Annual Report 2006 - Munters

Sustainable, consistent and profitable growth“Financial and operating trends were both very satisfactory in 2006 and strengthened ourpositions. The organizational changes to the three global product divisions have beeninstrumental. Our next step is to achieve greater commercialization of the global markettrends that we have positioned ourselves for.”Sales and profitability trends at Munters during2006 continued along the very positive trajectoryembarked upon during the second half of 2005.This has enabled the company to place a strongfocus on efficiency improvements, and toposition itself so that it can benefit from severalglobal market trends.If we were to categorize in accordance with the three phases– stability, profitability and growth – it is apparent that theDehumidification and HumiCool Divisions, after severalyears of weaker growth, were able to make major stepstowards the growth phase, while MCS remains primarilyfocused on profitability improvements.Strong entrepreneurshipFollowing my first six months at Munters and a large numberof visits to our production facilities, and in my daily interactionwith the Group’s employees, I am positively surprisedby a number of factors. For one, our production facilities andprocesses worldwide maintain a very high level of qualityand have contributed strongly to our competitiveness. Also,our Group’s employees have a high degree of applicationsknow-how and a strong sense of entrepreneurship – characteristicsthat are complemented by responsibility and vision,important factors in a global and highly decentralized organizationlike Munters. The factors above are very importantfor continued profitable growth. We estimate the underlyingannual growth in Munters market areas to be between 4 and6 percent. That should be analyzed in relation to our financialgoal of annual growth of 10 percent.Employees with solid applications skills, drive and vision, area prerequisite for success in achieving high organic growthdeveloping new solutions, expanding our offerings and capturingmarket share. We will also continue to complement ouroperations with strategically appropriate acquisitions. One suchexample is the acquisition of the italian company SIAL – aleading European manufacturer of portable heaters – whichwas completed in November. The operation had sales of SEK236 M in 2006, and is located less than 100 km from ourItalian HumiCool facilities, paving the way for synergies interms of distribution, administration and manufacturing. Mostimportant, however, is that we gain an even better position as asupplier of energy- and cost-efficient climate control solutions.Global product divisionsSince the 1970s, Munters has, in many ways, created its owngrowth by continually expanding its offerings, developing newapplication areas and through the forward integration of operations.This has made us a global market leader in a number ofselect niches, and is a journey that we intend to continue.An important prerequisite for maintaining sustainable,persistent and profitable growth is the organizational changesto the three global product divisions that we have implemented.Financial year 2006 was the first full year of thisevolution that will incrementally strengthen the company.The structure provides a global view of both our customerand product portfolios, which among other things results insales across borders, facilitating the introduction of successfulapplications into new geographic markets.We are also better prepared to expand our focus on grossmargin improvements since purchasing, manufacturingand product development can be coordinated from a globalperspective. M U N T E R S A N N U A L R E P O R T 2 0 0 6