CMD 2021

May 11, 2021

Slides

Welcome to the Muntas Capital Markets Update today. I am Sophie Jonsson, and I'm responsible for Investor Relations. I want to welcome you that are on the webcast, and I want to welcome Anstrans through to us throughout all of the 4 presentations that we will go through. And then we will take them during the Q and A session that we will have after the presentations. About 5 minutes before we will start the Q and A session. We will also open up for questions for those of you who are on the conference call. So from then on, you can place or make sure that you are standing in line for putting through your questions on the conference call. So with that, I want to hand over to our first presenter, who is Klas Vostrom, our President and CEO. Welcome again. During the presentation of the 1.5 hour, you will hear what Munters is all about Anders and what we do for our customers. We will present our progression on the set strategy. We will also drill into our 2 business areas, talk about how they are doing today and what they plan for the future. Airtech already now delivering on a set strategy and FoodTech with an exciting new strategy set for the future, a 2 legged approach, Equipment and digital helping an industry to change. We work We set plans and we deliver on it. I'm very proud and happy how we have continued to develop During the in the midst of the pandemic, and I'm so proud of our people that has done more than expected on them. Today, it is close to 2 years ago since I decided to join Munters. And I can say, I'm even more convinced today that Muntus has a great future ahead. So what is the agenda? It's Munters, a global leader in Climate Solutions. Me talk about what we are. I continue with strategy execution and drill into certain areas. And then I will hand over to our CFO, Annette Kummlin, And she will talk about driving value. Then Peter Giselle Ektal will come in jointly with me and talk about Airtech, our business area. And then after that, Pia, the Head of and President of Business Area FoodTech will talk about the exciting future. We will summarize and we will come in to Q and As. We are a purpose driven company And contribute to a sustainable planet. We make a difference in the world. It's a bold statement, but each and every day, I see evidence of that is what we're doing. As an example, When it comes to supporting the automotive industry in the change from combustion engine cars to electrified cars, We are there to support that battery production. When it comes to reducing sulfur oxide from coal fired power plants, We take away up to 99% of the sulfur. When it comes to feeding the world, 1 out of 7 meals asked have we and our equipment been supporting in production. And what is Munterstann? We're a global leader in climate solutions. We have around 3,500 employees. We have 2 business areas, Airtech and FoodTech. 17 plants, 4 assembly hubs across the world. We have also on software hubs. The last few years, we have grown roughly 6% in CAGR, And our net sales was divided into Americas, representing roughly 40%, EMEA about a third As said, we are on a journey. Muntus is on a journey. Going back to 2019, we jointly together Airtech and FoodTech from many different business areas. Myself and Annette were recruited. We started and carried through a review of data centers and mis elimination, and we decided to close the European operations 2020, a new strategic priority was launched. We reorganized asked to had a new design organization with giving the business here the full ownership of the value chain. We kicked off Efficiency improvement initiatives, especially focusing on capital working capital. We expanded the management team, bringing in new competence And supporting our journey ahead. We started to reduce our product portfolio and we initiated that program. Airtech carried through a strategic review and started to deliver on that. This year, the efficiency improvements have continued. Many different projects continue to have focus on working capital with strong progress. We have increased our Efforts and focus on R and D employed a lot of people and inaugurated a new lab. Ertech has continued to deliver on their strategy. And now we are ready to launch the FoodTech strategy and carry through the deliver of that. As said, we have 2 business areas, Airtech representing some 70% of our sales, very much towards the industrial part FoodTech very much to Ag Hort and Food Production and the Animal Protein Industry. Technologies and core technologies. Across Munters, we are using evaporative cooling pads And we're also working with controller concepts, slightly different in between the two business areas. In Airtech, it is Everything from large system installments to retrofits and upgrades and aftermarket sales. In FoodTech, It is to surround the farm with equipment and then more and more working with sensor software supported by controllers And what we stand for and what we deliver to our customers. Let me bring you into strategy execution. Muntus' unique application knowledge is a true asset. We are very much linked to global MIGA market trends, climate change, increased regulations and digitalization. The customer needs that we can support It's increased energy efficiency and higher yields, less waste, improved animal and human health. And what we offer here is, of course, once again, the unique application knowledge, our strong global market position with local presence, The proven energy efficient products and solutions. And then when it comes to the leading position in digitalization Our strategy has a clear purpose for customer success and a healthier planet. That is indicating that sustainability is engraved in Everything we do in our strategy. As you can see on this globe, in all the different buildings It is all about being close to customers and deliver on customer value, constantly innovate and work with the product We're on 2 or 3 on the medal podium. And then it's about continuous improvement, excellence in everything we do. It's the grit. It is the everyday improvement. And then adding to that, the courage to take decisions, What to focus on and what to not focus on. The people in this strategy, that is the fuel That fueled the engine of excellence in everything we do. Now we'll go through sector by sector What we focus on and give you a few examples on the mantra. We have decided what to do and we deliver on that. When it comes to customers, Our ambition is to be the customer's trusted advisor for energy efficient production close in critical areas. The focus areas are customer value, pricing strategies and go to market models. What is very pleasing that is The way forward is set both for Airtech and FoodTech. We have hired and brought in new competence when it comes to commercial excellence, And I'm also very pleased to see that we are progressing well when it comes to how to work with price. Engraved in all this, we have sustainability. It's about helping the customer to become more sustainable. Here is one example. Lithium battery production. It is us helping the industry to change. In this example, we have the top 5 Chinese manufacturers that placed orders for more than SEK 200,000,000 during quarter 1. We also collaborate with the University in Birmingham and with other academia when it comes to What is the next generation of battery production? The essence here, that is stable mission critical climate control for battery production, That is what we deliver, and it's very pleasing to see that, that is very much appreciated. Innovation. I think you all have heard me say, innovation is the essence of a forward looking company. It is about creating the solutions of tomorrow today. It's focused R and D investments. It is about aligning the product also in way of working in manufacturing and technology alignment. I'm really happy to see that the bold target is set ahead, 40% reduction of stock standard SKUs. We are moving towards that target, and we are now above 35%. We're also making strong progress in other areas, and I'm extremely happy for the increase of headcounts in R and D And when we now have inaugurated a new research lab in Sweden. Markets, This is about prioritizing our efforts in markets where we can be on the medal podium and where we can grow. It's markets and segments. Both Airtech and FoodTech have set a clear agenda, where should we allocate the resources. But it's also about, I mean, how do we optimize a nice footprint both in production but then also in sales efforts. And then, of course, it's about service. Asking how can we drive service. The last couple of years, we have increased roughly 1% unit per year, and this we will