Munters Group AB (publ)

Good morning and a warm welcome to today's presentation of Muntage Q1 2025 results. My name is Lidne Duvern and I'm Head of Investor Relations, joined here today by Claes Forsström, our CEO, and Katarina Fischer, our CFO. So we will begin with a presentation of our results and then we will open up for Q&As after that. So Claes, please go ahead.

Thank you, Lina. And once again, good morning and welcome. Before diving into the Q1 report, let me shortly summarize and share some highlights. First of all, an agreement is signed to divest the food tech equipment offering proceeds expected during quarter two this year. So with that, all comments and figures in the report refer to continued operations unless advice stated. a strong overall start to the year. Strong order intake, 27% growth, robust net sales growth, 18%, healthy profitability levels, 13.5% adjusted EBITDA percentage, that with one business era lagging behind. And also very pleasing, solid low operating net working capital levels at 10.2%. All in all a good start. As said, two business areas performing very well as expected, one weaker that is Airtek. Here we anticipate a stepwise improvement during the year and the second half of the year will be better than the first. When it comes to tariffs, I mean, no one likes tariffs, no one likes trade war. With that said, we are well prepared to handle the tariffs. We have a long-term executed strategy that, in short, is in the region for the region, sell and produce in a balance. To give you one example, 90% of what we are selling for in the U.S. is also produced in the U.S. Of course, we follow this development closely and adjust when needed. If I summarize it then in one sentence, I'm cautiously optimistic going into the remainder of this year. So let's then just for the sake of clarifying what do we mean with the design agreement and continued operations that we will talk about in the report that is air tech, data center technologies and food tech. This continued operation that is the equipment part of food tech. As I said, a strong performance in a volatile environment. Strong order intake, 27, and also to highlight here, 8% of that is organic. Air tech declined, battery continued as anticipated to be weak in all regions. Data center technology increased in orders, driven by strong demand, particularly in Americas. Foodtech, a new started foodtech, a new setup, increased, mainly driven by strong control of demands in all the regions. We ended up with an order backlog that declined some 10%, mainly due to DCT had delivered orders for this year. Robust net sales growth, 18% out of that is 5% organic. Air tech declined, once again the batteries and service sales in America also declined to some extent. Here I would like to underline this is very much about the pattern of different customers and when they expect to have certain things delivered. So it's not a fundamental change in the market. DCT once again increased the invoicing and was eating into the backlog successfully with good execution in especially Americas. Foodtech grew positive development both in software and controllers. The adjusted EBITDA, healthy profitability. Yes, it is lower than last year, but still very, very close to our target of 14%, 13.5%. DCT, the EBITDA, driven by robust volume growth. Airtech, here is the cost savings in focus. And in foodtech, of course, higher sales generated some positives on the EBITDA margin. As I said under absorption as expected and due to lower volumes in Americas as well as product mix in Airtek and then Foodtech. Now we are resetting this so we have a larger product mix of controllers versus software and we continue to invest when it comes to growth especially in software. DCT, as stated, the main driver of growth. If I take a look upon how is the spread in between the regions, 55% in Americas, some 30% in EMEA and 16% in Airtech. And as you can see, in Americas, DCT has close to 90% of their total sales there. Airtek balancing more, 41%, and Foodtech about one third and a little bit above that. Then in EMEA, one third of the order intake coming from EMEA and DCT around 12%. And EMEA being the strong leg for Foodtech, thanks to our recent acquisitions. And APEC still a little bit shy of 20%. All in all then we see in America as a positive general market sentiment. It is supported by solid demand as we see it in all more or less all key sectors with exception of batteries. Then since before the election and continued into the tariff dialogues we see some longer decision making processes but in general no major change there. EMEA, a mixed marketing sentiment, but a stable underlying growth. Solid growth in selected areas. Overall, you can say that activity is somewhat softening out due to a cautious investment climate. APEC, stable market, selective growth in certain segments. Yes, there is a continued weakness in the battery market, but I have to say here we start to see some positive signals, especially in China, but also across the region. Trade wars and tariffs, I think that is the headline for many companies. No one running a company, no one operating a company do like that. With that said, our long-term established manufacturing strategy in a region for a region is working off very well. So with that, we