Munters Group AB

Good morning and a warm welcome to today's presentation of our Q2 results 2026. My name is Lina Duvan and I'm head of Investor Relations, joined as always by our CEO, Claes Forsström, and our CFO, Katarina Fischer. So we will begin with a presentation from Claes and Katarina, and then we will have a Q&A session. So Claes, please go ahead.

Thank you, Lina. And once again, good morning and welcome. The quarter delivered exceptional order intake, both in data center technology and air tech, driven by solid underlying market and strong product offer. All setting up data center technology and air tech for substantial revenue growth 2027 and beyond. The profitability is as planned improving in Airtek while DCT was impacted by anticipated growing pain, as well as currently burdened by component shortages affecting ramp up speed and efficiency. Very pleasing also to see that the quarter showed strong cash flow and cash conversion. we are creating a sharper, more focused monitors by optimizing our portfolio and positioning food tech for the best possible future outside the Group. I'm very convinced that this will create a more focused monitors that without food tech is well positioned to deliver annual revenues well above 20 billion SEK over the coming years. So talking about the potential divestment of food tech, as I said, the portfolio optimization question, a sharper focus from hunters and creating a new ownership to accelerate food tech. The future monitors will be data center technology and act eccentric, generate focus, flexibility and enable us to allocate all efforts towards growing that part of the business. Foodtech or Speria, set up for a potential divestment, enabling growth, market position, and continue to scale. And I have to say this, Foodtech is a fantastic asset. And even if we're early in the process of setting this up, I'm very pleased to see that it is a high interest in the market, talking and understanding what Foodtech and Speria is all about. Looking into the quarter, once again, exceptional demand. External headwinds currently affecting profitability, and here I talk about data center technology. But going back then to order intake, more than 140% organic order intake increase. and very pleasing. Both data center once again showing strong growth, but also Airtek showing a very, very strong underlying growth. The order backlog improved up to 151% and the book-to-bill ended up at an impressive 2.3 times. The net sales increased with 6% organically, a little bit more. Airtek increased driven by components and commercials. DCT declined due to the planned ramp up and also damped by the current supply chain challenges. Foodtech increased both when it comes to software and controllers driven in Americas and EMEA. Modion impacted by external factors, as I said, and I will come back to that later on. DCT declined. Production is burdened by component shortages and of course also the ramp up and the product mix. Foodtech remain at the healthy level. We continue to invest and very pleasing to see Airtik improved. Higher volumes, cost saving measurements. Everything is biting in the way that we anticipated it to be. When we talk about the favorable trends, it is really cutting across all the different regions. But to be a little bit more sharp, America's very strong market and we have a strong impact in America's. EMEA is moving up to a more healthy market position. Very pleasing to see that data center, both the market and we in the market are showing clear signs of a pickup and order intake. And APAC, even if it is a smaller part of our order intake, it continues to be healthy. But of course, as always in APAC, at the slightly lower margin than the rest of the mix. Coming back then to 76% of the order intake is generated from Americas and a little bit shy of 20% EMEA and a little bit shy of 10% in APAC. moving into the different business areas. Exceptional demand in air tech. I booked a bill of 1.7. America's significantly growing and the exceptional demands is mainly coming from evaporative pads. components, but also in many other segments, including some reinstatement of a battery order that have gone in and out. EMEA generating growth, but as I said, a little bit more mixed, but moving to healthier levels. And APAC solid growth supported across the different components and sectors. This slide you have seen many, many times, and I very often come back to and say, now, battery is icing on the cake. Take a look upon where we are beside the battery. We have established ourselves cutting across many different segments, and I'm very pleased to see that Airtek has been able to reach out to several segments. Worth noting in here, as you can see, the components, i.e. the pads, are extremely strong in the quarter. And I have to underline, this is not a new normal. This is extraordinary, even with that said, that we have an underlying strong pad growth across the different sectors. But I don't expect this to be repeated in the coming quarters. All in all, a very pleasing development. And if we take a little bit closer look into this, then first of all, take a look upon 20% service, 24% components that generates of the order intake, 44% is service and component. That sets us up for a long-term delivery of components in the coming year and a half. What more to say? I'm super pleased about the good development in profitability driven by, first of all, the savings programs are delivering according to plan. And on top of that also, we are then moving up more and more when it comes to filling up the factories. I come back to one thing that I believe is super important. We will take this step by step. We are, if I say so, not in a