there is an active chiller market, but I reiterate that the market in.

Klas Forsström, CEO, Munters: Europe is definitely slower than in Americas.

Klas Forsström, CEO, Munters: FoodTech then a positive market outlook, very much driven by regulations and.

Klas Forsström, CEO, Munters: Push for better practices.

Klas Forsström, CEO, Munters: APAC AirTech, here we saw improvements in China when it came to battery, and we also saw some growth in the.

Klas Forsström, CEO, Munters: Southeast Asian and Indian markets.

Klas Forsström, CEO, Munters: We are not large in Data Center Technologies when.

Klas Forsström, CEO, Munters: It comes to Asia, we can.

Klas Forsström, CEO, Munters: See that when we now slowly start.

Klas Forsström, CEO, Munters: To enter the market is definitely strong.

Klas Forsström, CEO, Munters: When it comes to FoodTech, China is a market that is mature and there is high competitiveness in the market.

Klas Forsström, CEO, Munters: We make good strides into that market.

Klas Forsström, CEO, Munters: AirTech then as I said stable.

Klas Forsström, CEO, Munters: Quarter with organic growth, very pleasing to see.

Klas Forsström, CEO, Munters: If I go down to the different sub segments and highlight a few, I said several times that I expected that battery would be in between 10% to 20% of the total AirTech 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.

Klas Forsström, CEO, Munters: Pick up to be perhaps about 25%.

Klas Forsström, CEO, Munters: Our outlook is that now the battery has reached the bottom and then continued. I’m cautiously pessimistic that I don’t see.

Klas Forsström, CEO, Munters: A pickup, but in reality, no real change long term. I definitely am.

Klas Forsström, CEO, Munters: More optimistic also to mention here, you can see clean technology and service and components are definitely showing that the market.

Klas Forsström, CEO, Munters: Has the underlying growth traction here worth?

Klas Forsström, CEO, Munters: To mention, when it comes to components, it is a steady, strong underlying growth, but there has been a mix change there. In the past, we had more desiccant wheel in AirTech or battery and dehumidification type of components.

Klas Forsström, CEO, Munters: Now it is more pads than wet pads, more data center driven, just so you are aware of that.

Klas Forsström, CEO, Munters: All in all, I mean I will come into the details, but I.

Klas Forsström, CEO, Munters: Book to build pretty much on one then.

Klas Forsström, CEO, Munters: 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 2030 a continued strong belief that the.

Klas Forsström, CEO, Munters: Market will grow in a CAGR in between 10% to 15%, picking up more.

Klas Forsström, CEO, Munters: 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.

Klas Forsström, CEO, Munters: That weaker competitors are now being moved out of the market and leaving the market as such.

Klas Forsström, CEO, Munters: This you’ve seen and I have a couple of comments on this. One pattern that is clear is you can see that there is somewhat a seasonal effect in between, a little bit lower in Q3 due to the different, call it, buying patterns and Europe being closed. That is one, call it, sign. Another sign is take a look once again on what I call then the blue, and below we have a.

Klas Forsström, CEO, Munters: Very stable and strong, call it base market outside battery.

Klas Forsström, CEO, Munters: When I look upon this, I see a continuous steady uptick, not quarter.

Klas Forsström, CEO, Munters: By quarter, the general trend.

Klas Forsström, CEO, Munters: I go in then and saying we have a stable base market.

Klas Forsström, CEO, Munters: We will balance the battery on top of that.

Klas Forsström, CEO, Munters: Worth highlighting. I will come back to DCT.

Klas Forsström, CEO, Munters: I mean, Citi, I see more and more activities happening in that type of.

Klas Forsström, CEO, Munters: 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, as I talked about, the net sales that is slightly organic. When it comes to order.

Klas Forsström, CEO, Munters: Intake, I should say, and when it.

Klas Forsström, CEO, Munters: comes to net sales, yes it is.

Klas Forsström, CEO, Munters: A decline, but I mean very soon that is compensated and reach the average of order intake.

Klas Forsström, CEO, Munters: The adjusted EBITDA margin declined, pretty.

Klas Forsström, CEO, Munters: Much on what we expected.

