Transcript Atlas Copco Group

Atlas Copco Group
Q3 Results
October 23, 2008
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October 23, 2008, www.atlascopco.com
Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Q3 - Highlights
 Good order growth across all business areas and most regions
 Continued strong development of the aftermarket business
 Record operating profit and margin
– Price increases continue to offset component cost increases
– Neutral currency effect
 Solid financial structure
– Increased interest costs but very favorable loan maturity profile
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Q3 - Figures in summary
 9% organic order growth
 Revenues of MSEK 18 440; 13% organic growth
 Operating profit up 16% to MSEK 3 640
– Operating margin at 19.7% (19.0)
 Profit before tax at MSEK 3 224 (2 708)
 Earnings per share for continuing operations SEK 1.99 (1.54)
 Operating cash flow MSEK 1 054 (1 586)
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Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Orders received - Local currency
Group total +19% YTD, +9% last 3 months
(Structural change +6% YTD, 0% last 3 months)
39
18
+15
8
September 2008
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B
+4
+7
18
12
A
+13
C
+13
-3
+43 +43
+36 +33
A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
5
+23
+11
Q3 - The Americas
 Overall healthy quarter in North America
– Mining segment still strong, especially coal
in the US
– Weaker demand for construction
equipment and from automotive industry
18
+15
+7
– Strong growth in Mexico
 Continued strong demand from all
customer segments in South America
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September 2008
A
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B
C
A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
+36 +33
Q3 - Europe and Africa/Middle East
 Growth in Europe
– Good mining demand continues
– Low activity in the construction segment
and weaker demand from consumer
goods related industries in Western
Europe
– Good growth in Eastern Europe, the
Nordic countries, and Germany
 Continued strong demand in Africa /
Middle East
September 2008
A
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B
C
A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
39
12
+13
+4
+43 +43
Q3 - Asia and Australia
 Stable demand development in Asia
– Good order growth for mining
equipment and industrial tools
– Fewer large compressor orders and
somewhat slower industrial growth in
China affect compressor sales
18
+13
-3
 Mining equipment high in demand in
Australia
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September 2008
A
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B
C
A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
+23
+11
Organic* Growth per Quarter
Atlas Copco Group, continuing operations
 Change in orders received in % vs. same quarter previous year
30
25
20
15
10
5
0
-5
00 Q1
00 Q2
00 Q3
00 Q4
01 Q1
01 Q2
01 Q3
01 Q4
02 Q1
02 Q2
02 Q3
02 Q4
03 Q1
03 Q2
03 Q3
03 Q4
04 Q1
04 Q2
04 Q3
04 Q4
05 Q1
05 Q2
05 Q3
05 Q4
06 Q1
06 Q2
06 Q3
06 Q4
07 Q1
07 Q2
07 Q3
07 Q4
08 Q1
08 Q2
08 Q3
08 Q4
-10
*Volume and price
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Atlas Copco Group – Sales Bridge
MSEK
2007
Structural change, %
Currency, %
Price, %
Volume, %
Total, %
2008
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July - September
Orders
Revenues
Received
17 388
16 431
0
0
-1
-1
+3
+3
+6
+10
+8
+12
18 842
18 440
January - September
Orders
Revenues
Received
50 243
45 806
+6
+7
-3
-3
+3
+3
+10
+12
+16
+19
58 135
54 446
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 Area
MSEK
12 month values, period ending
Compressor Technique
Construction and Mining Technique
Industrial Technique
Eliminations/Common Group Functions
Atlas Copco Group
* excluding w rite-dow n of RSC notes
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Revenues Operating Operating ROCE
profit
margin
Sep. 2008 Sep. 2008 Sep. 2008 Sep. 2008
34 397
7 161
20.8%
59%
30 775
5 550
18.0%
31%
7 369
1 493
20.3%
51%
-546
-325
71 995
13 879
19.3%
34%*
Compressor Technique

4% organic order growth
– Slow-down in demand for smaller industrial compressors in
Western Europe
– Favorable demand for large industrial compressors
– Strong aftermarket sales