hurry when it comes to spiking up profitability. And what I mean with that is We will deliver diligent on the savings. And then when we have a couple of more quarters with 2 billion and above in order intake, we will also then gradually fill up our factories. And at that time, after a couple of quarters with this, I mean, then I expect us to be where we should be, i.e. in the range of 13%. But it will take a couple of more quarters to reach that level. data center technology. Once again, the continued order intake. For me, it is a clear sign on this is what we present to our customers is very much appreciated and we see no signs of any slowdown in the demand as such. several different types of orders, cutting across all the different product categories. We announced one significant order of 2 billion in the beginning of this quarter, and the order intake continued to increase. And now we are talking about that we are deliveries mainly for 26 and 27, but we are also starting to fill up 28. I'm super confident in the order backlog that we have. a book-to-bill of 3.6. Net sales declined. Part of it is very much as expected, the planned ramp-up of US shillers in the production, but then we have spiced it up, sadly, with also some current supply chain constraints that has brought us down a little bit more. I would say that if we would have not had this supply chain constraint, I would have expected us to be about 300 million more in net sales in the quarter. So that is holding us back for sure. And I will come back a little bit more how I look upon the future in this area. The margin declined. It has changed in the product mix. As we have communicated earlier, it is the planned production ramp up. Nothing strange with that. And then we have added on then the supply chain constraints. The tariff headwinds is estimated to be about three points higher than the norm. The order backlog then, and of course, this is not all the orders we have. We have added two just to give you a flavor of what we see. It is one then the two billion that we talked about, but it is also very pleasing to see that we have added a EMEA co-located order across and CDUs. And if I take a look upon this, I mean, it is clear, as I said in the beginning, I mean, we are setting up data center technology to deliver an increased and accelerated revenue growth starting in Q3, accelerating in Q4, and then carry us through 27 and 28. a healthy, strong order backlog. You may have seen this schematic view on how you ramp up new production, the curve on the right side. Let me start with an obvious statement. What do you need to have to generate success when you're building new factories, when you're ramping up, when you're investing? First, you need to have the factories, facilities in place. Then you need to have the people, bring them in, train them and let them shine. And then on top of that, you need to have materials in the supply chain in a good order. I'm very pleased. We are spot on when it comes to the build of the factories, the training of the people, the hiring of the people. And as you can see, this is quite an accomplishment. We are doubling the production output. We are increasing the floor space of 60%. So this is something that I feel that our people can be extremely proud of. On the other side, if I simplify, I say I'm not happy in regards to where we are when it comes to the material and supply. And my unhappiness is, of course, we didn't fully see this coming. And now we have to work ourselves out of this. But the unhappiness is also supported by a very, very strong conviction that we will work ourselves through this. And that takes me to the curve. You know, you start down in the bottom left, you build a factory, you increase the production volumes, you start to practice, you put in lean methods, etc. And at a certain point, let's call it a tipping point, the inflection point, when you have practiced enough, when you have had enough volume in the factories, then you start to move profitability up. My view is that we, according to plan, should have been a little bit below the inflection point at current. But now we are about one quarter behind the plan. But in the coming quarter, we will continue to move up to the inflection point, and then thereafter, we will continue to move up towards the profitability. And you can say, what are we doing to mitigate this? We are increasing our stock levels. We are putting in more suppliers. We are sadly then supporting it also with some more production in Europe that is hitting us on the... on the tariffs, but all in all, we are mitigating this in a very good way. And if I take a couple of quarters outlook, if I take a year outlook, I mean we are set up for success and a record delivery from those factories. Food tech. For me, this is a fantastic asset. And as I said earlier, it is not due to that we don't believe in food tech. We believe very much in food tech. But we need to focus our efforts on the core. Food tech, strong backlog, some delays in projects during the quarter, but still a book to build a 1.1. I'm super comfortable with this. I see that now it is full speed ahead on separation and full speed ahead on delivering orders. And I know P and the team, they are super excited to put this in place. Order intake goes both for controllers, but it's also when it comes to ARR. A little bit disappointed in the quarter when it came to the ARR development, but I'm very confident that we will be back on track in the range of 20% to 30% growth in the coming quarter. So for me, food tech is set up for success in the future, and it is just to push the accelerator and moving forward here. With that, Katarina, let's dig into the numbers.