Klas Forsström, CEO, Munters: As you can see there on the dots on the bars, it has.

Klas Forsström, CEO, Munters: Started now to turn around when it comes to margins.

Klas Forsström, CEO, Munters: Our view forward is very much.

Klas Forsström, CEO, Munters: A continued step-by-step improvements on the margins moving forward.

Klas Forsström, CEO, Munters: Super important, super happy. We have now a state-of-the-art.

Klas Forsström, CEO, Munters: Factory manufacturing flagship inaugurated in the Amesbury, Boston region.

Klas Forsström, CEO, Munters: 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, etc. 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.

Klas Forsström, CEO, Munters: Production with other factories before we have closed them fully, it generates a fantastic opportunity for the future.

Klas Forsström, CEO, Munters: Being in America, delivering and selling and producing for America. I talked about clean 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 the U.S., a first project of hopefully several more to come. It is our products, the components that we deliver. By using those components, the total capturing of carbon dioxide is 500,000 tons, the equivalent of 110,000 petrol-powered passenger vehicles. 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 billion potential.

Klas Forsström, CEO, Munters: Of course, that will not come immediately.

Klas Forsström, CEO, Munters: I think it sends the clear signal. Munters and AirTech have many different growth vehicles to come.

Klas Forsström, CEO, Munters: If I would add then other facilities or other companies across the globe.

Klas Forsström, CEO, Munters: We are closer to.

Klas Forsström, CEO, Munters: A potential of $10 billion than $5 billion.

Klas Forsström, CEO, Munters: Very exciting for the future. I think a first strong proof point that even in today’s America we can.

Klas Forsström, CEO, Munters: Generate wins in the green area.

Klas Forsström, CEO, Munters: Moving in then to Data Center. The short one is that 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. As you can see, it’s also pleasing when it comes to product mix that what we have said we should develop.

Klas Forsström, CEO, Munters: What we have acquired, that is also the type of products that are growing in demand.

Klas Forsström, CEO, Munters: Data Center Technologies 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. I can also say I’m impressed.

Klas Forsström, CEO, Munters: At how they handle capital.

Klas Forsström, CEO, Munters: All in all, when it comes to the sales and increase there, it is the backlog. Strong execution in Americas. Really good to see that the demand for chillers through Geoclima has really started to pay off. From day one, the adjusted EBITDA margin came out about 20%, and that makes me very comfortable in saying that we will be in this high teens moving forward. With that said, we will continue to invest. There are some challenges across the globe, but all in all, I go into.

Klas Forsström, CEO, Munters: The next quarter with a lot of comfort.

Klas Forsström, CEO, Munters: 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 million chiller order to be delivered during 2026 and the rest of the back. Don’t take this as an exact number but a backlog that you cannot see here.

Klas Forsström, CEO, Munters: About 50% so far is then for 2026. That’s the reason why I feel.

Klas Forsström, CEO, Munters: We will go into.

Klas Forsström, CEO, Munters: 2026 with a strong backlog fill moving forward.

Klas Forsström, CEO, Munters: I already talked about chillers. You may remember the day or very soon after we announced that we acquired Geoclima. We also announced that we will put.

Klas Forsström, CEO, Munters: Up an expanded manufacturing facility in Virginia.

Klas Forsström, CEO, Munters: Call it a smaller twin to what.

Klas Forsström, CEO, Munters: We have then directed into chiller manufacturing.

Klas Forsström, CEO, Munters: We have started to do that. It is set to start to deliver in the second part of the first quarter 2026, and what we will produce there is very much some of.

Klas Forsström, CEO, Munters: The chillers that you can see here.

Klas Forsström, CEO, Munters: Here we talk about really high performing chillers. When I listen around in the market environment, when I hear feedback from customers, up to 20% more energy efficient than any.

Klas Forsström, CEO, Munters: Competitors in the marketplace.

Klas Forsström, CEO, Munters: That gives me comfort that we are.

Klas Forsström, CEO, Munters: In the premium segment when it comes to chillers as well.

Klas Forsström, CEO, Munters: Going to FoodTech, before I start to talk about what they deliver, I would like to reiterate what a tremendous execution.

