Capital Markets Day 2006 Ronnie Leten, Business Area President · Public Services and Utilities Process – Chemical, Food, Textile, Paper, etc. 15% 4% 3% 34% 27% 8% 9% 21 Capital

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Compressor Technique

Capital Markets Day 2006

Ronnie Leten, Business Area President

1

2 Capital Markets Day – December 4, 2006 – Ronnie Leten

Compressor Technique in brief

Compressed Air Market

Performance – Compressor Technique

Strategy – Compressor Technique

CO

NTE

NTS


Compressor Technique


Market Position

World leader in compressed air products and solutions

Global coverage with own resources in salesand aftermarket support

Technology and cost leadership

– Focused R&D investments

– High volumes and focus on core activities

Advanced global logistics

Growth by strong market penetration and presence

Continuous introduction of new and innovative products and services

Focus on dedicated customer segments

2


Sales and Operating Profit

Revenues, MSEK Operating margin, %

Sep 06

19 18.718.820.619.5

18.5

0

5 000

10 000

15 000

20 000

25 000

01 02 03 04 050

5

10

15

20

25%


Our BusinessesShare of Revenues

Solutions

59%

Compressed Air

Equipment

&


Our Businesses

6%Gas Compressors

28%Aftermarket

3


Our Businesses

Specialty Rental

(excl. Prime)

7%

Generators


Our Vision

byoffering customers best value

First in Mind─First in Choice™






CO

NTE

NTS

4


The Compressed Air Market

TOTAL: ~ BSEK 75

AMERICAS EMEA FAR EAST

Equipment and Aftermarket


Trends in the Compressor Market

TOTAL SOLUTION PROVIDER

FOCUS ON ENERGY SAVING

LIFE CYCLE COST


Life Cycle Cost

Energy

Maintenance & Installation

Compressor

10%

20% 70%

Savings Potential

Durability / UptimeSolutions

Global Support

5


Market Electricity Prices2004 versus 2006

24 GWh per year (EUR per kWh)

without taxes

-11

0

-0.2

-0.3

-0.4

-0.5

-0.6

-0.7

-0.8

-0.9

-1.0

EU(25 countries)

EU(15 countries)

Belgium Czech Republic

Germany Spain Italy Poland Finland Sweden UK Norway

2006

2004


Technology Trends

SIZE

piston screw turbo

Air Compressors


Competitors

Kaeser, Germany

Gardner-Denver, USA

Sullair, USA

Ingersoll-Rand, USA

Hitachi, Japan

CompAir, UK

Parker Hannifin, USA

+ many regional / local, niche competitors

6






CO

NTE

NTS


Orders Received, Geographical DistributionTotal YTD +29% September 2006, +28% last 3 months

++++++14

++++++6++3

++++++25

++++45

++++++8

Portion of BAYTD, %

A Year-to-datevs previous year

3-month valuevs previous year

B C


Quarterly Volume Growth and Operating Margin

-10

-5

0

5

10

15

20

25

-10

-5

0

5

10

15

20

25

00 Q

1

00 Q

2

00 Q

3

00 Q

4

01 Q

1

01 Q

2

01 Q

3

01 Q

4

02 Q

1

02 Q

2

02 Q

3

02 Q

4

03 Q

1

03 Q

2

03 Q

3

03 Q

4

04 Q

1

04 Q

2

04 Q

3

04 Q

4

05 Q

1

05 Q

2

05 Q

3

05 Q

4

06 Q

1

06 Q

2

06 Q

3

06 Q

4

Revenue volume growth: change vs. same quarter previous year, % Quarterly operating margin, %

7


Orders per Customer Segment

Building & Construction

Mining

Automotive

Manufacturing

Other

Commercial &Public Services

and Utilities

Process –Chemical, Food,

Textile, Paper, etc.