Yes, thank you, Claes. Okay, so you have heard Claes talk about the results a little bit. So the Q2 then demonstrated good growth in Airtek and Foodtech net sales, while the data center net sales was lower then due to the production ramp up and also the supply chain constraints that impacted the throughput in the factory. Q2 also demonstrated resilient profits, so net income still increased, and also strong cash flow generation and further improvements in operating working capital, which is now well below our target range. Looking at the margin a little bit, so we talked about this, that we are ramping up, so we are supporting our growth initiatives, of course, and then we have some external factors. If we look at the volume development, it was a mixed picture. Airtec's volumes grew while DCT's volumes decreased then due to that the throughput was impacted in the factory by the supply chain constraints. We also had profitability negatively impacted by product mix in DCT, which we have talked about many quarters, and then also the tariff impact. At the same time, we are continuing to implement price increases across the Group, and these will come through, but it will be a gradual benefit to profitability as we have longer lead times in part of the business. On the operational excellence side, here we then also felt external supply chain constraints that affected the throughput and also the efficiency, of course, in the factories in the US due to the planned ramp up. And then we also had the continued underutilization in Airtek weighing on the margin. We remain committed to our strategic initiatives, so we are continuing to invest to scale the business in automation, digitalization and so on. And also, of course, expanding the footprint. Positive support from RTX cost savings programs that I will come back to. And then if we look at the sequential, how the margin has developed sequentially, it has improved somewhat then, driven by increased volumes and cost savings in Airtek. And then Airtek, you know that we are working on implementing these cost savings programs. They are progressing very well. The 2025 program has been completed and delivered more than the expected savings. Now we are continuing to implement the 2026 initiatives and here we have delivered over 100 million so far and we expect to deliver at least 250 million at the end of the year. And these initiatives, as you know, include investment adjustments, workforce optimization, and also increased efficiency. And the whole aim is, of course, profitability, which is happening, and then also make sure they are more efficient and have a scalable platform for future growth. Looking at the cash flow, in the second quarter we delivered a very robust operating cash flow, and this was primarily driven by customer advances in DCT, but also very disciplined cash management across the Group, of course. Investing activities increased and this is of course because we are continuing to invest in our business and also this includes the recent acquisition of Optifarm within Foodtech. This was partly offset by a positive proceeds then from the sale of a US production facility in the quarter. And then we paid out the dividend in the quarter which is part of the financing activities. Year to date, same picture, strong cash flow driven by DCT. We continue to invest, of course, in our business and also strategic investments, like buying out the remaining part of the Emtech shares that happened in the first quarter. Talking about investments then, in the quarter we had 7.2% capex as percent of net sales and a rolling of 5.9%. So still not as high as prior year at this point during the year, but still we continue to invest, of course, mainly in our Virginia facility where we are ramping up the production capacity for the Virginia campus. but also some investments for component production within Airtek, of course. And talking about full year outlook for CAPEX, that remains, so we expect it to be at the same level as prior year. Working capital, we talked about that a little bit before, very, very low, 5.2%, very good execution across the Group. Leverage slightly up from 3.1 in the first quarter to 3.2 now. This is mainly driven then by decreased adjusted EBITDA. Offset partly then by strong cash flow. And while we do not have a fixed leverage target, we do have an ambition, which is 1.5 to 2.5. We are comfortable being above this level since this is due to the acquisitions we made and also the strategic investments in our factories. Looking ahead, we will see leverage gradually improve as we see higher earnings and of course also very disciplined continued cash management within the Group. Turning to ESG matters. In the quarter, we reported our green financing report. This is a report that dives into how the proceeds from the green bonds are allocated and what towards project and what environmental impact those are making. So right now we have 2 billion SEK in outstanding green bonds across three maturities and we have 1.4 billion allocated right now against climate change. And of course these projects are extremely important for us because they will then drive environmental benefits. So a few examples, then we continue to drive lower emission manufacturing where we use more renewable electricity and fossil free heating, and that supports growth then while reducing operational emissions. In our product portfolio, we have AI powered dehumidification solutions that optimizes dehumidifier operations and remote monitoring improves efficiency and performance. and then we are also advancing digital solutions Food tech and here we have data driven feed optimization that improves accuracy through data and predictive analytics, reducing emissions, energy use and cost. And these investments and then they demonstrate that our green financing framework supports innovations that benefits both our customers, but also, of course, our own operations and really reinforcing that sustainability is really a key enabler for profitable growth and long value creation. So with that, I would like to hand it back to you, Claes.

