Annual Report 2006 - Munters

Moisture Control Services (MCS) DivisionWorld leader in damage restorationMunters’ MCS Division offers services in damage restoration following water or fire damages forprimarily insurance companies, and humidity and temperature control for the construction industry andother sectors. Operations are conducted on a global basis with a strong local presence throughapproximately 300 service depots. MCS has quick response times and efficient, environmentallyfriendly technology. MCS generates value for insurance companies by primarily minimizing costsrelated to scope of the damage and its management, but also by dealing with the damage professionallyon behalf of the insurance holder. With temporary humidity and temperature control, value is createdmainly through high quality services and by shorting the time of a customer’s project.Services and offeringsMunters has a long and proven record of dealing with damagecaused by water, humidity or fi re. The division has a stronglocal presence in many geographic markets through its 300service depots and 1,845 employees, and is therefore able tooffer a high degree of availability.MCS offers services in the areas of dehumidification,restoration, technical reconditioning, odor control andsmaller refurbishment projects. Insurance damages are oftenmuch less expensive using dehumidification and restoration,rather than resorting to demolition and rebuilding. For waterdamage, time is a critical factor and the flexibility of MCStechnology enables a rapid response, limiting the scope of thedamage. There are also major environmental gains comparedwith rebuilding, since the amount of both materials and wasteis reduced. MCS offers a comprehensive solution and oftenserves as a project manager for the insurance company, coordinatingother subcontractors involved at the damage site.MCS also offers services for temporary humidity andtemperature control for the construction industry and othersectors. Efficient drying of concrete and other constructionmaterials make projects faster and less weather-dependent.MCS also offers climate-control products for preventingcorrosion on cleaned steel surfaces, in shipyards, for example,thereby ensuring quality, which will reduce the risk of damageand associated warranty problems.CUSTOMER CASEDetecting humidity using thermographyThe UK’s Companies House was having problemswith moisture that was creeping into the building fromthe roof. A Munters damage restoration expert washired to localize the source and suggest a course ofaction. The 3,500 m 2 fl at roof was investigated usingthe latest infrared thermography technology. The testrevealed several moisture penetration locations,including damaged seams and cracks in the cement.Following completion of the renovation, the customerhas entered into an agreement with Munters forannual inspections and testing.Customers and marketThe global market for damage restoration after water andfi re damage is estimated to be worth approximately SEK 40billion. Underlying growth is stable and estimated to be inline with GDP trends. Demand has, however, varied sharplyfrom one year to the next due to the need for major efforts inconjunction with natural disasters of various kinds.Both the insurance industry and the market for suppliersof water and fi re restoration have traditionally been very fragmented,with over half of the contracts going to small, localcompanies. The current consolidation within the insuranceindustry has resulted in large insurance companies, such asAXA, Norwich Union, If, Zurich and FM Global, seeking, toa greater extent, framework agreements at centrally negotiatedterms and fi xed prices with national, and in some cases internationalcompanies. These customers also want to purchase acomprehensive range of services, which smaller damage restorationcompanies are seldom able to provide. The developmentof framework agreements has progressed the farthest in theUK, and is predicted to spread to additional markets. Thistrend will benefit Munters since the MCS Division is one ofonly a few damage control-fi rms that operate globally. Witha well-developed system of professional key account management,Munters is well-equipped to meet this trend. Muntersestimates that framework agreements will eventually accountfor about 40 percent of MCS Division’s sales, up from approximately25 percent currently. During the year, MCS reached aglobal framework agreement with AXA and several nationalagreements, including with the Swedish insurance companyTrygg-Hansa. Munters’ methods for damage control instead0 M U N T E R S A N N U A L R E P O R T 2 0 0 6