continue and accelerate. But service is also about connectivity and software as a service. How can we use data to drive service even further? Excellent in everything we do. As soon as I say that, I start to move. This is really What a great company is doing, always improve everything day by day, week by week, quarter by quarter. It's also about putting in a blueprint, setting best practices, working with lean and quality focus through the whole value chain, But it's also about optimizing the manufacturing footprint. Sometimes it could be to drive lean program. Sometimes it could be to open up a new factory, As we've done the last quarters, the new data center factory that we have taken the decision to start to build in North America. When we install a new factory, we also think sustainability. That is part of the investment plan. It could be solar panel. It could be green energy. It could be a better use of our resources. For me, this picture tells the story about where Muntus is heading and how we work. We started with a first step, setting a purpose, setting the organization, driving a strong focus on sustainability. The second step was drilling into Airtech, coming up with a Way forward for Airtech and start to deliver on that. And now we are just in the brink to release The food tech strategy that is very much about accelerate the digital journey, support the industry, The customer we serve to change and continue to strengthen the footprint and offering the equipment side, the normal industrial game. It's about delivering on our strategic journey. People. We are doing a lot in the people area. And for me, this is very much about developing, create value through people. It's about fostering a culture that grow let people to grow. And by growing as people, they make the company to grow as well. We have clear values, sustainable value creation, passion for results. There's always a better way. I'll come back to this continuous improvement. And of course, team spirit celebrates success when it comes. And for me, Munte's culture is on a journey from good to great. Many different examples here what we are driving, but we need to continue to invest in our people. That put the bold ambition ahead. We are aiming towards 0 impact on the planet. It's clearly stated, net zero emissions from our operations by 2,030. That is an ambition and that is really what we strive for. Already now we can see we are increasing the use of electricity from renewable sources up to 50%, And we are also moving into areas how we conduct business with code of conduct from material suppliers. We lower the rate of accidents. That tells me the story that we are now becoming more and more stable. But above all, it is about integrating sustainability in our strategy. It is part of our way forward. Yes, we are part of the solutions to a better world, And we contribute through our offerings towards our customers to make them more successful by how we operate, By using less, generating more by our employees and culture, creating a culture where we conduct business in the best possible way With that, I would like to invite Annette Kumlin, our Group Vice President and CFO, Thank you very much, Klas. So what is our take on driving value and how are we doing that? Well, I will let that answering the question, hang a bit in the air and actually put a bit of a backdrop of where we are today. As Karl said, we have been working on this since 20 And at the end of the day, it's about delivering a profitable cash generating growth. And as you can see, the performance we have had so far in relation to our mid Targets is basically that we have ticked off when it comes to the leverage. We're actually inside of the targets that was set out in Early 2019, we are delivering on the EBITDA margin. But as we have said earlier on and all along, is that we are on a journey And we are building Muntos from good to great in a sustainable manner. And then obviously, when it comes to growth, depends a little bit on the trajectory in the market, depends a bit on how we also handle COVID-nineteen. But at the end of the day, as Claus also talked about, we are riding on the key megatrends like So what is really then the framework of driving a profitable cash generating growth. Well, again, when you want to drive that, you have to put a framework in place that everybody had heard to. And it's circling around growth, profit and cash, Obviously, digital enhanced. And out of the activities that you're doing, you will hear all of us speak about these ones in one way or another, Look from an operational leverage point of view, we are working a lot with commercial excellence, looking into value based selling and also pulling in active pricing strategies. And as you know, also we changed organizations. We have Stefan joined us in February, who's really focusing on that and supporting Pia and Peter on it. Again, digitalization is something intrinsically that we need to make sure that we deliver on towards our customers in their journey to deliver more value efficient actually supports them delivering on the strategy, meaning that they have to create value and be key in order to deliver the activities we're doing. And at the bottom of that, Really make sure that the continuous performance reviews and evaluations are continually ongoing Lean is very important, and that's where Muntas Production System comes in place, which is under development and excelling also. Footprint optimization is something that we have talked Long time now and also you have seen some of the activities that we have done, for instance, investing in factories in the U. S, which Peter will talk about later. And then also looking into how we can connect our own value chain throughout the whole organization to be sure that we can deliver in a smart way towards our customers. And at the bottom of it, obviously, making sure then that digitalization is also used internally From a process automation and also from AI and robotics point of view. But it is a journey, as we said, and we started delivering on it. One of the key things that we started early on was actually driving cash because at the end of the day, if you don't have cash or you not have a financial stability, hard actually to put money into where you need them. So that was key for us to drive. In early 2019 or mid 2019, we did a pre study, which highlighted the key areas that could actually jump start our activities. And most of them are really applying best practices on converting profit to cash, both when it comes to the customer side, the supplier side, but also when you look at driving seeing the leverage, how it has come down, and you can also see how operating working capital has moved down from around 18% of sales to around 12% of sales. So with that, I would actually like to go over to the U. So with that, I would actually like to go over to the U. S. And speak to Don and hear about what he's saying and what they have done in Hi. I'm Don Driscoll, Financial Controller of MUS Airtech. And We've made a lot of improvements in that area over the last 18 months. And I'd like to reflect back on our journey and highlight some of the key aspects of the project that I think made it such a great success. Follow me to the training room. Like many change initiatives, whether at work or at home, our process began with an acknowledgment that our current state was insufficient and that there was room for improvement. There's an old saying in finance that goes something like, while the P and L is opinion, cash is fact and the facts were telling us that we could do better. So our next step was to engage some experienced advisors who could share best practices and help gather and analyze That were prioritized by their potential impact upon cash. Those projects or those potential projects were separated into 2 categories. The first category was Administrative process changes, which could deliver quick wins. The second category was systemic operational improvements that require more time, focus and collaboration, But we're going to have a big enough or could have a big enough impact to really move the needle on our operating working capital. In a way similar to that, which Our factories run their Kaizen activities. We engaged a wide variety of team members from throughout their organization and asked them to give us their honest unfiltered feedback about the different that affect working capital. From those groups, cross functional teams were formed. Each team created its own project charter With clear quantitative goals and deadlines and a steering committee was formed to support the project managers and provide accountability. So in the end, what was the result? From