Transcript Atlas Copco Group

Atlas Copco Group
Q4 Results
February 2, 2006
Contents
 Q4 Business Highlights
 Market Development
 Business Areas
 Financials
 2005 Summary
 Outlook
February 2, 2006
www.atlascopco.com
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Q4 - Highlights
 Decision to explore a divestment of the Rental Service business
 Record fourth quarter ends record year
 Strengthened market positions
– Demand remained strong
 Record performance by all business areas
– Strong organic revenue growth in all business areas
– Operating profit and profit margins at all time highs
 Several acquisitions in focused areas
February 2, 2006
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Q4 - Figures in summary
 Order received up 29%, up 11% in volume
 Revenues reached MSEK 15 033 (11 592), up 30%
 Operating profit at MSEK 2 955, a margin of 19.7% (15.4)
 Profit after financial items up 61% to MSEK 2 896 (1 798)
– Changed accounting for share based payments impacted profit
after financial items positively.
 Earnings per share increased to SEK 3.46 (2.05)
 Operating cash flow at MSEK 878 (1 274)
 ROCE at 29%
February 2, 2006
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Contents
 Q4 Business Highlights
 Market Development
 Business Areas
 Financials
 2005 Summary
 Outlook
February 2, 2006
www.atlascopco.com
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Orders received - Local currency
December
2005
Group total +20% YTD, +16% last 3 months
(Structural change +6% YTD, +2% last 3 months)
34
37
+21
+15
+15
+14
13
7
5
+25
+34
+26
+34
+40
-10
4
A
February 2, 2006
B
C
+17
A= Portion of Group sales last 12 months, %
B= Year-to-date vs prev. year, %
C= Last 3 months vs prev. year, %
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+4
Q4 - The Americas
December
2005
 Continued strength in North America
– Increased demand from manufacturing and
process industries
– Good demand for equipment and rental
from construction industry
– High activity in the mining industry
 Healthy demand in South America, but
orders for mining equipment lower than
previous year.
A
February 2, 2006
B
C
37
+21
+14
5
+25
A= Portion of Group sales last 12 months, %
B= Year-to-date vs prev. year, %
C= Last 3 months vs prev. year, %
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-10
Q4 - Europe and Africa/Middle East
December
2005
 Favorable demand in Europe
– Strong development in Eastern Europe, while
only moderate growth in Western Europe
– Increased sales of mining, construction and
compressed air equipment
 Africa / Middle East region developed well
A
February 2, 2006
B
C
34
+15
7
+34
A= Portion of Group sales last 12 months, %
B= Year-to-date vs prev. year, %
C= Last 3 months vs prev. year, %
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+15
+40
Q4 - Asia and Australia
December
2005
 Continued strong demand in Asia
– Strong growth in all major markets
Japan, India, South Korea and
China
13
+26
+34
 Investments in China and India to
support growth
4
A
February 2, 2006
B
C
+17
A= Portion of Group sales last 12 months, %
B= Year-to-date vs prev. year, %
C= Last 3 months vs prev. year, %
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+4
Volume Growth
per Quarter
20
15
10
5
0
-5

05 Q4
05 Q3
05 Q2
05 Q1
04 Q4
04 Q3
04 Q2
04 Q1
03 Q4
03 Q3
03 Q2
03 Q1
02 Q4
02 Q3
02 Q2
02 Q1
01 Q4
01 Q3
01 Q2
01 Q1
00 Q4
00 Q3
00 Q2
00 Q1
-10
Change in orders received in % vs. same Quarter previous year
February 2, 2006
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Group Total
Sales Bridge
October - December
MSEK
2004 reported
Discontinued operations
2004
Structural change, %
Currency, %
Price, %
Volume, %
Total, %
2005
February 2, 2006
Orders
Received
13 124
-1 362
11 762
+2
+13
+3
+11
+29
15 196
Revenues
12 957
-1 365
11 592
+2
+13
+3
+12
+30
15 033
www.atlascopco.com
January – December
Orders
Received
50 160
-5 501
44 659
+6
+4
+3
+11
+24
55 281
Revenues
48 654
-5 462
43 192
+5
+3
+3
+11
+22
52 742
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Contents
 Q4 Business Highlights
 Market Development
 Business Areas
 Financials
 2005 Summary
 Outlook
February 2, 2006
www.atlascopco.com
12
Compressor Technique
 Continued positive sales trend
– Double digit growth in all regions
– Best development in North America and Asia
 Strong order intake for all types of compressors
and its aftermarket
 Three acquisitions in growing application areas
– Quality air, marine and automotive
 New record profits and margins supported by
positive volume, price and currency
development
February 2, 2006
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Compressor Technique
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
25
25

