Welcome to the presentation of our first quarter results for this year, 2023. I'm Ann-Sofi Jönsson, and I'm responsible for investor relations. With me here today, I have our CEO, Klas Forsström, and our CFO, Annette Kumlien. We will run through the presentation, then we take a Q&A session. For those of you who are viewing on the web, do post your questions throughout the presentation, we pick them up afterwards. With that, I will hand over to Klas.
Thank you, Ann-Sofi, and once again, good morning and very much welcome to this quarter one presentation. When I look upon this quarter, I see a quarter with many steps in the right direction on our long-term journey. Our strategy is very much delivering, both when it comes to the investments that were made and the operation activities that now are making a clearer and clearer imprint, and we show a solid result. A little bit more granular, strong top-line growth in our main target segments, battery, service, data center cooling, and also very important, digital solutions within FoodTech. We are exposed to long-term sustainable demand driven by megatrends, and we have a strong offer brought to the market.
These results, as you will hear, in strong margin and profit development, driven by different components such as volume, price, efficiency. I have to stress that above all, a very innovative offer brought to the market. I have come out as the pessimist sometimes when it comes to supply chain constraints. Here I can say I see clearer and clearer signs of an ease up in the supply chain. We continue to maintain a high guard and focus on this. Moving forward, we are convinced that we are doing the right things. We will continue to invest in innovation, capacity, and efficiency, as well as digitalization, building future profitable growth. I have to say, I'm very proud of our people and what we as a company has delivered.
With that, as I said, stable order intake, strong net sales growth, and order backlog, margin improvements in all business areas. Even though we have a drop in order intake, very much explained by very strong orders on the comparable quarters, I see a lot of activities in the marketplace and a lot of attractions to our main areas. It was very rewarding to see that we delivered on what we had set ahead, deliver out a good volume in DCT, and a drop through to the bottom line, but also extremely good to see the good development in battery service in AirTech, but also how well FoodTech were able to manage the lack of certain volumes done. All in all, coming back to the EBITDA, 93% increase and a good margin development.
As I said, a stable underlying demands in all regions. Americas, it was AirTech components, CT and service that generated the good growth here. DCT continued solid market activity from the co-location market. FoodTech, a good growth across both digital side and the climate side. EMEA order intake. I see here that it's order intake Q4, we always refer to Q1 this year. AirTech components and services, a good growth. DCT, a stable demand. I'm very happy to say also that now we're targeting to bring in SyCool in the second half of this year into the European market. FoodTech, as in the past, an underlying weak market situation due to the lower investments as a reflection of the Russian war in Ukraine.
When it comes to APAC, growth in mainly batteries and components, and FoodTech, as we said, it will be a continued tough year in China moving forward. If I summarize this build when it comes to climate change and digitalization as strong market drivers, I would say on megatrends, I mean, we are plus here. We are so well exposed, and we have exposed ourselves to the megatrends, and we can take benefits on that. When it comes to the current market situation, yes, there is geopolitical instability. It is macroeconomic uncertainties, and yes, it is inflationary pressure, but ease in supply chain constraints. All in all, I have to say that this area, we are used to this, and I see easing up in this sector. Consequence is an opportunity in Q1 and moving forward.
Everything in the first left box here, going back to the megatrends, we are super well exposed. We are picking up the market demand. And on the other side, where I have talked a lot about, I mean, we should not call it the summer before the summer is here. An ease up in bottlenecks, et cetera. Here I have to say that I see an ease up, and I predict that the ease up will become even more ease up during the quarters to come. We keep a strong guard here as well. I think this picture is very important to reflect on.
You can see here how we have divided the larger orders that we have communicated and the spikes. My signal to the market, I'm super confident that we are having a great attraction in the marketplace, and I'm putting at current more focus on the out deliveries, the top-line growth when it comes to invoicing. Of course, it will come larger orders also in the coming quarters. The order intake will, to some extent, be a little bit up and down. Keep a close eye on what we deliver out. I'm super optimistic on this side. Coming back to how we see the markets. You've seen the trend lines in AirTech for couple of quarters. They continue to be green. Some are very much green for the long run.
