Munters Group AB (publ) (MTRS) Earnings Call Transcript & Summary

Hello, everyone, and welcome to our Capital Markets Day 2024. So welcome to everyone here in the room, and welcome to everyone who's joining us on the webcast. I'm Ann-Sofi Jonsson, and I'm responsible for Investor Relations and Risk Management at Munters. First, I would like to start with some security info for those of you here in the room. In this room, we have 4 exit doors. So one in that corner, here behind the curtain, behind the curtain on that side and down in that corner. If we would be evacuated today, then we will meet up outside of this building on the other side of the square. So outside of the hotel, opposite this hotel. And I also would like to say that we have toilets both to the right and to the left outside of the room. I joined Munters in 2019. At the same day as our CEO, Klas Forsstrom, also joined the company. And it has been a fantastic journey throughout these years. We have met many of you at several occasions throughout the years, many digital occasions as we have gone through a pandemic. But we have -- and at the webinars that we arrange regularly where we dive in to some specific topics related to our strategy. And we also met at the end of 2020 at the physical Capital Markets Day here in Stockholm. And now we are very pleased to host you here today. I would be co-moderating this event today with my IR team colleague, Line Dovarn, who joined us in 2021. So welcome, Line.

Thank you. Very happy to be part of the IR team here at Munters and it's been an exciting couple of years here. And talking about exciting, we're very happy to have an exciting agenda for you today. There we go. So first that, we will hear from Klas Forsstrom, our CEO and President. He will talk about how we are positioning ourselves for the next growth wave. Katharina Fischer, our CFO, will then talk about how we are focusing on profitable growth through value creation. Then we will hear from Grete Solvang Stoltz, who is our Group Vice President of Sustainability, Communications and HR, and she will guide us through our accelerated sustainability agenda. Then Pia Brantgarde Linder will come and talk. She is President of Business Area FoodTech, and she will talk about FoodTech's journey towards accelerated growth. We will then have a short break, about 45 minutes, depending on how we are on time. And at this time, we recommend you mingle and also there will be coffee outside where you had lunch and something sweet to eat as well. We will start at 15:20 sharp. And then we will hear from business area -- President of Business Area, AirTech, together with Vice President of Clean Technologies, Henrik Teiwik and Jing Jin. And they will talk about AirTech's well diversified and leading position. And then we will hear from business area data center technologies. The President there, Stefan Aspman, he will talk about DCT and how they are staying ahead of the curve. We will then finish off with some closing remarks and at that this point, we will open up for Q&A. So in the audience, you will be able to ask questions. And for those of you that are viewing on the webcast, you can ask questions throughout the full afternoon by using the chat function. And then we hope to finish off around 04:30.

Okay. And now I will present the booths. If you look to the right, you will see that we have some stations where you can find interesting information about different areas. And this is for you in the room, that we have one station where we have our Stefan Aspman, who is Head of Business Excellence and IT, and he will present how we work with Munters production systems, continuous improvements and so on. And then we have Henrik Teiwik, who is our VP, R&D and the Product Management and Marketing at AirTech. She will talk about sustainability and innovation and actually how important sustainability also is when we talk about the -- or the product development process and already in the design phase and so on, she's the expert on this. And then we also have Jing Jin, who will also present from Clean Technologies in AirTech, who'll talk about their growth areas in that booth. So very exciting. And we also have cycle split from data center technologies here to be presented by Craig MacFayden, who is Director of Office Strategy and Portfolio Management, as well as Frank Pellegrino, who is VP Finance & Strategy. And then we have from FoodTech, we have Saverio Zuccotti, I hope I pronounced your name correctly, Head of Product Management for Controllers, and he can present to you our controller, Rotem for you. It's also displayed here. And then we have Marcel Cohen, who is the President of MTech, who will talk about Amino, our software for the food industry. Good. Great. So with that, after a short introduction, we will leave the stage to our CEO, Klas Forsstrom. Thank you. [Presentation]

Isn't it fantastic to see what makes a company great. The people that works day in and day out to deliver on what we have set ahead. Super happy to see you all. It is larger and larger communities joining in and especially you, watching this on the broadcast also, very, very warm welcome. So what I will present, I will start to take us back a little bit, a couple of years and reiterate the mother of knowledge is repetition, where we were a couple of years ago and then take a step-by-step into where we are today, talk about where we are and then bring us into the future. And more about the future you will hear for sure from all the other presenters later on. So going back to 2019, you heard Ann-Sofi saying -- that was the time when myself and many others in senior management started to join Munters. We put together a strategy that in very simple terms, and this, I think you've seen a similar strategy presented by many other companies. But in simple terms, it was to create stability, to start to work with how could we become more profitable and then, of course, start to build the building blocks to how could we start to grow. Stability was very much about simplifying. I had the firm belief that we were an [indiscernible] matrix. You have to have the doctorate in matrix understanding to understand how people reported in Munters at that time. So step-by-step moving it to a decentralized, fully owned business operation driven by the individual business areas. Then of course, also to start to take a look upon the product assortment, what part of the product assortment should we keep or what part of the portfolio should be maybe close down. And we did some of that. And then, of course, in parallel, we started to work with profitability. Where could we reduce the assortment, where could we work with lean, where could we work to become a more professional company that started to look ahead and not just to fix the problems of the past. And then of course, and this is not a staircase really, we started to gear up for growth by identifying the right growth segments, where do we put our firm bets. And we started to bet on lithium batteries, data center technologies or data center cooling and then the transformation of FoodTech in different ways. And then, of course, to complement that, we also said that we need to start to sell more service and more components. And a couple of years later, now we are last year, I think the big push came when a lot of this started to come into real results. And humbly said, last year was a record year. But I also would like to say that this is still just the beginning of the journey. I mean, a journey that consists of many more steps to come. You know it as well as myself, but I think it's fair to talk about what are we today? We're a company then 5 years later that has doubled in size. We are about SEK 14 billion in sales. We have fully transparently integrated sustainability in our strategy. It is how we work, what we do, how we conduct business, but even more so, what we sell to our customers and how do we support them in accomplishing their sustainability agenda. It is also about profitability. Last year, I think on average, each and every quarter generated higher profitability in the year of 2019 on the full year. So step by step, we are moving in the right directions. We [ changed ] the organization. At current, we have 3 different business areas, and you will listen into all of them then. And even if that is not the most important part, but you are owners or investors or analysts, I think it's also fair to talk about what the market cap is on and about at this stage. We are a purpose-driven company. One of the things that we changed over the years that was to set the purpose, a purpose that we fully believe is the way you attract the next generation. Many of the coming technicians, experts, et cetera, they would like to join up with a company that has a purpose. And our purpose is very simple and are very much aligned with what we are, for customer success and a healthier planet. Being very, very close to the customer, delivering what the customer would like to have for them to succeed, but with an overarching target to support what we do and support them to create a healthy planet. Then I will not go into the strategy wheel. It is a very generic wheel. I'm a true believer on this. A successful company needs to constantly innovate, invest in innovation, putting the seeds in the soil for the future. It needs to concentrate itself on the right markets, the right segments, and move away from the wrong segments in their own markets, needs to be very, very close to the customer, get the interactions from the customer and send back information to the customer that a customer may be is not aware of. If you then start to spin this spin wheel and start to get it going around from innovation to the right markets and segments, to the customers, getting customer feedback, then you start to deliver a very, very good industrial-driven company. The engine in this is how we are -- how we work with operational excellence and the constant small improvements and the courage and the guts to say, yes, and to say no to certain things. And then, of course, the energy in this engine is how we organize in our people. Today, we are represented in about 45 countries, as I said. We have an organization that is, to a large extent, decentralized all the way. So the P&L responsibility belongs in the different business areas. Depending on size and organization, they have also pushed that further ahead into a region. We have a lean, very efficient support function on the top that -- and I think this is important as well. When we started to change Munters, we changed it in all dimensions. We'll be building capabilities on certain group functions, and we were investing also in the different business areas. So it was not just like pushing it all out to the business areas and off we took -- went. Those of you that have followed us as well, if you take a look upon the order intake, order intake and invoicing. 2019, 2020, it was a much higher dependency on Asia. And this has gradually moved over to become more and more, if I may say so, U.S. dependent or U.S. driven. I don't think that is very much different to many other industrial companies, but it's definitely something that we see. Part of this is, of course, that we have had a tremendous response from the market when it comes to data center and data center is predominantly in North America, but it's also that the Asian market has been that. When I see this picture, I become so excited, so proud. And the excitement and the proudness comes from -- whenever I read an article about an up-and-coming business that is driven by transformation and forces, mega trends or sustainability or digitalizations, I can find a Munters product system, component, service that is needed to make this change happen. I've been working in a few companies. And honestly, I cannot identify many, if any, companies where I can say, we are definitely hitting all the large transformational trends that happens on the globe right now. And to give you a couple of examples. You will hear the thunder, the positive thunder about data center. I mean, a megatrend that will continue to go for many years more to come. Lithium battery, we have talked about, but it's more than lithium batteries. It is electrification. Electrification of the EV fleet, energy storage, energy balancing, windmills, the cables from the windmills into the grid, in all of those examples you need to have a dehumidifier of various kinds, a large transformation. And what are we talking about? Electrification needs to happen. If we go into food production, a large question in food production is, how can we become more sustainable? How can we minimize the waste? How can we deliver a healthy environment to the chickens, the swines or even the vegetables. We are in the center of that development. And actually, we are creating a market that will drive that development forward. And you will hear more about that from Pia later on. And I can rattle alone on all this. But every time I see this picture, I discover a new area to talk about. Isn't that fantastic? If I take another perspective, a little bit more global, we can call it conceptually, I think we can boil those segments into a few mega trends. Climate change and resource scarcity, population growth and change of where people are living, of course, the acceleration of digitization, AI and so on. But then also, what is something that is working in our favor even if I don't like it -- I mean, this larger constraints in the global economy, regionalization taking place, globalization in a different way. Generally speaking, we are already now selling most of what we produce within a region. And that journey we will continue to do. Each and every company has a USP, the unique selling point. And if I have to identify one unique selling point in our company, that is our application knowledge. If I ask customer independent of segment, what differentiates us to many others, it is not the prospect of what we are selling. It is that what we say, we also make happen, that is the application specialists on the ground. We sell proven -- perhaps it's a hygiene factor nowadays. We sell proven energy-efficient products and solutions. We have a very large installed base, talk about service and aftermarket. In most areas, we are either on what I call the medal podium, the top 3 or very close to become. And if we don't believe that we will be on that, then we will take the consequences of that as well, and we will start to exit it. And then you can call us a global local company or a local global company, we are where the customer are, but we operate globally. But the unique selling point is our application specialty. You will see more about products. And for some of this, I mean, there is in Swedish old [ ScottKnott ], is old food, you know it already. But what I think is unique for us as well is, we are a company that are selling solutions, systems, products, components and services. And sometimes we sell all of this to our end users. But sometimes we sell components and parts of our service to competitors of us and what a brilliant opportunity to win in different ways. We can win the system sales, the product sales or we may lose some of it, and then we can win the component sales later on. On this, when it comes to FoodTech, we are making a review. And I promised and I will reiterate my promise before the end of this quarter, at latest during the Q2 report, we will come to a conclusion. And the review is all about what I now call the non-intelligent equipment, i.e., the fans the equipment, equipment, should we keep that or should we not keep it? Should we then concentrate on controllers, intelligent equipment and software? We believe that the connection is weaker and weaker. And at the end, at current, we are now testing the market on how they look upon what we possibly would sell off and then based our conclusion on that. I've already talked about this journey. But what I think is important on this time line, that is, you can say stability and then profitability and then growth. What this is exemplifying is very much that stability will always be a case in some parts of the company. We will always be able to improve and become more dedicated or more concentrated or more on top of everything. So stability will always be a small hint into the recipe. Profitability, the same. And then growth, of course. But at current, we are much more stable, and we have started to lead the way in improving the profitability. So we will concentrate even more on growing in the future and more about that later on. So what we are saying then that is we are now starting to position ourselves for the next growth wave. And that is also, and I will come back to that is why we have increased the target to 14% CAGR over the coming years. Beside the business then, what I think is important as well, that is, in all companies, you have a glue, you have something that unites. Sometimes that is, if you have individual pieces here and there, is it a company really, you need to glue them together. Some call it glue, some call it culture, some call it, I mean, what we stand for. And in our case, across the company, we will drive carbon dioxide reduction internally and to our customers, call it, sustainability. In the future, a good and high-performing company cannot say we do business and we generated EBITDA, and then we do a little bit of sustainability as well. Those 2 are closely linked, you cannot do either/or, you have to work with both. Then of course, integrated operations, and I know it sounds fancy. This is very much about how you constantly work in how to improve and how to become better in different ways. And this is not only in factories and that is not only lean, it is also what type of systems you have and how you sell smarter and quicker, what CRM systems and how you use them and so on and so on. The fourth area is fully digital and some are fully digital is all the way to the customer. And some others that is, of course, we can be smarter and be more efficient by using artificial intelligence, internally as well. And you will see some examples of that during the presentation. And last but not least, it is our people, the leadership and the talents that we develop. Strengthening CO2 reduction ambitions. We have now submitted that we will align with scientific-based targets. Many different reasons for that. We have already committed to Scope 1 and 2. Now we're also committed on a journey to find clear targets on Scope 3. And our Scope 3, of the total scopes are closer or above 99%. So the majority of our carbon dioxide consumption, so to speak, is happening when the customers are using our products. A forward-looking company in my book need to realize that one of the world's largest challenges is global warming. And we truly believe that if you're not lining up on that -- in that camp, I mean, then we are not here for future generations and a healthier planet. Digital and digital offering. I start with highlight FoodTech and what you will hear later on. FoodTech and the digital partner FoodTech, are sitting here at the front. I mean, we have 2 representatives, Marcel, Head of MTech and [ Eliezer ] that will talk about this later on then. This function, this section, I look upon this as spearheading our customer facing way towards digitalization. I said it several times. I, at current, we have on and about SEK 250 million in ARR. I see that we, within soon, not to define soon, will be a SEK 500 million ARR company. On top of that, we will also have controllers, a completely different type of footprint than what we have. But then, of course, FoodTech can also support DCT in understanding how to utilize this. DCT is super exposed to digitalization from their customers. So there, we have digitalization in another way. And AirTech, as you will see, when it comes to controllers and when it comes to work with artificial intelligence and so on and so on, they are also really taking strides forward. But I think it's fair, and it's the positive pressure that I like to put on organization that the spearhead of digitalization is FoodTech moving forward. a very, very busy slide, and I will spare you all the details here. In simple terms, it is all about -- it is always a better way. We can always improve a little bit. Many years ago, I said in another company and at that time, our son, Eric, was in that age and he listened into a business review, and I said, good is not good enough. And then he said, "Dad, I have to give you an advice, rephrase yourself and instead say, we can always do it a little bit better." And that is what we believe in. There is always a better way. And here, we can talk about taking portfolio decisions using lean principles, how to organize the sales force, it is cutting across. It is focusing on growth, it is a way of working and its operational excellence across. As I said, business slide, but super important. If you give this up, then you will not be a top performing company. And then the core of the core, our people and how we organize and how we lead, by attracting great talents, by evolving great talents and develop great talents, sometimes have to give up great talent because they are so good, so someone else are attracted to them. By doing this step-by-step, that is the fundament of a strong working company. So Munters need to be a company that is great to work at. To our customer, a company that is great to work with. And at the end, for all of us then, myself being an owner, a company that is great to own. And my firm belief is that this is not different pieces of a puzzle. This is a well-connected chain. So listening to a little bit of video before we move into next chapter. [Presentation]

