Company Primer | Munters Group AB | 17 Oct 2025

AI-fueled DCT engine vs battery trough; US chiller ramp shapes 2026

OVERVIEW

Energy-efficient climate solutions across three focused platforms - Munters provides industrial air treatment (AirTech), data center cooling (DCT), and digital farm optimization (FoodTech). The portfolio has been reshaped: FoodTech divested legacy equipment to become fully digital; DCT added high‑efficiency chillers (Geoclima); AirTech is consolidating its US footprint.
DCT is the growth and margin engine amid AI buildout - One of Munters' strongest 1Hs historically, with high‑teens/≈20% margins, broadening from air-based to liquid cooling/chillers. Americas drive execution; EMEA is slower amid evolving designs/regulation. Visibility is high with significant 2026 backlog coverage.
AirTech cycling through a battery-led downturn - Battery dry-room orders have stabilized at low levels with APAC green shoots. Mix and under‑absorption plus dual-site costs weighed on margins; a new US plant (Amesbury) underpins gradual improvement as consolidation completes.
FoodTech now fully digital, scaling ARR and controllers - Strong orders and ARR growth; near‑term mix skews to controllers while software deliveries ramp. Investment to scale moderates peak margins.
Consensus tilts to DCT strength; AirTech is the swing factor - Forecasts embed elevated but normalizing DCT margins, gradual AirTech rebuild, and steady FoodTech growth. Balance sheet and working capital discipline support elevated strategic capex into 2026.

Segments

DCT (~55% of EBITA; high-teens/≈20% margin engine) - Energy‑efficient cooling for data centers across air, liquid and chillers, plus service.
- Air-based cooling (CRAH/indirect evaporative): Americas/EMEA new builds and retrofits; efficiency/regulatory trends support.
- Liquid cooling & distribution (CDUs): Tracks AI densification; integration into facility water loops.
- Chillers (Geoclima): Premium efficiency; US onshoring in Virginia targets faster delivery, tariff relief, and cost gains.
- Service: Growing installed base drives lifecycle upgrades and resilience.
AirTech (~30–33% of EBITA; recovering from mix/under-absorption) - Industrial dehumidification, battery dry rooms, Clean Technologies, components, service.
- Industrial (incl./ex‑battery): Ultra‑dry dehumidification for electrodes; process climate for food/pharma/electronics.
- Clean Technologies (CT): VOC/solvent abatement; potential DAC components exposure; compliance-led demand.
- Components: Desiccant rotors, evaporative pads (rising DC usage); leverages DCT demand.
- Service: Installed base capture; digital enablement for performance.
FoodTech (digital; ~12–15% of EBITA; now 100% software/controllers) - SaaS (planning/analytics) and mission‑critical controllers/IoT for protein supply chains.
- Software (ARR): Planning, performance, traceability; higher incremental margins, paced by implementation.
- Controllers & IoT: Climate/feed/biosecurity controls; global dealer channels; training and customer success support adoption.

Key Debates

Durability of the AI-led DCT upcycle and margins - How long elevated hyperscaler/colo demand persists, the air-to-liquid mix shift, and competitive pricing determine if high‑teens margins prove sustainable as 2023–25 cycle orders roll off.
- Backlog cover already supports 2026; watch EMEA design shifts and liquid penetration.
- Pricing normalized to low single digits; product/region mix and utilization matter most.
- US chiller localization may offset tariffs/logistics and underpin availability.
[Time horizon: MT; Materiality: high]
Battery dry-room recovery timing and amplitude - AirTech battery intake has stabilized at low levels (APAC improving). The pace of gigafactory FIDs and regional policy support will drive utilization and margins post‑Amesbury.
- Labs/pilots continue; large greenfield projects remain tentative in Americas/EMEA.
- Competitive intensity in APAC affects pricing; service/components can partly offset.
[Time horizon: MT; Materiality: high]
US chiller onshoring execution as a strategic hinge - Virginia capacity (starting early 2026) is critical for lead times, tariff relief and cost curve; success supports DCT share capture and margin resilience versus global peers.
- Ramp timing, learning curve, and supply-chain localization are key watch‑items.
- Customer qualification and large order conversion will test the new footprint.
[Time horizon: MT; Materiality: high]
AirTech margin rebuild pace post footprint consolidation - Dual‑site costs roll off and mix shifts (service/components/CT), but regional price pressure and subdued battery may cap the recovery near term. Execution on Amesbury savings and utilization is central.
[Time horizon: ST–MT; Materiality: medium]
FoodTech ARR scale vs near‑term controller mix - ARR grew double‑digit, but controllers are currently the growth workhorse. The balance between investing for ARR scale and sustaining mid/high‑teens margins is the trade‑off.
[Time horizon: MT; Materiality: medium]
Service/components path toward >1/3 of sales - At 25% today, a higher mix should lift margins and cash conversion; requires installed base capture, higher attach/renewal, and component penetration into DC/industrial.
[Time horizon: LT; Materiality: medium]
Clean Tech/DAC pipeline materiality and timing - Policy‑driven abatement and emerging DAC can diversify AirTech, but timing/adoption remain uncertain; potential upside optionality in outer years.
[Time horizon: LT; Materiality: low]