Battery as an example, there is a debate going on now, will it be in U.S., will it be in Europe when it comes to the where battery factors will be positioned. Of course, as a European, I would like it also to happen in Europe. With that said, we are as strong in Americas as we are in Europe. From a Munters perspective, that doesn't really matter. Food processing, sometimes shadowed by the large battery sector, but this is also growing step by step. Components. You have heard me talk about components, and you heard me talk about that this is a second defense line. What I mean with that is if we lose a system order, we can still grab the component part of that order because we deliver also to, let's call it competitors of us. Clean technologies.
I have high hopes in the long run on clean technologies. What is interesting to see that is that we are getting more and more success in clean technologies, in smaller projects here and there, and especially in Americas. Then services, 21%. What I have to remind ourself on that is, yes, it is actually, as Annette will talk about later on, a lower percentage compared to the invoicing, but a much higher total value. Coming back to clean technologies. We are aiming for the future, and we are a very sustainable company in what we do and what we deliver. Take a look upon this. When it comes to e-methanol, to deliver e-methanol solutions, you need to capture carbon dioxide, you need to bring it in into the e-methanol, and you need to do that in a sustainable way.
Our components, the mist elimination components and technologies, is making that possible to purify to 98% carbon dioxide. This is also very interesting for the future. All in all, if I remember it right, we are in different carbon dioxide projects, exposed to smaller projects, around 10 projects the last few years. Data Center Technologies. Colocation is our clear focus. Hyperscalers, sometimes we fill up the system when we see it's needed to fill up the system, but the focus is in Colocation. Here I think it's clear to see, say that there is still a lot of activities in the Colocation area. We are now winning more and more attention towards the SyCool solution.
I'm very confident that, I don't promise next quarter, but in the quarters to come, that we will continue to deliver good order intake in this area because I see the order pipeline and what we are working with. Also important, why are customers so happy when we talk about some of our products? LCAs, as an example, super important moving forward. We are conducting LCAs now we have done 10 of our product families, ISO-certified LCAs by an independent third party verified. This is playing a more and more important role, not only how we work internally, but also proof on what it will mean for the customer as such. When it comes to sustainability, it is fully integrated in our way operating, in our strategy, delivering innovative, energy-efficient solutions that contributes to the customer sustainability targets. FoodTech.
U.S. showing a strong demand, both when it comes to equipment, the climate side, and also when it comes to the digital side. Swine, driven both by predominantly by China, still very weak. All in all, I think it's fair to say we don't see any large differences in this market. Continued good growth in US, weak in China, and challenging it for sure in EMEA. The shining star, digital solutions. I mean, our future focus area. We are delivering a 40% growth when it comes to ARR the Second quarter in a row. Very inspiring to see in here. We should remind ourself that the equipment side is also extremely customer-focused. It delivers superior energy efficiency.
It delivers, in this case, the need of less number of fans. That gives a better energy consumption, a better climate, and at the end also, thanks to our application specialist, a better environment for the livestock in the plant. Last quarter, I started to show this picture, it serves a couple of purposes. Of course, it is on a high level, identify our portfolio of different solutions. I talked about Data Center Technologies. The most important thing is to move up profitability, and this is what we have started to do this quarter. I'm very pleased with that. I also indicated that AirTech, step by step, gradually continue to work with growth in targeted areas and work with efficiencies and how we operate to bring out even better profitability. I'm happy to say that we have delivered on that this quarter as well.
In all due respect to the tough situation in FoodTech, a dual challenge. One, the growth story, driving innovation into the market, creating a market, and we being a market maker, bringing growth and future profitability into that arena, i.e., the digital side. Work, what I used to say, I mean the continuous improvements, how can we be more efficient, how can we work with price, et cetera, et cetera, in FoodTech that has a more damp market situation. In both areas, I think we made a strong and healthy progress this quarter. Let me talk a little bit of AirTech as well and try to separate out the different businesses. You remember the slide where we have different arrows, et cetera, there we talk about, I mean, what about the coming half year?
