July 17, 2006 Atlas Copco Group Q2 Results July 17, 2006

1July 17, 2006 www.atlascopco.com

Atlas Copco Group

Q2 Results

July 17, 2006


Contents

Q2 Business Highlights

Market Development

Business Areas

Financials

Outlook


Q2 - Highlights

Another record quarter

Strong growth in all regions and most customer segments – Negative development in motor vehicle industry

All business areas improved sales, profit and margins

Strategic acquisitions– Agreements to acquire two compressor businesses with a total

turnover over BSEK 2.2.

The divestment process of the construction equipment rental business continues and is expected to be finalized in the third quarter


Q2 - Figures in summary

Orders received up 19%, +13% in volume

Revenues up 18% to MSEK 15 408, up 12% in volume

Operating profit up 41% to MSEK 3 163, a margin of 20.5% (17.2)

Profit before tax at MSEK 2 926 (2 170), a margin of 19.0% (16.6)

Basic earnings per share were SEK 3.11 (2.36), up 32%

Operating cash flow totaled MSEK 799 (955)

ROCE at 32% (25)

Including discontinued operations


Contents


Market Development

Business Areas

Financials

Outlook


Orders received - Local currencyGroup total +26% YTD + 18% last 3 monthsGroup excluding Rental Service +28% YTD + 19 last 3 months(Structural change +2% YTD)

June 2006

A B C

A = Portion of sales, last 12 months, %

B = Year-to-date vs. prev. year, %

C = Last 3 months vs. prev. year, %

5 +12 +16

32 +13 +8

8 +54 +45

14 +35 +36

4 +20 +30

37 +22 +16

+29 +20Continuing operations


Q2 - The Americas

Continued strength in North America– Continued investments from most

manufacturing and process industries, with the exception of the motor vehicle industry

– Improved demand from construction industry

– High activity level in the mining industry

Solid demand in South America

June 2006

A B C




5 +12 +16

37 +22 +16

+29 +20Continuing operations


Q2 - Europe and Africa/Middle East

Robust demand in Europe– Improved demand for industrial equipment, with

the exception of advanced assembly tools for the motor vehicle industry

– The construction demand increased

– Double digit growth in Eastern Europe and in many major markets in Western Europe

Very positive development in the Africa / Middle East region

June 2006

A B C




32 +13 +8

8 +54 +45


Q2 - Asia and Australia

Continued strong growth in Asia– Demand from most customers segments

improved

– All major markets developed well

Mining particularly strong in Australia

June 2006

A B C




14 +35 +36

4 +20 +30


Volume Growth per Quarter

Change in orders received in % vs. same Quarter previous year

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Atlas Copco Group – Sales Bridge

April – June

Continuing operations

April - June

Group Total

MSEK

Orders Received

Revenues Orders Received

Revenues

2005 11 315 10 539 13 838 13 062 Structural change, % +2 +2 +2 +2 Currency, % +2 +2 +1 +1 Price, % +2 +2 +3 +3 Volume, % +14 +12 +13 +12 Total, % +20 +18 +19 +18 2006 13 562 12 444 16 526 15 408


Contents


Market Development

Business Areas

Financials

Outlook


Atlas Copco GroupOperating Profit and Return On Capital Employed (ROCE) by Business Areas

MSEK

Revenues Operating profit

Operating margin

ROCE

12 month values, period ending Jun. 2006 Jun. 2006 Jun. 2006 Jun. 2006 Compressor Technique 22 747 4 608 20,3% 72% Construction and Mining Technique 17 458 2 664 15,3% 33% Industrial Technique 6 565 1 345 20,5% 65% Rental Service 12 866 3 296 25,6% 18% Eliminations/Common Group Functions -853 -512 Atlas Copco Group 58 783 11 401 19,4% 32% Rental Service, discontinued operations -12 112 Eliminations, discontinued operations +377 Atlas Copco Group, continuing operations 47 048 8 630 17.8%


Compressor Technique

Very strong order growth– Strong order intake for all types of compressors

– Highest in Asia and North America, robust in Western Europe

Steady positive development of aftermarket

Strategic acquisitions of BeaconMedaes and ABAC– Total turnover over BSEK 2.2.

Operating profit up 26%. Margin at 20%– Positive effect from volume and price



Acquisition of BeaconMedaes– Strong presence in the United States and Great Britain

– A solutions provider, predominantly of medical air systems and medical utility delivery systems for hospitals. Medical air compressors, vacuum systems and pipeline components. The

products, for example, supply breathing air for hospitals and compressed air to drive surgical tools.

– 2005 turnover approx. MSEK 720 with around 7% operating margin

– 386 employees

– Purchase price approx. MSEK 700



Acquisition of the industrial division of ABAC– Manufacturing in Italy, Germany and the United States

– Complementary product portfolio and a wide international distribution network.