When you see a picture of your family, I think most of us are feeling a sense of pride. And this is our family. So moving a little bit more to the future. I will talk about the targets, and then we will listen later on to what we do in different business areas and so on. But first of all, we will dedicate even more resources towards service, components and software. And we have put a new target with a clear ambition to reach 1/3 of our total sales should steam from those type of ingredients. And of course, those do have a higher profitability than the rest of the Munters company. A greatly operated company, I think, should be able to drive a service component and software business that delivers 30% EBITDA. We are not there in all cases. But that is what we longterm drive towards. So super important. We have updated, upgraded our growth target to be above 14% over a business cycle, including both organic and nonorganic growth. For us and for me, it is very logical. We have moved to the position where we are a much more stable company and we can fully integrate and we can accelerate also the nonorganic growth. This is not slowing us down when it comes to organic growth. On the contrary, we are so well exposed to many different areas, but it's just a signal to everyone that we have a wider slope of how to generate growth nowadays. The adjusted EBITDA target is at current unchanged. I believe that to change that you need to show that it's not that you delivered that 1 quarter or 2 quarters, it is over a business cycle. Of course, we will go back and if the group set up will be changed, we will revert to this and take a look upon can we sharpen it moving forward. But still, I would like to see a more consistent delivery on this before we push it upwards. But I would like to underline, we will not stop at 14%. It is 14% or above. And then finally, a little bit with the same definition. We will continue to keep the operating working capital target in the span of 13 to 10. The first step is to bring us down below 13 and then when we have established that, I mean, then we will take larger strides on this. But I sometimes used to think a little bit like this. If you're a company that is growing 14% on CAGR, we're a company that is about 14% and we are a company that is closer to 10 or, let's say, 12 in operating working capital. I think we're a fairly decent industrial operated company in that case. You will hear more about other targets. As I said earlier, sustainability is not business and sustainability, it is linked together. And now we have lined till Paris 1.5-degree Celsius target, and we will establish defined steps to reach that agreement. Gender equality, equity. We are continuing to strive. At current, we are one of the best in our industry. We will not stop there to move towards -- about 1/3 our workforce and our leaders are women. And Code of Conduct, we are expanding that now not only to include our subcontractors, it's also about our customers. And when it comes to customers, we will take it step-by-step then moving forward. So in a nutshell, we are going to accelerate our growth journey. We will put in the second gear. We will invest in innovation. We will drive sustainability internally and what we deliver to the customers. We will focus even more on growth, but of course, growth that is profitable, that generates a higher EBITDA, not only percentage but also in value. So we are aligned for profitable growth, super well positioned to the right industries. Sustainability is driving most of the industries, and we have solutions that is among the most energy-efficient solution there is. So I am very, very confident that the next chapter on the journey for Munters will be an even brighter chapter. So with that to Ann-Sofi, and maybe I should go back there, I was one slide too fast. Thank you very much.

Thank you, Klas.

And that was the way. It's good when you have strong leaders.

So Klas, could you come back?

Yes.

Sorry, I have a question that I have to ask.

Absolutely.

Now we have listened to you and to all the opportunities that we have ahead. And if you think about one opportunity that excites you the most, what would that be?

I think I touched upon it in the presentation, but that is really how many different areas, Munters products and solutions makes a difference for our customers on their journey to become more sustainable.

Great.

Now, I can step down.

You can wait for me. But now after a short touchdown in China, we will welcome our CFO, Katharina Fischer, up on stage. [Presentation]

So good afternoon, everyone. I'm Katharina Fischer. I'm the CFO at Munters since September last year. In my presentation, I will walk you through what I'm focusing on right now and what I will focus on over the next coming years to support our new growth rate. First, I need to say that I'm very impressed by the journey Munters has done over the last 5 years. The whole organization has delivered and executed on priority set while demonstrating determination and agility in ensuring delivery of targets. I really think Munters is unique in having the ability to combine the entrepreneurial mindset, within the setup of a larger industrial company. When we look at growth, we have had strong growth over the last years. And from 2022, M&A has also contributed to the growth journey. Looking at profitability, the adjusted EBITDA margin has held very good levels during the pandemic years. And it's also important to remember that during these years, Munters has also continued to invest in many important growth areas that will set us up for the future. Operating working capital has come down and is now at a very good level, I would say, good level for a company like Munters. And this has been achieved by many important initiatives over the last few years. So all in all, I would say, very strong execution, and we are now positioned very well for future growth. Now I want to change focus and look ahead. Today we announced our new net sales target. And the target is to be above total net sales growth above 14% in the midterm. This now includes M&As and growth anticipated to come from a more active M&A agenda going forward. And you have also heard Klas say here that M&A activities are important to strengthen our growth journey, and make sure that we strengthen the portfolio from a technology but also from a market presence perspective. We are keeping our adjusted EBITDA margin and operating working capital to net sales target unchanged and as well as the dividend policy that is also unchanged. So what do I think are the most important things to focus on to support the new growth wave. What I am making sure is that we have a very robust performance management framework in place. To support Munters and that it covers the key drivers of growth, profitability and financial strength. For me, it's very important that our organization is very flexible and agile and is able to capture the value creation opportunities. And I really think a strong performance management framework is a key tool in this. And it covers then the two aspects of growth, which is, of course, the organic growth, but also the M&A growth. On profit, we will continue to have a very strong focus on continuous improvements in both commercial and operational excellence and also make sure that we have the right approach and the right tools to be able to evaluate the performance and the value creation from our different business models in our business areas and within our business areas. Working capital, always very important. This is a high focus for the business areas as it also affects our balance sheet. And from a Group perspective, the funding strategy is, of course, key for us to make sure that we have the funds available to support our growth initiatives. So what I really think is important then is to have a very structured and clear performance management framework. And in order for a performance management framework to really work and be effective, you need to have certain enablers in place. And these enablers that you see on the slide here, they are all -- they have been working with this, of course, with Munters for many years. So it's nothing new. But we really now when we grow, of course, we will raise the bar and be more ambitious, with its topics. So firstly, Analytics. Good analytics reporting and follow-up, of course, absolutely key. And I mean, it's obvious to say, but forecast accuracy is a very important topic, of course, for us. The world around us changes all the time. So we need to keep our eyes on this all the time. Sustainability reporting is a very big topic for us now like for many other companies. So here, we are making sure we have good solid processes in place to be able to report. We are also, of course, focusing on our digital ways of working. This is absolutely key and one of the most important enablers for us. So here, we will continue to invest in systems, processes, tools to really make sure we deliver on this and that we can drive harmonized processes and really continuously improve our cost structure. We also have a capital allocation principles. This is, of course, something that Munters had for a very long time. But as we grow, we can also raise the bar and be more precise and distinct in how we measure our large investments and how we allocate our money. And then, of course, the CFO agenda has changed a lot over the last years. And one big focus area is, of course, as I mentioned, the sustainability reporting, where the whole finance community need to understand this topic and work with this topic and make sure we create value for our business with this topic. But there are also many other new tools like AI and so on that we need to adopt and use and make sure we incorporate into the finance function. And of course, people are at the center of all of this. So it's extremely important for us to have the right people on board, people that are engaged. And I must say that it's easy to be at Munters because it's a great company to work for. So I think that part, we have covered, but you need to stay ahead and know what's happening in the business and in the markets and so on to be able to take the best decisions. So those were a few of the things that I'm working on right now and that I will also focus on in the future. So let's take a look at our new growth target. Here in the slide, you can see that over the last few years, we have had very good growth in Data Center and AirTech. FoodTech has experienced a period of a little bit weaker markets, whereas the demand for the Digital business and products has been very high. So here, you can see that we have had an ARR in 2023 of 69%. Going forward then, the core business will be the main driver, of course, of the organic growth, but it will be coupled with us also delivering on the M&A agenda. So to deliver on the M&A agenda is absolutely key for us in order to achieve the growth target. And since many years, we have worked on our M&A approach. And I will say that today, we have a very structured approach to this, how we drive M&As, how we build up our pipeline, how we do the due diligence process, how we do the integration and how we really make sure we deliver value from the acquisitions. We have clear categories for our M&As that you can see to the left there. And a couple of examples is, of course, on the core that we acquired the Indian company SyCool, where we grew our business in India. And another example is the minority investment in Capsol that we made earlier this year. When we do the due diligence, for us, it's very important to have a holistic view of the due diligence. So we will both look from a business, financial but also from a sustainability perspective to make sure we cover all aspects and also look at the risk perspective. And after each transaction, we also reflect and learn from the latest transaction. On the integration process, here, we have an Integration Officer that is appointed early in the process that leads the team and also make sure that we deliver short and long term on the integration plan. And I think we are also at Munters very good at making sure that Munters' ways are working and the Munters culture is part of the integration process very early on. So I think that is a very strong point that we have. So looking at the improved profitability there, here you see the key drivers over the last few years. Of course, it has been volume. It has also been a result of the good commercial excellence initiatives when we have introduced new pricing models and so on, but also a lot of operational excellence initiatives that we had. So we have been able also to balance this strong growth in volume and handle that, and also made sure that the organization has delivered on a lot of lean and efficiency initiatives at the same time. And while doing all of this, we have also been able to invest in our growth areas like innovation during these years. And looking ahead then, our target is to be above 14%. And here, since several years, we have been driving many key activities to drive improved efficiencies. And many of you will recognize these initiatives. So they are not new in a sense. But what is important is that we hold on to this, and we continuously do the hard work to get better and better and better. And this is referred to as [indiscernible] by Klas but it's so important because this is really -- you need to make it stick. And that is how you improve your margins over time and are able to offset certain challenges over time. But just to mention a few examples here. Of course, in operational excellence. We are working with our footprint, of course, making sure we optimize. We use the Munters production system and make sure we are as efficient as we can. And then on commercial excellence, you heard Klas talk about that as well that we have a large focus on digitalizing and make sure we have an agile and strong offering for our customers. And this is also we work -- also something that we work within service. So here, I would like to show a movie about how we work in service with this. [Presentation]