In this case then, if AirTech in general is the bubble in the center, then service of course has a higher profitability, and we push ourselves to increase the service content day after day. Even if the percentage compared to the invoicing was lower this quarter, it was a healthy growth of some 30% in the service business. Components, closely linked, you can say, to what I said earlier, the systems, but also as a backup if we lose system sales, and you can also say to some extent linked to service in a, in one way or another. Also, a better, generally speaking, margin than the average of AirTech, here we show healthy growth. That is the mantra forward, try to capture as much as possible in that arena. Then of course, battery.
Slightly lower margin than the average of AirTech, but at the end, fueling future services business, fueling future component business, and generate a lot of call it customer benefits for a healthier planet. FoodTech processing, sometimes hidden in between everything else. Also that, a healthy margin, now recovering step by step after the COVID slowdown, but something to keep an eye on. Here, not to over-exaggerate for the coming years, but I see clean technologies having great possibilities to be what battery is today about five years ahead, i.e., generate growth opportunities in carbon capture and generate growth opportunities in VOC businesses. More to talk about that for the coming years. It's important to always be as ahead of the curve. What are the future growth opportunities?
Our purpose: for customer success and a healthier planet. Some of this is updated. Some of the it we only report once a year. But on the left side in the updated after quarter one, I'm super pleased to see that we are continued to advance when it comes to renewable electricity. This is how we operate. I'm super excited, as you heard me say, when it comes to the service content, even if it was a lower percentage, the growth was impressive. Some other areas where we have to work more, that is, we have a low number still in total recordable incidents, but I mean, the aim to be at one. And then, I mean, when it comes to diversity, here we can continue to work very much moving forward.
The only other one I would like to highlight this presentation, that is energy efficiency. Last year, we produced more, but per produced component system, we consumed less energy. I think that is a matter of walking the talk very much. With that, this being your last quarter report, Annette, the floor is yours.
Thank you very much, Klas. Let's dive into the figures. As you can see, trailing down on the back end of great order intake last year and actually building up a big order backlog, we're starting to deliver now to the customers. You can see the first quarter, we had good deliveries out, sales high, almost 40% up. Also, as we have spoken about earlier, the margins are starting to come true, both from a volume perspective, but also from a net price perspective, including also efficiency improvements. When it comes to operating working capital as a percent of net sales, we are within the frame that we have set out to be, and also given the high net sales we had, we keep it within the limits. Again, we are in a growth agenda.
That's also why we are so focused on making sure that we are staying focused on operating working capital. Looking into what the group has delivered. As Klas talked about, we do have a decrease in our order intake, but it's basically because we had a very high order intake in the first quarter last year, both when it comes to DC, when you exclude a high or the big order that we got, but obviously also because of the digital order that we got in FoodTech. The underlying demand and discussions in the markets shows that there is a good trail out there. When it comes to sales again, 40% increase is very strong in the focus areas, and particularly in DCT and the batteries that are delivering.
Obviously also when it comes to services. Yes, we're at 13% of net sales. The last, I would say, period last quarter was 14%. So in a way you can say then we have not increased the sales percentage, but given the high increase in net sales of 40%, that means actually that there is a growth, and you will see that in the AirTech figures as well. When it comes to EBITDA margin, yeah, it has increased in all areas. Particularly when you look at DCT, there's been good delivery because of volumes, but also because of making sure that the new factory is running right and also looking into that the old orders with the low prices actually have been delivered earlier on, as we talked about.
Also when it comes to AirTech, same thing, they're trailing on with good volumes and net price increases. When it comes to FoodTech, it's a stable margin, actually. When it comes to the cost that we have talked about strategic investments. Yeah, it will take a bit of our margins out, obviously, as we have said, and that's about 0.8% of our EBITDA margin that goes into that one. Operating working capital, as said, it's about, it's about just below 13% of sales, and that comes out of high deliveries here in the quarter that helped out the relative levels. Obviously, when you look at the absolute numbers, there is an increase, yes. Looking into what has happened with the margins.