Thank you very much, Catharina. So let me summarize before we move into Q&A's then. We continue to progress towards our financial targets. Current adjusted growth in the quarter, a little bit shy of the target that we have. On the other side, operating working capital definitely well below and adjusted EBITDA pretty much as where we expected it at current time. And then when it comes to the dividends, we continue step by step to improve the dividends moving forward. The outlook for 2026 is unchanged. Some status updates here, Airtek. Continued strong growth trends across several segments. As you could see earlier, I mean, we are really jumping up the reach out to different segments. Very pleasing to see the ongoing efficiency program progressing on plan. Data center technology continue to scale to capture larger share of market growth with a broader portfolio. It is very clear that our broad and highly operating portfolio is generating a lot of positive attraction in the market. Also very pleasing, as I said, to see that we are both the European market as such and we in Europe are making progress. ramp up progressing as planned when it comes to what we have in our control. But as I said, we are currently burdened by some external factors. One of those is the supply chain challenges, but that we will gradually work ourselves through. Foodtech exploring the divestment to sharpen the strategic focus. It is a very attractive underlying market where we will continue to invest and we are searching a very good home for Foodtech in the future. The market outlook, flat to positive in air tech, positive in data center and continued positive in food tech. And the business outlook for the full year, no change. Net sales growth expected to develop positively. The longer the year goes, the more positive it will be. And as I said earlier, we are also now setting ourselves up for a very, very strong 2027. The adjusted EBITDA margin expected to improve during H2, driven by all the backlog in DCT and continued step in AirTech as such. So with that, welcome back, Lina, and over to all of you out there for some Q&A's.

Great. Thank you very much. So we are ready for questions. You can use the chat function and we will address them here in the studio. Or you can use the telephone conference. And if you are dialing into the telephone conference, we ask you to please limit yourself to two questions at a time so we can hear from as many of you as possible. But you're welcome to join the queue again, of course. So handing over to the telephone conference.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad.

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

Good morning, Klaus. Good morning. I'm going to start off on the data center segment. Appreciate the commentary here about being roughly one quarter behind your planned track. Can we actually talk about what this means? You've previously guided for a 30% total sales growth in the data center segment for the full year. Does this guidance still hold or do the supply chain disruptions now result in component shortages that create longer delays than the weekly that you've been talking about previously?

Very obvious and clear question. And the answer is no. Or I should say yes. The guidance on 30% is still valid. And that is what we hold. So it is tilted more towards the end of the year. But if I put it like this, I mean, I used the frame 30 to 40%. But for sure, 30%, that is the guidance.