Yes, you have heard me say capital allocation several times. So let's talk some more about that. Going forward, we will, of course, prioritize investments in our growth areas. So one area, as Klas also talked about, is innovation, where we will continue to invest to make our products even more efficient. And as we heard, we have -- we are committing to the SBTI, so we are very focused on reducing our Scope 3 emissions. We are also making investments to support our net zero targets for Scope 1 and 2 and then we are also investing in our global manufacturing footprint, of course, where we are currently expanding both in the U.S. and Ireland. It is important to really have an optimized platform to fund the M&As we want to do and also the dividends going forward, So a solid financial platform is a very important growth enabler, of course. So in the business areas, there is a lot of focus on the operating working capital, of course. So there it's [indiscernible] every day to make sure we come as close to the target as possible by working with the components of operating working capital. So we can come as close as we can to the 13% to 10%. And this is a really good level for a company like Munters. On the group funding side here, from the group perspective, it is, of course, important to follow leverage, and we work towards a long-term ambition to keep leverage within 1.5 to 2.5x. So to wrap my presentation up, we will then continue to execute on our strategy, of course, and we are very well positioned for this new growth wave. So we will continue to drive the profitable growth, of course, creating the customer value and focus on the continuous improvements and performance management and then making sure we run the business in a capital-efficient way. So with that, I'd like to welcome the [indiscernible] back.

Thank you, Katharina. Very interesting to hear. So I have a question for you. Today, we increased our net sales target that we kept with our EBITDA margin and our operating working capital to net sales. Would you like to elaborate a bit around why we kept these targets?

Yes, absolutely. So starting with the EBITDA margin target. So one should, first of all, remember that it is above 14%. That is what the target is, and as many of you have seen, we have only reached that target twice in the last 12 months. So for us, we think we need to show that and demonstrate that over a longer time period before we adjust the target. And we should also remember that we are very focused on continuing our investments for growth as well. And then on the operating working capital target. I think that is a very ambitious target already, 13% to 10%. So that is very good for a company like Munters.

Good. Thank you very much. I'll take that from you. Thank you. And we will now see a short video of Klas talking about how we work with sustainability in Munters and then we will hear from Grete. [Presentation]

Thank you, Klas, for setting the scene for me. In my presentation today, I will give you an overview of our sustainability journey and how we will accelerate it towards 2030, and I also will address our people agenda. Our purpose for customer success and a healthier planet fits perfectly well with our sustainability agenda. To live our purpose, we are committed to help customers to reduce their Scope 1 and 2 over Scope 3. We address emission in our own operations, and when doing this, we need to have a diverse and inclusive culture and high standards when it comes to health and safety. And of course, we need to ensure high ethics and respect of human rights throughout the whole value chain when operating and doing business. And we are very well positioned when it comes to the global mega trends. If you look at climate change and resource scarcity, we believe -- we strongly believe that companies helping customers to become more resource and energy efficient will have a clear advantage going forward. When it comes to the urbanization and growing population that requires more efficient food production done in a more sustainable way going forward. 1 of 10 of the world population today goes hungry to bed and that's a quite scary figure. If you look then at accelerating the digitalization and the use of AI around 1% to 1.5% of the global energy consumption today goes into storing data. And with AI coming our way, the amount, of course, to be stored will increase heavily. So to find solution to store data more energy efficiently will, of course, be a key going forward. The good news is that we really are part of the solution today. We support battery production. We provide carbon capture in a number of pilot projects. We use sensors and software to optimize food production and we help data center to operate in a more energy-efficient way. So let us have a look on our sustainability journey so far. In the initiating Phase, we launched our purpose. We got the strategy in place, integrated into the business strategy. We set some important targets like service, but also the zero accident vision, and we started to report on CDP, but also adopting to the Global UN Sustainability Goals. In the next stage, the formalizing phase. We got an important target in place, the net zero emission in own operation. We launched the Amino software tool to help food producer produce food in a more sustainable way. We launched more training. We started the Scope 3 mapping and got some important HR tools in place. And then last year in the more accelerating phase, we launched the Eco Designed and also worked more with LCAs which is the product life cycle assessment and we included that into our sustainability strategy. And throughout the break, I would recommend you to visit Gene over there, I can show you more about how we do that and how we integrate it into our product strategies. We had a very good achievement during last year. We were able to reach 80% of renewable electricity in our factory, actually 2 years ahead of plan. So a great achievement. We also saw a positive trend when it comes to accidents, and we increased also the training into more diversity areas. So what's next on the agenda now? We are in the phase of concluding our Scope 3 mapping extremely important for Munters. If you look at our different Scope, 99% of our emission are in Scope 3. And it's downstream in the category use of products. Basically because you need to add some kind of energy source to actually use our products. We are developing road maps in the different areas to reach the 1.5 degree scenario in the Paris agreement. As Katharina talked about, we have a joint venture between sustainability and finance, of course, to establish the CSRD compliance and have very good news during the last couple of weeks was that we was included in the OMX Sweden Small Cap ESG index, 1 among 30 companies. And as Klas launched today, we are committing to science-based targets. We have sent in our targets. And next step is to submit our targets for validation by science-based targets. Key to success is to have a strong performance management model even for the sustainability side. We have, as you have seen here today, one strategic target in one -- each of the category, environmental, social and governance. Of course, that's not enough. We need to have an expanded structure with KPIs breaking down to the needs in the different business areas. We are also including sustainability performance into our quarterly business reviews, but also really having it in all from strategy to business plans to budget. And of course, also have quarterly ESG reporting from every production side or assembly site or office within the Munters structure. You have seen the target now a couple of times. So of course, the reduced CO2 and the important part here is that we are adding the Scope 3 according to the Paris Agreement. Gender diversity, 30% and the Code of Conduct is important that we act and behave in a good way throughout our value chain. Another kind of key point to success in this area is to integrate sustainability to our whole value chain. From innovation and R&D to the end of life. And let's have a look on how we do it within Munters. [Presentation]

Some very good people in that video, and I would like to take the opportunity to talk a bit more about our people agenda going forward. Towards 2030, we are building on our strength, and we have some key development programs in place to develop our people and culture. I will talk a bit more about that in my next slide and focus a bit on the structure side in this slide. We believe in a decentralized structure where we can take decision close to the market and to our customers. But to be able to do that, we need to have some strong common foundation in place, not at least to be able to scale up the business when doing M&As, but also to be able to integrate new companies to Munters going forward. And as we have talked about here, we also need to adapt and renew organization throughout this growth journey. We are going from being industrial company to getting more and more software into the business, and of course, that we need to find a new way of doing things as well. When it comes to the way of working, we believe in cross-functional problems solving going forward. the complexity of the challenges of today and tomorrow, they are complex, and we need to be able to work together with different competencies to solve the challenges. Data and Ai, we definitely need that going forward that support -- to support us in decision-making, but also to increase efficiency. We also believe in partnership, finding other partners, good businesses to help us on our journey going forward. And of course, we need to work in a compliant way going forward. So let's have a look at some of the key activities we are driving to elevate our people and our culture. We have what we call High Act Leadership. It's our leadership framework. It describes what kind of leadership Munters need on our journey towards 2030. And of course, to implement this, we run programs and workshops. We have the managers at Munters, which is onboarding for new manager. Managers coming in through recruitment, but also through promotions or M&As. We run a very exciting action learning program where we take strategic initiatives, pair them up with key talents and for a period of 12 months you can see -- really see the strategy comes alive and people are developing under this process. Change is the new normal. So of course, having the capability to handle change is key here. So we run change management program. Katharina talked about integration. Of course, we need to educate and develop our integration leaders throughout this process and to drive the gender diversity agenda forward, we have what we called "What will it take" workshops from senior management to kind of see what kind of activities do we need to drive to increase the number of women throughout the business. So to conclude, key takeaways from my presentation. We are future approved with sustainability integrated into the business. And I can tell you that you will see that when my colleagues now from the different business areas are entering the scene. Sustainability is really integrated into the business. We are signing up for the science-based target. And as always, people and culture is the glue and paves the way for success. Thank you.

Thank you very much, Grete for that. Thank you. Very interesting. Today, we announced that we will sign up for the SBTI. Yes, which also means that we will set targets for our Scope 3. And you touched a bit upon what we're doing with road maps. We're working with LCAs and so on. But could you elaborate a little bit more on what actions we are taking to set the plan for our Scope 3?

Yes, reduction. Yes, as I talked about having a look at our Scope 3, it's the main category is in the use of product. So what will be key here is to pair it up with an innovation agenda and really see to it that we have energy efficient on top of that agenda. And I now generally have that definitely. So it's very good to see, really integrated into the innovation strategy.