15%

4%

3%

34%

27%

8%

9%


Q3 Highlights

Strong order growth in all markets and all major product segments

Operating profit up 31%, positive effect from volume and price

New manufacturing plant for screw compressor elements in China

New acquisition: Bolaite (China)

– Significant order growth in gas and process compressors

– Higher growth in Western Europe

– Steady positive development of aftermarket






CO

NTE

NTS

8


Strategy

Capitalize on strong market presence

– Develop new businesses

– Aftermarket

Focused markets

Focused segments

Multi-branding

Global logistics and manufacturing strategy

Innovative product development

Acquisitions


CompressedAir Treatment

Portable Generators

Focused Segments

Aftermarket

Specialty Rental

Air Compressors

Our Business


Develop New Businesses

Nitrogen

Airnet

Low pressure

9


The Driving Principles for Profitable Growthin the Aftermarket

COMPETITIVE PARTSAND SERVICES

INCREASETHE 1 / 1 RATIO

ENERGYSERVICES

CLIMBING THECUSTOMER LADDER

ProductsPeople Presence Process

DRIVING EFFICIENCY OF OPERATIONS


Climbing the Customer Value Ladder

Ad-hocmaintenance

Maintenanceagreements

Monitoring

Air Networkservices

Spare partsfix it

keep fit

optimize


Focused Segments

Trains

Marine

CNG

10


Focused Segments

Medical AirLNG

Quality Air Solutions


Medical Air, BeaconMedaes

MEDICAL AIR PLANTBREATHING AIR / SURGICAL AIR

VACUUM PLANTTISSUE / BODY FLUIDS / ANAESTHETIC GAS

PIPE LINE COMPONENTS PATIENTENVIRONMENTPRODUCTS

compressors, air treatment vane, liquid ring, claw

valves alarms & data systems outletsmanifolds

head walls trunking


WESTERN

CENTRAL

SOUTHERN

EASTERN

ALASKA

Focused Markets: USA

Production facilities

Regional offices

Compressor centers

Distributors (top 20)

Acquisitions

Production facility

Service facilities

Distributors (top 18)

INDUSTRIAL FOOTPRINT

CONSTRUCTION FOOTPRINT

11


Focused Market: China

Plants▲ Atlas Copco▲ Liutech▲ Pneumatech▲ Bolaite

WUXISHANGHAI

BEIJING

SHENYANG

GUANGZHOU

CHONGQINGCHENGDU

Sales / service outlets● Atlas Copco● Liutech● Pneumatech● Bolaite

Service Center (logistics)

New investments (Bolaite factory)

Global sourcing


Liutech New Factory Inaugurated May 19, 2006


Wuxitech Inauguration on Sep 28, 2006

12


Focused Market: India

Strong growth

Global sourcing

New sales andservice outlets

Engineering hub

Concentrating productionin Pune

Started production of CNG



Pune - PC, CC & GECIA

Regional offices

Area offices

Resident – sales & aftermarket

Resident – aftermarket only

Nasik – PC

Delhi

Mumbai

Baroda

Ludhiana

Ahmedabad

Ghaziabad

ChennaiBangalore

Coimbatore

Indore

NasikPune

Hyderabad

Madurai

Kolkata



13


Differentiated offer / position

Dedicated channels

Better territory coverage

Business coordinated

Synergies

Multi-branding


Manufacturing and Service Centers

Global manufacturing strategy

Global design platform strategy

Global sourcing

Regional Manufacturing Plants

Regional Logistics Centers


Understandingcustomer applications

Focus on energy efficiency

Oil-free Air solutions

Extending the offer

Product Development

Vitality Index Industrial Compressors< 6 years

> 6 years

82 85

24 18 15

76

0

20

40

60

80

100

2002 2004 2006

14


Large Air Compressor / Range extension

Markets

– Air Separation

– PTA(Purified Terephtalic Acid)


where design, innovation and functionality meet


Efficiency in Processes

SAP

Manufacturing platform rationalization in Europe

Global sourcing

Regional Logistics Centers in India, China, USA and Brazil

15


Conclusions

Continuous growth

Strong product development portfolio

Focus on customer application

Expansion in key growth areas

Integration new acquisitions

Investment in core component manufacturing

Material price levels

Currency developments


We are committed to your superior productivity throughinteraction and innovation.


Documents

Capital Markets Day 2006 Ronnie Leten, Business Area President · Public Services and Utilities Process – Chemical, Food, Textile, Paper, etc. 15% 4% 3% 34% 27% 8% 9% 21 Capital