That's really good to hear. Thank you. And then a similar question on the level of profitability. You have been talking about an ambition to return to high teams, which I guess then if you're still delivering 30 to 40% sales growth for the full year, high teams should as well be achievable in H2. So I guess my question, number one, is that true? And then secondly, then what does this mean that you're one quarter behind? Do you mean that Q2 is the one quarter that you're behind? Or does it mean that Q3 is the one quarter?

Also a very good question. And if I use the curve that I showed earlier as a backdrop, I would have expected we at Current to be just a little bit below the inflection point where we started to improve profitability. Now we are one quarter behind, so we are not there. It will take ourselves a quarter to move up. to the point where we will start to see profit improvements of significant characters. So the short answer is also when it comes to the profitability improvements due to, I mean, the throughput, etc., we are one quarter behind, and that means that we sort of will be slower one quarter moving forward. But the overall direction is, yes, we will continue to move towards what we have talked about. And then even more so when I look into next year, when we talk about the deliveries that we are setting ourselves up with.

Should we expect margin expansion in Q3?

You know, Adela, here I don't give that detailed guidance, but what I say that is, I mean, we will gradually move up now in the outputs, i.e. the revenues, but the real revenue booster will come in Q4 due to the one quarter delay.

Okay, thanks. Thank you. We will take another caller.

The next question comes from Jingyi Jing from UBS. Please go ahead.

Good morning, all. This is Jean from UBS, and thank you for taking my questions. I have two questions on DCT as well. Firstly, could you appreciate the color on supply chain situation? I wonder if you could share a bit more color on that and specifically the impact on operations. Show meaning for all the resulting production or delivery delays. Are we talking about one to two weeks shift in delivery or something more substantial? Because I understand your delivery schedule significantly increased in H2 based on the slide of large orders that you shared. So I wonder, do you think the supply chain situation could be a bottleneck in fulfilling your delivery obligations from the large orders in H2?

But I appreciate the question. And let me give a little bit of flavor on this. First of all, What is really good for us, that is our wide product assortment and the wide categories of different customers. So the short answer, we are not expecting any delays in deliveries, but we also see that we need to shift delivery schedules. And that is very much in line with what the customer would see and what they would be able to handle. And what do I mean with that then? As an example, I mean, predominantly in the US, we are ramping up the chiller production, but we have also taken substantial quarters CROs we can produce in all of the existing factories. We have less, call it, supply chain challenges. But CROs do have a lower profitability. So there, by doing those mixed changes, we will be able to keep up the out deliveries in revenues, but it could be shifting in type of categories. So that is one way of handling it, thanks to our strong, wide portfolio. The second one, if I share some, what are the details on the supply chain challenges? First of all, I think when it comes to fans, the full market are seeing some crunches on deliveries of fans. Then we have also wolves and certain components. for us then more specifically it is also due to the fact that we need to set up a bill of material in us and thanks to this crunch in supply that has been delayed so that is also something that is burden our profitability that we need to ship continued more components from Europe into US. So all in all, I look upon this and, you know, is this something that I'm happy about? No. Is this something that I'm worried about? Worried about? No. Is this something that will, as I said, delay us about a quarter in the expectations of profitability and ramp up? Yes. Am I worried about the overall outlook for the second half year? No. Excited about next year than I was in the beginning of this year. We are building up a fantastic, strong and healthy backlog. in carrying us into next year as well.

Thank you very much. Really appreciate the call. That's good to hear. And my second question is on the same topic, but on your mitigation efforts. Could you talk about what level of visibility do you have today and what are the key indicators you're monitoring that underpins your expectation for how the situation will develop over the next few months?