Okay. And that is key. The products are key. So thank you for that. Now we will do a very quick touch down in Atlanta. Before we welcome Pia from FoodTech up on stage. [Presentation]

Good. Now you heard a bit about MTech and our Atlanta software location. So I'm happy to be here today. Now I'm going to take you through a bit about the last years and what we have done in FoodTech in the last years, but also what do we focus on in the future. And we will do a deep dive into our digital side of the business. And I think both Klas and Grete now have mentioned sustainability and digitalization a lot of times. We are really working on sustainability every day. I think that is everything we do in FoodTech. We are transforming an industry and making the food much more sustainable. But we are also the spearhead for digitalization within Munters, and we are driving new business models. Let's start with where we are today. We are a global leader in both Digital Solutions and Climate Solution. We have had a few quite challenging years, market challenges that has been facing. We have seen the [ swine ] industry in China significantly reduced over the last years. We have also seen the impact from the Russia War on Ukraine. The feed prices have gone very, very high. Russia, were the largest grain producer in the world. And at the same time, we've seen raw material prices also increasing. And you can see really our growth and profitability, taking a hit of that. But have we wasted that time? No, we have acted. We have done a lot of things internally to improve our business. We have launched new products. I will come into those details later on. We have also worked a lot on operational efficiency, consolidated footprint, and we have been working on pricing initiative. And we have also built a strong scalable digital business. And one of the new business models that we are driving is the [ SaaS ] model. 1.5 year ago, we launched the KPI ARR, annual recurring revenue and we have seen a fantastic growth in the latest years. If we now take a retrospective from where we were in the Capital Market Day, some of you maybe were there in 2021, 3 years ago. We launched the new strategy of FoodTech. We already, at that time, said we want to both focus on the digital solution, and we want to grow with that. And we said we also wanted in parallel to focus on our climate solution. We decided to have 4 strategic directions. And now I'm going to tell you a bit what has been the focus in the last years. So if I start with the digital side, and I heard many of you ask me in outside what is the digital side really? For us, it is both software, it is controllers, IoT and sensors. The thing that Klas mentioned was the intelligent part of our recruitment portfolio. We launched our cloud-based software Amino, a few years ago, that has also made us much more scalable for the future. We have also invested a lot in the business. We have built up our software development team. We have invested into data scientists. We have also invested into driving much more product execution and sales execution. We have done M&As. We acquired our controller company InoBram in Brazil, and we have done minority investment into partnerships. We have also worked a lot with performance management. Some example of that is how we have been driving productivity in R&D, but also value-based pricing in our software business. And what have we done then on our equipment side of the business? Which is more the fans and the cooling, the air inlets. We have more new products. We have a new portfolio of air cleaning products. We have also a new portfolio of heat recovery products, very, very interesting for the European market. We have consolidated our footprint in China. We have put 2 factories together to 1. We have also consolidated our footprint in Germany. We have worked with LEAN in many of our factories, and we have really worked on our cost structure to be taking out costs and improve pricing. And all of this have led to a lot of the result in the last quarter. We opened up new markets. We have already seen -- growth start going in the equipment side. We've been growing with 17% in the last quarter and also our ARR development has been fantastic with the EBITDA close to 12% in the latest quarter. What is going to happen in the future? How are we going to go the journey of accelerated growth? And I will take you through this. So I start with existing segment. Our core segments today is Broiler, Swine and Layer. Within those segments, we want to expand geographically. We have already entered in with our Digital Solution in Europe, taking several projects there. And we have also entered into Asia, but we have more to do in the existing segments. We want also to increase the share -- the share of wallet with our existing customers. And we also want to launch even more products and offerings to our customers, and we want to expand into new customers. Then we take that, we replicate that into new segments. We have the opportunity to go into other segments like beef, aqua or greenhouse. And we are also having the potential to grow with building an ecosystem of data. And I will come back to that ecosystem, explain it a little bit further later on in my presentation. And the most important to make this work is moving with speed, penetrate our customer base capture more and more data. And if you have the opportunity later on, you can see only on that screen over there, how many data points we are capturing and that is only a small part of what we are capturing today. And innovation is also important, constantly involved coming out a new offering in our [ SaaS ] portfolio. And our enablers, what makes us successful. This is our foundation or our culture, even our DNA. We have a very long history with a lot of legacy and footprint. We have been in this industry for more than 20 years. We also very close our customer. We work very, very close to them. That is key for innovation. That is feeding us in to find new products and new offerings. Scalability is important. We have invested a lot in scalable platforms, and we are going to do that even further for the future. And the most important of everything is the people and culture. Our people, very, very competent, a lot of application knowledge, but also the culture we have, based on the Munters culture of agility and entrepreneurship. This is our existing footprint today, and I think it's quite diverse and also very spread around the different regions. And how do we want to invest in this for the future. I will give you a few examples. If I start with the digital investment for accelerated growth, I've already mentioned a thing -- a few about that, but we will invest in new products and new offering. We will also scale for growth. We have already built a strong organization, but now we want to scale it for the next growth wave. We want to continue our expansion into existing segments but new geographical areas. We want to expand into new segments and new customers, new offering, new products, and we are going to do more partnership and more M&As. And if I take the Climate Solutions side, I mean, Klas mentioned it already, we are doing a strategic review of our equipment offering within Climate Solution. We have done so since July last year. We are going according to the plan and testing now the market, the appetite on the market. But we, in FoodTech, we still drive this business exactly as business as usual. We invest in it and we drive it for growth. And equipment today is very well positioned for profitable growth after all the things that we have done in the last years. What are we investing in? We are investing in R&D, in new innovation. We just recently launched our new E-Line fan. We are continuously investing into efficiency. Operational efficiency is an important part for us, but also productivity. And we are going into new markets. Middle East has been a market that we have not been present that much in the past. We have started that, got nice orders from the Middle East, but there is more potential to go in. They have decided to be self-sufficient in this region. We're also spending more and more time in North Europe, but there were some other segments in Asia that are quite interesting for us as well. So let me now deep dive, and I will only now talk about the digital side of the business and what do we really do here. And we will start with the video. [Presentation]

Yes, we are on a mission. We are on a journey. We help to feed the world by changing the way we farm and produce food. Many times, we take food for granted. I think we don't think about having food on our plate every day when we eat, but that is not for everyone. More than 800 million people are still going to bed hungry every night. And at the same time, 1/3 of all food produced is wasted or lost. I mean that strikes me quite a lot. 65% of that comes from the food supply chain. We work within the animal [protein] mainly. So this goes also to plants, but there is a huge potential to contribute to making that more sustainable. And if the food and agriculture industry would have been a country, the whole industry would have been the third largest emitter in the world, 8% of the global greenhouse gas emissions. And it's also the same size of the land of China. So we have a purpose. We have responsibility to make this better every day. Our customers are large food producers. Many of them are multibillion U.S. dollar companies. They are all around the world. They are global. They have more than 100,000 people employed, and they have challenges. They need to make sure that every day they transform and grow livestock and to transform it into high-quality, healthy food. We have a lot of mega trends ongoing. We are talking about this, but also other industries are talking about these mega trends. We had a climate change and resource scarcity. This will require a lot. We will have problems with land, water, energy. Our customers also have challenges to handle organization and the change in demographics, which is putting a lot of pressure on much more professional production of food. We also see the trend of digitalization and AI going very, very fast, and we have the global globalization. And we have the population growth. More and more people need food every day. But these are not only the challenges that our customers are facing. We also had the consumer demands. I mean all of us in this audience, we want to have our food to be guaranteed to be safe. We also put quite high requirements on predictability and standardization, the food should look the same, taste the same every day all the year around. We also want health and wellness, and we have high expectation on animal welfare. And of course, we want to know that the food is produced from sustainable sources. So as you can see, there is a lot of challenges that our customers need to handle. And how do we do that? Precision is super important to make the whole supply chain much more precise. And how do you do that through digitalization and data. The more data you can capture, the better you can optimize the supply chain. Let me now take you into our offering. So as you can see in the top forward, our product portfolio. Let me start from the controllers, the IoT and sensors, the two buckets you see to the left. That is our data capture platforms. Some of them are owned, and some of them we work with tech partners, partners we have invested in. And then to the right, we see our supply chain management software. It's fully agnostic. It can work with our own data capture platforms but can also work with other data capture platforms. We want to access as much data as possible from the complete supply chain. How do we sell? The software we sell directly to the C-suite are the large food producer. We are in constant dialogue with the CFOs, CIOs, CTOs and COOs of those large food producers. And the other two data capture platforms we sell through dealers, directly to the growers and then the food producer is specifying what kind of brand and products they need. And how do we create value? This is a bit of a messy slide, but I will only give you a few details and then you can read it yourself or listening to Marcell later on in the break. So to the food producer, we are actually capturing data. We are capturing accurate data. And with that accurate data, we can cleanse it with AI, and we can do analysis. We analyze the data and we provide better planning, better forecasting or better purchasing. And in the end, that will lead to a better operation. And for the farmer, we can help them to reduce workload or plan the workload in a better way or make sure that we have better water consumption or energy consumption. And in addition, we help with animal welfare or better conditions in the climate. And how we do that, I already talked about when it comes to our enablers. This is one of our new offering, which we are very proud of because this is the way that we live our mission. This is our new amino sustainability module. It started already a few years back. We were listening in to many customers who also are moving into the scientific-based targets or the CSRD reporting here in Europe. With this sustainability module, you are able to use the carbon accounting, you get accurate data and then you can use it for your carbon accounting. You can also use it for reducing your carbon emission in the whole supply chain. And I'm not going to go through this more in detail because you have the possibility to actually talk to my team later on and get to understand exactly what we do. But there is a lot of data collected into the amino water, energy, wastewater, transportation, fuels, et cetera. I also want to mention that AI is part of our culture and DNA. I mean, we'll reduce papers every day, and everyone talk about AI. That's nothing new for us. We've actually been doing this for years and years. We have more than 100 people in software development and data scientists. We have already AI in our offering. Many of our customers are operating their operation with our software powered by AI. We also use it to be more efficient. We have included into our way of doing development. We have ChatGPTs in a safe environment internally so that we can increase response time to customers. And we are also using it in our Munters Academy. So in many ways, we have AI in our DNA. We have also a whole complete data capture platform. We are capturing a lot of data through our data capture platforms, our controllers, IoT and sensors. We push it up to our agnostic supply chain management software. And with that, we can actually operate the whole supply chain and help our customer to improve it and optimize it for the future. But also, we attract tech partners. There is a lot of companies that actually want to be part of our family. Companies, high-tech companies that really see the beauty of being part in our ecosystem, and we are building this ecosystem with data, and we are going to do it stronger and stronger over the coming years. So how big is this market then? That's maybe something you are wondering. We are creating a new market. So we are building it. And what you can see here is the ARR, the SaaS market. This is a potential to have an addressable market of SEK 15 billion to SEK 20 billion. We have estimated this based on our products and our offering. So there is a huge potential to go after. And how fast can we go after this market. That depends a lot on how fast the customer will adapt to new technology and new way of working. But as you are listening in, digitalization and AI is going fast out there. Today, we are at SEK 250 million almost in ARR. Our aim is, of course, to double this again. We have already doubled it twice, and now we go to double it again. The whole global market for food production is much larger, of course. In the animal protein side, we have SEK 18,000 billion but also a large part of the plant market is also a use for feed into the animal protein. So over time, it can be, of course, much, much bigger. But I mean, this is enough for us to go after already now. And my last slide. So what are the takeaways from this presentation. We are on a journey towards accelerated growth. Our equipment business that had gone through quite some challenges in the last years are really well now positioned for growth. In the digital side, we have true market creators. We have scalable platforms, and we have AI and sustainability at the core. And we have also set a clear strategy for our accelerated growth journey. Thank you.

Yes. Great. So a question for you here. We'll stay in the middle. So the SaaS business has grown very strong in recent years. Do you want to talk a bit about the success factors behind this?

