Atlas Copco Group
Q3 ResultsOctober 23, 2001
Page 2 October 23, 2001 www.atlascopco-group.com
Contents
Market Development Business Areas Financials Outlook
Page 3 October 23, 2001 www.atlascopco-group.com
Q3 Highlights and Strategic Moves
Earnings per share up despite weaker demand Earnings per share up 9 percent Operating margin at 12.5 percent
Order volume decrease 1% Strategic moves give results
Consolidation and rationalizations of manufacturing Product development and service activity contribute Increase of presence in China
Strong operating cash flow
Page 4 October 23, 2001 www.atlascopco-group.com
Group Total
MSEK July – Sept. Change January – Sept. Change2001 2000 % 2001 2000 %
Orders Received 12,885 11,743 +10 38,573 34,451 +12 - volume -1 +1Revenues 13,041 11,795 +11 38,022 33,686 +13 - volume 0 +1
Page 5 October 23, 2001 www.atlascopco-group.com
Change in orders received in % vs. same Quarter previous year
Volume Growth per Quarter
-10
-5
0
5
10
15
2097
Q1
97 Q
2
97 Q
3
97 Q
4
98 Q
1
98 Q
2
98 Q
3
98 Q
4
99 Q
1
99 Q
2
99 Q
3
99 Q
4
00 Q
1
00 Q
2
00 Q
3
00 Q
4
01 Q
1
01 Q
2
01 Q
3
Page 6 October 23, 2001 www.atlascopco-group.com
-151
+14
+32
+130
+54
-39
Orders received, 12 month trend Change in Local Currency ±0
Portion of Group Sales, %
Change in %, last 3 month trend
September 2001
Page 7 October 23, 2001 www.atlascopco-group.com
-151
+14
Q3 - The Americas
Declining demand in North America Lower demand than expected for
equipment rental Sharp fall in demand for industrial and
professional electric tools South America
Good order intake from the mining industry Brazil weakening from good level
12 months, Portion of Group Sales, %12 months, Change in %, last 3 month trend
September 2001
Page 8 October 23, 2001 www.atlascopco-group.com
+130
+54
12 months, Portion of Group Sales, %12 months, Change in %, last 3 month trend
September 2001
Q3 - Europe and Africa/Middle East
Solid demand in Europe Growth in Germany, France and
Eastern Europe Robust demand for investment-
related products Professional electric tools and light
construction equipment weak Good growth in Africa/Middle East
Oil-producing region and South Africa outperforming
Page 9 October 23, 2001 www.atlascopco-group.com
+32
-39
Q3 - Asia and Australia
Weakening demand in Asia Continued growth in China Weak development in
Southeast Asia and Japan
12 months, Portion of Group Sales, %12 months, Change in %, last 3 month trend
September 2001
Page 10 October 23, 2001 www.atlascopco-group.com
Contents
Market Development Business Areas Financials Outlook
Page 11 October 23, 2001 www.atlascopco-group.com
-20
-15
-10
-5
0
5
10
15
20
25
CompressorTechnique
Construction &Mining Technique
IndustrialTechnique
Rental Service
Volume Growth per Quarter by Business Area
Change in orders received vs. same quarter previous year, %
Page 12 October 23, 2001 www.atlascopco-group.com
Compressor Technique
3% volume growth - profits up Europe and China best performers Newly developed products helped
improve market share Good order intake for large
industrial compressors Continued growth in aftersales activities
Increased presence in China New product development facility
Page 13 October 23, 2001 www.atlascopco-group.com
Construction & Mining Technique
Improved profitability despite volume drop
Good activity level, but little investments in the mining industry
Construction generally weak Positive development of surface
drilling equipment Share of use of product revenues
increase Consolidation of manufacturing Acquisition of Christensen Products
Page 14 October 23, 2001 www.atlascopco-group.com
Industrial Technique
Volume drop Terrorist attacks had big effect
on U.S. business in September Good demand for industrial
tools, but weak demand for professional tools in Europe
Stable margin, thanks to currency and rationalizations
Consolidation and restructuring activities of professional electric tools in Q4
Page 15 October 23, 2001 www.atlascopco-group.com
Rental Service
Rental revenues fell in weak underlying market
Growth in industrial rental Continuous rationalization of stores
and rental fleet to balance presence 3 stores opened and 16 stores
consolidated Increase in sales of used equipment
and low new investments Continued strong cash generation
Page 16 October 23, 2001 www.atlascopco-group.com
Earnings by Business Area
* The operating profits include non-recurring costs of MSEK 13 for Compressor Technique, MSEK 127 for Rental Service and in Corporate items a net pension refund of + MSEK 134. Total net + MSEK 6 for the Group.The corresponding margins are 19.5%, 15.9% and 14.5% respectively.