a quantitative standpoint, DSO, days sales outstanding, was reduced from 52 days to 40 days, days payable outstanding increased from 45 days to 60 days. Our customer deposits virtually doubled our customer deposit balance rather, and we put new inventory controls in different facilities where they were lacking in the And this all combined to reduce our levels of working capital consumed by between 1 half and 2 thirds from where we started. Beyond that, we've seen improvements in our on time shipments and quality and it's just an all around better place to work. And the focus on working capital is spread beyond just the finance department to basically all departments within the company. So We're celebrating our successes and we're still looking into the future to find where we can improve further. Thanks a lot for your attention and have a great day. So you have heard Don talk about what he has done in the U. S. So far, but it ain't over yet, as they say. So what are we going to do more? Well, it's again continued to drive the best practice, work a lot with cash profiles on our project business, look also into our warehouse and inventory management, looking to lead time reductions in our own production and also with our suppliers and then also have a look at supply chain financing to see if we can enhance our leverage even further. But all of those activities we are doing cannot be done without actually getting into the next step. And that's really value chain optimization. That is a key enabler asking it to cash. So what we are talking about is actually redrawing the landscape within the company on how our value chain is going to be connected all the way from R and D, am to make sure that we drive our offering towards our customer in a much better way because it has to be a circular economy around that one. If you look at M and A, as I said, another thing that we started very early on was to look into how can we drive our growth, not only from an organic but also looking into jumping the curve in a way. So what we have done over the past one and a half years is to look at asking where can we enhance our business and where would we like to do it? So you have heard us earlier talk about that. Obviously, when we look into the mergers and acquisitions and alliances on-site. It's about looking into where do we have the core, where we are looking more into the consolidation side of it, looking more into add ons when it comes to technology and Obviously, digital. And then services, as we have talked about for a long time that we want to increase, that becomes more of a string of a purse, Which is a geographical entrance into certain markets or enhancing where we are today. And then as we go along, obviously, also making sure that we when we come across new growth actually make sure that we drive them into our business also. But again, it's not only about mergers and acquisitions, also the alliance side of it And greenfield also that could be created out of the ideas that we have when we look into the non organic growth. So again, it has to be business value Well, obviously, if there is a strategic fit, then we will do it. Business case has to be sound and also risk has to be managed in a good manner. And once we do this, also make sure that we do the integration in the right way because at the end of the day, the synergies that we're expecting, enhancing into the Muntos way of doing things. With that also, obviously, we need to make sure that we drive a digitalization In a smart manner that actually can take care of both the short term activities that enhance and drive us even further out, where we today are leading in the food tech area from a digital perspective. At the same time, as we manage then our internal landscape, it needs to be jump started in certain areas. So The ambition that we have founded over the past year is related to obviously making sure that we drive products and service that are growing also looking into what could a digital twin do trust both from a customer perspective, but also actually driving internal optimization. And that's something that needs to be combined. And that's what also make the digital landscape much stronger. Again, if we want to do that, organization really has to go G and A digital, and this is something that we also started over the past 1 year to make sure that we're moving into it. Also then adding up with being run both from a short term perspective and a long term perspective. Now as Klas said also that when we joined them Almost 2 years ago, we needed to look into what can we do to drive mantas from good to great and started our strategic journey and implemented a strategy. After we had reviewed the Airtech strategy to look into where can we enhance it, how can we do the sharpening measures. And as you remember also we stepped out of the non core part of the commercial business in the U. S. After having reviewed FoodTech, which was clear then a week ago, we have also undertaking the consequences of that where we see that we need to accelerate the digital journey, which is really talking about going asking for our IoT offering and moving into a 2nd generation. At the same time, also looking into how can we scale the software operations so we can drive it even faster than what we have done before. That's one part of the program that we're doing today. And then the second part of the program is also looking into how can we sharpen also looking at the streamlined product offering that we're talking about today that needs to be enhanced in Europe. So in total, The second part of the implementation of the strategy today is a cost of about SEK 140,000,000 as you saw in our announcement 3. And as again said again, implementation starts now. So all in all, when you look at the framework, it's about making sure that we all have a collective way of working to drive profit, growth and cash hand in hand so that we deliver on the expectations that is on Montes. And today, the midterm targets As we talked about, 5% organic growth. We have 14% EBITDA margin, adjusted so, and then a leverage of 1.5% to 2.5%. And as you can see, after 1st quarter, we had quite a good quarter with a strong growth in Airtech particularly. We had a strong profit delivery, particularly in Airtech, and we also had a leverage that stayed actually on the same level as we ended 2020 with, in spite of having some supply and deliveries that needed to be backboned with more Asenseter. So with that, I would like to hand over to Peter to talk about Etech. Thanks, Annette. I will present Etech together with Claus, so we will do this in 2 parts. First of all, when it comes to Airtech, we are 2,006 very proud and happy people with NERTeq. We're taking pride in making sure that our customer becomes more successful. We also take pride in participating and making sure that this planet becomes a much healthier planet place than today. We're also striving to be flawless and seamless in all our operations in order to be more profitable. So who are we, Anssen Erikek. We are the true global leader when it comes to the communication and cooling solutions for demanding industrial applications. In the majority of the markets where we are present, we are the clear number 1. Last year, we represented 70% of the Group net sales. And I talked about us taking a pride in making sure that our customers are more successful. And some examples you will see here. If you look in the pharma and the medtech companies, they need clean air in order to make sure that they have The right dry manufacturing conditions. We help them to accomplish that. When it comes to the wind farms, the ones that operate the wind farms, They need to maintain the equipment and they need to make sure that they are in perfect conditions, so they're up and running. We support them with that. When it comes to the battery manufacturers, they need extremely dry air in order to produce the batteries. We support them with that. When it comes to data center operators and the owners, they need to cool massive amount of hot air. With our equipment, we support them with that. So whenever our customers are having a problem in mission critical applications, we help them. I also mentioned our us taking the pride in making sure that we create a healthier planet, and we facilitate The transition to a more sustainable and healthy world. If we take in the pharma industry as an example, when it comes productions now against COVID and all the relief efforts. We take a big part of that search. When it comes to sort of the transformation to renewable energy and with windmills, we are part of that transition. When it comes to the automotive industry and the transition from