Klas Forsström, CEO, Munters: By our team doing a portfolio shift.

Klas Forsström, CEO, Munters: Being a company that is driven by old-fashioned type of equipment, now being fully digitalized and software driven, many talk about doing this shift.

Klas Forsström, CEO, Munters: Pia and her team have really delivered on that.

Klas Forsström, CEO, Munters: We have reset it.

Klas Forsström, CEO, Munters: A very strong order intake, the best order intake in history for this type of segments.

Klas Forsström, CEO, Munters: 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 US dollars, it would be 18%. That gives me the comfort of saying we will continue to deliver not quarter by quarter, but in the long run what we have done in the.

Klas Forsström, CEO, Munters: Past 20 to 40% on average on CAGR over the years.

Klas Forsström, CEO, Munters: Also very pleasing here to see in the same way as you.

Klas Forsström, CEO, Munters: Geoclima started to deliver growth from day one. Also our controllers, especially Hotraco, the latest addition, from day one generating growth and generating profitability.

Klas Forsström, CEO, Munters: Of course, a lower profitability than software.

Klas Forsström, CEO, Munters: Still about the average of Munters.

Klas Forsström, CEO, Munters: You can talk about, I mean, organic growth and you can talk about what.

Klas Forsström, CEO, Munters: A new M&A drives when it comes into a company.

Klas Forsström, CEO, Munters: What is interesting here, both in Data Center Technologies and in FoodTech, it is our strength in Munters, the receiving end that supports the newcomer.

Klas Forsström, CEO, Munters: The new family members in driving order intake. They could not have done this by themselves. A fantastic new family member coming in to man.

Klas Forsström, CEO, Munters: The two legs, controllers and software, here. I have two examples of the progress.

Klas Forsström, CEO, Munters: That we are doing here.

Klas Forsström, CEO, Munters: One is from China, a major egg producer in China. We talk about controllers, a contract signed for the future. It is 100% delivered, controllers installed within.

Klas Forsström, CEO, Munters: Active connectivity.

Klas Forsström, CEO, Munters: Completely connected for the future. Now those are not combined, but I think it gives you the two orders that I talk about here. I think it gives you an example how well this connectivity capturing data use in software. Also, super happy to see that we during the quarter signed a contract with one of the world’s largest leading egg.

Klas Forsström, CEO, Munters: Producers with FoodTech then.

Klas Forsström, CEO, Munters: This is also, call it a.

Klas Forsström, CEO, Munters: Breakthrough in that area. I reiterate it.

Klas Forsström, CEO, Munters: In the last five years FoodTech have evolved from a traditional ventilation equipment business into a global leader in optimizing the.

Klas Forsström, CEO, Munters: Food supply chain with digital solutions.

Klas Forsström, CEO, Munters: With that, let’s dig in a little bit more to the numbers.

Klas Forsström, CEO, Munters: Katerina.

Yes, thank you, Klas. 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 acquisitions had a significant impact. They added 21% to the order intake and 10% to the net sales. This was also complemented by solid organic growth that contributed then 12% to order intake and 10% to net sales. However, we also had the negative currency impact of -10%. The adjusted EBITDA margin remained robust at 13.6%, albeit lower than the exceptionally strong margin that we had last year of 18.2%.

Data Center Technologies continued to develop a very solid profitability and FoodTech delivered a very healthy margin despite ongoing investments. I think this really demonstrates resilience and operational discipline. In FoodTech, the AirTech margin improved sequentially, so it improved versus Q1 margin, although the margin in this quarter was of course lower than prior year. This was mainly driven by the lower volume in Americas and also an unfavorable mix impact from regional and product mix. There was an impact from the competitive market in APAC. Moving to a major achievement in the quarter, the operating working capital to net sales ratio improved down to 9.1%, which is now below our target range of 13% to 10%. 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 due to the higher lease liabilities, especially the new Amesbury factory that Klas talked about, but also due to the recent acquisitions that have been financed through debt. Looking at the margin, it is a robust margin, although it was a very tough comparison. Compared to last year we had volume growth especially in Data Center Technologies and FoodTech, whereas we had lower volumes in AirTech than in Americas. It is very pleasing to see that we continue to have positive net price increases in Data Center Technologies. However, what we did see was this negative product and regional mix. For AirTech there was a negative regional mix and that is due to a shift towards more Asia-Pacific sales than in prior year.