Operating margin at 21.3%
– Previous year 20.7% adjusted for capital gain
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Compressor Technique
Organic* revenue growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
25
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
01 Q1
01 Q2
01 Q3
01 Q4
02 Q1
02 Q2
02 Q3
02 Q4
03 Q1
03 Q2
03 Q3
03 Q4
04 Q1
04 Q2
04 Q3
04 Q4
05 Q1
05 Q2
05 Q3
05 Q4
06 Q1
06 Q2
06 Q3
06 Q4
07 Q1
07 Q2
07 Q3
07 Q4
08 Q1
08 Q2
08 Q3
08 Q4
20
*Volume and price
Quarterly operating margins include Prime Energy from Q1 2006.
15
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Construction and Mining Technique
 Continued high order growth; 17% organically
– Demand from the mining industry still strong
– Construction demand slower in North America and
Western Europe, specifically for light equipment
 Operating profit up 30%, margin at 18.8% (16.9)
 Two new factories inaugurated
– Drilling consumables factory in Canada
– Road construction equipment factory in India
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Construction and Mining Technique
Organic* revenue growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
30
25
20
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
01 Q1
01 Q2
01 Q3
01 Q4
02 Q1
02 Q2
02 Q3
02 Q4
03 Q1
03 Q2
03 Q3
03 Q4
04 Q1
04 Q2
04 Q3
04 Q4
05 Q1
05 Q2
05 Q3
05 Q4
06 Q1
06 Q2
06 Q3
06 Q4
07 Q1
07 Q2
07 Q3
07 Q4
08 Q1
08 Q2
08 Q3
08 Q4
25
*Volume and price
17
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Industrial Technique
 4% organic order growth
– Growth in motor vehicle industry
– Strong aftermarket business
 Operating profit margin at 18.8% (22.5, adjusted for restructuring
costs)
– Margin affected negatively by sales mix and production disturbances
related to restructuring of pneumatic tools manufacturing
 Acquisition of US distributor
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Industrial Technique
Organic* revenue growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
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08 Q4
08 Q3
08 Q2
08 Q1
07 Q4
07 Q3
07 Q2
07 Q1
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
*Volume and price
19
25
Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Group Total
MSEK
July - September
2008
2007
Orders received
18 842
17 388
+8
58 135
50 243
+16
Revenues
18 440
16 431
+12
54 446
45 806
+19
Operating profit
3 640
3 127
+16
10 518
8 705
+21
- as a percentage of revenues
19.7
19.0
19.3
19.0
Profit before tax
- as a percentage of revenues
3 224
17.5
2 708
16.5
+19
9 604
17.6
8 400
18.3
+14
Profit from continuing operations
2 432
1 890
+29
7 087
6 040
+17
184
53
Profit from discontinued operations, net of tax
Profit for the period
2 432
1 890
7 271
6 093
Basic earnings per share, SEK
1.99
1.54
5.94
4.97
- of which continuing operations, SEK
1.99
1.54
5.79
4.93
1)
2)
Return on capital employed, %
21
%
January - September
2008
2007
%
1)
Excluding non-recurring w rite dow n of RSC notes.
2)
Including discontinued operations.
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31
Profit Bridge
July – September, 2008 vs 2007
MSEK
Q3 2008
Organic Grow th
Price/Volum e
Currency
One-tim e item s
Acq./Div.
Q3 2007
Atlas Copco Group
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Revenues
18 440
2 169
-215
55
16 431
EBIT
3 640
573
0
-60
3 127
%
19.7%
26%
-
-
19.0%
October 23, 2008, www.atlascopco.com
Profit Bridge – by Business Area
July – September, 2008 vs 2007
Q3 2008
MSEK
Organic Grow th
Currency
Price/Volum e
One-tim e item s
Q3 2007
Acq./Div.
Com pressor Technique
Revenues
9 028
769
-50
5
8 304
EBIT
1 921
190
10
-80
1 801
%
21.3%
25%
-
-
21.7%
Revenues
7 742
1 248
-175
35
6 634
EBIT
1 455
349
-15
2
1 119
%
18.8%
28%
-
6%
16.9%
1 788
117
10
15
1 646
337
-26
0
20
343
18.8%
-22%
-
-
20.8%
Construction & Mining Technique
Industrial Technique
Revenues
EBIT
%
One-time items in the previous year include a capital gain in Compressor Technique and restructuring costs in Industrial Technique, both affecting the one-time
items column reversely
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Balance Sheet
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MSEK
Sep 30, 2008
Dec 31, 2007
Sep 30, 2007
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
12 177
1 992
5 698
4 797
16 371
19 770
1 531
3 403
39
65 778
19%
3%
9%
7%
25%
30%
2%
5%
0%
11 665
1 906
4 894
4 245
12 725
16 627
1 124
3 473
11 578
1 920
4 629
4 793
11 962
16 141
1 131
4 020
Total equity
Interest-bearing liabilities
Non-interest-bearing liabilities
TOTAL EQUITY AND LIABILITIES
18 759
27 694
19 325
65 778
29%
42%
29%
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21%
3%
9%
7%
22%
29%
2%
6%
56 659
14 640
24 397
17 622
56 659
21%
3%
8%
9%
21%
29%
2%
7%
56 174
26%
43%
31%
13 054
25 403
17 717
56 174
23%
45%
32%
Capital Structure
Net Debt/EBITDA
2,5
2,0
1,8
1,5
1,6
1,0
0,5
0,9
0,6
0,8
1,4
1,3
1,4
1,4
0,8
0,0
-0,5
-1,1
-1,0
-1,1
-1,5
2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008
Q1
Q2
Q3
Q1
Q2
Q3
Q1
Q2
Q3
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Loan Maturity Profile
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Public Bonds
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Bank Loans
Cash Flow
Continuing operations
MSEK
Operational cash surplus after tax
of which depreciation added back
Change in working capital
Cash flows from operational activities
Investments in tangible fixed assets
Sale of tangible fixed assets
Other investments, net
Cash flow from investments
Operating cash flow
Company acquisitions/ divestments
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July - September
2008
2007
2 936
524
-772
2 164
-708
126
-528
-1 110
1 054
-45
2 576
445
-168
2 408
-635
165
-352
-822
1 586
-68
January - September
2008
2007
8 557
1 483
-3 103
5 454
-2 008
370
-1 466
-3 104
2 350
-223
7 312
1 302
-1 461
5 851
-1 707
532
-1 013
-2 188
3 663
-5 750
Contents
 Q3 Business Highlights
 Market Development
 Business Areas
 Financials
 Outlook
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Near-term Outlook
The overall demand for Atlas Copco’s products and services is
expected to decrease somewhat compared to the most recent
quarters. Demand from the mining industry is foreseen to decrease
from the current high level and construction in North America and
Western Europe will remain weak. The recent strong growth in
emerging markets is expected to moderate.
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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 major customer credit losses.”
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