But first of all, I mean, it is clear that Stefan, and this is very comforting, you know, the future CEO is an expert in data center technologies. I mean, he is very much on to this already from day one, so to speak. But more detail then. I mean, we have our very, very strong and well educated supply chain organization. They are now working with the obvious one. finding new suppliers from different type of vendors when it comes to fans. It is, of course, also pre-ordering from those suppliers to building up stock so we have a better stock situation. And that is also one of the reasons Katarina mentioned that we are building some operating working capital then for healthy reasons in data center. And thirdly, then, as I said, we are also then working with organizing supply, even if it hits us on tariffs, but organizing supplies outside North America. So you can say we're working with all the different ingredients in how to mitigate a situation like this. And... If I could choose then, what would I like to have? Would I like to have an order book that is not full at all? Or would I like to have an order book that we have to work with? Every day in the week, I would like to have an order book that we have to work with. That is a much more comfortable situation than not having orders.

Maybe add something on tariffs, which also...

Yeah, exactly. So the tariff impact in the quarter was 3%, and that is a result of the continued import of Finnish goods then from our Italian production, and also, as Klaus mentioned, some Chile components also from Europe.

But going forward, this will continue to also have an impact as we move over to... we will be moving over to a localized bill of material, but this is also affected by the supply chain constraints and thereby will take longer than what we anticipated in the beginning of the year. Good. Thank you for your questions. Thank you. We can take another caller.

The next question comes from Jacob Marken from SEB. Please go ahead.

Good morning and thank you for taking my questions. So if we start on, we keep it at the DCT part. First, do you see any risk that competition takes any of the potential orders that might arise on the market when you have these production issues or how do you view that?

We don't see any risk at all when it comes to this. You are assigned to a project. You deliver accordingly to the schedule you have had. When we assigned ourselves to this, of course, we put in some call it bumpers. And as I alluded to earlier, thanks to our strong and wide product assortment, we can also shift different products to different customers. And at current, we don't see any indications that the customer is worried or annoyed on any level. We are pretty much on par with what they would have expected. Then what we would have expected, that is that we would have been some 300 million more in deliveries already now then compared to what we delivered.

Okay perfect that's good to hear and then if we move from the digital part then you have the question on the food tech order intake you know down a bit here year on year margins also weakening do you see any risk that that might hamper the potential divestment and while on that topic do you have any highlights or something that you want to share with us regarding the potential investments?

First of all, if I start with, yes, we are a little bit shy on order intake. I look upon this as, call it, we have had some, sometimes, I mean, you take an order and sometimes you are not taking the order in the quarter. So for me, I look upon this as more temporarily important. Mishappenings, if I use that expression. So I'm super confident, Pia and the team, they are super diligent in going for orders. I expect us to be, not each and every quarter, but be back on the 20 to 30% order growth that we have had in the past. So if that is the base, then super excited about, I mean, what the customer are saying about this. Then, of course, even if this may sound as a small excuse, of course, P and the team, they have also now been concentrating on getting the ducks in a row for a potential divestment. And so especially in the beginning when you announced that, that takes a little bit of the focus away. But now everyone is lined up to both handling the separation and the built up by that, and then also handling, I mean, generating orders, etc. And on the process as such, then, I mean, we are early in the process. We will communicate whenever we have something to update, as I said in the beginning. I'm really happy to see that it is not only us that see the great potential in food tech. We have also had the good calls from potential interested parties, but I need to underline we are early in the process and this we will take step by step.

Okay, thank you. That was very clear. I'll get back in line.

Thank you very much. We can take another caller.

The next question comes from Anders Roslund from Perito Securities. Please go ahead.

Yes, good morning. I have two questions and one regarding DCT. I just want to follow up the supply issues in the chiller production. And what you're saying here is that you have to rely on imports from Europe and elsewhere, while you're still searching for local suppliers to the shallow production. So my question is simply, is it the risk that the tariff remains a negative impact of until the end of 26 and also in 27 due to that you are not fully equipped with local suppliers for chiller production. So given that the chiller production or the chiller area is the high margin business, I assume that you may have an impact of of tariffs also for the coming year?