For FoodTech, it was about the product mix where we had a higher share of the controller sales in the quarter compared to prior year. This is due to the acquisition of the Hotraco company from an operational excellence aspect. The under absorption in AirTech weighed on the margin, while the factory utilization in Data Center was very strong. That provided some offset. Another offset was the continued strong lean improvements across all the business areas. As discussed in prior quarters, we continue to invest in our strategic initiatives to scale the business for the future. There are many examples within FoodTech and also in Data Center for this, how we continue to invest in digitalization and automation and also in our global footprint. Finally, as Klas also mentioned, we also had a negative currency impact in the quarter.

Looking at cash flow, 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. This was mainly due to the lower earnings and also a less favorable impact from the changes in working capital. That effect was really strong last year. I want to point out 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 positive cash flow, whereas AirTech had a negative cash flow impacted by the battery market and also the under absorption. The cash flow from investments, the $1.3 billion here, is of course a significant number.

The increase here compared to last year is driven by our acquisition of the remaining shares in EmTech 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, but that is reported under discontinued operations. This slide is only showing the continuing operations. 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, our capital allocation strategy remains highly focused, and 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.

I would like to say that going forward we will maintain a somewhat higher level of CapEx in the near future. Looking at the rolling 12, we are at 7.9% of net sales as you can see in the graph. 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. One good example was when Klas 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 Data Center Technologies market in Americas. Looking at leverage, the leverage at the end of the second quarter was 2.8. That is a higher level than last year when it was 2.0.

As I commented earlier, this is then due to the increased lease liabilities for the new factories, but also the acquisitions made in 2H 2024 and also in the beginning of this year. While we do not have any fixed leverage target, we have an ambition to be in a range of 1.5 to 2.5x. 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 strengthening. 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.

I think this is a very important strategic step for us. For us also to have it linked and backed by the Green Bond framework is very important. If we move into service, this is of course a very important area for us. Every business area has this as a very important priority to continue to scale this and grow our installed base. You know that we define this as the aftermarket service in all regions. We also add the software as a service service in FoodTech, the ARR. We also measure components closely and the components are what Klas talked about earlier, it’s the dehumidification rotors and also the evaporative pads. All of this we measure closely and we have an ambition for the group, for those two combined service and components to be above one third of group net sales.

In the quarter the number was 25% and if you look at the rolling 12, it was 24%. This then represents an organic growth for service of 4% and for components of 5%. We remain focused on driving this further. For AirTech, 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. We are also improving our system where we increase the monitoring capabilities, the remote support, and also make sure that it all runs much smoother. The whole thing is of course to make sure we have higher reliability and create more value for our customers. Turning then to sustainability. Here I’m very pleased to report that we are making very good steps towards our strategic agenda in sustainability.

I talked a little bit about the MTN program that was established. The size of the framework is SEK 5 billion. In the beginning of June we issued our first bond and those are then green bonds. That framework is aligned with the ICMA green bond principles. We issued SEK 1 billion and it was a three-year bond of SEK 200 million and a five-year bond of SEK 800 million. This really supports us going forward. We will also then direct the capital towards more sustainable investment, which is very much in line with our strategy of course to make Munters a very sustainable company for the future. The green framework will enable how we finance things. What really makes the difference is how we operate in our facilities. One very good example during the quarter is our FoodTech Innebram entity in Brazil.

They are the first ones to be zero CO2 emissions. They have a very high share of solar panel energy and then they complement that with renewable energy. 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. We have also been engaged in other industry conversations, so to say. We participated in the International Energy Agency annual conference and that focused on industrial decarbonization and also scaling the global energy efficiency. Rather than me talking about this, I would like to hand it over to Klas who attended the conference for a few comments.

Klas Forsström, CEO, Munters: Thank you, Katharina. What is this all about then? If I divide it into two different areas, one area is to drive the green transition. In Munters, you can say we do it in our operations, as Katharina talked about, and we do it with our offer.