Yes. We have invested. I've said this many times during my presentation, but we have invested a lot in the scalable platforms. Scalability is important for a SaaS business. And our cloud-based amino is actually one of the successes we have. But we also have more than 20 years in this industry. We have a unique application knowledge and the data that we have captured for many, many years. And I must also say we are very customer-centric. We work with them every day and we get a lot of feedback in what do they need to be solved and how can we solve it for them?

Great. Thank you. So we are running a little bit late, but we will now have a break, and we will start, as we said before, at quarter -- 3:20 again. Yes, 3:20. So please be here a few minutes before because we will start straight away. And now take the chance to mingle, talk to our experts, look at some of our products out here. And if you need coffee and sweets, there will be some in where we had lunch. And for those of you listening in, you don't have to do anything, just to stay on, and we will come back to you when it's time to start again. Thank you. [Break]

Welcome back. I hope you've had a nice break. And for those of you who are here in the room, I hope you had nice talks with the persons in the booths and that you learned something new about Munters. Now we will continue with the agenda. And after a quick visit to Mexico, Henrik Teiwik and in Jing Jin will join us from AirTech on the stage. [Presentation]

Good afternoon, everyone, and isn't it great with our people, one of our heroes, Ricardo Gonzalez. So let me tell you a little bit more about the journey we are embarking on in AirTech. We are to date 3,200 fantastic employees worldwide with 14 production facilities. We are well diversified across the industry and geography, and we have a sizable service business. And as many of you know, we have grown significantly in the past years also coupled with margin expansion. Looking back into 2022 in our last Capital Markets Days, we have developed a business in many positive ways. It's both about continuing to develop our business imperatives. For example, how we continue to expand our sales footprint. We have continued to grow our important service business and we have also made a number of strategic acquisitions in the past years. ZECO was mentioned earlier, a service company called SIFT, HygroMedia and Rotor Source in the U.S. and many more. It's also about investing for the future, and we have continued to do that by revitalizing our product portfolio, continue to drive operational efficiency through our own internal Munters production system and systematically worked on our sustainability journey towards their net -- our ambition to reach net zero. For example, as Grete mentioned, we reached last year, over 80% of renewable energy in our different production plants. And we have now started also to map Scope 3 emissions in our product portfolio. And our mission is twofold: to be the undisputed leader in humidity, climate and air quality control for mission-critical applications; and to provide the best-in-class sustainable solutions for our customers across their value chain. And we are a little bit of a different BA compared to our 2 sister BAs. We are an application-driven BA, meaning that we are serving a multitude of different industries across 3 application areas: dehumidification, humidification and air quality and pollution control. Dehumidification that is where we're extracting humidity from there and provide a dry environment, this is our largest business and where we offer a full product suite from everything from small portable dehumidifiers to large dehumidification systems. We have a sizable components business with our dehumidification rotors that we both use in our own products, but also sell to other third-party dehumidification OEMs. We have also a sizable and comprehensive service business where we support our customers throughout the product life cycle, everything from commissioning to product upgrades and refurbishments. Our second leg, humidification is actually where we add humidity to the air, and we do this primarily through our high-performing evaporative cooling pads and cassettes, sold either to a third-party humidification system providers as well as to our sister BA data center that is used in their product portfolio. Our third leg, air quality and pollution control consists of a relatively sizable components business made up by mass transfer, mislamination and VOC rotors. But where we have also started to take more strides into the systems side with the latest acquisition of Airprotech that we'll talk about in a minute. And as I said, we are covering a multitude of industries, and this is what makes this business area so excited -- exciting, I would say. Some are very mature markets or segments that you are all very familiar with. Some are more emerging like batteries like renewable energy and some are truly virgin like carbon capture. And the common denominator in all of this is that we are focused on focusing on mission-critical applications. Our growth journey has been driven in the past years, primarily by battery, as you probably know. Also significantly driven by our service business and components business. But the rest of the segments have also developed relatively well, including our pollution business with Clean Technologies if you exclude the Marine segment that we exited some years ago. Looking ahead, we are relatively optimistic about the short term, although that we are experiencing or continuing to experience some delays in the large projects, primarily in batteries and in pollution control. But for the long term, we also strongly believe that the battery market will recover and accelerate again. The climate -- or the focus of climate impact and Climate Solutions will also increase while we're also becoming increasingly optimistic about Clean Technologies. And in the last years, given our strong growth in equipment, we have also significantly grown our installed base, which also means, over time, more opportunities for us to do more service, including more digital solutions. So why are we optimistic about the future? Well, we simply believe there are a number of trends that are playing in the hands of increasing the demand for humidity and air quality and pollution control solutions over time. It was previously mentioned the global electrification trend that is just accelerating. The urban population is also providing more demand for hygienic food and health care sectors that we are directly impacted by. And the whole theme about climate change is not only increasing the general awareness of sustainable solutions in general, but also a more volatile climate, of course, drives more sophisticated need for climate control solutions like our dehumidifiers. But the world is changing and business and operating models are continuing to evolve, and we, of course, need to adapt to that as well. Our customers are expecting more energy-efficient solutions to help them reduce their carbon footprint. New materials and technologies are constantly coming online, which we need to adapt to. And the era of artificial intelligence has just started. And in addition to this, we also see a world that is getting a bit more complex with more regulations. And we believe that this also will offer opportunities for us going forward. But we also need to navigate this in a very careful manner and also adapt with also developing our operating model going forward. So with the backdrop of these trends, and to fulfill our growth ambitions, we have identified 3 disciplines in which we need to excel going forward. Customer intimacy, product leadership and operational excellence. Customer intimacy, where we are strong today, but where we believe there is more scope for us to take a larger scope of the full product life cycle, including the sustainability theme. And also work towards a more modular product portfolio to become more agile and in that sense, faster responsive to our customer needs. Innovation and product leadership to drive more investments in early-stage innovation and also continue our journey that we have embarked on in the past years, focusing on material science and connectivity. And operational excellence, that is a key enabler for us to grow -- to take -- for us to take benefits from the scale opportunities that this entails. It's about continuing to harmonizing our process landscape, continuing to work with lean and operational efficiency through our Munters production system and continue to focus on optimizing our production footprint. And in all of this, sustainability and artificial intelligence is getting more and more integrated in everything that we do. Grete talked about it a little bit earlier here. These are just some examples of pilots and initiatives that we currently are pursuing that we believe will benefit from in the next years to come. One of those initiatives is our AirC cloud-based remote monitoring platform, which I will now shortly introduce to you. [Presentation]

So this is a solution that we developed in the past years. It's fully in-house Munters solution and that we released last month. And for those of you who are in the room here, I hope you took the opportunity to meet [ Jing ] and talk about the solution that we're exhibiting over here on the right. So to also support our growth ambitions, we also need to continue to focus on adapting our operating footprint and manufacturing footprint. As you may know, we are making now a number of important investments in the AirTech history. First of all, in Americas, we are setting up a new manufacturing plant in Amesbury, where we are consolidating a number of smaller sites into one large and which we also prepare for to be fully carbon neutral when we are in operation. In Europe, with our 2 large plants in Sweden and in Czech Republic, we have made a number of investments into further operational efficiency and automation and where we also have an opportunity to further expand capacity if needed. And in APAC, with the acquisition of ZECO, we have now a more balanced operating footprint as well. And when we talk about growth ambitions in AirTech, it is also more than fair to talk about Clean Technologies. And with me today, I have also Jing who will give you some guidance on some of the exciting stuff that we do over there. So Jing, please.

Thank you, Henrik. Excellent. So let's talk about Clean Technologies. We are extremely proud of our mission, which is to deliver clean air to the world. And how do we do that? Well, we help our customers by cleaning the air from their production before it is released out. So we take away the emission from their production. In that way, we are part of their sustainability journey, and we're helping them in improving the production. So today, I am very excited to talk about 2 focus areas that we have in Clean Technologies. The first one is on the VOC space. So VOC stands for volatile organic compounds. And these are emissions that are created in many industrial processes. Just to mention a few, we create them when we manufacture semiconductors, batteries, but also composites and when we do painting. If we look at the market, it is a very large and growing market. And for that, we find it extremely attractive. The growth is driven mainly by 2 factors. The first one is that there are large investments going into the underlying segments, such as in batteries and in semiconductors. The second one is that VOC markets are a regulated market, which means that you can only emit certain amounts. And the trend here is that more and more markets are coming under regulation and also that regulated markets have come to under stricter tolerances which means that you need to invest more in these types of systems. Today, we offer systems for these type of abatements in U.S., and we offer systems and services. This is one of the reasons why we made the purchase of Airprotech that was announced in Q1. So Airprotech is an Italian company doing VOC abatement, but with a European platform. So with them, we are able to grow now in Europe. We're also able to add new technologies to our portfolio. We're able to combine their technology with our technology of VOC rotor concentrator and strengthen the total offering. And lastly, that will then give us a better chance of addressing the markets that we focus on, which are semiconductors, batteries and the process industry. Let's now look a bit at another very high potential market, and that is within the carbon capture space. So IPCC states that carbon capture is needed in any type of scenario to reach our climate goals. Behind me, you will see a graph that shows how many metric tons that need to be captured per year to reach the Paris Climate Agreement. And I think there are 2 takeaways here. The first one is that it is an exponential growth, whether it is 12x, 10x or 5x. The second one is that we are just in the beginning of this development. So it's happening now, but we will see the growth coming decades. Munters are already today delivering into these type of systems. So we are delivering components into all key steps from pretreatment, absorption, desorption, but also liquefaction. And we've delivered that across 26 carbon capture like type of projects. And we believe that we are very well positioned in this market. Not only do we have the offering, we also have the end customer contacts, specifically in the industries that need to invest in this type of technology. I'm talking about industries such as cement industry, pulp and paper, Waste-to-Energy, among many others. In addition to that, we also have the technology know-how the engineering and industrialization capabilities. Going forward, we are working in this area in many ways. You can divide it into 3 complementary paths. The first one is, of course, we work with our R&D department to develop new products, new generation products. Second one is that we're partnering up with technology providers within this space. And the third one is that we will make investments where we see fit. So an example of #2 and 3 is Capsol Technologies, which we also announced in Q1, where we are having a joint development project together with them as well as an investment in them. So both VOC and carbon capture is very exciting areas for us. And if you want to know more, I mean, please visit the booth before you go out. Now I want to welcome Henrik back.

Thank you. Just wanted to finish off to talk a little bit about our growth journey in some context. As you have seen, and I hope that we have explained, we are trying to maximize some of the opportunities that we have at hand right now, but also some are investing in future business development. And the idea here is that we take these development and exploratory themes into the maximization phase for the next years to come. We will do this organically, but also via M&A or acquisitions when we deem it fit. So to summarize, AirTech is a well diversified and global business. We believe we are also well positioned for future growth and sustainability and artificial intelligence is part of the journey. Thank you.

Thank you very much, Henrik, and Jing. So I have a first question to you, Henrik. The battery market has been very strong in recent years, and you elaborated a little bit around this now in your presentation. And could you also talk a bit more about the battery market? And what trends and opportunities you see in the various segments of the battery market, that would be very interesting.

Yes, of course. And those of you who follow the battery market and the electric vehicle market know that there is some turbulence in the market at the moment. In the battery space, there is a little bit of oversupply from China at the moment that is putting a lot of pressure on the rest of the supply chain. Whereas in Europe and in Americas, there is still a lot of projects going on and up and coming. But you also know that there is a bit of regulation and regulatory discussions across these key geographies and exactly how this will play out now in the next years, it will -- it's difficult to foresee. But if you look at the forecast or the latest forecast of battery manufacturing and also add the larger electrification trend. And as Klas explained also with battery storage and all these other applications that will eventually come over time, I think that we're confident that this market will recover and accelerate once again.