July - September MSEK2001 2000
Margin 2001 2000
Compressor Technique 829 698* 19.2 19.2*Construction & Mining T. 178 164 10.1 9.5Industrial Technique 305 298 10.2 10.4Rental Service 378 469* 9.2 12.5*Corporate items -63 71*EBIT 1,627 1,700* 12.5 14.4*
Page 17 October 23, 2001 www.atlascopco-group.com
Contents
Market Development Business Areas Financials Outlook
Page 18 October 23, 2001 www.atlascopco-group.com
Income Statement
MSEK 3 months ended 9 months endedSept. 30
2001Sept. 30
2000Sept. 30
2001Sept. 30
2000Revenues 13,041 11,795 38,022 33,686Operating expenses -11,414 -10,097 -33,240 -29,117Operating profit 1,627 1,700 4,782 4,569As a percentage of revenues 12.5 14.4 12.6 13.6
Financial income and expenses -340 -455 -1,136 -1,251Profit after financial items 1,287 1,245 3,646 3,318As a percentage of revenues 9.9 10.6 9.6 9.8
Taxes -449 -458 -1,277 -1,224Minority interest 13 -9 -6 -34Net profit 851 778 2,363 2,060
Earnings per share, SEK 4.06 3.71 11.27 9.83
Page 19 October 23, 2001 www.atlascopco-group.com
Balance Sheet September 30, 2001
MSEK Sept. 30,2001
% Dec. 31,2000
% Sept. 30,2000
%
Intangible fixed assets 22,835 34 20,792 34 21,124 33Rental equipment 15,719 24 15,225 25 15,975 25Other fixed assets 7,760 12 7,032 11 7,301 12Inventories 6,670 10 5,881 9 6,186 10Receivables 12,228 18 11,521 19 11,419 18Cash and bank 1,658 2 1,237 2 1,121 2Total assets 66,870 61,688 63,126
Equity 27,138 41 23,982 39 23,282 37Minority interest 220 0 219 0 218 0Interest-bearing liabilities 23,667 35 23,507 38 24,622 39Non-interest-bearing liabilities 15,845 24 13,980 23 15,004 24Total liabilities and equity 66,870 61,688 63,126
Page 20 October 23, 2001 www.atlascopco-group.com
Atlas Copco Group Return on Capital Employed
12 month values
21,1
17,2
14,1 14,513,5
0
5
10
15
20
25
ROCE Weighted average cost of capital (WACC), pre-tax
1997 1998 1999 2000 2001Q3
Page 21 October 23, 2001 www.atlascopco-group.com
Cash Flow
July – September Jan. – SeptemberMSEK 2001 2000 2001 2000Operating cash surplus after tax 1,692 1,834 5,146 4,565Of which depreciation added back 1,154 1,074 3,332 2,886Change in working capital 78 109 27 -75 Cash flow from operations 1,770 1,943 5,173 4,490Investments in tangible fixed assets -964 -2,034 -2,795 -5,584Sale of tangible fixed assets 607 565 1,613 1,612Company acquisitions / divestments -106 -123 -241 -407Other investments, net -10 -21 -110 -57Cash flow from investments -473 -1,613 -1,533 -4,436 Cash flow after net investments 1,297 330 3,640 54Dividend paid 0 0 -1,122 -1,007 Net Cash flow 1,297 330 2,518 -953
Page 22 October 23, 2001 www.atlascopco-group.com
MSEK
289 301426 415
345426 470
649
382 377
927
756
265
2372
1636
606
333
625
338
190 199 207 244 160 178 191 324 207 171 318 243 196 265 183 279 208 275 1470
500
1000
1500
2000
2500
0
1000
2000
3000
4000
5000
Net, Rental Equipment Machinery & buildingsTotal 12 months values Net, Rental Eq. 12 months valuesQuarterly 12 months
Net rental fleet investment = approx. SEK 1 billion
Capital Expenditures in Tangible Fixed Assets
1997 1998 1999 2000 2001Q3
Page 23 October 23, 2001 www.atlascopco-group.com
Contents
Market Development Business Areas Financials Outlook
Page 24 October 23, 2001 www.atlascopco-group.com
Near-term development
Atlas Copco is basing its near-term activities on the current demand situation, which is as follows: Still weak in North America and relatively good in Europe, the Middle East, and Africa. In South America and Asia, the demand is now declining from recent good level. Contingency plans to cope with a more negative scenario have been implemented or are ready to be executed.