Klas Forsström, CEO, Munters: A typical example is the carbon capture that I talked about, that is green solutions.

Klas Forsström, CEO, Munters: Beside that, earlier everyone talked about productivity. Productivity and energy efficiency is pretty much.

Klas Forsström, CEO, Munters: The same type of process.

Klas Forsström, CEO, Munters: It is about bringing forward products that.

Klas Forsström, CEO, Munters: Are more energy efficient.

Klas Forsström, CEO, Munters: 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.

Klas Forsström, CEO, Munters: We really participate in making a better world for the planet, so to speak.

Klas Forsström, CEO, Munters: That’s the reason why I sign.

Klas Forsström, CEO, Munters: On behalf of Munters, the commitment letter to doubling the global energy efficiency progress during this decade is through our products and how we operate.

Klas Forsström, CEO, Munters: Good. Let us move to something else here, I think. Let’s see to the summary. You see, here it comes. If I sum this up then and start to talk about our financial.

Klas Forsström, CEO, Munters: Targets.

Klas Forsström, CEO, Munters: On the numbers, that is what took place during the quarter and on.

Klas Forsström, CEO, Munters: The graphs, that is what has taken place, as you can see on these separate time periods.

Klas Forsström, CEO, Munters: In the quarter, 21% growth, 13.6%.

Klas Forsström, CEO, Munters: Adjusted EBITDA and 9.1% operating working capital through net sales.

Klas Forsström, CEO, Munters: Two above and one very, very close. I’m very pleased that we have this in this more unpredictable environment. For me, it shows that we have targeted the right areas to grow and we have executed in the right.

Klas Forsström, CEO, Munters: Way within the company.

Klas Forsström, CEO, Munters: 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.

Klas Forsström, CEO, Munters: The home run on all three targets, as such.

Klas Forsström, CEO, Munters: If I go more into the quarterly highlights, very pleased with a continued good momentum in the quarter across all different areas. Solid execution from Data Center Technologies 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.

Klas Forsström, CEO, Munters: They deliver what we said they should deliver. At the end, I mean.

Klas Forsström, CEO, Munters: It is not each and every quarter.

Klas Forsström, CEO, Munters: It is about the quarters that build up years and build up the future. We are really positioned for the next phase of sustainable and profitable growth moving forward. Thank you.

Klas Forsström, CEO, Munters: With that, I think we move over to Q and A and welcome back, Line Dovärn.

Line Dovärn, Head of Investor Relations, Munters: Thank you. Absolutely. We are ready for Q and A. 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. You’re welcome to join the queue again, of course. I will hand over to the telephone conference.

Conference Operator: Thank you. If you wish to ask a question, please dial on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Adela Dashian from Jefferies. Please go ahead.

Thank you and good morning. Two questions for me then. The first one on the battery market outlook. Klas, I think you mentioned here that you believe that the weakness in the battery market has somewhat bottomed out. Could you please elaborate on what specific indicators support that view and whether you’re already seeing signs of a recovery in customer sentiment.

Klas Forsström, CEO, Munters: Thank you, Adele, for that question. First of all, I mean, we can see that there is still a weak market, but I don’t see a declining market. If you call it proof points on that, then one that is clearly seen 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.

Klas Forsström, CEO, Munters: It is definitely not going in the opposite direction then.

Klas Forsström, CEO, Munters: When it comes to EMEA and Asia Americas, it’s very pleasing to see that what I call the labs and.

Klas Forsström, CEO, Munters: What I call smaller projects, they are.

Klas Forsström, CEO, Munters: Still there, and we are very much.

Klas Forsström, CEO, Munters: In our sweet spot. I mean here customers would like to team up with a company like Munters that has a strong support function and application knowledge.

Klas Forsström, CEO, Munters: On the other side, that is medium sized projects, we continue to see a hesitation to, call it, put on the green bottom, so to speak, and say yes, we go for it. What makes me very pleased is that I know that we are definitely, if not front runners, the finalists in.

Klas Forsström, CEO, Munters: Quite a few of those.

Klas Forsström, CEO, Munters: When that comes, eventually, I mean.

Klas Forsström, CEO, Munters: We will have a good chance.

