Atlas Copco Group Q3 Results October 23, 2001. Page 2 October 23, 2001 Contents Market Development ...

Atlas Copco Group

Q3 ResultsOctober 23, 2001

October 23, 2001 www.atlascopco-group.com

Contents

Market Development Business Areas Financials Outlook


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


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


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


-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


-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


+130

+54


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


+32

-39

Q3 - Asia and Australia

Weakening demand in Asia Continued growth in China Weak development in

Southeast Asia and Japan


September 2001


Contents



-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, %


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


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


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


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


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*


Contents



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


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


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


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


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


Contents



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.


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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.”


Contents

Market Development Business Areas Financials Outlook Additional Information


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


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



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


0

10000

20000

30000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 01120

1000

2000

3000

Revenues, 12 month values EBIT





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


-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





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


0

3000

6000

9000

12000

15000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 01120

300

600

900

1200




Rental Service

* EBIT in Q3 2000 includes MSEK 127 and EBIT in Q1 2001 includes MSEK 60 of non-recurring cost.


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


0

4000

8000

12000

16000

20000

9612 9712 9812 9912 0012 01120

400

800

1200

1600


Rental Service


Group Total


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


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


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


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


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


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


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


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


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Atlas Copco Group Q3 Results October 23, 2001. Page 2 October 23, 2001 Contents Market Development ...

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