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1October 24, 2007, www.atlascopco.com
Atlas Copco Group
Q3 Results
October 24, 2007
2October 24, 2007, www.atlascopco.com
Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
3October 24, 2007, www.atlascopco.com
Q3 - Highlights
Strong order and revenue growth continue– Solid market conditions
– Excellent growth in BRIC countries
– Organic order growth 15%
Both capital equipment and aftermarket sales show strength
All-time high operating profit
Strong cash flow generation
Acquisition of Mafi-Trench expands offer to oil and gas industry
4October 24, 2007, www.atlascopco.com
Q3 - Figures in summary
Revenues up 31% to MSEK 16 431– 19% organic growth
Operating profit up 36% to MSEK 3 127– Operating margin at record 19.0% (18.4)
Profit before tax at MSEK 2 708 (2 081)
Profit from continuing operations up 28% to MSEK 1 890– Earnings per share continuing operations SEK 1.54 (1.17)
Operating cash flow, continuing operations, MSEK 1 586 (916)
5October 24, 2007, www.atlascopco.com
Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
6October 24, 2007, www.atlascopco.com
Orders received - Local currencyGroup total +27% YTD, +29% last 3 months(Structural change +9% YTD, +14% last 3 months)
September 2007
7 +46 +53
10 +39 +33
19 +33 +40
5 +28 +38
40 +25 +21
19 +20 +26
A B CA = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
7October 24, 2007, www.atlascopco.com
Q3 - The Americas
Solid growth in North America– Good demand from most customer
segments within mining, process, and manufacturing industries
– Weaker demand from the motor vehicle industry and parts of the construction market
Continued good demand from all customer segments in South America– Strong growth in Brazil
September 2007 A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
A B C
7 +46 +53
19 +20 +26
8October 24, 2007, www.atlascopco.com
Q3 - Europe and Africa/Middle East
Robust demand in Europe– Good development within the manufacturing
and process segments
– Demand from construction industry softened in some markets
– Best growth found in Eastern Europe and the Nordic region
Positive development in the Africa / Middle East region
September 2007
A B CA = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
10 +39 +33
40 +25 +21
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Q3 - Asia and Australia
Asia continues to deliver– Strong demand for all types of equipment in
most parts of the region
– China and India recorded even higher growth than in recent quarters
High demand from most customer segments in Australia
September 2007 A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
A B C
19 +33 +40
5 +28 +38
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Organic* Growth per Quarter
Change in orders received in % vs. same Quarter previous year
Atlas Copco Group, continuing operations
-10
-5
0
5
10
15
20
25
30
00 Q
100
Q2
00 Q
300
Q4
01 Q
101
Q2
01 Q
301
Q4
02 Q
102
Q2
02 Q
302
Q4
03 Q
103
Q2
03 Q
303
Q4
04 Q
104
Q2
04 Q
304
Q4
05 Q
105
Q2
05 Q
305
Q4
06 Q
106
Q2
06 Q
306
Q4
07 Q
107
Q2
07 Q
307
Q4
*Volume and price
11October 24, 2007, www.atlascopco.com
Atlas Copco Group – Sales Bridge
Orders Revenues Orders RevenuesMSEK Received Received2006 13 847 12 538 41 108 36 930Structural change, % +14 +15 +9 +10Currency, % -3 -3 -5 -5Price, % +3 +3 +2 +2
Volume, % +12 +16 +16 +17Total, % +26 +31 +22 +242007 17 388 16 431 50 243 45 806
July - September January - September
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Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
13October 24, 2007, www.atlascopco.com
Atlas Copco GroupOperating Profit and Return On Capital Employed (ROCE) by Business Area
*including discontinued operations
Revenues Operating Operating ROCEMSEK profit margin12 month values, period ending Sep. 2007 Sep. 2007 Sep. 2007 Sep. 2007Compressor Technique 30 168 6 274 20.8% 65%Construction and Mining Technique 23 079 3 994 17.3% 33%Industrial Technique 6 593 1 461 22.2% 58%Eliminations/Common Group Functions -452 -560Atlas Copco Group 59 388 11 169 18.8% 31%*
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Compressor Technique
Continued strong development for all product areas– Organic order growth 11% vs very strong previous year
– All regions showed good growth
Record operating profit at MSEK 1 801– Includes MSEK 78 gain from sale of rental assets in Australia
– Underlying margin very strong considering currency and acquisition effects
Acquisition of Mafi-Trench finalized on August 1
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Compressor Technique
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Organic* revenue growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
