Transcript Atlas Copco Group

Atlas Copco Group
Q3 Results
October 24, 2006
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October 24, 2006 www.atlascopco.com
Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Q3 - Highlights
 Value creation
– High growth
 Double digit growth in all regions
 Good demand from most customer segments
 Solid growth in the aftermarket business
– Increased profits
 All business areas improved profit margins
 Atlas Copco sells majority stake of the equipment rental business
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Q3 - Figures in summary

Orders received up 21%, +19% in volume

Revenues up 17% to MSEK 12 538, up 15% in volume

Operating profit up 29% to MSEK 2 306, a margin of 18.4% (16.6)

Profit before tax at MSEK 2 081 (1 800), a margin of 16.6% (16.9)
Including discontinued operations

Basic earnings per share were SEK 3.36 (2.71), up 24%

Operating cash flow totaled MSEK 434 (1 671)

ROCE at 36% (26)
Revenues and operating profit including discontinued operations
as per previously used accounting principles for comparison only
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
Revenues of MSEK 15 566 (13 479)

Operating profit of 3 176 (2 512), a margin of 20.4% (18.6)
October 24, 2006 www.atlascopco.com
Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Orders received - Local currency
Group total +24% YTD, + 25% last 3 months
(Structural change +2% YTD, +3% last 3 months)
39
22
+17 +24
18
+18 +13
10
6
September 2006
A
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B
C
+57 +66
+15 +21
A=
B=
C=
+32 +26
Portion of sales, Year-to-date, %
Year-to-date vs. prev. year, %
Last 3 months vs. prev. year, %
5
+17 +12
Q3 - The Americas
 Continued strong demand from most
customer segments in North America
– Solid growth in most manufacturing and
process industry segments
– Increased sales of mining and construction
equipment in the region
22
+18 +13
 Sustained growth in South America
– Manufacturing and process industries’
demand particularly strong
September 2006
A
7
B
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C
A=
B=
C=
Portion of sales, Year-to-date, %
Year-to-date vs. prev. year, %
Last 3 months vs. prev. year, %
6
+15 +21
Q3 - Europe and Africa/Middle East
 Europe shows strength
– High order intake for all types of compressed air
equipment
– Weaker demand for advanced assembly tools
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+17 +24
– Increased demand from the construction and mining
industries
– Very strong growth in Russia and improvements in
many major markets in Western Europe
 +66% in the Africa / Middle East region
– Booming mining sector in Africa and strong overall
demand in the Middle East
September 2006
A
8
B
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C
A=
B=
C=
Portion of sales, Year-to-date, %
Year-to-date vs. prev. year, %
Last 3 months vs. prev. year, %
10
+57 +66
Q3 - Asia and Australia
 Steady, high growth in Asia
– Large compressor orders in China, on top of
already strong development
– High growth trend continues in India
 Mining particularly strong in Australia
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+32 +26
5
September 2006
A
9
B
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C
A=
B=
C=
Portion of sales, Year-to-date, %
Year-to-date vs. prev. year, %
Last 3 months vs. prev. year, %
+17 +12
Volume Growth per Quarter
Atlas Copco Group, excluding Rental Service
 Change in orders received in % vs. same Quarter previous year
25
20
15
10
5
0
-5
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06 Q4
06 Q3
06 Q1
06 Q2
05 Q4
05 Q3
05 Q2
05 Q1
04 Q4
04 Q2
04 Q3
04 Q1
03 Q4
03 Q3
03 Q2
03 Q1
02 Q3
02 Q4
02 Q2
02 Q1
01 Q4
01 Q3
01 Q2
00 Q4
01 Q1
00 Q3
00 Q2
00 Q1
-10
Atlas Copco Group – Sales Bridge
July – September
MSEK
2005
Structural change, %
Currency, %
Price, %
Volume, %
Total, %
2006
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Orders
Received
11 452
+3
-4
+3
+19
+21
13 847
Revenues
10 674
+3
-3
+2
+15
+17
12 538
Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Atlas Copco Group
Operating Profit and Return On Capital Employed (ROCE)
by Business Areas
Revenues
MSEK
12 month values, period ending
Compressor Technique
Construction and Mining Technique
Industrial Technique
Rental Service
Eliminations/Common Group Functions
Atlas Copco Group
* including discontinued operations
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Sep. 2006
23 879
18 208
6 514
782
-471
48 912
Operating
profit
Sep. 2006
4 931
2 854
1 345
259
-504
8 885
Operating
margin
Sep. 2006
20.6%
15.7%
20.6%
33.1%
ROCE
Sep. 2006
72%
34%
64%
na.
18.2%
36%*
Compressor Technique
 Strong order growth in all markets and all major product segments
– Significant order growth in gas and process compressors
– Higher growth in Western Europe
 Steady positive development of aftermarket
 Operating profit up 31%. Margin at all-time high 21.5%
– Positive effect from volume and price
 New manufacturing plant for screw compressor elements in China
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Compressor Technique
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
25
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06 Q4
06 Q3
06 Q2
06 Q1
05 Q4
05 Q3
05 Q2
05 Q1
04 Q4
04 Q3
04 Q2
04 Q1
03 Q4
03 Q3
-10
03 Q2
-10
03 Q1
-5
02 Q4
-5
02 Q3
0
02 Q2
0
02 Q1
5
01 Q4
5
01 Q3
10
01 Q2
10
01 Q1
15
00 Q4
15
00 Q3
20
00 Q2
20
00 Q1
15
25
Construction and Mining Technique
 Continued strong demand, particularly in mining
 Order intake up 25%, excluding currency
– 18th consecutive quarter with volume growth
– Significant growth in Europe
 Record profit, up 34%
 Launch of new crawler rig for surface
applications
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Construction and Mining Technique
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
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06 Q4
06 Q3
06 Q2
06 Q1
05 Q4
05 Q3
05 Q2
05 Q1
04 Q4
04 Q3
04 Q2
04 Q1
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
Industrial Technique
 Strong sales to general industry
 Weaker demand from the motor vehicle industry
– Sales declined in Europe and North America
 Good development of the aftermarket business
 Strategic acquisitions
 Improved operating margin
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Industrial Technique
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
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06 Q4
06 Q3
06 Q2
06 Q1
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
Rental Service
Including discontinued operations
 Rental revenues increased 20% in USD
– Price +5%, volume +15%
 Fleet utilization at 73.5%
 Record operating margin
 Continuing operations
– Prime Energy and Prime Mexico will be
integrated into the rental operations in the
Compressor Technique business area
when the divestment is finalized
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Rental Service
Rental Revenue Volume Development, incl. discontinued operations
Rental revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, % (Business Area)
30
06 Q4
06 Q3
06 Q2
06 Q1
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