don't see any current needs for the regionalized production. We have already invested and put in place a good setup. And I can pick a few areas here. 90% in the US, as I stated. Europe, 95% of what we are selling is also produced there. And APEC then, you may wonder why only 70%? This is the small outlier. Here we actually are importing from mainly Europe to China and Asia certain components. All in all we believe that this is a stable base of course then I mean in times like this we are very attentive to what changes are happening and we will act on those when needed. Moving into the different business areas then. Declined order intake affected by EMEA in general. But let me dive in a little bit more. I've said several times that I expect that the battery will be in between 10 to 20% per quarter. This quarter we reached 11%. I also said that it could be quarters where we're up to around 30% because the battery market is not dead. It is still a lot of activities, decision processes and smaller projects in general. But another reflection here, that is 90% of our orders are coming from other segments. I think that shows that we have started to shift also our exposure to other segments than battery. A strong point moving forward. If I go into this then, You have seen this slide many, many times and I concentrate on the left side here. You see the different colors on the bars. You may remember that the yellowish here, the beige styled, that is then batteries. And now no more large battery orders to be delivered. Take a look upon everything except batteries. Now it's the third quarter in a row that continues to grow. That is a fundamental direction from us that we are trying to fill up the factories with other components than batteries. With that then it is also so that battery is not dead. So in between then 10 to 20 could be quarters where we reach also 30 percent. Service has a stable development and I just want to go back to that then when it comes to service some service contracts some patterns when it comes to service sales is also then a little bit seasonal depending on when the customer accepting service bills. We see a continued strong stable service development moving forward. A water intake that decreased, but still we're reaching some 2 billion in sales. The order backlog decreased. That is continued eating off some of our larger batteries in the past. But what I expect moving forward now, that is really a reverse of what you can see what was driving the EBITDA margin to decline this quarter. We reduced production utilization we had due to service and batteries. We had a product and a regional mix that was unfavorable. We continued very diligent in certain areas to drive investments and we started to generate cost savings then bringing up DBT. What about this gradual improvements during the year? It is to deliver more on the cost savings and I can say like this I mean isn't it fascinating when you start to drive a cost saving program suddenly you discover more opportunities. So I said earlier that we would aim for about 100 million and what I can say now that is we are aiming for more than 100 and at current we have reached about one third of the 100 million in this quarter. All in all then a step wise improvements moving forward. When it comes to innovation, super important. And let's start on the right side here. This is an award-winning new model from Manters. The design, the performance, I mean all of the different aspects are really world-class. And as you can see, it's suitable for storage, infrastructure, preservation. Here you can read everything from food to military equipment, when it comes to water damages, laboratories, food, etc. Really targeted to all the different areas outside batteries. It delivers energy savings, lower energy consumptions and it delivers more or less a perfect climate through the AirConnect control system. Moving to data center. I'm so pleased about data center performance. It continues to deliver. This is one of the best order intake starts of the year. With that said, it is built up by several medium sized orders not any super large orders but as you know in data center there are no one million Swedish krona order all the orders are of more or less sizable manner. A couple of highlights here. First of all, on the left side, you can see that when it comes to hyperscalers, when it comes to co-locators, we don't see any signs short term. And I have to say long term that it's a slowdown. It's still a healthy, good demand there. When it comes to the order intake split, we have now started to open up a little bit more granularity to not only talk about the different customer segments, as you can see the 71 and 26 when it comes to co-locators and hyperscalers on rolling 12, but also talk about different product categories. And as you can see here, the 21%, the split systems, and the 65%, the indoor units, CDUs and so on. Those are the areas where we hear and we see that is what the market would like to have and I'm so pleased that is also where we are growing. So Stefan and his team they have positioned their product assortment in a very very good manner for the future. You have heard me say many many times that it's not the order intake chart that you should focus most on. I'm very confident that we will