First quarter last year, we had around 9.5%, We're delivering now at 12.3%, as you can see. Volume is picking up. We have good net price impact. All of our business areas are delivering a net price positive. The operational efficiencies that we had issues with last year, they're gone. When you look at DCT, for instance, the new factory is starting to get into a more steady state. Supply chain, as Klas talked about earlier, we're starting to see an ease of it. Yes, there's still work around it, but it's starting to ease up a bit. When it comes to regional mix, yes, we do have, as Klas talked about earlier, the weak markets in FoodTech when it comes to China and EMEA that is tying us down a bit.
Again, we're putting part of our profits actually into making the company a resilient company for the future. If you look at AirTech. AirTech had also a stable order intake in this quarter, that's particularly when it comes to EMEA and Americas, where we had good growth in services. It was slightly offset here by APAC. When you look at the component side, it's delivering good growth. Net sales up very much. It's, again, it's the battery that we talked about, but also the component side. Here you can really see what's going on when it comes to services. It's actually 24% of this quarter. If you look at last year, we've been trailing around 19%, 20%.
There's a really good increase here, particularly in the Americas, in the EMEA area. When it comes to adjusted EBITDA, again, you can see volume coming through. You see the positive contributions from our manufacturing efficiencies that we did have issues with actually in one of our factories in the first quarter last year. Also that the net prices are coming through, although there are still some of the old orders that are there. Again, if you look quarter- by- quarter, AirTech is improving quite a bit. DCT. Yes, order intake declined, if you have an order of $150 million in the first quarter last year, that's quite hard to beat, to take another one year after.
You can say, yes, still, when you take that away, there is still a decrease. Remember that DCT is a project business. The last year, first quarter, it was a strong growth, even if we took away that big order. The market activities are continued good. We should remember that our customers last year also placed orders early to make sure that they will get the capacity to them. When you look at net sales, orders is now coming through, so it's quite a big increase. You can also see how that is coming into the EBITDA margin. When the volume is coming into the margin, you have net price increases. All the old orders are gone, basically. We have the efficiencies in the U.S. that comes into place.
When it comes to, when it comes to then how we handle the supply chain, for the future deliveries, there is a lot of focus that is placed on securing the components still. However, when we look at the easiness of the supply and issues we had before, we think that they will sort of have trailed out towards the end of this year. Looking at FoodTech then, it's very much the same way as you have seen, earlier quarters. There are still issues when it comes to APAC and EMEA. Americas is turning out good in certain areas, particularly the digital area. Actually, if you take away the digital order last year, actually order intake was positive. That was good to see. When you look at net sales, it's trailing a little behind last year.
Again, we are coming out now with a good SaaS order, so the growth there is around 40%. If you looked at the booked SaaS orders we have today, it's trailing in the level of $24 million. It's quite nice to see this increase. When you look at then the margin, again, FoodTech has been very good working with the net prices, so they have been very positive for a long time, and they still continue to be that way. Obviously then when it comes to the size of the business, there are still activities that needs to be handled with the losses of the volumes that we got in EMEA in the back trailing of the Russian war.
Again, when you look at the digital solutions, we are seeing the profitability coming through now in the back end of the net sales deliveries. When we look at the operating working capital and the cash flow and the leverage, when you look at the cash flow, you can actually see now the profits coming through in the cash flow. Again, we are a growing company, and with that comes also then that we need to make sure that we plan ahead so we can deliver according to the schedules we set up with the customers. Yes, there is an increase in operating working capital, and particularly this is pertaining then into the DCT area, but also a bit to the AirTech area. It's on the back end of actually planned activities for future deliveries, which will come through within short.