Page 25 October 23, 2001 www.atlascopco-group.com
The
face
of i
nter
actio
n
Page 26 October 23, 2001 www.atlascopco-group.com
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.”
Page 27 October 23, 2001 www.atlascopco-group.com
Contents
Market Development Business Areas Financials Outlook Additional Information
Page 28 October 23, 2001 www.atlascopco-group.com
Orders received, Jan. - Sept. 2001Group Total MSEK 38,573 +12
12 months, Portion of Group Sales, %
Change 2001 / 2000, %
+1151
+164
02
+1330
+254
+139
Page 29 October 23, 2001 www.atlascopco-group.com
0
10000
20000
30000
40000
50000
60000
70000
9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 01120
1000
2000
3000
4000
5000
6000
7000Revenues, 12 month values Earnings bef. Int + tax
Long Term Trend
Page 30 October 23, 2001 www.atlascopco-group.com
Compressor Technique
MSEK July – Sept. Change January –Sept. Change2001 2000 % 2001 2000 %
Orders Received 4,249 3,693 +15 12,725 11,313 +12Revenues 4,324 3,643 +19 12,441 10,613 +17EBIT 829 698 +19 2,398 1,942 +23- margin, % 19.2 19.2 19.3 18.3ROCE, %12 month value
67 57
Page 31 October 23, 2001 www.atlascopco-group.com
0
10000
20000
30000
9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 01120
1000
2000
3000
Revenues, 12 month values EBIT
Compressor Technique
Page 32 October 23, 2001 www.atlascopco-group.com
Construction & Mining Technique
MSEK July – Sept. Change January –Sept. Change2001 2000 % 2001 2000 %
Orders Received 1,701 1,591 +7 5,481 5,168 +6Revenues 1,766 1,726 +2 5,422 5,185 +5EBIT 178 164 +9 545 479 +14- margin, % 10.1 9.5 10.1 9.2ROCE, %12 month value
22 20
Page 33 October 23, 2001 www.atlascopco-group.com
-3000
0
3000
6000
9000
9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112-300
0
300
600
900Revenues, 12 month values EBIT
Construction & Mining Technique
Page 34 October 23, 2001 www.atlascopco-group.com
Industrial Technique
MSEK July – Sept. Change January –Sept. Change2001 2000 % 2001 2000 %
Orders Received 2,987 2,915 +2 9,071 8,549 +6Revenues 3,002 2,869 +5 8,894 8,293 +7EBIT 305 298 +2 885 860 +3- margin, % 10.2 10.4 10.0 10.4ROCE, %12 month value
15 15
Page 35 October 23, 2001 www.atlascopco-group.com
0
3000
6000
9000
12000
15000
9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 01120
300
600
900
1200
1500Revenues, 12 month values EBIT
Industrial Technique
Page 36 October 23, 2001 www.atlascopco-group.com
Rental Service
* EBIT in Q3 2000 includes MSEK 127 and EBIT in Q1 2001 includes MSEK 60 of non-recurring cost.