start now to fill a little bit more for 2025, continue to fill more or less all orders that we are receiving from end of last year to this year is for 26 and very soon we will start to fill up for 27. But take a look upon the invoicing chart. more or less step by step then improving quarter by quarter and not to give a forecast but I say that I mean we will stay definitely on more or less this level or slightly above for the coming quarters then. Adjusted EBITDA margin strong Volume growth, high production utilization, and then of course we continue to drive organizational ramp up. But with that said, we have mitigated with all the other positives in this quarter. You have heard me say many different figures of when am I pleased or not pleased. I will not talk about when I'm pleased or not pleased this time. I will say we have established ourselves now on the high teens and that I see that we can continue to deliver in the near future. Then of course you can have some product mix up and down in different quarters but that is just the normal way of handling business. We publish either if it is very sizable orders, we press release or put it together and communicate with the market, or we then gather also information like this when it comes to more sizable projects or more strategic projects. And this is what we present right now. And as you can see, the majority of the sizable projects are for 2025 but then the other backlog that is for 2026 and moving forward. Very pleasing to see that we have a strong backlog also reaching into 2026. This, innovation, once again. In the past you heard us talk about what is the future, what type of systems are in demand. Chillers is one of those. You have heard me say that we had in the past cross, we added chiller with geoclima, and now we start to see the clear proof points done. This is a combination of the two different systems and order value of 37 million US dollar. That for me tells the story. We made a very, very good acquisitions when it came to GeoKlima. And that in combination with what we already have and what we have brought to the market is really paying off. Vitality index in DCT, the vitality index, i.e. how much of the sales is generated by products of an age less than five? Well above 40%, a very, very strong number that shows that we are agile and forward leaning in a rapidly moving segment. Let me breathe in here when I start to talk about Foodtech and the reason for breathing in. This is a new type of business area. First of all, it consists of controllers and software. The offering First of all, it is to gather data, very agnostic. It is to make sure that the data can then be exported to software that can draw conclusions and give advice and optimize the different systems. When it comes to the controllers and IoT and sensors, we have several different companies, brands, some are within Manters since many years and some are new. Innobram in South America, Hotrako in Europe and different than other brands when it comes to US wrote them as one example. Then when it comes to software, Emtech, the long and now fully owned company, develops the software systems. And then we have created partnerships in the controller areas with Barn Tool and Pharmacy and in the software arena with AgriWeb. What I see here, that is a very agile, forward-leaning business area that is geared up to create the market. And I hear customers say, we have a unique setup. And then it's also a business area set for profitable growth moving forward. Strong order intake, especially through controllers. A few highlights here. First of all, as you can see, it is much less swine in our end user segment now compared to four or five years ago. And then you can also see that crops and agriculture are expanding up to 8%. So we have positioned ourselves in a different way. Greenhouses, I should say, and plants. Margin, lower, very much driven by it is a mix, more software, more controllers. But then also, of course, as I said, we will not be greedy when it comes to this. We will continue to invest in software and so on in order to grow. The growth 23% and now calculate in a slightly different way instead of quarter times four it is month times 12. Continue to show a good underlying growth and all in all I'm very very comfortable with the progression in this business area. Here are a few examples, and I will start from the bottom. When it comes to software, churn rate is of great importance. In the quarter, pretty much zero in churn rate. And the churn rate we measure as, is it a customer that has abandoned our software system? And no one has during the quarter. In the other quarters, we've had below 3%. Both numbers, very, very strong. When it comes then to controllers, we have now more than 50,000 different equipments across the globe, connected or prepared to be connected, a very strong base to grow from. We are expanding our efforts when it comes to software in EMEA, we are consoling our efforts when it comes to the companies and driving profitability and synergies across the controller family members. Very pleasing to see new customers are adapted when it comes to software and very pleasing to see that now when it comes to controllers, we have a very, very strong footprint in Europe. With that, I leave over to you, Katarina.