If you get leverage, we have been able to reduce the leverage a bit with the performance we have made during the first quarter, so we're down to the 2.7x , down from about three that we had before. As Klas said, I am then leaving, as most of you know. What have I been doing? What has really been my focus? I think you've guessed it. At the end of the day is to make sure that Munters become a resilient company, the rough diamond, and try to make it shine. A lot of it has been around how do we make sure that we get the performance management running, setting a strategy, making sure that we start to deploy the strategy, what we say we do and what we do we say.
The other one is looking into best practices also. At the end of the day, there's a lot of good best practice that we can make use of as well. Growth, a lot about where are our focus areas, both from a organic point of view, but also have you seen working a lot looking into what are the holes that we should fill by actually acquiring businesses that could fit nicely into our portfolio, and you have seen some of them. When it comes to profits, again, it's about making sure that we secure a scalability and also increase the efficiency that we have in the group. You can see part of that also coming through in the Q1 result this year. Last but not least, to get growth, we actually need to make sure that we're capital efficient and generate cash.
A lot of the focus has been on operating working capital, and there's been good trajectory there, and there are still ideas on what we can do to improve it further. Last but not least, at the end of the day, we're living in a digital world, and actually to give the best offering to the customers, digital is part of it, and that's also what we have been focusing on. Some nice ideas coming out of it. With that, thank you very much, Klas, and I'll hand over to you the last time.
Thank you, Anette, and great to listen in to what you have created and what we are having ahead of us in the area of finance then. Let me then shortly summarize what we have achieved this quarter. Major strategic progress in the first quarter, that is the heading. What do I mean by that? We started to invest in innovation. We started to invest in building up production capacity. We were, as I used to say, we were ahead of the curve, and that we started a couple of years ago. Now this has started really to trickle through, i.e., significant growth and strength in margin, strong improvement in profitability. The lesson learned from this, that is in order to make this happen over and over again, we will continue to drive strategic investments for future profitable growth.
With that, let's end the presentation part of this, quarter report and move into Q&As.
Okay, great. Thank you. With that, I would like to open up on the conference call, the telephone conference, to see if we have any questions there.
Thank you. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Gustav Berneblad from Nordea. Please go ahead.
Yes. Good morning, everyone. It's Gustav from Nordea. Just to dig in on the data center here. You commented on a somewhat dampened data center market in the report. However, reiterate that the underlying demand remains strong. Can you give a bit more color on what you see in the data center market in general? Also, are you seeing less data centers being built now than compared to a couple of quarters ago, would you say?
Thank you, Gustav, for the question. Let me put the color on this. As you know, we concentrate mainly on what we call co-location market. We continue to see a lot of strong activities in that. As always, when it comes to this, of course, some quarters you have projects and other quarters you do not have projects. With that, I think we're also now starting to trail into a situation where in the past, during COVID and during the very, very tough side of the supply chain crisis, customers were ordering, let's say, 15, 18, sometimes 24 months ahead in order to secure the deliveries. Now, I predict that we will move more and more to perhaps a year ahead ordering.
In that period of shifting, orders may be lower, but the activity, I can tell you, I see that very much in the marketplace. It is sort of two sides of the coin, but the most important thing, that is our solutions. I'm so happy that we have widened the customer base and added a few customers, smaller sized customers when it comes to SyCool. I'm so happy when it comes to we are bringing SyCool into the European market the second half of this year. Perhaps the word is not right, but I put it, I have no worries for the continued activities in the marketplace.
Okay, perfect. Sort of stay on the data center here. You had a very strong sales growth also. Is there any reason to believe that you deliver faster on the faster than expected on the larger orders, would you say?
I think I answered in the past a little bit like this when it comes to the larger, the first large order. We delivered a little bit last year. I have generally said, I mean, divide that into four pieces, i.e. 25% each and every quarter. Generally speaking, we are on the trail of that then. Some quarters will be a little bit up, and some quarters will be a little bit down when it comes to call it the spread of it. The interesting part that is I'm so happy to see that what we saw end of last year, we continue to see this this quarter, that the efficiency in the factory we have put in place are delivering up the promises.
Is that factory fully up and running today, would you say, or?