combustion driven cars to electrical cars powered by battery, We are part of that transition. In the whole thing about the utilization, we are very much part of that journey as we support on sustainability journey. We are there to support and we support our customers. I talked about Airtech and who we are, and I mentioned that we are 2,600 very proud and happy people. We also around the world have 14 plants and 2 assembly hubs. And then when it comes to sales offices, we are present in more than 22 countries. And with that footprint, we are able to really support our customers. Sustainability is super important for us. And when we're looking at our KPIs, we see that we have a bit ago to reach the target that Klas mentioned, but we are on our way. So if we think about renewable energy, 41% of the energy we consume is renewable. If we talk about waste, we recycle today 36% of the waste. In terms of incidents, I mean, safety comes first. Last year, we were able to reduce number of incidents with almost 60%. In terms of women, we today have 20% as female leaders, and that's a growing number. If we then look at our footprint and where we're active around the world, U. S. Is by far our most important markets. So Americas 51% of our business today. If we then take EMEA, almost 30%, 29% of our business And then APAC represent 19% of our business. You also see on this slide the different segment and how big they are. And I will go back to these numbers when I talking about long term trend and how these segments are actually developing. I also talked about us being flawless and seamless. If you look in our financial performance the last year, you can see that we have a clear trend that we are improving. And if you read the The quarterly report, the Q1 and as Annette stated as well, we are performing well and we have a good sort of activity level. So we are very pleased when it comes to our performance. Klasen Anand mentioned that we launched our strategy last year. And I think the most important part with our strategy is that we redefined the way we look at the business area. We were focusing on our different technologies And we mapped them. And this work was important for us in order to make sure that we took the right decisions. If it comes to building a new factory, if it comes to developing new products, if it comes to making acquisition, we need to look on the technology We have and need to make sure that we become stronger in each of these pockets. First of all, we have our core technologies, on high performance dehumidification, center the majority part of our business. But it is also important to see that we have this adjacent business Where we have consequences of dehumidifying, we might have to humidify, we might have to cool, we might have to heat. And these businesses are also important. Then we have other technologies, our data center business, where we have a lot of cooling technologies. We have also another part of unification, which is that we're actually are unifying different industries. And then we have our miscemination business, our BFC business and the part of noncommercial that we kept, which is primarily supermarkets. So this is all about how we look on our different technologies and how we invest in going forward. And our offering is important. So when it comes to our offering, we have our components, we have our products, we have our system and we have our service offering. Our components, they represent roughly 20% of our business. And here, we're talking about media, media and cassettes. We're talking about our FX6 units And we talk about Reuters. Then we have our products, which is stand alone package, the unit fires. And then we have our systems. And then we have all and everything linked to our service offering. That could be service contracts. That's different kind of level of service contracts. Of course, asking a big part is also spare parts. When it comes to our unique selling points, first of all, quality and performance is extremely important. We need to make sure that we deliver in time. Of course, we need to use the resources in an efficient way. So energy efficiency, The way we consume water is extremely important. But perhaps the most important unique selling points For us, and the reason why we win so many businesses is our high degree of application knowledge. Very asking we know the process of our customers better than they do by themselves. So we take pride in making sure that we stay in the forefront when it comes to application know how And we are developing that even further. So by that, I would like to leave over The CyCool data center system is based on the principles of a thermosiphon. The first product that we're offering called CyCool split is rejecting 400 kilowatts of IT load with a 20 degree delta T, and we're really excited to be bringing this product to market. It's best in class In terms of efficiency, with no water use whatsoever, more hours of passive economization, no pumps To move the refrigerant so there's less maintenance, lower overall electrical power consumption compared to other dry solutions. Munter's recently completed construction on a multimillion dollar test lab facility. And the purpose for this facility is really to test the performance of our Equipment for customers giving us the ability to test their equipment for their specific project and to improve our product development processes. And then ultimately it will benefit our customers as we develop new products. We pride ourselves in developing innovative cooling for the data center industry and we developed the CyCool technology out of request and demand from the market and our customers. CyCool is an energy efficient thermosiphon based cooling technology integrated with ActiveDx through a heat exchanger that essentially eliminates potential to disrupt the industry similar to what our Oasis Indirect Evaporative Cooling Technology did nearly 10 years ago. We expect to develop other variations of products around the Sykul technology in the next few years. So you have seen how good our offering is. Mike Gillenkiv, the presenter sort of to show that we are in forefront. And then of course, with a good offering, you need to be in the right markets, you need to be in the right industries. I'm so proud that we are in the right industries and also that the underlying growth trends are great. If we look in Industrial, by far our biggest segments represent almost 37% or 40% of our business. You can see here the trend line long term is positive, primarily driven by the battery segment. The battery segment represent almost 6% of the business. And you can see that it has grown rapidly as posted in the Q1, especially in APAC, but we know long term that growth will also come from Europe and from U. S. Food, as we eat more and consume more and we become a bigger global population, the food segment will always continue to grow. It's also good to see that a lot of our customers just started to appreciate our offering and they see that they can become more efficient if they use our equipment. Then we have other being a quite big part of industrial and the BA 23%, and here we have pharma and preservation among others. Data center represent a little bit shy of 17%. Here you can see very strong underlying growth trends. I mentioned digitization journey and of Ann's Data Center is benefiting from that. Components, north of 10% of the business, very strong underlying growth trends Driven by both data center segment and as well the battery segment. Mis elimination, south of 10%. We see that as flat and that's mainly driven by a shift and we see the shift from coal who is declining And Processes is actually improving. Then we have Commercial Supermarkets, flat as well. We have, however, a good replacement business. On. And then services, 20% of the business and we see a good growth trends and we are actually aiming to gain market share. So with that, I would like to hand over the baton to Klas and to talk about the future. So with you Klas. Thank you, Peter. And for me, it feels very, very logical to talk about the future of Vertech because Peter, Peter's team and myself have been working closely together when it comes to building the strategy. 