Thank you Claes. So we entered 2025 with a solid order backlog log set to be delivered over this year and next year. In the quarter our net sales grew with 18% and this was a combination of organic growth but also acquisitions of course. So this is fully in line with our growth ambitions. and 2024 was really marked by several acquisitions as you know and now also latest with the acquisition of mtech the remaining part of mtech and what is very pleasing to see is that the integration of the acquisitions are really contributing very well and we also see some synergies already now so this is Supporting growth and also good operational momentum. Our EBITDA margin declined, as Claes mentioned, although it remains at a steady level. And both for DCT and Foodtech, they delivered very solid margins, although we saw a weaker margin than in Airtek. And this was affected then by the lower volumes in Americas in batteries and service, leading to a lower production utilize. We also had the additional cost for running two factories in Amesbury and this is of course as you know a temporary measure and that will start to ease then in the second quarter. We also had a stable cash flow and this was then supported by the continued strong performance in operating working capital management and our ratio is now at 10.2% which is very strong and well within our range of 13 to 10%. Our net debt increased and this was due to the increased lease liabilities then for the new plant in Emsbury and also the acquisition of the outstanding Emtech shares. And we have now owned Emtek since 2017, partly owned, and now we have made the full payment. And this is, of course, an important step in supporting Foodtech's digital transformation journey. And as a reminder then, we have paid 80% of the transaction price in the quarter and the remaining 20% will be paid in the first half next year. We had a stable margin in the quarter then, as we said. Volume had a positive impact where we had a robust growth in data center and food tech, while air tech then declined primarily in Americas. I'm very pleased with the positive net price increases we have seen in the quarter in Data Center and Foodtech. However, we did see that Airtek and Foodtech had somewhat negative product mix. On the operational excellence side, we saw then that the underabsorption in Airtek weighed on their margin. However, I do want to mention that all business areas, they are driving good improvement initiatives on operational efficiency. And then, as we have discussed in prior quarters, we continue to make strategic investments in order to be able to scale the business for the future. And this of course includes investments in systems and also the digital capabilities and also to strengthen our global footprint. And this is of course very important for us since we want to make sure we are future proofs for continued growth. Looking at cash flow management, we see a stable cash flow in the quarter, so good contribution from earnings and also from good positive contribution from operating working capital. So that is very positive. And then we saw the fine investing activities increase, of course, due to the M-Tech that we bought the remaining shares, but also increased capex in Amesbury. And then looking at investments, as we have highlighted before, we are continuing to make the investments. And in the first quarter then, the percent of net sales reached 7.2%, a slight decline. Fourth quarter was quite high at 10%, so now it is at 7.2%. And this was driven then by the Ainsbury investment. And if we look ahead, we will continue to see, it will go down slightly, but we will still be at a higher level than historical levels, if you look at our investments, since we want to continue to invest, of course, to scale the business. In terms of capital allocation priorities we remain very focused and we put money in the areas that generate value of course and growth. Looking at leverage then, it increased in this quarter to 3.1 and this was due to the net debt increase due to the lease liabilities increasing them for Amesbury but also our acquisition of the remaining shares in Emtek. For the second quarter we expect an improvement in leverage given that we will receive the payment for the sale of the equipment offering and adjusting for that the ratio in this quarter would have been 2.6 instead of the 3.1. Although we don't have a fixed leverage ratio, we do aim to be in the range of 2.5 to 1.5 for leverage. That said, now we are higher than that, but we are not concerned about that. This is, as we know, a result of our strategic investments in the very important acquisitions that we have made. So that is not something that we are concerned about and we have shown historically that we can bring the leverage down also in a structured and disciplined way. Looking at service then, the service business is of course very important for us to increase the efficiency of our installed base and the service we define as the aftermarket service across all business areas but then also the software as a service which is then reported as the annual recurring revenue ARR. We also measure the components in ARPTECH and that consists then of the dehumidification rotors and the evaporative cooling pads. And the ambition that we have for the group is to exceed one third of net sales for these two combined service and components. And in the quarter the share was 22% and if you look at rolling 12 it was 25%. And if you look from a contribution from each of the business areas for Airtek service was 19% in the quarter and components 17%. For data center it was an increase to 5% and if you look at the bars you also see that the value increase was quite high in data center. They have such a strong growth in the net sales so the percentage on service is not developing so much but the value has increased a lot. And then for service it is 26% and this is then a decline and this is due to the higher mix, so more controllers in the net sales numbers. And of course service continues to be an important focus area for us in all business areas. Now I would like to turn to how we are developing in the sustainability area. So here there are a few things to highlight. One is of course that we have gotten our climate targets validated by the science-based targets initiative, the SPTI. So this is of course a very important milestone for us and it confirms then that our goals are aligned with the Paris Agreement, one and a half percent pathway, one and a half degrees pathway of course. And of course this strengthens our role as a responsible and forward-looking company. And then I want to highlight that Atmanters product innovation is very strong and we really drive our sustainability work through the product innovation. And for us, the use of our product represents the largest part. So that is basically 99% of our emissions. And of course, this makes us focus on the product innovation to really make sure we can deliver the most energy efficient products. And that will also help our customers operational efficiency, of course. And Claes mentioned a very good example of this with the M300. So it's really good to see that we are really dedicated and strong in delivering innovative solutions. And then the other part I want to highlight is that we are integrating sustainability across our operations. So during recent quarters, we have focused on making sure that we include the newly acquired companies in our ESG reporting and also in our sustainability roadmap. So, yes, our sustainability journey continues and we are well progressing according to plan. So with that, I would like to hand it back to you, Claes.