Klas Forsström, CEO, Munters: You can say if I balance it out, more activities in Asia.

Klas Forsström, CEO, Munters: Not less activities in the two other markets.

Great, that’s good color. On the data center market, it would be great to hear your views on the recent developments here, especially with Amazon launching a proprietary liquid cooling solution. I’m appreciative of the fact that you don’t get specific customer exposures, but could you mention whether Amazon is a customer to Munters and how you view this shift to the new competitive depth.

Klas Forsström, CEO, Munters: Now if I elaborate, then without saying that Amazon is a customer, the majority.

Klas Forsström, CEO, Munters: Of the hyperscalers we have installments with.

Klas Forsström, CEO, Munters: As you know, also the larger wins that we’ve done the last couple of years have been towards what we call colocators, but then of course.

Klas Forsström, CEO, Munters: Co-locators provide then what they build to many hyperscalers.

Klas Forsström, CEO, Munters: My general comment on this, first of all, it shows that we are.

Klas Forsström, CEO, Munters: In a very attractive market, many are working with different type of technologies.

Klas Forsström, CEO, Munters: Secondly, this is not in competition with.

Klas Forsström, CEO, Munters: If I may say so, our quality solutions, they are in, and you know what I mean when I say step two, step three, and step four. This is closer to a step one.

Klas Forsström, CEO, Munters: It is also so that similar solutions have been on the market.

Klas Forsström, CEO, Munters: I don’t look upon this.

Klas Forsström, CEO, Munters: I call it a fantastic innovation with all due respect. 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.

Klas Forsström, CEO, Munters: That is great for everyone.

Line Dovärn, Head of Investor Relations, Munters: You could add more towards the retrofit.

Klas Forsström, CEO, Munters: Yes, perhaps also. Yes, I should also say thank you, Lina. I mean this is more to the retrofit and really what we are into.

Klas Forsström, CEO, Munters: That is not retrofitting if I call it old installations, that is to upgrade it to the latest and best type of things. Forward looking solutions. It’s a great addition. Thank you, Lina.

Thank you both. 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?

Klas Forsström, CEO, Munters: The simple answer is yes. Colocate caters, they are building, call it, they are handling two types of end customers. One is someone that they are building for on behalf of them and.

Klas Forsström, CEO, Munters: They hand over a data center to a specific customer.

Klas Forsström, CEO, Munters: If I generalize, a large customer quite.

Klas Forsström, CEO, Munters: Often hyperscalers and then other type of.

Klas Forsström, CEO, Munters: Customers, that is, that they operate them on their own or hand it over to someone that operates with many different.

Klas Forsström, CEO, Munters: Customers within the same location.

Klas Forsström, CEO, Munters: I think we talked about hyperscalers and co-locators earlier, and I have alluded to about 50% of the historical colocation end customers have come from.

Klas Forsström, CEO, Munters: What we call hyperscalers.

Perfect. Thanks a lot.

Line Dovärn, Head of Investor Relations, Munters: Thank you. We’ll take another call from the telephone conference.

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

Yes, good morning, it’s Gustav here 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. Would you say that roughly one third of that order is.

Klas Forsström, CEO, Munters: Is still left?

If you can comment on your comments regarding the positive pricing in the market as well.

Thank you, Gustav. I cannot say exactly if it’s 1/3 or if it’s 20%, but let’s say.

Klas Forsström, CEO, Munters: In the ballpark of that, then I think the most important thing that.

Klas Forsström, CEO, Munters: We are now very, very close.

Klas Forsström, CEO, Munters: To have delivered everything of the larger cycle orders. That is what we have referred to, I have referred to earlier as a slight mix change, then moving forward. That is the summary on that large order then.

Klas Forsström, CEO, Munters: When it comes to price, if I generalize, I mean we have been on average in months across.

Klas Forsström, CEO, Munters: Have delivered a price effect of about.

Klas Forsström, CEO, Munters: 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.

Klas Forsström, CEO, Munters: Inflation in two ways.

Klas Forsström, CEO, Munters: You should compensate the inflation with pricing, that is the 3%, and then you.

Klas Forsström, CEO, Munters: Should drive efficiency with at least as much then.