Exactly. And there are other areas than just the dry room production room there are there are many areas in the value chain that are of interest in us.

Exactly, exactly.

Yes. Okay. Great. Thank you. And Jing, it would be very interesting to hear if you could elaborate on what synergies you see between Clean Technologies and AirTech, the wider business area.

Absolutely. I mean I would say I see 3 areas of synergies. The first one is on the commercial side. We have overlapping customers, of course. You heard batteries, both Henrik and from me as an example, but there are more. The second area I would say would be within services. Of course, having a service fleet out in Europe and rest of the world, of course, we can utilize that combined. And lastly, it's about R&D. Of course, we also have overlapping capabilities there, which we can use.

Great. Thank you. So now we will turn over for a short touchdown in Selma, Texas, before we hand over to Stefan Aspman, who will present data center technologies. [Presentation]

Thank you, Yves, and most thank you to all of you that have had the patience to stay and also attend this part of DCT. It's a privilege to have this opportunity to create transparency and describe what we do, and I hope I will add to this event by explaining a little bit more what we actually do in DCT at the moment. If we go back in time, I think 2 years ago, I've had plenty of opportunities to interact with many of you 1 to 1. But last time we met in a context like this was 2022 in the Capital Market Day. At that time, we were a pretty humble part of Munters Group. We were around, what does it say, 13%, right? And SEK 1.4 billion in revenue. We were just broken out of the big border AirTech and maybe more importantly, in terms of portfolio management, we only had air cooling. I now belong to a team that is very proud of the development that we've seen in the last few years, but maybe even more so a humble for the fact that success is not something that we have, it's something we have had, but we can have it again if we do the right things. And hopefully, today will be an example of how we believe that's going to look like. The development in the last few years has been very much related to the 4 areas that we spoke about in the capital market last time. We spoke about making the trend our friend. As some of you remember, liquid cooling was a thing already back then. We also spoke about optimizing the process to be able to scale going from this small part of the company to something more significant. We also spoke about growing the production capacity. As I remember, there was a lot of questions. Will you be able to capture this growth? Will you have the footprint to support the momentum you seem to be in. And I think we have shown clearly that we can scale. Since then, the development is that we have more or less doubled the team members of the team going from 355 to 707. We have tripled the production capacity. We have added a full factory, and we have moved in, you could say, to the new one, the 1 we spoke about last time in Daleville, Virginia. We have tripled the profit margin since then. As you remember, we came out of the supply chain constraints then. So we were even maybe slightly lower than what we used to be. And since then, I think we now have 7 -- well, I know we have 7 consecutive quarters of improvements. So approaching 24 months in July of steady improvements on profitability and growth. And from an offering point of view, what I'm going to show you today is that I think we've been good at capturing the opportunity in this market, adapting to the new needs of the customers. meaning that data centers have, if I simplify, they have been cooled the same way for 2, 3 decades. And now due to AI and the development of GPUs and CPUs, there's so much more power density in the server racks that calls for something completely different. And we have been really good at capturing that. And I'm excited to show you how we do it. So I'm not going to say too much on this page, but what you can see that stands out is, of course, that we have gone from being 13% of the group to 27%. It's surely no detail any longer. I think we are a fair portion of the group. We are still very much U.S.-based, as you can see by the graph, but I'm happy to say that the progress we have in Europe. You will see in a video that I showed that we are also planning and building a new factory in Europe. So we are gaining momentum also in Europe. So becoming more and more of a balanced player in this industry. With that said, it's important to remember that data center industry is still very much driven by U.S. where we have the main hub of the bigger customers. So what do we do then? I think on the high level, everyone in this room would recognize that we do cool data centers, right? But you can do it in many different ways. And my ambition here is to describe a little bit where in the value chain we take place. So bear with me going a little bit technical here. We show this on the webinar that we had, was it 1 month ago, Frank? So to some of you, this is repetition, but I'm going to be fast with this. Because when you talk about cooling and not at least liquid cooling, which is the new buzzword in the industry. I think everyone, if I would go around and ask you, you would have different definitions of this, everyone of you. So I think it's good to at least agree what do we mean when we speak about liquid cooling. If you divide thermal management into 4 parts, you have the dissipation. It basically becomes hot at the server level, right? You can feel that in your laptops having on your knee right now. That heat needs to go away from the computer. Same thing in a data hall. You need to dissipate the heat generator. Then that's this picture. You can see that the heat is going from the servers up in a plenum you don't see that actually in this picture, but the heat is coming off the service, up in a plenum in the ceiling and back to this box that we call a computer room air handler. The second step is when you have actually got the heat out of the server, right? You have the heat still indoors, still in data hall, but not in the server. That is the capturing of the heat. That is what we normally do when you see a press release that we have sold the computer room air handler, that's that unit, taking the heat out of the actual data hall. That heat needs to transfer somewhere normally up to the ambient air on the roof of the building to get rid of heat. Sometimes, if you have the right preconditions, you can actually reuse and repurpose the heat, right? So 4 steps. I show you this to say, you could say liquid cooling is the first step, right, the dissipation where you go into the server. But you could also say that liquid cooling is how you take care of the full heat rejection process. That's where we take place. We currently do not go into the server, but we take care of the heat coming from the liquid cooling loop once it leads to server. And I have some visuals to show that. So to manage this as the other ones, we have an offering, right? It consists of components, as Henrik said, we have components sold together with AirTech as well. We also have product -- singular products that you can use for these data halls. But we also, as you have seen in SyCool here, we have complete systems end-to-end, where we offer. If you think about an air conditioning system at your home, you will have an outdoor unit and an indoor unit. With SyCool, we have the full range, end-to-end, both indoor and outdoor. So that's a full offering. And not at least, we're also working hard to develop the service offering within DCT meaning, as Henrik said, it's both commissioning, installation and of course, we work more to develop digital opportunities with remote optimization and other aspects where we can actually add value to the customers. So here's a film. And prior to this, the introduction is more -- I asked my team to say, how can we explain on the Capital Market Day, both what the data center industry looks like, but maybe a little bit on how we differentiate. So take it away, and let's see what they say. [Presentation]

Good. So basically, in essence, I think the key takeaway for me showing this movie is really all about the differentiation we have. I mean we have proprietary solutions like SyCool. It's amazing. It's the world's most energy-efficient dry split system. With that said, in the other part, let's be honest, there are many companies that can produce HVAC systems for data center space. But there are very few, if any, that can do it the way we do with the product model approach that we have, with the customization, with the tailoring of these projects, there are almost always like snowflakes. That doesn't mean we can't work with modularity and smart back-end work to have efficiency. But in the commercial approach, that's how we stand out. That's the secret source of DCT, sorry. So the underlying demand and growth drivers, I'm going to be quick about these ones because I think they are pretty obvious. The growth drivers are very much about digitalization, even without AI, I think just go to your own lives. Do you feel digitalized? Do you ever use the smart watches or watch Netflix or whatever you do, you have Teams meetings, of course. That growth is here to stay with or without AI. On top of that, you have the AI infusing this causing a new demand. And here, to be honest, I think all the projections at this point are pretty useless because we cannot even imagine what it will do to the digitalization of the world. I have no clue. I just know that the challenge for humans are that we kind of think in linear ways that when we try to understand the future. We look what happened 10 years past and see what's going to happen 10 years from now. I think the exponential growth and the development of AI, we have just scratched the surface. So I think that the underpinning growth of this industry segment and the opportunities for us are immense. But there are definitely pain points and challenges as well. One is, of course, that this calls for electricity or energy and there's not going to be as much as needed. That's a huge challenge for the customers. Luckily, since the '50s, Munters is a company that supports customers with energy-efficient solutions as we are today. So I think this is really something that is a pain point for the customer, which is a clear differentiation and opportunity for us to make a difference. The pressure on sustainability, I mean Grete, thanks for a good presentation. What you did today, companies all across the globe are doing the same, right? They're focusing on how can we be good citizens, how can we develop this agenda. So we're going to see more regulations, more pressure on everything from refrigerants to energy reuse, whatnot. This is also where we can differentiate and make a difference. And lastly, you remember those that have covered us for quite some time. You know we started in the evaporative cooling solutions. Those do require a lot of water. There's still a space for it for sure. But with all of the droughts in the world, we also see that, that part of cooling a data center with high proximity to the heat source and using a lot of water is partly phasing out. It's still going to be a space for it. For certain customers, we have this accessibility to water, but that is a trend that water scarcity is spreading and it's influencing the industry. So what this boils down to. Allow me to ask a question if anyone dares to answer, what do you think, when I describe this industry, focus on energy efficiency, sustainability, definitely engineering skills, if you're ever going to try to recapture the heat or whatever you want to do with it, what do you think they're going to seek in a partner? What do you think the customers are looking for? Do you think they look for more off-the-shelf standardization global kind of partners like that? Or do you think there's also a space for more tailor-made partnerships where you can actually develop things together? It's a pretty leading question, I guess. My point here is that there is a space for us to grow because we have a different approach to the market. I get that question all the time, what's your claim to fame in this industry? Why are you here when you have Carrier, Daikin, Schneider, et cetera? Because we can do parts of what they do, but we can also do something they cannot or probably can, but they don't. So we have a unique approach to the market treating every order as a project. That means that you get the white glove treatment every time you deal with us, and we set up a customer engagement team with product leaders, engineers and we take it with you all the way end-to-end. The biggest disruption, if I should leave you with anything. Again, everyone talks about AI, but I think in this industry segment, it's a little bit different because we have a direct impact of AI. AI simply, if you go high enough in the kilowatts per server, you cannot no longer cool it with air. It's simply either very uneconomical or it becomes too hot. This is not going to be valid for the full industry because remember, as I showed you before, cloud computing is still the major part of this industry. AI gets all the attention, gets all the headlines, but cloud computing and value is growing even more. But these kind of ships that I have on the picture here from NVIDIA as an example, some of them have reached a limit when you can actually cool them with air. That has an implication. And very quickly, I show you this. This is how it looks like today. This is a SyCool. On the roof, you have the condenser, the unit that takes away the heat. That goes down to the box that you have inside the data hall right, you're soon going to see the movement here where the heat loads are coming up, being taken off from the server into a plenum in the ceiling back to this box, this is connected to the roof, and that's how you get rid of the heat. This is 1 loop and this is 1 loop. That's how you cool a data center today regardless if it's SyCool or not. Any split system works in roughly that way. Now with liquid cooling, you exchanged this box. The 1 we call for a computer, we call this computer room air handler, those are switched to, in this case, what we call liquid cooling evaporator, you see 2 new boxes with the differences that instead of air going into the data rack, it's a liquid circuit that takes out the heat. And this is, of course, you had the opportunity to meet with Frank and Craig from our team, and you're more than welcome to stay after here and ask questions about this. But this is a disruptive change in the industry. Again, it's not going to happen overnight. It's not going to be for every server, every data hall, but with AI and as it grows, this is going to change. What about the market then? I'm not going to be long on this 1 because I think, again, this is really much guesswork. What we do know is that data centers normally represent 10% to 15% of the total CapEx investment of the data center. Of that, I'm pretty sure that we can see. About the projections of the future. When we look into the most acclaimed or the ones that we trust when it comes to business intelligence, I think the spread of the growth is between 9% and 14%, averaging around 11%. And every time I've shown this to, if I may call it people like you, people from the capital market to analyze us, they say, why isn't it higher? I just read an article on LinkedIn saying that it's going to be 20% or 15%. Well, I tried to visualize this like this, I'm sorry, one step back, sorry. There it is. There will be growth above 25% and more in some niches to the most right. And there's going to be 0 growth and minus due to this disruption and change I talked about, there's not going to be an even average. There's going to be an average build of extremes. So going from left to right, if you look at our assortment as an example, we come from the evaporative cooling and air handling units. I think that is going to stay pretty moderate when it comes to growth. Some of it might even be minus. But in the new parts where we develop more for liquid cooling, cooling distribution units, et cetera, we're also going to experience a lot of high-level growth. And that's going to take us into the future. So that means -- what does it mean when you look at our growth? Well, we're going to be partly hampered by having built our revenue historically on technology that will be more flattened out. And we're going to gain momentum of all the new exciting stuff that we have invented during this year because trust me on this one, I have 1 of the absolute best R&D teams in this industry. In this period that I spoke about the last 2 years, we have seen what's happening in the market when we have within 1.5 years, developed new technology to cater to both of these needs, air-cooled and liquid-cooled and sold it. That's a pretty impressive. I don't know if any 1 of you have any technical background or R&D background, but I can promise you that is a pretty big achievement. What we do lack that currently, we do not have part of the solution for shield water infrastructure. We have a perfect solution for refrigerant base that we have with SyCool. But when it comes to chilled water infrastructure, we do the indoor units, the cross, but we do not offer the outdoor units, the so-called chillers on the roof. That is a problem we are addressing. We are developing incrementally, finding new alternatives to address that. And once we find solutions to go into that part of the market, I think we would open up a completely different profit pool. Final words. Any takeaways from this, I would say, AI and cloud growth, remember, cloud is still driving this industry, and we have solutions that caters to those needs. But AI will continue to disrupt this industry. Right now, I would say the average density of our server rack is 12 kilowatts. If you have an electrical car, you will know that, that is roughly what it takes to charge it. Now some servers are all the way up to 30, 40, 50, 60 kilowatts. So it means that all of a sudden, you have not 1 car in you're parking lot, you have 5, 6. They need to charge all of them. That's going to be a game changer when it comes to this industry. And lastly, energy. Energy in all aspects, constraints, power constraints, the challenges in that energy efficiency becoming more important. Customers focusing more on OpEx than CapEx because they will have to for sustainability reasons, as Grete mentioned, but also for the fact that this is the only way to do it when you reach certain levels. So energy efficiency is going to be key, but also energy in where you make your bets. And I can rest you assured that me and my team, we have a lot of energy to meet the future and dig into more market share and more opportunities in this vibrant market. Thank you.