1st, we are aiming to become the undisputed leader in humidity, climate and pollution control 100% of our equipment will be connected moving into the future. We also strive to move towards 0 impact on the planet. And then, of course, coming back to the grid, set a continuous improvement culture with people that collaborates at heart. And moving over then to The focus, it's about strengthening our core, food, battery and services, Create and have the base core business developed, then expand the core, moving into digitization And to system sales, but also important, building our new core, As I said earlier, we analyze, we decide, we set plans and we follow through. I'm so impressed by Airtech and I'm so happy to continue to follow the road map forward. We put together dedicated plans for each and every area we would like to move. As an example, exit the commercial non core business, Expand data center production from Virginia to Texas, launching a data center service team in North America, Building up a new marketing organization with a new team that is much closer connected to the sales team. I mean, marketing and sales, They're overlapping and integrated processes now and into the future. Driving commercial excellence, Customer value and pricing standards. And I have to mention once again, I see a change in how we approach the pricing in the company. Innovation and R and D that is putting seeds in the soil for the future. And we have invested in more FTEs and more resources that is up 70% the last 15 months. And at the end, coming back to continuous implement on what we have set forward is really what Airtech will continue to do. But if you talk about the future, we aim to have 100% of our equipment connected. That will drive predictive and prescriptive maintenance solutions with our customers. And already now you can see that what we launched Last year, the remote assistant development and being able to service customer from distance is leaning together here and makes a lot of logic. Manufacturing optimization. You heard Peter talk about how we invest in North America. But here, it's also about continue to drive investment, Upgrade factories, drive lean, automation and sustainability, U. S, China and the Czech Republic. And above all, it is about continue to develop our efforts when it comes to production and manufacturing our core components. Coming back to continued innovation and investment. In the coming years, we will set up new innovation hubs in U. S. And China, What did it now started with center of excellence when it comes to battery and EMEA, and this will carry on into other segments as well moving forward. I'm super excited on what will happen in Airtech, and I'm so impressed of what has been done so far. With that, I would like to hand over to Pia Brantjeri Linde, our President of FoodTech. Please, Pia. Thanks a lot, Klas. So let's look into FoodTech. FoodTech is in both climate solution as well as in digital solution. Asking for 30% of group net sales. There are really 4 strong trends in the food industry. We talk a lot about food safety and the need for increased traceability. We talk a lot about improving animal welfare That makes me proud, and that was also one of the reasons that I decided to join Munters and FoodTech. I will give you a few examples. We really reduced the energy consumption by better designed ventilation systems and more energy efficient equipment. We are also there to help our customers to improve animal with our sensors. We are there also to reduce the usage of antibiotic by providing a better indoor climate for the Anzalz. And we are there also to help our customers to increase traceability all throughout the a supply chain in the food industry by collecting more data. And we are also helping our customers to reduce the usage of feed by offering better climate and thereby lower the feed needed to produce food. Station. We have 900 employees all around the world. We have 160 of our employees asking countries all around the world, and we have also 3 software development centers. If you look at the geographical split, we are really very well balanced between the three regions. More than 30% of our net sales are asking for the full year 2020. If we look at the segments, our strongest segments are broiler, a swine and layer, but we are also present in Greenhouse. And over the last years, we have done a solid growth and a solid profitability. Anssen. And in another area where we are investing a lot of our efforts in is into the sustainability KPIs. Today, we are doing 88% of Fotek has a dual offering to our customers. We are strong both in the climate side of the business, but also in the digital side. The climate side is our core and our heritage. There we use our strong position in ventilation. In the ventilation equipment, we connect it to our controllers and sensors and we create an optimized indoor climate. On the digital side, we are strong in the software area. We are with our software company, Amtech. We connect our software with our controllers and sensors. Answers, we access data all through the value chain and we give software solutions to our customers. On our traditional ventilation equipment. We have our fans, our air inlets and our cooling pads together with our controllers installed in the farms, and they are providing a the animals. They own the breeder farms and they own the hatcheries. They contract the growers and the farmers to grow the animals to the precise weight, but also with high focus on animal welfare, and they own the processing plants. And we are present with our software solution all through the value chain. The integrators want to optimize the whole supply chain and the farmers really are looking into being able to grow the animals in a precise weight, but also focusing a lot on animal welfare. Let me now show you an a software solution. So let's watch Sonar solution. You love technology and the control on. Especially when it can increase your profit. So it makes sense you would equip your poultry houses with all available smart controllers, gauges and IoT sensors. But then reality hits. All those components from different manufacturers are communicating through different platforms and different mobile apps. Now you're stuck in the middle of overwhelming alerts and incompatible reports. Let's fix that. SONAR by Emtek Systems, the IoT platform that brings it all together in one central system. Connect your existing farm data feed to the Sonar Cloud Or you can choose to deploy a fully compatible set of IoT gauges from Munters. Sonar allows you to go from simply monitoring your house environment with intelligent mobile app alerts to tracking feed consumption, inventory Automatically scheduling deliveries as well as predicting bird weights, uniformity and condemnation. Correlate every house environmental data point with flock performance indicators like mortality, weight gain, health status and many others. Emtek's AI platform will accurately predict your outcomes before they happen and even suggest actions to maximize performance and allow you to increase profit. Eliminate the noise with Sonar. Get the precision farming capabilities you need right at your fingertips and get only notifications that matter for your business and for you. Schedule a demo today and get focused on profit with Precision Farming. The film you just saw, I think, is an excellent example on how the importance to connect farms. And it's also a good example on the ambition that we are going for. It's really to create unique vertical position where we really would like asked to connect our equipment with the controllers and sensors all the way up to the cloud with our software solution. We are strong today both in the climate side as well as in the digital side. That's the reason why we can go for this vertical position. Doing that, we will also connect the integrated with the farmers, which is very important to drive productivity and reduce carbon footprint in the whole food industry. By connecting this vertical position, we also are going to connect the whole supply chain, going from the feed mills into the hatcheries unique customer value will improve animal welfare through facts based climate solutions. We will help them to improve feed conversion on safety through end to end traceability. So a lot of important customer values that are needed. To realize this potential, we want to drive the strategy, and we want to address 4 areas in our strategy, asking 2 areas in each of our offering. Let me start with Climate Solution. This market is today growing today, but we want to strengthen it even further. We want to strengthen our equipment position and we want to grow through Climate Solution. It is really what I talked about earlier today. It's about the trend towards traceability and food safety. It's about the trend towards reducing carbon footprint, the trend towards increasing productivity through digitalization, but also the health for animal and people. This area, we are part of that market and we are building that market today. We are a clear market leader in the software side. This market has a potential is what we are estimating it