Klas Forsström, CEO, Munters: The pricing effect, if I analyze on Munters, is lower. We peaked at about 7-8% a couple of years ago. When it comes to Data Center Technologies, 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.

Klas Forsström, CEO, Munters: That is the best I can give you, Gustav.

Yeah, perfect. That’s very clear. Sorry, my last one here regarding your comments on avian bird flu and 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?

Klas Forsström, CEO, Munters: Maybe I should clarify. Maybe it was interpret. It is not that it will be a fast pickup, but it is controlled, contained in North America. That historically means that in a few months or quarters it will.

Klas Forsström, CEO, Munters: Start to pick up.

Klas Forsström, CEO, Munters: It is always a cleaning process, etc.

Klas Forsström, CEO, Munters: cetera, but always after an outbreak of any type of loose.

Klas Forsström, CEO, Munters: You have also more.

Klas Forsström, CEO, Munters: Of a push into the market, and upgrades and retrofits and new builds.

Klas Forsström, CEO, Munters: Don’t expect it to be, I.

Klas Forsström, CEO, Munters: Mean next month, then it will start to pick up.

Yeah, okay, that’s very clear. Thank you very much and have a nice summer.

Line Dovärn, Head of Investor Relations, Munters: Thank you. We can take another caller from the telephone conference.

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

Yes, good morning. I have two questions. One regarding AirTech. The order intake for the battery segment possibly down this year in Q2, 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 AirTech business?

Klas Forsström, CEO, Munters: The order intake when it comes to battery represented 11% of the total order.

Klas Forsström, CEO, Munters: Intake in AirTech then.

Klas Forsström, CEO, Munters: Of course, that is in.

Klas Forsström, CEO, Munters: Current run rate of currency, so to speak.

Klas Forsström, CEO, Munters: You can say that as an example what Katharina said, that is when it comes to service and components that was growing on and about 5%. 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.

Klas Forsström, CEO, Munters: 5% if I sort of balance it out in the rest. Here we can come back to the, call it, more exact accurate number then.

Klas Forsström, CEO, Munters: This all goes back to what we have talked about. If you take a look outside battery, I see a stable to picking up.

Klas Forsström, CEO, Munters: Market showing that our strength is also very much outside battery.

Klas Forsström, CEO, Munters: The highlights this, that was to some extent service and components, but it.

Klas Forsström, CEO, Munters: Was also what we refer to as commercials this quarter.

Okay, and my final second question is regarding Data Center. The 1.4 was definitely better than expected, but it’s still below sales. You have a run rate now on the sales level of 1.5 billion, indicating some 6 billion for the full year. To grow the business in Data Center for 2026 and 2027, you need to have an order increase of above 1.5 billion. We haven’t seen that for a couple of years. You have to go back to 2023 and we had fourth quarter with 1.8 billion. When will we see a little bit bigger order intake increases? Do you need larger orders or could you go up sort of gradually? How should we expect the order flow in Munters to see growth coming 2026, 2027?

Klas Forsström, CEO, Munters: It’s a fair question, Anders. As you know, we tend not to say, I mean this is exactly what the orders. If I elaborate on it, I give you two perspectives. First of all, I see a very, very strong, call it interest and super pleasing to see that our recently acquired chillers, they are making strong progress. Here I have high hopes or beliefs moving forward that that will continue to grow. Beside that, also the market 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 confident that we in, I don’t say next quarter, but in the coming quarters we.

Klas Forsström, CEO, Munters: Have a book to build that is definitely about one and at current we.

Klas Forsström, CEO, Munters: Are starting to fill up, as I said earlier, one large order and about 50% of what we have then in the.

Klas Forsström, CEO, Munters: The rest of the orders are already booked for 2026.

Klas Forsström, CEO, Munters: I’m not worried, but it’s a relevant question.

Okay, that was my two questions.

Thank you.

Line Dovärn, Head of Investor Relations, Munters: Thank you, Anders. We will take another caller from the telephone conference.

Conference Operator: The next question comes from Carl Bockvist from ABG Sundal Collier. Please go ahead.