Thank you, Stefan. Very good presentation. So let's walk to the middle here. So your market has shown significant growth driven by digitalization, of course. But do you see -- what challenges do you see going forward.

I think it's -- I mean you can grow in different ways. You either grow with the market or you grow because the market is hot like but you can also grow based on innovation that you actually change something. And that trick to grow both with as is and grow with something new. That is the challenge not only for us but for the full industry. So I think that is truly the challenge, and I'm proud to say that so far, we've been really successful. That is why we are here. That's why I can stand here and bang my chest and say, look at what we've done because we managed to capture that. We have to do it again, of course, as everyone else, but that I would say it's a challenge to keep growing with the market but also adapting to everything that is changing.

Exactly. Good. Thank you. So now we will hand over to Klas for a summary, closing remarks, but I would just like to remind you listening in on the webcast that you can post questions by using the chat function below, and we will soon start addressing questions. Klas?

Thank you. And when you have had a long day with a lot of input, a lot of dialogue. I have learned that we need to keep the summary very speedy and fast. So what I would like you to bring with you are those 3 points on this. First of all, in many different aspects across what we stand for, we are definitely energy-efficient leaders when it comes to climate solutions. And we can talk about that Munters is inside or Munters is behind or Munters is in a multitude of different subsegments. But if I summarize it, we are so well positioned towards all megatrends that are that current driving forward. And then sustainability. And our strategy is not 2 different parts. Sustainability is our strategy, both how we operate and how we support our customers to become more successful. And this is in a nutshell, 1 of the reasons why we now are saying, we are not aiming for only 10% organic, we are aiming for 40% CAGR total growth over the coming years to come. With that, I think we closed this informative part and open up for Q&As.

Thank you, Klas. So we welcome all the presenters up on stage.

It's good to have someone that is pointing you in the right direction.

Okay. Good. I think we can start from the audience. Can't we if there's anyone here who would like to ask a question. Thank you. Mats, go ahead.

Yes. Mats Liss, Kepler. A couple of data center questions maybe. Could you just sort of, well, give some flavor regarding the sort of -- I mean, you're into -- there are other ways of cooling your data center also besides your application. I mean, the cells are also of interest. Is there any idea of being a sort of tier of cell cooling as well for you.

Sorry, can you repeat the last thing. You said supplier of cell cooling?

So I mean, is there an idea for you or could it create some synergies to being a supplier of cell cooling equipment as well as what you supply now?

Not something that we have in the pipeline or investigating right now.

Okay. That's good. And 1 other thing is that all these data centers, where you need a lot of energy. And when you sort of make an offer to customer. Is there anything that sort of make them -- well, could it be something that made them choose -- well, could you please help us with using that heat to supply energy again?

Yes. No, that's a good question because that is definitely something that is topical, not at least in Europe, there's a lot of focus on energy reuse. If you take Germany as an example, they are even making legislations that this has to be -- if you build a data center, you will have to show that your technology is ready for it. Not at the point that they actually have to use it to my understanding yet, but you have to kind of future-proof your business. But the answer to your question is, yes, we can definitely help customers with this. We have done it before in, I think, 1 of the biggest projects in Europe. We have been involved in this. So that is where I believe coming back to differentiation where we can really stand out because we can also partner with customers solving these more complex issues. So we do it, but it's not something that we or to my knowledge, any of the competitors are putting on shelf, sort of like here is the heat we use 2,000. So it's rather like if you have a project and you have the circumstances where you can use it, then we can help out for sure, and we do.

And just finally about -- I mean you have a lot of air cooled SyCool applications out there now. And could those be sort of retrofitted to being liquid cooled as well.

Yes, that's the beauty of it, right? That's the versatility of the system that with this LC that I showed, when you change the box, you can use different equipment indoor to the same condenser outdoor. So yes, it's 1 of the brilliant aspects of the system.

Carlos here from Berenberg. A question on FoodTech. First of all, just to sort of get a sense, you didn't announce exactly what's happening with the strategic review today. But -- could you just remind us how much of the segment is nonintelligent products? And then I have a few more. Then secondly, just on the profitability here, obviously, you're announcing this is quite a huge market that you're basically driving. So if we could get a sense just how much you're spending to drive this growth? What kind of margin profitability for the digital solutions should we expect in the near term and the long term? And then maybe finally, just on competition here. I guess, big global food producers are still trying to optimize. So what are they using today if they're not using Munters?

If I start on the more general questions, and then I lean towards Pia on the more specific questions. I mean, first of all, you have to conclude on when to expect a final sort of decision on what to do within FoodTech before or in conjunction with Q2. At current, we are testing the market. I think that is a very wise at the end. It is about what is the best strategic fit for us and what is the largest value creation. I have a view that we will come to a conclusion in conjunction with the Q2. Then when it comes to, I mean, what is the intelligent and nonintelligent. I mean the best way to describe it, that is the largest part of what we call equipment is nonintelligent. And then there is -- the best description is a couple of hundred millions. Give or take, is intelligent. But when we come to that conclusion, of course, we will separate that out and explain how it is. The more intercap questions, please, I hand over to you, Pia.

I think the question was about competitors.

Well, yes, so it was, first of all, maybe on the margin side, what we should expect near term. I'm guessing you're going to have to invest quite a bit to realize this growth and then also on longer-term margin potential as well as competition.

I don't know if we comment really on margins, but I mean software businesses, I think you know that is high-margin business. And then of course, we are really investing in this business for the future. So I don't know if you want to comment a specific.

I think it's a fair point to say that the gross margin within the software business is 85% or above. Then, of course, we are committed to drive growth to contribute. And then at the end, it is a decision at a certain time, we optimize profitability or we optimize growth. At current, we would like to grow as much as possible.

And on the competitor side, I mean, there is actually no 1 in the industry today that are the ability to put the whole ecosystem together with both data capture platforms and software solutions. The competitors we sometimes meet in the market could be large software companies like SAP, but they are normally more about the financial side. We will often integrate with them. Sometimes they step into this area. And some other times, we meet more local suppliers than maybe a very specialized in 1 part of the supply chain.

Karl Bokvist here at ABG. Two questions. The first one, even though you don't have a targets for them, but if we can talk a bit about profitability ambitions between equipment and service. In the long run, is it viable that only the equipment side can be above 14 as well?

If I divide the service, I think that -- and as I said many times, a solid service and component business should be able to deliver a profitability in the range of 25% to 30%. I'm not talking of Munters at current stage, I'm talking about what I believe is how good it looks like. In certain areas, we do deliver that. On the equipment side, and then I don't talk about equipment in FoodTech. I talk about larger equipment sales. Most projects that we are then delivering on, we always have the ambition to be on or close to our group target. And then, of course, we are not always delivering. But if I go back to data center. I mean, there, we have hardly any service. And obviously, we can deliver substantially higher margins than on only simple equipment business, if we do it right and I didn't mean simple, sorry for that still.

That's good to hear. And then market segmentation, we talked about the battery side before, lots of larger projects and factories, data centers, the same thing. So how should -- how do you and how should we externally try to track the market and how do you assess your competitiveness in relation to what we can see.

I think the best and the reason why I take is it spans over the full range here. I think what we can continue to be even more, call it, transparent on to explain what is the competitive environment in the different, call it, business area. It is the beauty of Munters and it's the curse of Munters. And what I mean with the curse that is we are in so many different segments. So it's sometimes difficult to say who is the main competitor there and who is the main competitor over there. But here, we can generate more clarity. But I can say it like this. It's very few if any, that competes against Munters across the majority of the competitors we have in a subsegment or in a region directly against together with a business area, but we can become more transparent on that.

Understood. And then just to follow-up mainly towards data centers at this point in time. Do you feel that you're either outgrowing or matching the market growth when you look at your segment of the market?

It's guess work when you look at the future. But if I look at the history, definitely, I mean, looking at that growth, that is not what you find as an average of the industry. So in that respect, I would say we're gaining market share and growing faster than the market.

Okay. We take a question from the web. Before we address the audience here again. So this is a question regarding data center. And are you working with liquid cooling providers and semiconductor companies to provide a complete solution. And how important is it to work with semi manufacturers in providing new solutions for data center customers I think semiconductor.

Yes. Good question. The short answer would be yes. We are working quite a bit with different partners across the industry from ship manufacturers to colocation companies and hyperscalers. So I think that is 1 of the really nice aspects of this industry. There's a lot of collaboration actually to find what good looks like for the future. So yes, we definitely do. I don't think it's important maybe necessarily to work directly with the semiconductor companies. I mean that could be part of this value chain, but that is not where we put our focus rather on the -- depending on how you see it, but the ship manufacturers in that case because they can explain what the ship will require in terms of cooling.

Great. Thank you. So Carl?

Carl here from Carnegie Research. So 2 questions from my side. Maybe first on a little bit more in M&A since that is now more included in the financial target. If you could talk a little bit about what you're looking at, is that predominantly that capacity or geographical span or yes, a little bit more flavor there would be helpful.