– Multi-brand strategy

– Turnover approx. BSEK 1.5 with around 10% operating margin

– 650 employees

– Purchase price approx. BSEK 1.1



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Revenue volume growth: Change vs. same quarter previous year, %

Quarterly operating margin, %

Operating margins restated (IFRS) from 2004


Construction and Mining Technique

Strong demand from both mining and construction

Order volume up 15% – 17th consecutive quarter with volume growth

– Strong growth in all regions

Record operating profit, up 49%

Investment in increased manufacturing for construction tools

Launch of new range of drill rigs for tunneling applications


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Construction and Mining Technique



Industrial Technique

Strong sales to general industry

Weaker demand from the motor vehicle industry– Notably in Europe, North and South America

Good development of the aftermarket business

Increased revenues, operating profit and margin


Industrial Technique

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Rental Service

Rental revenues increased 23% in USD– Price +6%, volume +17%

Fleet utilization at 72%– Increased investments in equipment to support demand

and further improve fleet quality

Record operating margin at 27.6%



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Rental revenue volume growth: Change vs. same quarter previous year, %

Quarterly operating margin, % (Business Area)

Rental Service


Rental Revenue Volume Development, incl. discontinued operations


Contents


Market Development

Business Areas

Financials

Outlook


Group Total

April – June continuing operations

April - June including discontinued

operations MSEK 2006 2005 % 2006 2005 %

Orders received 13 562 11 315 +20 16 526 13 838 +19 Revenues 12 444 10 539 +18 15 408 13 062 +18 Operating profit 2 337 1 667 +40 3 163 2 241 +41 – as a percentage of revenues 18.8 15.8 20.5 17.2 Profit before tax 2 433 1 766 +38 2 926 2 170 +35 – as a percentage of revenues 19.6 16.8 19.0 16.6 Profit for the period 1 695 1 258 +35 1 963 1 492 +32 Basic earnings per share, SEK 2.68 1.99 +35 3.11 2.36 +32 Equity per share, SEK 41 34 Return on capital employed, % 32 25


Balance Sheet Including discontinued operations

MSEK June 30, 2006 Dec. 31, 2005 June 30, 2005

Intangible assets 10 069 18% 10 607 19% 10 174 20% Rental equipment 14 265 25% 13 456 24% 11 973 23% Other property, plant and equipment 4 750 8% 4 503 8% 4 179 8% Other fixed assets 1 906 3% 1 818 3% 1 893 4% Inventories 8 124 14% 7 215 13% 7 050 14% Receivables 14 673 26% 13 240 24% 12 760 25% Current financial assets 658 1% 389 1% 398 1% Cash and cash equivalents 2 968 5% 3 727 7% 3 174 6% TOTAL ASSETS 57 413 54 955 51 601

Total equity 25 981 45% 25 808 47% 21 620 42% Interest-bearing liabilities 11 840 21% 11 345 21% 12 484 24% Non-interest-bearing liabilities 19 592 34% 17 802 32% 17 497 34% TOTAL EQUITY AND LIABILITIES 57 413 54 955 51 601


Capital Structure

4%

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16%

75%

59%

92% 92%

72%67%

46%

28%32%32%

0%

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1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 June2006

Adjusted for IFRS, but including discontinued operations

Net Debt/Equity


Cash Flow

April - June January – June MSEK 2006 2005 2006 2005

Operating cash surplus after tax 3 396 2 487 6 089 4 480 of which depreciation added back 947 798 1 871 1 516 Change in working capital 7 47 -571 -75 Cash flow from operations 3 403 2 534 5 518 4 405 Investments in tangible fixed assets -2 813 -1 993 -4 749 -3 329 Sale of tangible fixed assets 545 623 1 225 1 189 Other investments, net -336 -209 -659 -293 Cash flow from investments -2 604 -1 579 -4 183 -2 433

Operating cash flow 799 955 1 335 1 972 Company acquisitions / divestments -145 -99 -413 3 800 Dividends paid -2 675 -1 886 -2 675 -1 888 Share redemption - -4 192 - -4 192 Change in interest-bearing liabilities 1 205 856 1 111 477

Net cash flow -816 -4 366 -642 169


Capital Expenditures

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Machinery & buildings, quarterly Net, Rental Equipment, quarterly

Net. Rental Eq.+Mach.& buildings, 12 months Net, Rental Equipment, 12 months

2005

MSEK

Quarterly 12 months

Net rental fleet investment = MSEK 5 184

20042002 20032001 2006

Tangible Fixed Assets


Contents


Market Development

Business Areas

Financials

Outlook


Near-term Outlook

The demand for Atlas Copco’s products and services, from most customer segments such as mining, infrastructure and other non-residential construction, the manufacturing and process industries, is expected to remain at the current high level.



Cautionary Statement

“Some statements herein are forward-looking and the actual outcome could be materially different. In addition to the factors explicitly commented upon, the actual outcome could be materially effected by other factors like for example, the effect of economic conditions, exchange-rate and interest-rate movements, political risks, impact of competing products and their pricing, product development, commercialization and technological difficulties, supply disturbances, and the major customer credit losses.”

Documents

July 17, 2006 Atlas Copco Group Q2 Results July 17, 2006