Thank you, Anders, for the question. If I move to the second part of the question, when it comes to next year, I'm very confident that we will be able to set up local bill of materials and so on for next year. Then, of course, as we said, we are delayed on the bill of materials, etc. So, yes, it will have an impact during the coming quarters as such. But once again, when we move to next year, at current, I don't see any worries. I mean, I talked about we are about one quarter delayed here. But I think this is the burden you have sometimes have to have when it comes to setting it up. I'm not happy about it, but at the same time, I'm very confident that we will be able to handle this in a good way.

Okay, thanks. Then I have a question on AirTech. The order intake was very impressive. And looking at the chart at page six here, You mentioned that you had a battery order that was reversed, the previous canceled order. Was that the major part of the battery order intake, or was it half the size? And then you mentioned also on the component side that that was an extraordinary increase. And in the report you say about timing here, that could it be a catch-up for... Those timing effects, what does it mean? Because it's such a huge part of the total order intake. So those two issues.

If I start to go back to what do we see that we need to have in order to move ourselves towards the right profitability, i.e. 13 and above in Airtek, we need to consistently have an underlying order intake of about two billions for several quarters in a row. So from that perspective, Anders, it is very pleasing to see this is the second quarter in a row that we have that, and this quarter we had substantially higher than that. If I go back to the other part of the question, start with the component. It is very much pads. It is a surge due to that There is an extra spike in the demand due to others being not able to deliver. But we are in this area very good in delivering. So here we have received more orders than normally. We are taking market shares, but some of those orders are then not delivered next quarter and the quarter thereafter. They are also scheduled to be delivered in 2027. What is important also to understand that it is still an increase in components, both when it comes to pads and when it comes to desiccant wheels. So the underlying is improving, but it's not a billion per quarter moving forward. That is not the new normal. But I'm super excited for components as such. This shows our strength in air tech. And sometimes, and please understand me right, Anders, sometimes I'm a little bit bored and only talking about data center technology. Now let's talk about air tech and all the good progression that is happening in air tech. We have two legs to stand on, and that is great to have two legs to stand on.

Yeah, and there's the question about the reversal of a cancelled order.

Yes. So the exact amount, but let's say if I split it into two parts, a little bit more than half, it comes from a reversal. I mean, and that is a comeback in a positive way. And then there are several smaller orders actually predominant. in Asia, if I remember it right then. So it's a mix. It is a blend of it. So it is not only the reversal. It is also several smaller orders that is filling it up. I look upon batteries as icing on the cake. We have not changed our view that we believe it will be 10 to 15%. And if it is above, fantastic. But as you can see now, I mean, if I deduct batteries from the last two quarters, the last two quarters are the strongest quarters in Airtex history when it comes to the other parts of the business.

Okay, excellent. Yeah, thanks for those answers.

Great, thank you, Anders. We can take another caller from the conference.

The next question comes from Lacey Midgley from Bloomberg Intelligence. Please go ahead.

Klaus, Katerina, Lina, thank you very much. Thank you for the question. You've actually ticked off quite a few of mine on DCT, but I guess just one more on the margin. So as you mentioned, the price increases to offset the high material costs, but with that timing lag, just wondered if you could give some colour on what proportion of the backlog has already been repriced, how much remains exposed to higher input costs, presumably all sort of future orders are already factoring that in, but some colour there on the backlog and how that looks would be helpful. Thank you very much.

I can start and then Katarina please chip in on. But how do we handle orders then? In general, you can say like this. When we take an order, we price it to where we expect the cost to be when the orders is to be delivered. And then on top of that, we put up what I call then some safety net. So we price it even higher than on that then. Then, I mean, when you have a situation like this, when you have very strong, call it inflation-driven cost increases, sometimes you are still then not pricing it high enough. What we do then, that is, of course, each and every order we take, we are pricing that exactly where we believe it should be. So for every order we take, we jump up the price as the cost increases. So from that perspective, you can say that the best way to describe it, that is perhaps it is on average half a year, call it delay, until we have corrected the pricing with the existing order backlog, if I generalize them. And then, of course, we are doing everything we can to mitigate this by lowering purchasing price and so on and so on. But Katarina, this I know that you are on to each and every day.