MSEK July – Sept. Change January –Sept. Change2001 2000 % 2001 2000 %
Revenues 4,094 3,751 +9 11,693 10,106 +16EBIT 378 469* -19 1,136* 1,323* -14- margin, % 9.2 12.5* 9.7* 13.1*ROCE, %12 month value
5 6
Page 37 October 23, 2001 www.atlascopco-group.com
0
4000
8000
12000
16000
20000
9612 9712 9812 9912 0012 01120
400
800
1200
1600
2000Revenues, 12 month values EBIT
Rental Service
Page 38 October 23, 2001 www.atlascopco-group.com
Group Total
MSEK July – Sept. Change January –Sept. Change2001 2000 % 2001 2000 %
Orders Received 12,885 11,743 +10 38,573 34,451 +12Revenues 13,041 11,795 +11 38,022 33,686 +13EBIT 1,627 1,700* -4 4,782* 4,569* +5- margin, % 12.5 14.4* 12.6* 13.6*Profit after financialitems (PAFI)
1,287 1,245* +3 3,646* 3,318* +10
- margin, % 9.9 10.6* 9.6* 9.8** EBIT in Q1 2001 includes MSEK 60 of non-recurring cost* EBIT in Q3 2000 includes MSEK 6 or non-recurring cost
Page 39 October 23, 2001 www.atlascopco-group.com
Non-recurring items
MSEK Q3 2001 Q2 2001 Q1 2001 Q4 2000 Q3 2000Compressor Technique Move of production from Mauguire -13 Move of dryer production from Hamrins -14 Outsourcing of painting for Portable Air -6Industrial Technique Net of Capital gain and restruct. costsRental Service Merging of Prime and RSC -127 Restructuring of operations -60Corporate Pension refund 226 Less early retirement provision -92Group Total 0 0 -60 -20 -6
Page 40 October 23, 2001 www.atlascopco-group.com
Group Totalexcl. non-recurring items MSEK July – Sept. Change January –Sept. Change
2001 2000 % 2001 2000 %Orders Received 12,885 11,743 +10 38,573 34,451 +12Revenues 13,041 11,795 +11 38,022 33,686 +13EBIT 1,627 1,706 -5 4,842 4,575 +6- margin, % 12.5 14.5 12.7 13.6Profit after financialitems (PAFI)
1,287 1,251 +3 3,706 3,324 +11
- margin, % 9.9 10.6 9.7 9.9
Page 41 October 23, 2001 www.atlascopco-group.com
Earnings Before Interest and Taxes
MSEK %
1988 1990 1992 1994 1996 1998 2000
12 month values
EBIT margin excluding non-recurring items 1999 = 12.1%, 2000 = 13.8%, Q3 2001 = 13,1%
2001Q3
1741 14861099 1172 1225
18902665 2931
38134345 4470
6392 6605
1179
9,2
11,6
9,3
7,3 7,36,5
9,0
10,911,7
12,7 12,912,3
13,0
15
13,7
0
1000
2000
3000
4000
5000
6000
7000
0,0
5,0
10,0
15,0
20,0EBIT EBIT margin, % Group EBIT target
Page 42 October 23, 2001 www.atlascopco-group.com
Taxes
13221137
1723 1776
1280
36,4 36,3
33,3
36,735,4
0
500
1000
1500
2000
2500
0
10
20
30
40
12 month values 12 month values in % of profit before taxesMSEK %
1997 1998 1999 2000 2001Q3
Page 43 October 23, 2001 www.atlascopco-group.com
Inventories, Customer Receivables and Net Rental Equipment
0
5
10
15
20
25
30
35Inventories Customer receivables Net Rental Equipment
Percent of Sales12 Month Values
1997 1998 1999 2000 2001Q3
Page 44 October 23, 2001 www.atlascopco-group.com
Cash and Interest-Bearing Debt
10,214
Dec.1997
10,052
Dec.1998
19,325
Dec.1999
22,270
Dec.2000
Net borrowings
-7610 -4922 -8192 -9987 -8120
-5308
-10969-11999 -13781
-2016
1613 12862118 1237 1658
-2201
-1940
-1450
-1521 -1766
Cash Short-term loans Long-term loans Pensions
22,009
Sep.2001
MSEK
Page 45 October 23, 2001 www.atlascopco-group.com
Earnings per Share and Dividend
1996 1997 1998 1999 2000
10,15
11,5611,96
11,50
13,95
15,40
3,604,08 4,32
4,755,25
0
5
10
15 Quarter values12 month valuesDividend
2001Q3
Page 46 October 23, 2001 www.atlascopco-group.com
The
face
of i
nter
actio
n