to be, a several 1000000000 SEK market in the future. And we want to take a leading position also in the future in this market. That's why we have decided to accelerate our growth in this area. We really want asked to roll out more software solutions and we want to build an installed base of connected farms. So within the Climate Solutions side, we will strengthen it we will develop it and continue to grow. And on the digital solutions side, we want to accelerate our digital journey and roll out Connected Farms. Answering. Let me now go into 3 examples on how we are driving our strategy forward. And let me start with Climate Solution. Answers and request for high airflow. With our deep application knowledge And with our long experience within this field, we were able to customize the climate control solution for the customer. And we have been able to serve them with a complete Muntas solution, including both fans, inlets, cooling and also connected controllers. And the benefit that we are helping our customers with is that they are getting an optimized indoor climate And they are able to run that the same performance all through the year, also in summertime. And now the customer has actually decided to build more You saw the Sonnar film earlier. That was really a film that was showing the importance of connecting farms. Now we are going to present you a film where we are going to talk about what kind of software solution we are providing and what kind of One of the most exciting projects we have been working on for 2 years is weighing live animals. The hardware has not changed in decades. It's still a rod hooked up to a platform hooked up to a load sale. But the catch is to know how many birds are getting into that platform. Is it 1 bird, 2 birds, 3 birds? In the past, you had to give them a standard growth curve for the system to know what's a valid weight. Now with water consumption, feed consumption and leveraging machine learning, we can create our own growth curve And we can use that to filter the weights. This innovation has helped us improve the accuracy of the weights With the current technologies available, both on the hardware and the software, IoT a machine learning. We can accurately predict animal performance and this helps our customers balance We're a software company. We develop a product For live animal production, we help our customers improve their supply chain. We have been in business for 30 years and it feels like we're just getting started. Really good. So now you could see in the film with Marcel how we are bringing AI to the chicken farms. And In this example, how we are leading the software market going forward, we are showing how we are bringing AI to the whole supply chain and how we are improving aspiration together with our customers. You will now get to know JBS. JBS is the largest animal protein a contributor in the world. They have been a partner to us in Manthurs and Emtek for over 10 years. They have our production management system already implemented all around the globe. I will give you an example from the hatcheries. JBS is hatching 40,000,000 eggs per week, and it could vary quite a lot between the weeks how many eggs are hatching. Asking between SEK 1,000,000 and SEK 4,000,000 could be the variance. It requires a massive planning procedure to get the Hatch And if you get too few, we'll not be able to meet customer demand and consumer demand. And that massive planning procedure that is done today is completely manual. They are using a lot of Excel spreadsheets and a lot of people are involved in the process. They're also very an AI platform. We are able to, with a lot of data from genetics, from the nutrition asking and from the environment, gather all that data and automatically predict and forecast how many eggs will This is also helping the customer to overlap the competence shift that is going on in the industry. Within the coming 10 years, a lot Anstag people are moving into retirement. There is a generation shift. And with our user friendly AI platform, it will be much easier for the customer to also let that competence shift work with less with people with less experience. Reduced waste. This platform will go live as a prototube on St. Jude in Q3. Let me now summarize finally where we are heading on the digital side, we are going to invest in innovation to build up more connected Thank you, Pia. Super exciting to know about the future in FoodTech. Before I summarize, I would like to remind you all that we are now opening up the calls on we have the call numbers You can also put questions on the in on the webcast. So, Munters is on a journey For customer success and a healthier planet. And what is it all about? It is to continue to deliver on set strategies. It is about sustainability being fully integrated in everything we do. Innovation and growth, both organic And in the future, non organic: continued footprint optimization and process improvements Capital efficiency and cash generation is the end result of all this. We need to continue to keep a strong high alert in mitigating current Supply chain challenges that is not only affecting us, but the total globe in all different industries. For Airtech, it is about continue on the growth journey they have set ahead, grow in the prioritized markets. For FUTEC, it is about acceleration and market creation in the digital arena, Creating and supporting a change of industry that will represent several SEK 1,000,000,000 in the years to come as a market. I have full confidence, And I truly believe that we are on the right way forward. So with that, Let's open up for Q and As. I step down and stand on the side here, so we even out the heights. Ansel. I would like to open up for questions on the conference call, if we have any there. I'll take a few questions from the webcast. A question from Kenneth Oljensson at Carnegie. And the question is that you talked about establishing an excellence Center or Center of Excellence for battery technology in EMEA at the end of this year. And what are the plans? And what will you do different this time than what happened last time you entered the European market for the Data Center Cooling. So I hand that over to you, Klas. Thank you, Kennenet, for the question. I think it's a very good question. We will do it in the sound way this time. We have already established and have a lot of competence gathered in Europe. This is not to build up a physical center competence. This is about aligning all the people and all the already existing competence That we have in this arena. And it's very much about working together with customers, working together with academia And setting the stage moving forward. But please, Peter, if you would like to add any more to this because I could say everything is different compared to how data center in Europe was established the last time. Now we have concrete plans and a way forward. First of all, I mean, for me, it was 2 different questions. When it comes to center excellence teams for the different segments that we mentioned, the battery team, This is, as Thorsten mentioned, we are gathering the know how and making sure that we have a combination of physical and virtual team. And that is in order for us to really as I mentioned, when it comes to application know how. So the center of excellence teams we have for battery and we will have for all the other focus segments. When it comes to data center, the day when we decide to re enter Europe, if we do so, we will make sure, as Claus mentioned, we will do it in a Much better than previously, and we will sort of learn from the success we're now having in U. S. Anast. And this is a question to Peter from Lukas Verhany at Jefferies. You talked about the windmill business. And can you quantify or can you say what the size of this windmill business currently is for Airtech and how it's growing. It's actually a fairly small part of Airtech. So it's way below 10%, but it's a very important business for us, and we have some key OEM customers that are asking for us both from a product perspective, but also when we talk about our digitalization journey, Where we make sure that these windmills are connected. Okay. Thank you. Then we have a question from Fredrik Svanhall. And it's a question related to FoodTech. On the equipment side. What is the Muntas market share on equipment in your largest markets? And who are the biggest competitors and their share asking relative to Muntas. And also, what is your strategy to increase the attach rate on services when selling new equipment? Also three questions actually in one. I can start with the first one and then Pia, please. I mean, it's difficult to say exactly what the