It's a good question. A factory is never fully up and running, but you can say it's fully operational. Of course we are bringing in more and more production into it. The answer is yes, it is fully up and running. If the answer on can we push in even more in the factory, the answer is yes on that as well.
There are even rooms for a bit more efficiency.
Absolutely
in the factory as well. It's, it started on a very good level now in Q1.
Perfect. Just, last one here on the cash flow, and in terms of the working capital in the quarter, you have said before that the larger orders will be very volatile, but you aim to sort of balance these out by balance out the working capital in how you deliver on these larger orders. Just looking at the Q4 and Q1 here, would you say that it's more difficult than you had initially thought, or how should we interpret it?
No, it's not more difficult than we thought. If you remember, if you concentrate on DCT then or data center, there are two large orders. Obviously with the first order, that's where you see the more sort of negative stress on the working capital. When we get into the second order, the first order will counterbalance the second order, so to say, deep, because we're never really fully cash neutral during the project's lifetime. There is also always a certain point when it goes a bit negative before we start, the full deliveries out of the factories.
And-
In a way, it's as expected, I would say.
Isn't it fair to say, Annette, that on the second half of this year, we really see that it will start to bite?
Yeah
on the operating working capital as well?
Yeah.
Okay, given that you start to deliver on the battery and.
Yeah.
Yes.
Yeah, but given, I mean, remember now that the order is rather big. The first one, [SEK 115], and the second one also. Once you get through a certain, through a certain level in the delivery schedule, it starts to balance off, and we get the positive sides of it. That's where we, you're sort of looking into having Q2 as one of the, one of the sort of lower levels before we get into the stronger deliveries. Obviously that first order will balance off the effects of the second order that comes later.
Okay, perfect. That's all for me. Thank you.
Thank you.
The next question comes from Karl Bokvist from ABG Sundal Collier. Please go ahead.
Thank you and good morning. My first question is on, correct me if I'm wrong here, but if we exclude FoodTech, I believe, prior comments on 2023 have been that, you know, both deliveries or sales and margins should be a kind of gradual ramp up throughout the year. A bit going back to Gustav's question, given that the first quarter now, seemingly is very, very strong, is that still valid, or could we see a bit of a more volatility than perhaps what you previously said about a gradual ramp up every quarter?
A very good question. I mean, as I said, Annette has talked about, we are very pleased with what we have seen this quarter. If I go to Data Center, I reiterate what I've said. At the end of this year, I expect us to be at the 14%. Now it started very well. It gives me even, "more confidence" in saying that, run rate at that time, it will be 14%. When it comes to the others, I think it's fair to say I don't expect, we don't plan, I'm not worried for, call it volatility. If I say like this, the first quarter has been good. I don't foresee that it will be the same boost in the coming quarter, as we had in the first quarter. It's a good start of the year.
Understood. On FoodTech there, if we just look at the kind of level there on FoodTech compared to if we're a bit shortsighted here the prior quarter, just and then kind of sales level roughly similar. Is it fair to assume that the profitability improvement is really, as you write about the digital part, or do you see other parts of FoodTech that has also improved on profitability?
I can start here, and then I also hand it over to Annette. It is yes, on the question, small yes on both. What we have to remember on the digital side, that is we continue to invest and the big profitability in digital, that is, of course, when you have balanced out the resource that you continuously allocate into that, but it starts to show good progress. Secondly, I'm very happy with the very hard and very tough network or continuous improvement work that has happened within the equipment side, especially in Europe. Annette, any?
Yeah. Just to add, obviously, that big order that we got last year, a digital order, that is a delivery time over the delivery schedule over three years. You will successively see how it actually comes through in the P&L. That's a big part of the digital improvement. Obviously, when you look into the equipment side, as Klas was talking about, some of the units that we had where we had issues in last year, they are improving on a smaller scale. All of those contributes then to the margin being a bit better than it was in the first quarter last year.
All right. That is all for me. Thank you.
Yes, yes.
Yeah.
Just to sort of, reiterate this as well. We don't foresee, as you saw.