Thank you so very much, Catharina. And let me then shortly summarize it and then we move over to Q&As. We have three financial targets. The numbers highlighted 16% currency adjusted growth in the quarter, an EBITDA margin of 13.5 and operating through net sales of 10.2%. pretty much two well in line with our targets and one not too far away from it and in the graphs you can also then see what was the rolling 12 for last year then and of course gradually we will start to update those. Then at the right also to bring forward that we over the last couple of years now have year after year continuously been able to increase the dividends and this year then it will be 1.6 per share and it will be then divided into two different payout periods. So the highlights, strong performance in a volatile environment in pretty much all the different areas. Two robust pillars, data center technology and food tech delivering very good. Airtek, a tougher environment, but definitely progressing in line with expectations and stepwise during the year then reach a level that would please me. Then when it comes to trade wars and tariffs, since Several years we have worked diligently and established a regional production to support regional sales. And that is a platform that can actually turn into an advantage in times like this. And I would like to once again highlight that about 90% of what we sell in the U.S. is also produced in the U.S. That puts us in a U.S. for U.S. perspective. So with that, let's open up for Q&A's and over to Julien.

Thank you, Claes and Katarina. So we are ready for Q&As. For those of you listening in to the webcast, you can use the chat function and we will address the questions here. For those of you dialing into the telephone conference, I once again ask you to please limit yourself to two questions so we can hear from as many of you as possible. And with that, I will hand over first to the telephone conference.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Joan Sundmark from SEB. Please go ahead.

Oh, thank you for the presentation. So firstly, if we could talk a bit air tech sort of on the current demand situation outside of the battery market and whether you're seeing geopolitical uncertainty having any impact on these other segments outside of battery.