market share is. But we estimate the overall market in FoodTech, the equipment side of the market To being in around SEK 10,000,000,000 and our total sales in FoodTech at current is roughly SEK 2,000,000,000 So give or take then slightly below 20%, give or take. Yes. And asking. The next question was related to the software as a business or software as a service. And of course, in the accelerating the digital side of our business And our software solution that is, of course, going into that area more and more and drive SaaS business model. We are today working a lot with our dealers and distributors, and they are serving the customers on the service side. We are, of course, helping them to do that in an excellent way. Okay. Great. Thank you. Asking. Do we have any questions on the call on the conference call? Very good. Sorry? I remind you that if you want to ask asking. We do have a question from the line of Lucas Ferrani from Jefferies. Please go ahead. Your line is open. Hello. Thanks for taking my question. I just wanted to ask whether you thought about potentially moving the medium term targets for this event And why haven't you done so? Like you said, Bjorn was very strong. If you look at the margin development, I mean, it feels really reachable Potentially this year, so I was just wondering what was the thought process, sorry, on the margin? Thank you. Luca, a very good question. It's a asking Question that pops up on and off in various meetings. We have a view that when we set those medium term targets, We talked about the 3 to 4 years journey. And now we're in the midst of a pandemic and we yes, We are delivering better and better. But at a certain time when we feel ready to set new targets, I mean, of course, then we will put that forward. But at current, we will continue to do our utmost to reach those targets. And I can say like this, I'm very confident that we will reach those during the times table set. Perfect. Thank you. And then I have a follow-up that I also asked on the webcast. What is preventing farm owners Today to go digital, why is the penetration rate of those software solutions so low? Obviously, that makes it for greater opportunities. I was wondering If that development is necessarily going to accelerate now, what has changed really? Thank you. I can start to answer And then I know Pia knows much more about this. But if I refer back to the industry that I used to work in, I mean the pure manufacturing industry. That industry was has also over a decade talked about IoT and connecting different on setups and it was not that easy to implement. If I go back to Farmers, etcetera, What it's all about here, it is about creating a market that has not have been there. But I think we have Good, good ways forward. But please, Pia. No, but I think it is about it's like in all type of industries. It takes time for people and for companies to move into the digitalization side, and it goes more faster and faster into that. And understands the importance also to remotely monitor and connect the farms. So I'm confident that this move will come and it's coming more and more step by time. I heard a great story by Pia in regards to let me call it the new generation of farmers. The old generation of farmers may not have been so used to being connected Using software, etcetera, but they cared a lot about their animals. And what did that mean? They had to go up and they had to guard, they had to watch, they had to control That the livestock was really feeling well. And Pia told me a story about, let's say, younger farmer, a modern farmer In the future outlook environment and he said, I mean, having this on an app that gives me A good night sleep. I know that my animals are feeling well. Yes. And I think that it goes for all of us, having the access We have another question from the line of Anders Roussjond from Pareto Securities. Please go ahead. Yes. Hello. I would go back to the Airtech chart you have about There is market trends and you see there that lithium batteries had 6% of sales In 2020 and in others you had also the pharma business. I don't know how big that is of the 23%, but let's assume 10% or something. While in the Q1, you had a very strong growth in this lithium batteries and also the pharma business, It's a very bumpy business, but how do you see those progress? Should lithium batteries at a 10% of the business or is it could you give any sort of color asking to the sort of market potential for those areas, the pharma and the lithium batteries. Let me start and then I hand it over to you, Peter, to give more color on the question, so to speak. I mean what is clear? Lithium batteries and battery business is here to stay. The first wave now is very much I mean, in Asia, It is a tremendous growth on that side. They are leading the way when it comes to electrifying the automotive industry. Now it's moving towards Europe and it's also coming in North America. I mean North America Aslaug, but as a society, it has not really moved in that way. Beside that, lithium batteries is also about Energy storage. So it's not only combustion engine. So what we see that is let me phrase it like this, A double digit growth of this industry for many years to come. That is the industry. And when it comes to the pharma, What we predict that it will continue to grow. It is quite substantial growth right now in regards to The COVID-nineteen, but we predict that testing and vaccination And pharma as such will continue to be, if not double digit, close to double digit moving forward in the coming years. But Peter, you can give a little bit more in-depth color of the 2 industries. First of all, when you're looking in the battery part that we've posted at 6%, you also need to know We've posted at 6%. You also need to know that's part of the battery business is also in the component business, so it's bigger than the 6%. And as we on the slide, we said had a deep green arrow pointing almost straight upwards. So we see a very positive trend in the battery segment. And just if you look on number of projects that are now happening in Europe, you see that the sort of the underlying growth trend is very strong. So as Karl said, the battery segment will continue to grow and will continue to grow for long. In the Pharma segment, I mean, we have seen the surge now due to the COVID-nineteen test case production. There also might be other things happening in the Pharma That they might be reading the most when it comes to pharma production and that might benefit us long term. But the trend line for pharma is not as strong for battery, but it is strong. Okay. Thank you very much. We have a question from the line of Mats Lies from Kepler Cheuvreux. Please go ahead. Yes. I think you. An easy question at first about service, I guess. You have a target to grow service and Appreciate that. And is the main driver a change in sales mix or is it sort of an increased Contract penetration in the existing fleet of Muntas equipment. Could you say something about that? The service growth is simply put divided into 3 different buckets. And I will also hand this over to Peter in a few seconds here. But really, it is about penetrating the order of the existing installations. It is about connecting service agreements to all new installations whenever possible. As an example, you saw that we are building up a service organization over in North America now when it comes to data centers. And then of course, it is also about Can we then start to build the string of pearls in regards to more feet on the street, more service capabilities? Sorry, but easy way to describe it that is, we know now that if we hire a strong service and application technician in less than a year that is being paid back on service growth. But Peter, you have More details on this. No, I've touched. I mean, you covered all the 3 buckets. And the service organization with NERFT is now Good machinery. So we just need to continue to grow that. Of course, we need to add some support functions, but we are in a good way and we are really accelerating In terms of bringing on new people on board and as well trying to acquire, as Claus mentioned, a number of small companies. And you will see activities when it comes to that going forward. And then we can let me speculate a little bit moving forward, not about If we acquire or not, but let's say like this, 2, 3 years ahead, how do we look upon service? A typical good example is this, the remote service that we have started to install digitally driven, but other type of services is also Maintenance contract, software contracts, etcetera. So if I add that, I am quite sure that our definition of service 5 years ahead in the industry is