The next question comes from Gustav Österberg from Carnegie. Please go ahead.
Gustav, before I let you in.
Thank you, operator. Good morning, everyone. I think, my first question is on the high profitability level in AirTech. I mean, I appreciate the slides with the bubbles and the direction of where you're going. Can you just clarify, is there any mix, changes driving the high profitability here? There's two quarters in a row now with 16% margin. Just trying to understand, the stability and the drivers of that.
Good question, Gustav. Before I answer that, just let me summarize on FoodTech then, because when it comes to equipment side in China and Europe, we don't foresee a market that will recover the coming two, three, four quarters, so to speak. Coming back then to your question, a very good question. I mean, it's a couple of ingredients there. One, of course, we had a good service level, especially in North America. The other part is, as you've heard earlier, we have had challenges with operational efficiency also in Americas, in a factory that we were solving end of last year, and it shows continued good progress. The third part is we have now balanced the pricing and the cost inflation, so to speak.
All in all, those two different points. It is a very, very strong first quarter for AirTech. Once again, I shouldn't say that we should expect the same percentage improvements in profitability for the coming quarters.
I would say also, I mean, all of those things that you're seeing is what we have talked about already last year, that we were foreseeing that it would come true, and this is coming in now. It's nothing, it's nothing unusual from that perspective.
Just to summarize, I mean, AirTech shows stability.
Yeah, definitely.
Very pleased with that.
A follow-up just shortly on that. How important is the service and component segments to the profitability level here, in Q1?
I mean, it's having a positive effect. The real size of the positive effect, that is difficult to sort of pinpoint. What is also important to say, that is the projects that we took a couple of years ago, we took them to deliver on or about then our medium long-term EBITDA target. I'm very happy to see that they are starting to deliver on that or in some cases, slightly above that.
Okay, perfect. Those were all questions from my end. Thank you very much.
The next question comes from Mats Liss from Kepler Cheuvreux. Please go ahead.
Yeah. Hi. Thank you. Well, couple of quick questions. First, I mean, coming back to the orders then. I mean, you have probably a tender backlog out there, well, customers are looking through the need to place an order. Of course, you have competition also. I guess my question is more related to the tender backlog there, if it's sort of in line or with last year or if the need to make orders among customers are less sort of important now, so they are sort of holding back on those. Also regarding the market share there, if you feel that you take the, well, sufficient amount of orders to keep your market position.
Mats, two very good questions. If I take the two largest segments that we are having received large orders on during the last couple of years. If I take batteries, I'm very pleased to see the tender backlog, so to speak. I have said that in the range of 20 projects are in the long run backlog, 20 about in North America and 20 about in Europe in regards to battery projects. As you know, it's a debate, will some of them go to Americas or not? At the end, we are strong in both areas. I'm very confident that we maintain what I've said, the technology share in the battery sector on or about or sometimes about 50% of the orders ends up in our pocket.
When it comes to data center, really strong attention from the market when it comes to our new innovative products, SyCool in particular. As I alluded to earlier, there is a shift going on that has nothing to do with the market when demand. In the past, they were ordering substantially ahead in order to secure deliveries. Now it's moving more, let's say, from 18-24 months ahead to perhaps step by step, 15, 12 months. With that said, I think we have a very strong tender backlog there as well. It's a matter of is it a quarter, this quarter, next quarter, or the quarter thereafter.
Great answer. Thank you. Then about the price increases, I guess you have implemented price increases gradually. Would you say that you have catch up with the cost increases, or are there more so to do there? Also this, well, impact of supply chain constraints, if you still see that those erode the margin or are we sort of in a balanced situation now?
I think that, you know, so far we're in a much more balanced situation than we were before. A lot of it is obviously due to the delivery of the old orders that were taken some time ago. Those were still lagging the results last year. When it comes to AirTech, there's still some orders left there that should be delivered out during the next quarter. Otherwise, DCT has come clean. When you look at FoodTech, they've been out of that for a long time ago, and that is only a little bit left in AirTech. But again, when you look at then how you work with prices, obviously you always need to look into what's going on with the material cost situation.