Thank you very much for the question and when it comes to as stated in the report I'm very pleased with that we are now step by step during the last couple of quarters. We have moved up the non-battery related and order intake in a very very pleasing way then. In general, we see some longer decision times, especially in America and in Europe, really not related to the trade tariffs, etc. That is something that has been like that then. To be frank, in the quarter we have not really seen any large effects on that whatsoever. So a good development in non-battery sectors in air tech.

Okay, thank you. Very helpful. And then second question on the corporate functions and its effect on adjusted data. It appears to be positive 3 million this quarter. Last year, I think it was negative 49. So could you explain a bit on the drivers behind this and perhaps if this is something that we should expect going forward as well?

I turn it to Katarina here representing the corporate function.

So there are a couple of things here. So one thing is that we have a positive currency impact from a revaluation then of a non-current software agreement. So that had a positive effect in this quarter given then that it's denominated in euros. So that could of course turn back in coming quarters so to say. And then the other thing is that we are progressing with our software implementation and that is driven by the corporate functions. So the corporate functions are also invoicing out more of their costs and that has progressed in 2025. So those are a couple of reasons.

Okay, thank you very much. That's all from me.

Thank you, Johan. So we'll take another caller from the telephone conference.

The next question comes from Gustav Berneblad from Nordea. Please go ahead.

Yes, good morning. It's Gustav here from Nordea. To start off here in Airtek also, is it possible to quantify the excess costs related to double facilities? You also comment that this will start to ease in the second quarter. What does that really mean? Is it the full quarter, or should we see that it will ease just in the first half of Q2, or how should we think about it?

If I start with the East and then turn over to Katarina in regards to perhaps split it up in different ways then. I mean the East, it is fairly simple to explain it. I mean at current we have two production facilities and that means that no one has high full rates. During the quarter then, sequentially during the quarter, this new facility will be fully operational. I will move away from the old ones and then going into the second half of the year we also see that the high order intake rates moving forward, the stepwise improvements as I said, the combination of having one, now I talk about Americas, having one facility only and a healthy order intake then, that will then give these. Beside that, then, of course, we're also driving cost mitigation actions. But perhaps a few comments on the different components.

Yeah, no, but I can add that the double costs will start to ease towards the end of the second quarter. And then, as Claes said, of course, we are driving cost savings initiatives and we are also actually seeing more of those, so to say. So that will also help throughout the year.

Okay, perfect. And then if we sort of go to the DCT margin, you comment that you expect it to be in the high teens and however sales sort of remaining at these levels or slightly above. Can you just sort of explain the reasoning here? Is it that you expect the product mix to worsen a bit more or that the orders you are taking is that on lower prices or do you expect to see increased costs here?

A really good question. High teens, I mean, the reason, as you've heard me say several times, the largest effect on the profitability is the mix. And certain products have a higher mix, higher profitability. And as you remember, then the crow type of products has the lower product margin then. And here we see during the remainder of the year having a larger content of that then. that is of course compensated that the more cross we are producing the better we will be but it is it has a lower than labor content than some of the other components then when it comes to then as you saw price we have taken and some positive pricing etc But also here it is more mix related as such. And when I say high teens, I mean that is call it the 18th and 19th region.

And to build on that, it also worth highlighting that data center will continue to invest in support functions. So that cost will also for sales and service and so on will continue to increase over the year.

But if I conclude, a sector world class profitability in data center.

Okay, perfect. That's very clear. Thank you very much.

Thank you, Gustav. We will take one more caller from the conference, telephone conference.

The next question comes from Adela Dashian from Jefferies. Please go ahead.

Good morning, guys. Thanks for taking my questions. I'm just going to follow up on the previous question on the Airtek margins. Are you able to quantify what the effect of running two facilities in the U.S., what kind of effect that had on the margin drop in the first quarter? It would just be great to know, I guess, how much of the weakness was fully driven by just that.

Do we have a flavor on that, Katarina?

No, nothing that we're communicating right now. No.