21
30
Operating margins for Q2 and Q3 2006 include depreciation expense for discontinued
operations, as per previously used accounting principles, to enhance comparability
October 24, 2006 www.atlascopco.com
Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Group Total
MSEK
Orders received
Revenues
Operating profit
– as a percentage of revenues
Profit before tax
– as a percentage of revenues
Profit for the period from
continuing operations
Profit for the period from
discontinued operations, net of tax
1)
Profit for the period
1)
Basic earnings per share, SEK
1)
Equity per share, SEK
1)
Return on capital employed, %
1)
July – Sept.
2006
2005
13 847 11 452
12 538 10 674
2 306
1 781
18.4
16.7
2 081
1 800
16.6
16.9
1 475
1 272
642
2 117
3.36
45
36
437
1 709
2.71
37
26
%
+21
+17
+29
Jan. – Sept.
2006
2005
%
41 108
36 930
6 739
18.2
6 313
17.1
32 599
30 223
4 792
15.9
4 766
15.8
+26
+22
+41
+16
4 493
3 429
+31
+24
+24
1 708
6 201
9.83
970
4 399
6.97
+41
+41
+16
+32
Including discontinued operations. Earnings for Q2 and Q3 2006 do not include depreciation on assets held for sale
and the earnings for Q2 2006 have thus been restated for the effect of the depreciation.
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Balance Sheet
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Including discontinued operations
Dec. 31, 2005
Sep. 30, 2005
MSEK
Sep. 30, 2006
Intangible assets
Rental equipment
Other property, plant and equipment
Other fixed assets
Inventories
Receivables
Current financial assets
Cash and cash equivalents
Assets classified as held for sale
TOTAL ASSETS
4 240
2 072
3 722
2 050
8 522
12 573
597
2 616
24 107
60 499
7%
3%
6%
3%
14%
21%
1%
4%
40%
10 607
13 456
4 503
1 818
7 215
13 240
389
3 727
54 955
19%
24%
8%
3%
13%
24%
1%
7%
10 250
12 712
4 266
1 692
7 137
12 853
325
3 364
52 599
19%
24%
8%
3%
14%
24%
1%
6%
Total equity
Interest-bearing liabilities
Non-interest-bearing liabilities
Liabilities associated with assets
classified as held for sale
TOTAL EQUITY AND LIABILITIES
28 449
11 197
13 447
47%
19%
22%
25 808
11 345
17 802
47%
21%
32%
23 255
11 303
18 041
44%
21%
34%
7 406
60 499
12%
54 955
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52 599
Capital Structure
Net Debt/Equity
100%
92%
92%
80%
75%
72%
67%
60%
59%
46%
40%
32%
30%
20%
28%
31%
16%
4%
0%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Sept.
2006
Adjusted for IFRS from 2004. Including discontinued operations.
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Cash Flow
Including discontinued operations
26
MSEK
July – September
2006
2005
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
Change in interest-bearing liabilities
Net cash flow
2 772
-379
-569
2 203
-1 868
486
-387
-1 769
434
-637
-138
-341
October 24, 2006 www.atlascopco.com
2 796
-875
362
3 158
-2 054
635
-68
-1 487
1 671
-150
-2
-1 434
85
January – September
2006
2005
8 861
-1 700
-1 140
7 721
-6 617
1 711
-1 046
-5 952
1 769
-1 050
-2 675
973
-983
7 276
-2 391
287
7 563
-5 383
1 824
-361
-3 920
3 643
3 650
-1 890
-4 192
-957
254
Cash Flow in Summary
Continuing and discontinued operations
MSEK
Net cash from
— operating activities
Total
4 551
3 170
7 721
- 1 582
442
-1 140
-3 296
-3 706
-7 002
whereof acquisitions/divestments
-1 050
0
-1 050
Operating cash flow
2 305
-536
1 769
whereof change in working capital
— investing activities
before acquisitions/divestments
27
January – September 2006
Continuing
Discont.
operations
operations
October 24, 2006 www.atlascopco.com
Capital Expenditures and Depreciation
Tangible fixed assets, continuing operations
MSEK
Property and machinery
Rental equipment, net
Depreciation, tangible assets
2000
1800
1600
1400
1200
1000
800
600
400
200
0
YTD 2005
28
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YTD 2006
Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Near-term Outlook
The demand for Atlas Copco’s products and services, from most
customer segments such as mining, construction, and the
manufacturing and process industries, is expected to remain at the
current high level.
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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.”
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