Recent Reporting

Q2'25 group snapshot indicated resilient demand and solid execution despite FX headwinds and AirTech mix pressure.

KPI (continuing ops)	Q2'25	Q1'25	Q2'24	YoY	Seq.
Order intake (SEKm)	3,666	3,556	2,996	+22%	+3%
Net sales (SEKm)	3,606	3,714	3,256	+11%	-3%
Adj. EBITA (SEKm)	491	502	593	-17%	-2%
Adj. EBITA margin	13.6%	13.5%	18.2%	-4.6ppt	+0.1ppt
OWC / Net sales	9.1%	10.2%	14.3%	-5.2ppt	-1.1ppt
Leverage (ND/EBITDA)	2.8x	3.1x	2.0x	+0.8x	-0.3x

Segment highlights (Q2'25):
- AirTech: Orders -4% YoY; sales -12%; margin 7.4%. Battery weak in Americas; APAC improving; CT and components (pads) provided partial offset. Dual‑site US costs and regional price pressure diluted margins; management guides gradual H2 uplift as Amesbury normalizes.
- DCT: Orders +32%; sales +37%; margin 21.0%. Strong Americas execution; mix across chillers/CRAH/CDU; positive net price. ~50% of additional backlog already scheduled for 2026; US chiller plant to start late Q1'26.
- FoodTech: Orders +204%; sales +86%; margin 17.2%. Best‑ever orders for new digital scope; ARR SEK 316m (+11% org.). Controllers leading near term; software timing and growth investments temper peak margins.
Mix/FX and cash: Currency headwind was material (~-10% on orders/sales). Service+components 25% of sales (ambition >1/3). OWC/net sales at 9.1% supports cash discipline. Strategic capex elevated (Amesbury; Virginia chiller lab/factory).
Consensus setup (Oct vs Apr 2025):
- FY25E trimmed slightly on AirTech downgrades; DCT raised on execution. FY26E margins eased (14.31% vs 14.85% prior) mainly on AirTech.
- Implied H2'25: Group margins broadly steady vs H1; AirTech up sequentially (under‑absorption unwind), DCT normalizing to ~high‑teens, FoodTech slightly better on scale.
- Sensitivities: Potentially optimistic on AirTech FY26 margin if battery remains muted; potentially conservative on DCT 2026 cadence given backlog cover and US localization.

Upcoming catalyst: Q3'25 results (Oct 24, 2025) — focus on DCT book‑to‑bill/mix, AirTech margin progression, FoodTech ARR/software deliveries, and service/components mix.

Lead Indicators

Indicator	Target	Justification
Hyperscaler capex (AWS, Microsoft, Google, Meta)	DCT	Primary driver of DC buildouts; informs technology mix and timing.
Colocation absorption/vacancy (CBRE/JLL)	DCT	Take-up and vacancy by market foreshadow orders/backlog and pricing.
NVIDIA DC revenue / GPU server shipments	DCT	AI compute deployments correlate with incremental thermal capacity needs.
US ISO/RTO interconnection queues/power constraints	DCT	Power availability is a gating factor for DC project starts.
Benchmark Mineral gigafactory tracker	AirTech (Battery)	FIDs/announcements and timelines drive dry-room pipeline by region.
Global Manufacturing PMI/Industrial Production	AirTech (Industrial)	Macro proxy for discretionary process climate investments.
Avian influenza outbreak updates (USDA/OIE)	FoodTech	Outbreak/rebuild cycles influence controller and software demand cadence.