Thank you. Good morning. The first one on my end would be that if we look at the order intake in AirTech without batteries, it seems like in million SEK that the order intake is now down to the kind of lower levels that we saw mid 2024. During the last couple of quarters, otherwise we’ve been talking about an improving order trend for the remaining AirTech, so to say. I’m just curious, of course currency is one thing, but are there other aspects that have kind of put a halt to the improving AirTech 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.

Klas Forsström, CEO, Munters: Thank you for the question, Emana. Exactly as you said. I mean we have in a substantial quality 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, etc.

Klas Forsström, CEO, Munters: That is filling the factor, it is not the value per se.

Klas Forsström, CEO, Munters: It’s a continued strong underlying market in this. With that, I think, and this goes outside also Munters in the general industrial sector. I would say there is somewhat of.

Klas Forsström, CEO, Munters: A hesitation related to the different tariffs on and off type of discussions.

Klas Forsström, CEO, Munters: I see still a very, very.

Klas Forsström, CEO, Munters: Strong activity in the non-battery sector.

Klas Forsström, CEO, Munters: There are 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 as commercials, and that is very much then driven in India. The third one that is also.

Klas Forsström, CEO, Munters: Clean technology, where I highlighted one quite interesting testing product solutions.

Understood. The follow-up question is also on AirTech 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 how we should think about the second half. Given that the factory is now at least inaugurated, will we see a clear improvement already in Q3, or will it be more towards the end of 2025?

Klas Forsström, CEO, Munters: If I talk about the factory, two things to mention there. What will move into the factory later in the year, that is what.

Klas Forsström, CEO, Munters: I refer to as the process part.

Klas Forsström, CEO, Munters: That is the desiccant wheels, the media production, etc. 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.

Klas Forsström, CEO, Munters: In the upstarting phase to move in.

Klas Forsström, CEO, Munters: You will not see a dramatic uptick 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 two operations in parallel, so to speak. I go back to what I referred to earlier. I expect a gradual then improvements in.

Klas Forsström, CEO, Munters: AirTech for the remainder of the year.

Understood, thank you.

Line Dovärn, Head of Investor Relations, Munters: Thank you. Another caller from the telephone conference.

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

Yeah, 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 rated order, should we expect the profitability to be on the high side now when all the sort of safety related guarantees, etc., are phased out, or is it sort of a normal contribution to data center EBIT in this quarter?

Klas Forsström, CEO, Munters: It is. We have not had any, call it negatives or positives, and any type of provisions or, call it, miscalculations of the project. If you say like that, ups or downs, what we have delivered, that is.

Klas Forsström, CEO, Munters: What we get at the bottom line, so to speak, if I summarize it like that, what.

Klas Forsström, CEO, Munters: You can see that 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. High teens, you can say that refers to about 19%. I remain as, call it, forward looking as forward. We have established that. I don’t foresee that we will be in the 21% area moving forward.

Klas Forsström, CEO, Munters: I think I’ve been very clear on that at least for more than half a year.

Line Dovärn, Head of Investor Relations, Munters: One last short question, Mats.

Yeah, no FoodTech there. I mean order intake was pretty strong, I think. Could you say something about the margin mix there in the orders compared to what you deliver sales wise?

Klas Forsström, CEO, Munters: 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.

Klas Forsström, CEO, Munters: They have still above what we have in Munters as an average.

Klas Forsström, CEO, Munters: What is important to know when it comes to the software. Last year we had a very strong software year. Now we are reiterating investments to generate growth. We are not maximizing the software.

Klas Forsström, CEO, Munters: Profitability for this year.

Klas Forsström, CEO, Munters: We are sort of aiming for the future. All in all, a little bit lower in controllers and a little bit higher in software. What we know is if we will not invest in software, for the future we can deliver in.

Klas Forsström, CEO, Munters: The range of 30% on the software business.

Okay, great, thanks.

Line Dovärn, Head of Investor Relations, Munters: 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. I would like to thank everyone for listening in. Thank you to Klas and Katharina for presenting. Feel free to reach out to us at Investor Relations if you have any further questions. I wish you a very lovely summer.

Klas Forsström, CEO, Munters: Take care. Thank you very much.

Klas Forsström, CEO, Munters: Thank you.

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