Quarterly operating margins include Prime Energy from Q1 2006.*Volume and price
16October 24, 2007, www.atlascopco.com
Continued strong demand, particularly from mining industry
Organic order growth 21%– 22nd consecutive quarter with volume growth
Operating profit up 50%, margin at 16.9%– 19% margin for comparable units
Low Dynapac margin due to seasonal variances as well as production disturbances
Construction and Mining Technique
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Dynapac
Market development and order growth is good and in line with expectations
Production disturbances primarily related to Germany and one business line– New product allocation between factories
– Move from station-based assembly to line-assembly
– Introduction of revamped paver-line
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Organic* revenue growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
Construction and Mining Technique
*Volume and price
19October 24, 2007, www.atlascopco.com
Industrial Technique
Continued very strong development in general industry and resumed order growth in the motor vehicle industry
13% organic order growth in total
Operating profit up 10%, margin at 20.8%– Negatively affected by restructuring costs
Suggested move of assembly operations from UK to Hungary
New advanced battery tool introduced
20October 24, 2007, www.atlascopco.com
Industrial Technique
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Organic* revenue growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
*Volume and price
21October 24, 2007, www.atlascopco.com
Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
22October 24, 2007, www.atlascopco.com
Group Total
MSEK 2007 2006 % 2007 2006 %Orders received 17 388 13 847 +26 50 243 41 108 +22
Revenues 16 431 12 538 +31 45 806 36 930 +24
Operating profit 3 127 2 306 +36 8 705 6 739 +29
- as a percentage of revenues 19.0 18.4 19.0 18.2
Profit before tax 2 708 2 081 +30 8 400 6 313 +33
- as a percentage of revenues 16.5 16.6 18.3 17.1
Profit from continuing operations 1 890 1 475 +28 6 040 4 493 +34
Profit from discontinued operations, net of tax - 642 53 1 708
Profit for the period 1 890 2 117 6 093 6 201
July - September January - September
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Balance Sheet
MSEK Sep 30, 2007 Dec 31, 2006 Sep 30, 2006
Intangible assets 11 578 21% 4 299 8% 4 240 7%
Rental equipment 1 920 3% 1 979 4% 2 072 3%
Other property, plant and equipment 4 629 8% 3 777 7% 3 722 6%
Other fixed assets 4 793 9% 3 161 6% 2 050 3%
Inventories 11 962 21% 8 487 15% 8 522 14%
Receivables 16 141 29% 12 401 22% 12 573 21%
Current financial assets 1 131 2% 1 016 2% 597 1%
Cash and cash equivalents 4 020 7% 20 135 36% 2 616 4%
Assets classified as held for sale 24 107 40%
TOTAL ASSETS 56 174 55 255 60 499
Total equity 13 054 23% 32 708 59% 28 449 47%
Interest-bearing liabilities 25 403 45% 8 787 16% 11 197 19%
Non-interest-bearing liabilities 17 717 32% 13 760 25% 13 447 22%
Liabilities associated with assets classified as held for sale 7 406 12%
TOTAL EQUITY AND LIABILITIES 56 174 55 255 60 499
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1,9
1,6
2,7
2,21,9
1,5
1,10,8 0,9
-1,1
1,6
-1,5
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
3,0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Q3
Capital Structure Net Debt/EBITDA
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Cash FlowContinuing operations
MSEK 2007 2006* 2007 2006*
Operating cash surplus after tax 2 576 2 012 7 312 6 420 of which depreciation added back 445 379 1 302 1 196Change in working capital -168 -315 -1 461 -1 582 Cash flows from operating activities 2 408 1 697 5 851 4 838Investments in tangible fixed assets -635 -509 -1 707 -1 625Sale of tangible fixed assets 165 170 532 423Other investments, net -352 -442 -1 013 -1 045Cash flow from investments -822 -781 -2 188 -2 247 Operating cash flow 1 586 916 3 663 2 591Company acquisitions/ divestments -68 -637 -5 750 -1 050
*Restated, continuing operations
July - September January - September
26October 24, 2007, www.atlascopco.com
Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
27October 24, 2007, www.atlascopco.com
Near-term Outlook
The demand for Atlas Copco’s products and services from most customer segments and regions is expected to remain at the current high level.
The positive outlook includes the main part of the construction segment, while construction related to housing is expected to slow down, primarily in North America.
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29October 24, 2007, www.atlascopco.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 major customer credit losses.”