05 Q4
05 Q3
05 Q2
05 Q1
04 Q4
04 Q3
04 Q2
04 Q1
03 Q4
03 Q3
03 Q2
-10
03 Q1
-10
02 Q4
-5
02 Q3
-5
02 Q2
0
02 Q1
0
01 Q4
5
01 Q3
5
01 Q2
10
01 Q1
10
00 Q4
15
00 Q3
15
00 Q2
20
00 Q1
20
Operating margins restated (IFRS) from 2004
February 2, 2006
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Construction & Mining Technique
 Strong demand from both mining and
construction
 Order volume up 14%
– 15th consecutive quarter with volume growth
– Strong growth in Asia, Africa / Middle East
and Eastern Europe
 Record revenues and profits
– Operating margin at all-time high 15.7%,
supported by currency effects
February 2, 2006
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Construction & Mining Technique
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
25
25

05 Q4
05 Q3
05 Q2
05 Q1
04 Q4
04 Q3
04 Q2
-20
04 Q1
-20
03 Q4
-15
03 Q3
-15
03 Q2
-10
03 Q1
-10
02 Q4
-5
02 Q3
-5
02 Q2
0
02 Q1
0
01 Q4
5
01 Q3
5
01 Q2
10
01 Q1
10
00 Q4
15
00 Q3
15
00 Q2
20
00 Q1
20
Operating margins restated (IFRS) from 2004
February 2, 2006
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Industrial Technique
 Good order development in Asia and North
America, weak in Western Europe.
 Acquisition of control instrument and torque
measurement manufacturer.
 Record revenues, operating profit and
operating margin.
February 2, 2006
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Industrial Technique
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %

05 Q4
-5
05 Q3
-5
05 Q2
0
05 Q1
0
04 Q4
5
04 Q3
5
04 Q2
10
04 Q1
10
03 Q4
15
03 Q3
15
03 Q2
20
03 Q1
20
Operating margins restated (IFRS) from 2004
February 2, 2006
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Rental Service
 Rental revenues increased 20% in USD
– Price +7%, volume +13%
 Fleet utilization at 73%
– Continued investments in equipment to support
increased demand and improve fleet quality
 Operating margin at all-time high at 26%
– Resulting from improved rental volume and
rental rates in combination with continued work
on efficiency
February 2, 2006
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Rental Service
Rental Revenue Volume Development
Rental revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, % (Business Area)