All right. Then I will ask a question on the data center market. You're saying here that you don't expect any or at least not seeing any slowdown from hyperscalers nor co-locators. But can you say anything about regional differences between Europe and the U.S.? ? I've seen some of your peers commenting that the European market is taking a bit longer in terms of making investment decisions versus U.S. customers. It would be great to see if you're experiencing the same. Thanks.

But thank you very much, Adela. Yes, that is the simple answer to that question. As I and Stefan and we have said, it is a longer, call it, compliance process in getting approvals, etc. And now I come with a speculation then. In the world of trade wars, in the world of tariffs, in the world of security, I would predict that it will ease up, it will become quicker in Europe. But in general sense than to give permits etc. But in general sense it is a slower market in Europe and a very strong market in the US. And that is what you hear from others and that is what we see. We are well equipped to handle both US and Europe and then also what is very promising now we are dipping our toes into Asia as well that is also a market that has started to grow substantially.

Do you have another question, Adela? We didn't really answer your first one, so I'll give you one more.

If my first question doesn't count, then I'll just continue on the topic of data centers. So what we can expect then is basically that, given the general uncertainties in the US, that maybe some of your customers will look to invest more in Europe. Is that basically what you're

Now I'm very speculative. I think that Europe, Europe as a region, Europe as the different nations, if I put it like that, they see a larger and larger need to have a data-centered environment under their umbrella, if I put it like that. That, of course, could drive different customers to do different investments. But what we see, that is just to underline it, we see as strong underlying demand, as strong underlying dialogues with our customers in the US. So we are not seeing a shift from the US to Europe per se, but we see an eager in Europe from customers to have their data stored, the end users stored in Europe, if that makes sense.

Perfect. That makes absolute sense. And can I just confirm that you now have the Ireland plant fully up and running to take on the European opportunities?

Yes.

Great. Thanks a lot. Thank you. Let's take another caller.

The next question comes from Carl Bockvist from ABG Sundal Collier. Please go ahead.

Thank you. Good morning. I just wanted to follow up on something you said during the call, Claes, just so I understand it. You said something about expecting activity to stay at current levels. Was that regarding data center momentum? I didn't really catch that.

I say I believe so, but I can expand on what I said then. At current, we are continuously seeing strong activity in the data center arena. So that is a yes. If I go into food tech, we are continuing seeing, and here we are actually building the markets to see in general strong activities and good demands from our customers. And when it comes to air tech then, I go back to the three quarters in a row where non-battery demand has quarter by quarter improved step by step. And with that said, Very low activity in batteries, but still activities in the battery arena. I hope that gave a better flavor on all the different aspects.

Understood, thanks. And the second one is on the new food tech. If there is anything to keep in mind now for future quarters regarding seasonality, be it on sales, but perhaps especially on margins.

Good question. When it comes to software, really no seasonality at all. It is more call it general customer pattern. When it comes to the software as a service, ARR, I mean the sales rate there, I mean that is a gradual call it ramp up then, so no seasonality. When it comes to orders then in that, no seasonality, but it could be, I mean, a larger order, a smaller order, etc. In controllers, it's some seasonality, but not as in non-intelligent equipment, but some seasonality. So to some extent, a little bit weaker in quarter four and a little bit weaker in quarter one, but not as to the extent of equipment.

Understood. That's all from my side. Thank you.

Thank you. So let's take another caller.

The next question comes from Matslis from Kepler. Please go ahead.

Yeah, hi, thank you. Just coming back to the margin then and looking at status and guide for high teens. in general terms, as you've seen, but is it something that you expect to see already in the second quarter, or is it more a long-term view? I mean, I heard that comment from you a couple of times that, well, you are impressed by the performance, and you don't see sort of a long-term view for data centers, so could you extrapolate a bit around that?