different today. So we have many streams. At current, we are growing The service sector will be roughly 1% unit a year. And I said in the future, it will by our own force At least being between 1% to 1.5% a year, and then we can add other on that. Okay, great. Thanks, folks. There are no further telephone questions registered. Okay. Thank you. Then we take a question from Filbert VCS. I heard of chicken shortage in the U. S. How is the broiler market doing in the U. S? And related to the labor shortage. Do you have any issues to hire new people in this industry in the U. S? Pia, I think you have the air to the Yes. I think as you could see in Q1, there was a weaker side of the broiler in U. S. We also foresee that, that will continue for a while more. On the broiler side, it is a lot related to COVID. It's related to the timber prices are going up in Jaws and how they are building a lot of the farms with timber So that is impacting the situation right now. Of course, in the long term, if we're looking a few years ahead, that will, of see that kind of challenge, of course. Going forward, we will recruit people in all areas in our global organization. And U. S. Is an we have another question related to FoodTech here, and that is from Kenneth Tolj Johansson at Carnegie. Can you use any software that you now have developed for the U. S. Market in Europe or in Asia? We are doing that already today. We are our software solution are global. And then they are, of course, used in an application that is customized for the specific customer, but is already asking for the specific customer, but this is already today a rollout for several customers around the world. Yes. To add here, a lot of the customers that Pia talked about earlier, the top 20, I mean, they are truly global customers. When they say yes to a softer package, of course, they will also start to install it on a global level. But We are leading the change in industry here. It is and it's exciting. Yes. And the example I can also the example I gave in my presentation on JBS. They have businesses both in U. S, Mexico, Brazil and U. K. And we are following them with our solutions in all those places. Thank you. Then we have another question that is also related to FoodTech. And it is a question to you, Pia. You from Bruno the most at Muntes since joining and maybe mention a few example of areas asking that you think can be improved and what the key challenges are in the markets FoodTech answered. Okay. Yes, I did. So I did start 9 months ago, and I'm really happy for joining Muntas. I was really much attracted to Muntas because of the position we have in the global market. We are really a global true global organization And we are present all over the world. And we also have a very strong brand name and we are laying a lot of effort in innovation. I think that is an important part for driving a profitable company into the future. I was very much impressed about the digitalization and the level that Food Amtech Borat when I started. I think really our software company, Amtech, have really shown an example in industry on how they are driving new solutions in the software side, and that is impressing me also today. And we have much more to do in on that area. When it comes to the areas that we need to work on is what Annette and Klas already mentioned, we need to work on both in innovation and in our production facilities and also with our product offering and pricing and so on. Great. Thank you. I would like to ask if we have any questions on the conference call. Yes. We do have a follow-up question from the line of Lucas Ferrani from Ansserius. Please go ahead. Hello. Thanks for the follow-up. We are hearing right now Potentially a new wave of African swine fever in China. I just wanted to know if you heard asking. Anything also for if that's a worry on your side? Thank you. Yes. We have heard and seeing that there are a few outbreaks in some places inside China, not of course, not in the same situation they were several years back. And that is, of course, something that we are monitoring and helping our customers with. And I have to add like this and this is a little bit on the borderline. I mean, it's always At the same time, a lot of our offers moving into the chicken industry, to the swine industry, etcetera, is actually there To prevent outbreaks of that type of diseases. So I just want to balance it. It's always sad to hear of outbreaks. At the same time, our offer is very much supporting avoidance of that. Thank you. We have another follow-up question from the line of Mats Elias from Kepler Cheuvreux. Please go ahead. Yes. Hi, thank you. Well, a food tech geek. And I guess you mentioned that while you have Top 20 customers and so on. And then I guess you offer new things with digitalization and software as a service So on that. Does that mean that this customer sort of group will shake going forward that you maybe will be I have many times personally talked about that we have installed I call it pilots among those top 20 customers. And what I see that is We jointly together with them discover value creation, What they can do in order to improve yield, improve animal welfare, improve profitability. But Pia, I mean, you are in more in direct contact with that type of customers, if you would like to add something. But we are in a journey answered with our customers. As Karl already mentioned and I also said earlier, we are there with the top 20 largest protein producers asking that are coming into this new technology going into the new area of digitalization. Okay, great. And you don't expect to see new competition in those areas? It's more of the same, I mean, From your side. Maybe you should start Claus and then I can Yeah, but I always frame myself and say, I love, we love competition. But what I've learned when it comes to digitalization, and this is not only for mantas, this is It's one thing to drive digitalization and software. But if you combine that with a thorough domain knowledge about The industry as such, then you have a strong, strong benefit. And here, I have to say, I look upon Munthers as being unique. And if we can develop According to the plans, I mean, in the foreseeable future, let's say, 5 years ahead, At least I have the ambition to see that we have a double digit part of FoodTech being Generated from this type of business, I. E. Software as a Service representing more than 10% of the total sales. But it's a step by step improvement and a journey and it will not happen in a few quarters. Okay. Thank you very much. There are no further telephone questions registered. Thank you. We have another question on the website or from the webcast and it's from Bruno Anssa, and he's asking if we could share any tangible signs of progress in our strategy for growing services. Absolutely. I think we have alluded to some of it already. And please both Peter and Pia jump in at any time here. But already in the beginning of the COVID, We generated an accelerated remote control being servicing customer on distance digitally. We are launching dedicated service teams, as an example, in North America towards the data center. We are searching and scanning for suitable service companies to acquire I think sort of just during COVID times, a lot of our customers didn't actually allow us to come and visit them. And still, we were able to perform on this High levels when it comes to service revenues. So that is a tangible proof. And then as Claus mentioned, I mean, remote assist is one of our new service products, But we have a lot of other more service products that we're offering to our customers. So new products, really good performance during COVID times. And then of course, as DAS mentioned, we are really adding a lot of service people to the organization. Okay. Great. We have no further questions on the webcast, and I also assessing there are no further questions on the conference call. But just double check, there are no further questions on the call, right? Yes. No further questions on the telephone. Okay. Great. Thank you. Claus, do you want to say a few words to end the session? Yes. I am I can end in the same way I started and summarized it. Munters is in a journey. We have now analyzed what is needed for the complete group and we have put together change and development programs in that area And we are delivering on those. We have made an analysis of Ertech and we are delivering strong progress on that strategy. And now it's the 3rd leg, the 3rd part and that is FoodTech. And as I said in the beginning, I'm even more convinced now than 2 years ago that Munter's future is great. Thank you very much. Thank you for viewing us and listening in. And