Annual Report 2006 - Munters

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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
Focus on product development and growth in AsiaProduct development in particular is high on the agenda.In order to secure our future growth, we will be focusing onand strengthening our product development operations. Weare planning to invest more money, both structurally andon specific projects, a process that was launched in 2006. Akey focus is to continue to strengthen our position as a leaderwithin energy-efficient and environmentally friendly solutions.We will be concentrating product development withineach division to “Centers of Excellence” with the purposeof gaining more efficient allocation of resources and strongreturns. The catchwords in this effort are global productfamilies, modular thinking, development of existing andintroduction of new application areas through energy-efficient,environmentally friendly solutions.Another prioritized goal is to strengthen manufacturingand sales in the Asian market. We are doubling the capacity ofour existing facility – Dehumidification and HumiCool – inBeijing, China. In addition, we intend to strengthen our salesresources for the purpose of obtaining improved geographiccoverage and more efficient management of domestic andinternational customers in the Asian market.At MCS, we foresee a steady increase in the number offramework agreements. Our broadened offerings generatedstrong sales growth and improved market share in Europeduring 2006. To date, however, margin improvements havebeen insufficient. Implementation of strategic initiatives, suchas mobile IT, to improve operational efficiency and marginswill continue.Favorable market trendsOur strategic plan for the coming three-year period is basedlargely on positioning Munters to best commercialize thefollowing global market trends:Increased environmental awareness and the need for moreefficient energy consumption.Better indoor air quality requirements.Stricter rules on handling food products.Consolidation of the insurance industry and long-termforms of cooperation, such as framework agreements fordamage restoration.Profitable growthWe experienced good financial growth during 2006 andfurther strengthened our brand and, in many instances,our leading market positions. We are in a strong financialposition, which gives us the freedom to act. I am lookingforward to leading Munters with the aim of creating globallysustainable, consistent and profitable growth, together withour motivated employees, thereby creating additional valuefor you as a shareholder.Sollentuna, 7 March 2007Lars EngströmPresident and CEOM U N T E R S A N N U A L R E P O R T 2 0 0 6
Page 1 and 2: Annual Report 2006
Page 3 and 4: The year in briefOrder intake incre
Page 5: From everyday life to highsustainab
Page 9 and 10: Munters develops a strategic plan f
Page 11 and 12: Carl Munters’ first sketch of a r
Page 13 and 14: PRODUCTS AND SERVICES CONTRIBUTING
Page 15 and 16: and a bonus program aimed at upper
Page 17 and 18: Many production processes require p
Page 19 and 20: “In many instances, Munters has t
Page 21 and 22: Facts - Dehumidification Division
Page 23 and 24: For insurance companies and constru
Page 25 and 26: “The development of framework agr
Page 27 and 28: Facts - Moisture Control Services (
Page 29 and 30: In Mist Elimination, we develop eff
Page 31 and 32: “The increasingly stringent envir
Page 33 and 34: Facts - HumiCool Division“ Our en
Page 35 and 36: Transaction exposureTransaction exp
Page 37 and 38: DividendFor the 2006 fi scal year,
Page 39 and 40: Work of the Board of DirectorsGener
Page 41 and 42: for implementing the guidelines to
Page 43 and 44: Pro forma 2GEOGRAPHIC REGIONS 2006
Page 45 and 46: 2006 2005 2004GEOGRAPHIC REGIONS Q4
Page 47 and 48: Income statementGroupParent Company
Page 49 and 50: Balance sheetGroupParent CompanyAmo
Page 51 and 52: Statement of the Group’s recognis
Page 53 and 54: Average rateYear-end rateCurrency C
Page 55 and 56: Borrowing costsBorrowing costs are
Page 57 and 58:
NOTE 4 CONT.Dehumidification MCS Hu
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NOTE 9 Cont.GroupDeferred tax asset
Page 61 and 62:
NOTE 15 PARTIciPATIONS IN ASSOCIATE
Page 63 and 64:
NOTe 18 cont.Parent CompanySharecap
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NOTe 20 cont.Reported pension costs
Page 67 and 68:
NOTE 27 REMUNERATION TO THE BOARD A
Page 69 and 70:
Proposed distribution of earningsFu
Page 71 and 72:
GLOSSARYAbsolute humidityThe volume
Page 73 and 74:
Group ManagementLARS ENGSTRÖMBorn
Page 75:
= Production facilities, sales and
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Annual Report 2006 - Munters

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