That's a kind of like constant focus that we have learned how to work with, compared to previous. When it comes to the component or metal prices or, I mean, those are being constant monitor as well because they are moving a bit, so we need to be stay focused on them and make sure then that we are agile enough to act on it when they change.
Okay, great. Thank you very much.
The next question comes from Anders Roslund from Pareto Securities. Please go ahead.
Yes. Good morning. I have one question regarding the delivery pace here. Given that you have a couple of other large orders being implemented next year, will we have exactly the same step change that you will see sort of a big step change in the first quarter next year? Is it something that you try to sort of gradually increase? How should we look upon the production pace going forward?
Hi, good morning, Anders. A great question. Let me use two of the large, the two largest DCT orders, and I use them as an example then. The first SEK 1.1 billion that we are delivering now, I mean, as I said, we had a little bit at the end of the year last year, conceptually 25% per quarter, but it can be 1% or 2% up or down per quarter. At the end of this year, the SEK 1.8 billion order will start to deliver in a similar manner as we talked about the first one. More evenly spread, 20% or 25% per quarter, but with a little bit of overlap into the first quarter 2025 as well then. Our focus now, sometimes perhaps people or you may perceive me too relaxed when it comes to orders coming in.
We are always attentive to that, really what we need to start to fill up, that is actually for the end of 2024 and filling up for 2025. I'm really pleased with efficiencies that we have in the factory. That gives also opportunities that if we have a short-term win, we can also act on that. I mean, that is no promises.
Okay. General question here. The fact that you now are proceeding according to plan, is that already so expected, or are the clients gives this room for more orders thanks to that you can deliver the existing ones?
I come back to, I mean, also a great question. I mean, we have balanced the production site in Virginia, and we have the backup site in Texas that is co-shared with AirTech, when I talk about data center then, to be balanced on, I call it one shift plus I use. If we need to, when we have ramped this up and it's running smoothly, of course, we can always add more capacity by adding people, et cetera, et cetera. I think I've said something like this, there is always opportunities for about 20% more orders to squeeze in. At the end, I mean, we need to attract the customers, we need to work with the customers. The short term answer is yes, we can add orders into the system.
Excellent. This European ramp up, will that be produced in Ireland or is it something you will may deliver if orders come in in Europe?
The idea is, we are moving forward to having the SyCool approved fully for the European market the second half of this year. We are working with the clients in the market. We see good attention from them. They are very interested in the product, and we aim to produce that in Ireland. If we need to rush a product just for the sake of showcase it, et cetera, of course, we can transport that from U.S. over to Europe.
Just to see that you can start to take orders in the second half of this year and then hopefully deliver later on. That's sort of your planning here.
Exactly. Have that as a, as a timeline. Then of course, you never know when orders may come if it takes a quarter or even longer. With that said, I mean, we are already pre-selling the concept into the European marketplace.
Do you have any idea about the size of the market here or?
I don't have it on top of my mind, I mean, the reason why we decided to come back to the European market, that is that our view on the European market and as in particular the co-location area was that it was a market where we could take a lot of progress. I cannot size this compared to U.S. at current because then I have to go into the fact sheets, et cetera. It's a substantial market, and it's a market where we do not have much market share at current.
Excellent. That's all questions for me. Thanks.
There are no more questions at this time, so I hand the conference back to Ann-Sofi.
Thank you very much. With the questions that we've had on the conference call, we have actually covered all the questions we have received today on this report. With that, I would like to hand over to you, Klas.
Thank you very much, Ann-Sofi. Instead of wrapping up the conference, I will take the opportunity to say thank you very much, Anette. This is your last conference. A fantastic to support to me, a fantastic support to Munters. I can promise you, I mean, the journey will continue, and we can always improve in all areas. I think it's hug time then also on the conference like this, you know. Thank you very much, and thank you to every one of you out there.
Thank you very much. See you back in July when we present our half year report. Thank you.