But as I said on what we're doing to lower purchase price, but also qualifying additional suppliers, of course, to improve pricing as well.

And over the group, we've had price increases of 2.8% in the quarter. But that's over the group.

That's really helpful. Thank you very much for the color. Thank you for the time this morning and the question.

Thank you. We have one more caller.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay, good. Thank you. We do have a question here on the chat, or two questions. Can you say anything about the timing of the supply chain constraints? When do you expect them to ease?

I think whatever answer you give there is not an accurate enough answer. What I have learned when it comes to this, that is, this you have to work every day with, day and night, until it's over. The best I can say, I feel, as I reiterate here, we are about one quarter behind. I'm super confident that when we are signing up new delivery suppliers, when we are working with all the different efforts that we will come through. But if I would have said two months or if I would have said four months, I mean, it would not be a correct answer. So from my perspective, we are working diligently with this, and then we will handle it in a good way.

Good. Your guidance of 30% growth in DCT for the full year and you comment on slow acceleration in Q3 would imply sales of more than 3 billion SEK in the final quarter of the year. Is this feasible from a capacity standpoint?

From a capacity standpoint, we have all capacity installed. We have all people installed, and we are working diligently with having all the supply in line. The plan is to deliver the 30%, and I'm very confident on that. And if that indicates that, yes, we will have a very strong fourth quarter, then we will deliver a very strong fourth quarter.

Great. I think we do have one more caller on the line.

The next question comes from Jacob Marken from SEB. Please go ahead.

Just one follow-up question from my side. On the AirTech side, as you mentioned, very good Q1, Q2 here, and the cost-saving programs that you're running. I mean, at which time or at which volume do you need to take some of that cost back or should we view that all of those costs are removed and then you can grow from that base or how do you view that?

The idea, the firm grip that is Airtek has reset themselves and from that position they should be able to handle a 2 billion order intake and the deliveries from that without any cost increases. Of course, if Airtek continues to grow, see new opportunities to expand, etc., of course, we will start expanding areas. But the current view is not any cost increases in Airtek. We should still be able to handle that. What do you think, Katarina?

Oh, I fully agree with that.

Okay, thank you.

Thank you. And can you also talk a bit about where you believe margins in DCT and AirTech could be in the midterm?

I mean, if we talk about the midterm, the targets that we have, that is to reach a 14% over a business cycle. I put it like this. When we have worked ourselves out of the supply chain, when we have set up everything we are supposed to set up in data center technology, in my view, then we should be in the high teens. Now the proof is in the pudding. They need to work with this. They need to drive this forward, etc. But I think definitely that is not only our ambition. That is what we are supposed to deliver on. But it will take some time then, as I described. When it comes to Airtek, I just reiterate what I've said several times. It's two components. One is cost out, and there we're delivering. The other one is for several quarters in a row, have an order intake that is 2 billion and above. And when that starts to drop through in the revenue, I mean, then we will be back 13 and above. But it will take yet a couple of quarters of order intake before the drop through will come. You know, I mean, it is one more quarter to go for me, and I just want to say this once again, as I said in the beginning. We have been and we are on a fantastic journey with Munters. The fascinating part, that is, seven years ago, we were six billion in turnover, six and a half. I clearly see, even without food tech, that we in coming years will be 20 billion and above. And why am I so confident in that? First of all, the very strong order backlog that we are building up and then the capabilities that we are building up. So with that said, I'm not worried about the quarter on and off. I'm 100% focused on where we and Manters should be one or two years ahead. So super confident about that. The best days for Manters, they are for sure yet to come.

Good final words. Thank you very much for listening in today. Thank you, Claes and Katarina, for presenting. I would just like to remind you all that we will be hosting a Capital Markets Day here in Stockholm on the 11th of November. It will also be available to join online if you prefer that. With that, I think we wish you all a very nice summer.

Enjoy the summer.

Thank you very much. Thank you.