If I start and then I mean perhaps individual comments on each and every one. But on a general level, you can say like this, it is bolt-ons that either adds market share or geographical expansion or it is technology. And if we can combine it both a perfect fit. Then it's service, the string of puts step by step. And then to complement it, it is dedicated and technology providers or software companies or controller companies. And then there are different granularity in each and every. So perhaps we just take few comments from each and everyone.

Yes. Now short for us. I think that bolt-on is not that interesting at this point in time. We are looking more for portfolio expansion. And in terms of geographical coverage, as you know, we are strong in U.S. We have established in Europe. There are other areas where we have proximity like Latin America, where I feel like we managed pretty well already. So it would be something that in an ideal world could give us either some growth opportunities in Asia or primarily portfolio expansion.

And for us, it's a lot about going into more software solutions where can we find more software to bring into our portfolio, how can we extend our data capture platforms? How do we go into regional even more geographical expansion? It could also be that we want to go into new species, new segments in an industry we have not been in before.

Yes. And on AirTech, on the humidity side and then you can also respond on clean technology side. It is both our application areas, dehumidification and humidification and also find both equipment suppliers, but also different types of services providers that we like to link together.

If you look at our customers, typically speaking, if you have 1 problem or 1 type of emission, you actually have problems with flu type of emissions. So for us, M&A is very much about adding technologies that we can then sell to the same customers.

So if I then wrap it up, so to speak, on this, then is, yes, we're adding capabilities on M&As. But the idea, on that we briefly talked about that, that is if we add a number of percentage. Of course, we're aiming to acquire something that will grow faster than our ambition is. So that will generate an organic growth as the next step.

Okay, very well. And then I had a follow-up on data center technologies as well. I guess -- what we have been seeing here quite recently in the U.S. is a capacity race among hyperscalers. I mean, we saw Amazon here quite recently with huge investment. And I just wanted to sort of hear your view on that with regards to future capacity on if that's cloud or AI driven. Obviously, hard to quantify, but co-location versus hyperscalers who are going to be the big sort of market drivers on CapEx in your view, also considering that you have a quite significant tilt towards colocation.

Yes. No, good question. I'm not going to try to quantify it, but I can give you an answer more qualitative terms because here, I think sometimes the capital market puts too much focus on the differentiation between co-locators and hyperscalers because in essence, the hyperscalers are driving the growth of the colocators because they rented out to the hyperscalers. So to answer your question, well, I guess that the engine of the digital world will still be the big ones, as you know, the Googles and the Apples and the Metas and who are they? And they will build their own data centers, but they will also hire colocators to build for them. So the starting point and the engine would be the hyperscalers, but that also leads to significant growth of colocation.

Pass it down there. Anders.

Anders Roslund from Pareto Securities. I have a question regarding data center and your strategy. In your last webinar, you described your service as a niche player, but your aim is to broaden your market scope. What are you doing? And what should we wait for?

Good question. No, I think we have delivered on that already. But what we're doing to answer on that, I mean, we are doing exactly that. We are broadening the portfolio, what I showed today with the liquid cooling evaporator as an example, that's a pretty big innovation in our world where we have adapted SyCool to cater to both air and liquid cool needs. We're also doing that with chilled water developing equipment to have liquid heat exchange as an example. So without going into the technical weeds, we are definitely working on that agenda. But then coming back to the previous question, of course, we're also looking into M&A opportunities, how could we also acquire broadening of the portfolio. So yes, it's work in progress. So I'm not sure you should wait for 1 thing. It's an incremental development that happens all the time.

Yes. And then a follow-up on that question is in the liquid cooling area and the SyCool we've been used to those gigantic orders of SEK 1 billion and SEK 1.5 billion, et cetera. Will it be differently in the future that you see more of a testing or smaller orders or?

Yes, very good question. I think yes and no to some extent. Yes, in the extent that I believe that what we saw 2022 and the really big orders that you talked about was really much coming out of the supply chain constraints, no one trusted on demand and just in time. So the bundle order pattern was there, and that is going away partly. But no in the sense that I think there's plenty of growth in the market. And the kind of pattern of program orders, if I call it that, where customers are finding suppliers that they want to work very tightly with that's here to stay, and that could theoretically lead to either many small shop top orders or that they decide to cluster this. And that's really out of our control. It's up to them how they order, so.

Okay. And my last question is clean tech. You have a lot of very exciting activities in carbon capture. Is it sort of a 5, 10-year scenario? Or is it closer when we see more sizable?

Well, I think you saw from the graph that it's starting now, right? Money projects are coming out on the market. But then, of course, with the build, it, of course, takes a while to bring them live. And then if you want the real exponential growth that will come with due time.

It's Gustav here from Nordea. Just in order to sort of reach, go back to your financial target here of 14%. I mean how confident are you in reaching this sort of beyond 2025 case where you sort of deliver on the strong backlog while you're still sitting on the equipment part of FoodTech. And then also, what can you say in terms of geographical expansion and sort of untapped markets today in order to get more conviction in this 14% number I mean, are you sort of -- how do you look upon the DCT expansion in Europe? Are you also looking into Asia, maybe you've been quite forward-leaning in terms of the battery in India and so forth, if you can expand there.

I think I'll take this question, and then I mean please chip in. If we talk about the 14% and above, that is -- if I summarize it, if I go back 2 years, and where I am right now, I'm much more confident that we will reach that than what I were 2 years ago. And I was pretty confident already at that time. Then I mean, 1 of the reasons why we have not changed the target at current, as Katharina talked about, that is, first of all, I think there is some misunderstanding in saying then, I mean, is it to reach 14% or do we have the ambition to be above 14%. And yes, we have the ambition to be above 14% moving forward. And about, that is, of course, the definition on how much above. Sorry, but then you have the profitability target here. I gave you that answer, then going back to the growth target -- sorry for that then. I think that on the growth targets, look upon it like this, as with the order pattern we have don't expect that each and every quarter will be spot on or above the targets. But if I take the long-term trend that I think you all can see that we have a fairly good outlook I'm very confident that we will continue to deliver on that moving forward. But I will not guarantee it will happen each and every quarter and sometimes not even each and every half year. But if I take a 2-year perspective, I'm very confident.

Good. Adela?

Yes. Adela Dashian from Jefferies. I'm actually going to go back to the data center comments and differentiating between the co-locators and hyperscalers. It seems like the hyperscalers are the 1 that will be driving the AI acceleration in growth, yet there are a couple of bigger players in the U.S. that already have a large presence within that space. Do you see that as a challenge? Or will SyCool be the technology that will differentiate yourselves from others? Because it seems like you don't have the similar type of system currently?

If I get your question right, you spoke about established technologies already in there. But -- no, I think we have the heat rejection part going back to the steps 1 to 4 that I've shown in the presentation. We have a lot of good collaboration with companies taking care of the first dissipation step, and we are agnostic in a way that we can adapt to any system in that space. So I don't feel like if I interpret your question right, that there is a seat that is taken that we cannot move into taking this or grabbing this opportunity in growth. Quite the opposite, I think we have a really good position to claim our space in the industry also with liquid cooling and high-density needs.

And then if we maybe continue on this business area, the service offering today is quite small for you and there's continuous investments and innovations that are taking place that I guess will only prolong the opportunities that you see within service. What's your view on that? And what type of life cycle do the products that you currently have in the space?

Good question. In short, the service in data centers is quite different from the rest of the business, not at least AirTech. AirTech, as we joke sometimes, and call it the black magic of HVAC. You really need to know your specific stuff while even though we have a high complexity of what we can do with our products, the actual build of the heat rejection equipment is pretty simple with coils and frames and so on. So the maintenance opportunity is lower, I would say, in data centers, but commissioning installation, different other service concept is still interesting for us. So we work on it. And of course, the more units we put in the market the more we have to take responsibility as well and build up an organization that can cater to these new needs that we establish in the market. So we are aggressive in growing the service part of the business, and we have grown significantly the last year. But with that said, given the momentum right now, we definitely focus on the physical products, both to deliver on what we have taken on, but also to innovate to capture the big kind of profit pool opportunity here.

Great. And then lastly on M&A question for you, Klas, or maybe Katharina. On the financial profile of the acquisitions that you're considering is that a reason why maybe you're holding back on obtaining the EBITDA margin target? Or how should we view that?

I think the simple answer there is no. That is -- I mean when we evaluate an M&A target. It needs to be technology, it needs to have the future growth. It needs to have the profitability pool. It doesn't have to deliver day 1, but it has to have it in the long run. As an example, I take 2 examples here. One example is Hygromedia, as an example, earlier in that delivered pretty much from day 1 and forward. In some other of our M&As, I mean I used to say that we are behind the first year, and we are ahead the second year. That has been whatever business case we put forward. We are slightly behind in the beginning and then we are very often catching up and over delivering in 2, 3 years ahead then. But Katharina, more about M&A. Anything -- any comments from your side on how we look on that and the pipeline or...

Yes. No, I think we can say that we have this very structured process that I was talking about. And we, of course, evaluate the financial aspects and the sustainability we take a holistic view and the targets that we look at, they need to meet all criteria basically and contribute to the full business.

Good. Julia?

Julia Utbult with SEB. So follow-up question on M&A that to start with. It would be interesting to hear your view of the valuation multiples in the current M&A market and specifically on potential target for different divisions.

I think here is whatever multiple I or anyone else would give that would most probably be the wrong multiple. But let me phrase it a little bit like this. In simple terms, we try to buy at the lower multiple than what Munters has as an multiple. Then of course, in certain pockets, in certain hot areas, then I mean, the multiple will be higher than what Munters has. That could be in a hot technology area that can be in the software area, et cetera, et cetera. But then, I mean, multiples that is you multiply it with the multiples. That's the definition. And then I mean if you are convinced that you can drive that forward and you can generate more growth, et cetera. I mean, then you come to conclusion that it is a solid business case. So -- but if I talk about the generic business, then our ambition is to acquire at a lower multiple and then bring it on and improve it.

And then a second question from my side. You mentioned your ambition to double the ARR growth in FoodTech. Can you elaborate a bit on this? And also to what extent this also includes entering new segments within FoodTech.

I mean, our ambition, I think we are focusing mainly in the beginning to continue with our existing segments. But of course, we have the potential also to go into new segments. And when we do it, I mean, that we will see in the future. How fast we will do it and when we do it. But we have a huge potential to just stay within our own core segments for the moment. And doubling the ARR, I mean, that will take, as I said before, I mean, it depends how fast will that go? It depends a lot on how willingness and how fast our customers adopt new technology is a new way of working.

Okay. Great. So we take another 1 from the web. And this is a question for Klas regarding the new service ambition that we communicated today. Previously, we had an ambition to increase service as a percentage of net sales to 30%. Now we have an ambition to increase service the software business and components to 1/3 of the business. Is this not a less ambitious ambition for the future of service within that.

What a nice question from the web. In general terms, we are very ambitious. And you can define this as is it less or more ambitious, let me define it in a different way. It is substantially higher than what we are today. And we have been growing the general business that is not service components and software at a much higher pace than I think anyone expected 2 years. So from a value perspective, I would say it's very ambitious.

Very good. Thank you for that answer and a clarification. I think with that, that we would like to thank everyone who has joined us today, both here in the room. It has been fantastic to share these hours with you here and also for those of you who have been viewing us on the web. And thank you to everyone here on the stage and around and behind the stage that has contributed to making this happen.

And we look forward to seeing you again when we present our Q2 results in July. And please, before you leave, take the opportunity to talk to our experts. If you still have time, they're very willing to talk to still. Thank you for today.

Thank you.

Thank you, everyone. Thank you.