Model Drivers

Model by segment using order intake→backlog→revenue conversion, overlaid with price/mix, utilization and FX. DCT is driven by hyperscaler/colo capex and product mix (chillers/CDU/CRAH), with US chiller localization shaping costs/tariffs and margins. AirTech splits battery vs industrial/CT/components/service, tied to gigafactory starts, Amesbury savings and regional pricing. FoodTech separates ARR KPIs from controller volumes/ASP and implementation timing. Cash/OWC follows project mix and capex cadence.

DCT revenue bridge
- Orders by region/product; backlog coverage and conversion lags
- Mix/pricing, factory utilization; US chiller onshoring cost curve
AirTech drivers
- Battery project count/avg order size; regional win rates
- Industrial ex‑battery orders; CT awards; components/service mix
- Amesbury savings and under‑absorption unwind; pricing (~3%)
FoodTech drivers
- ARR: subs, ARPU, churn, attach to controller base; deployment timing
- Controllers: units/ASP by species/region; channel inventory
Group overlays
- Net price vs input/tariff/FX; OWC turns; capex and leverage

Read-across Peers

Peer	Score	Justification
— Data center cooling OEMs and systems —
Vertiv (Liebert)	●●●●●	Closest overlap in CRAH/liquid cooling; demand and margin co-move.
STULZ GmbH	●●●●●	Precision cooling specialist; similar product mix and end-markets.
Modine – Airedale Data Center Cooling	●●●●●	CRAH/chiller exposure; good proxy for AI-related demand.
Johnson Controls – DC HVAC (York)	●●●●●	Chillers/AHUs into DC; US exposure and pricing trends.
Trane Technologies – Chillers/DC HVAC	●●●●●	Chiller demand/efficiency trends, esp. in Americas.
Carrier – Chillers & DC Cooling	●●●●●	Chiller orders correlate with DC projects and mix.
Daikin Applied (McQuay) – DC	●●●●●	Competes in high‑efficiency chillers for DCs.
Schneider Electric – Cooling Solutions	●●●●●	Broader DC infra vendor; partial thermal read‑across.
CoolIT Systems	●●●●●	CDUs/liquid loop components; liquid-cooling penetration proxy.
Alfa Laval – Plate heat exchangers	●●●●●	Thermal components used in liquid loops; adjacent signal.
— Data center operators (demand proxies) —
Equinix	●●●●●	Global colo bookings/build cycles drive order cadence.
Digital Realty	●●●●●	Colo utilization and pipeline indicate cooling demand.
QTS Realty	●●●●●	US hyperscale-leaning builds; strong near-term signal.
CyrusOne	●●●●●	Hyperscale DC development pace; technology mix indicator.
Amazon AWS (Hyperscaler Capex)	●●●●●	Hyperscaler capex slope informs DC thermal demand.
Microsoft Cloud (Hyperscaler Capex)	●●●●●	AI DC expansion and liquid-cooling adoption proxy.
— Battery dry room / dehumidification peers —
Bry‑Air (Pahwa Group)	●●●●●	Direct competitor in ultra‑dry rooms for Li‑ion.
Seibu Giken/DST	●●●●●	Desiccant tech and dry-room solutions; strong overlap.
Condair	●●●●●	Industrial humidity control; battery exposure proxy.
Cotes	●●●●●	Low-dew-point specialist; European battery projects.
— Clean Technologies / emissions abatement —
Dürr – Environmental/Clean Tech Systems	●●●●●	RTO/oxidizers and solvent recovery; CT demand mirror.
CECO Environmental	●●●●●	Air pollution control orders; compliance-driven demand.
Anguil Environmental	●●●●●	VOC abatement projects; similar permitting/timing.
— FoodTech digital/controllers peers —
SKOV	●●●●●	Poultry/swine controllers; primary competitor in controllers.
Big Dutchman – BigFarmNet/Controllers	●●●●●	Integrated equipment+digital; strong end-market overlap.
CTB Inc. (Chore‑Time)	●●●●●	Controllers/automation; demand proxy for farms.
Fancom	●●●●●	Climate controllers for livestock; EMEA exposure.
AgroVision / Porcitec	●●●●●	Livestock management software; ARR adoption proxy.
— Food producers (end‑market proxies) —
Cal‑Maine Foods	●●●●●	Layer economics/biosecurity influence controller retrofit cycles.
Tyson Foods	●●●●●	Integrator capex and efficiency focus drive digital adoption.

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