Now I'm balancing on this, what is forecasting and what is not. But put it like this then, I mean what is driving the profitability? Of course it's the fill rates in the factories, of course it is the mix. And in this quarter to a small extent you can say we over delivered on a positive mix and that of course that positive mix will then during the year be spread out as a little bit negative mix then for the remainder of the year. The best I can say Mats and that is the very honest answer. We expect them to be at the high teens. Some quarters it could be slightly lower than high teens but more stable and some quarters it could be starting with a two in the beginning but high teens is the best I can say.

Great and then about air technology and I mean it's pretty soft and could you give some similar guidance there going forward? Are you sort of aiming at sort of returning to the 14-15% you achieved a year ago or so?

Great question. I think we were pretty clear. It will be a stepwise improvement over the coming quarters. The second year will, as we already talked about in last quarter, will be stronger than the first year. And our ambition is, of course, not saying that we will be at that run rate directly at the end of this year, but gradually move ourselves up to the levels where I would be pleased, and that is the levels in between 13 to 16. But the best guidance here, that is, it's a stepwise climb then, quarter by quarter.

Great. And finally, just about gearing. I mean, you have the debt structure there. And could you say something about the impact there of, well, the Krona has appreciated some of them. How much are you?

I think it's worth remembering here that Monters has a part of their financing in US dollars. So it is actually quite limited effect on leverage ratio.

So in kronor you have, well, fake wind, I guess.

Yeah, so we are quite balanced there. We don't expect fluctuations on the leverage ratio due to that, since we have part of the loans in US dollars.

And I think, I shouldn't say that we are unique in this, but we are pretty, call it, standing out in a positive way. And that goes both for the depth in different currencies, and it goes also for, as we talked about earlier, Mats, the exposure. I mean, what we produce in the region, we are also selling in regions. So also there, if there are fluctuations in the currency, it goes both for the top line and the bottom line, so to speak.

Okay, great. Thanks a lot.

Thank you, Mats. One more caller, please.

The next question comes from Anders Roslund from Pareto Securites. Please go ahead.

Yes, good morning. I just wanted to talk about the data center again. Ordering order intake has been below sales in last year, and you continue here, 1.1 versus sales of 1.5. What is needed to get order intake above sales? Otherwise, I can't see that you will grow very much in 26, unless you get either larger orders or bigger flow of small and medium sized orders. How should we look upon that for the growth scenario for 26 and 27?

It's a very relevant and good question Anders. I think that historically we have, I was close to say always, been having that question in the beginning of the year. And I'm confident that, I mean, when it comes to 2025, we have the fill rates that were needed. Most of the orders that we took end of last year, the majority of the orders that we have took this quarter and moving forward is for 2026. So I reiterate, I've said that we will continue to grow about 14%, i.e. the group target for data center moving forward. I cannot say anything more that I'm very confident that we will continue to fill up 2026 in a good manner.

Excellent. And on the air tech, my second question here on the air tech and the battery segment. When China recovers somewhat, Do you get the same project orders in China, or are you more of a component supplier to the Chinese battery segment, i.e., if growth is stronger in China, you get less of the sort of larger projects? Or how should we see about the Chinese recovery in China?

I have a good question. First of all, and I said it many times and I will not reiterate much, the Chinese battery manufacturing sector has been in a consolidation state. As you saw in some of the comments where we talked about selective easing up or selective promising areas within the battery sector, we see that it starts to come orders in general terms than in China. And we do receive orders in the rest of Asia then. It is a mix. We have a very large installed base on your question. We have a very large installed base in China. That's where we started. So a blend, but it's not only sort of replacements and upgrades. It is a combination of medium-sized orders, etc. So the normal blend when you have an established market, basically.

Perfect. Okay. Thanks a lot.

Thank you, Anders. Thank you, everyone, for listening in. And thank you for your questions. We have a few questions on the webcast which we have not addressed, which we will reach out to you individually with answers. Please feel free to contact us at Investor Relations if you have any further questions. And I would like to thank Klas and Katarina for a great presentation today. Thank you, and until next time. Thank you.

Thank you.