05 Q4
05 Q3
05 Q2
05 Q1
04 Q4
04 Q3
04 Q2
-15
04 Q1
-15
03 Q4
-10
03 Q3
-10
03 Q2
-5
03 Q1
-5
02 Q4
0
02 Q3
0
02 Q2
5
02 Q1
5
01 Q4
10
01 Q3
10
01 Q2
15
01 Q1
15
00 Q4
20
00 Q3
20
00 Q2
25
00 Q1
25
Operating margins restated (IFRS) from 2004
February 2, 2006
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Rental Service
 Decision to explore a divestment of the Rental Service business
– Different business characteristics
– Limited synergies
– Only in North America
February 2, 2006
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Contents
 Q4 Business Highlights
 Market Development
 Business Areas
 Financials
 2005 Summary
 Outlook
February 2, 2006
www.atlascopco.com
22
Atlas Copco Group
Sales, EBIT and Capital Employed by Business Area
2005
22%
Rental Service
27%
54%
28%
21%
11%
12%
Construction and
Mining Technique
22%
39%
40%
6%
18%
Net invoiced
sales
February 2, 2006
EBIT
Industrial
Technique
Compressor
Technique
Capital
Employed
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12 month figures
Income Statement
MSEK
Oct. – Dec.
2005
2004
15 196 11 762
15 033 11 592
2 955
1 784
19.7
15.4
2 896
1 798
19.3
15.5
1 965
1 228
217
64
2 182
1 292
1)
1)
3.46
2.05
41
36
1)
29
22
%
+29
+30
+66
Jan. – Dec.
2005
2004
Orders received
55 281
Revenues
52 742
Operating profit
9 403
– as a percentage of revenues
17.8
+61
Profit after financial items
9 300
– as a percentage of revenues
17.6
+60
Net profit from continuing operations
6 364
Net profit from discontinued operations
217
+69
Net profit
6 581
2)
1)
+69
Earnings per share, SEK
10.43
2)
Equity capital per share, SEK
Return on capital employed, %
1)
Including discontinued operations.
2)
Earnings per share and equity capital per share are adjusted for share split.
February 2, 2006
www.atlascopco.com
44 659
43 192
6 651
15.4
6 382
14.8
4 430
241
4 671
1)
7.41
24
%
+24
+22
+41
+46
+44
+41
+41
Atlas Copco Group
Earnings Before Interest & Taxes (EBIT) and Return On
Capital Employed (ROCE) by Business Areas
Revenues
EBIT
EBIT-margin
ROCE
2005
2005
2005
2005
Compressor Technique
20 672
4 032
19.5%
70%
Construction & Mining T.
15 154
2 073
13.7%
26%
6 064
1 200
19.8%
66%
11 604
2 666
23.0%
16%
-752
-568
52 742
9 403
17.8%
29%
41 100
6 700
16,3%
41%
MSEK
Industrial Technique
Rental Service
Common Group Functions
Atlas Copco Group
Pro forma
Atlas Copco Group, excluding Rental Service
February 2, 2006
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Balance Sheet
MSEK
Property, plant and equipment
Rental equipment
Other property, plant and equipment
Intangible assets
Other fixed assets
Inventories
Receivables
Short-term investments
Cash and cash equivalents
Assets held for sale
Total assets
Dec 31
2005
Dec. 31
2004
13 456
4 503
10 607
1 818
7 215
13 240
389
3 727
0
54 955
24%
8%
19%
3%
13%
24%
1%
7%
0%
9 154
3 714
8 597
1 825
5 634
10 776
308
2 386
5 774
48 168
19%
8%
18%
4%
12%
22%
1%
5%
12%
Total Equity
Interest-bearing loans and borrowings
Non-interest-bearing loans and borrowings
Liabilities held for sale
Total shareholders’ equity and liabilities
25 808
11 345
17 802
0
54 955
47%
21%
32%
0%
22 601
10 030
13 296
2 241
48 168
47%
21%
28%
5%
February 2, 2006
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Capital Structure
Net Debt/Equity
100%
92%
92%
80%
75%
72%
67%
60%
59%
46%
40%
32%
30%
20%
28%
16%
4%
0%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Adjusted for IFRS but including discontinued operations 2004
February 2, 2006
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Cash Flow
MSEK
Operating cash surplus after tax
of which depreciation added back
Change in working capital
Cash flow from operations
Investments in tangible fixed assets
Sale of tangible fixed assets
Other investments, net
Cash flow from investments
Operating cash flow
Company acquisitions / divestments
Dividends paid
Share redemption
Unclaimed shares from bonus issue 1989
Change in interest-bearing liabilities
Net cash flow
February 2, 2006
Oktober – December
2005
2004
2 997
2 338
929
808
-561
-596
2 436
1 742
-1 853
-840
724
605
-429
-233
-1 558
-468
878
1 274
-168
119
-482
-731
228
662
www.atlascopco.com
January – December
2005
2004
10 230
8 305
3 320
3 121
-231
-445
9 999
7 860
-7 236
-4 832
2 548
2 129
-790
-460
-5 478
-3 163
4 521
4 697
3 482
-2 405
-1 890
-1 575
-4 192
2
-1 439
-1 917
482
-1 198
28
Capital Expenditures
in Tangible Fixed Assets
Net rental fleet investment
= MSEK 4 032
MSEK
Machinery & buildings, quarterly
Net, Rental Equipment, quarterly
Quarterly
Net. Rental Eq.+Mach.& buildings, 12 months
Net, Rental Equipment, 12 months
12 months
2500
5000
2000
4000
1500
3000
1000
2000
500
1000
0
-500
February 2, 2006
0
2001
2002
2003
www.atlascopco.com
2004
2005
-1000
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Contents
 Q4 Business Highlights
 Market Development
 Business Areas
 Financials
 2005 Summary
 Outlook
February 2, 2006
www.atlascopco.com
30
2005 Full Year Summary
 Improved demand, increased market presence and
penetration, and successful introductions of new products.
 Strong order growth with double digit growth in all regions
 Record sales MSEK 52 742 (43 192)
 Record profit MSEK 9 403 (6 651), corresponding to an
operating margin of 17.8% (15.8)
 Strong cash flow, operating cash flow of MSEK 4 521 (4 697)
 Earnings per share up 41% to SEK 10.43 per share
 Proposed dividend for 2005, SEK 4.25 (3.00) per share
February 2, 2006
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31
Focused Markets
CAGR 2003-2005
Russia: 50%
USA: 12%
China: 26%
(ex. RS: 30%)
India: 30%
February 2, 2006
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Earnings per Share, Dividend and Redemption
Dividend + redemption of share
Dividend per share
Earnings per share
12
11
9,67
10
10,43
9
8
7
7,41
6
5
4
4,25
3
3,00
2
1
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001 2002* 2003
2004 2005**
* Earnings per share excluding goodwill impairment charge
** Proposed dividend by the Board of Directors
February 2, 2006
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Contents
 Q4 Business Highlights
 Market Development
 Business Areas
 Financials
 2005 Summary
 Outlook
February 2, 2006
www.atlascopco.com
34
Near-term Outlook
The demand for Atlas Copco’s products and services, from all
major customer segments such as mining, infrastructure and
other non-residential construction, manufacturing and process
industry, is expected to remain at the current high level.
February 2, 2006
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February 2, 2006
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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.”
February 2, 2006
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