October 21, 2005 Atlas Copco Group Q3 Results October 21, 2005.

October 21, 2005 www.atlascopco.com 1

Atlas Copco Group

Q3 Results

October 21, 2005


Contents

Q3 Business Highlights

Market Development

Business Areas

Financials

Outlook


Q3 - Highlights

Stronger than ever

Strengthened market positions– Demand remained strong

Record performance by all business areas– Double digit organic revenue growth in all business areas

– Operating profit and profit margins at all time highs

Several acquisitions in focused areas


Q3 - Figures in summary

Order received up 25%, up 15% in volume

Revenues reached MSEK 13 479 (11 325), up 19%

Operating profit at MSEK 2 562, a margin of 19.0% (17.3)

Profit after financial items up 33% to MSEK 2 470 (1 851)

Earnings per share increased to SEK 2.65 (2.13)

Operating cash flow at MSEK 1 671 (1 661)

ROCE at 26%


Contents


Market Development

Business Areas

Financials

Outlook


Orders received - Local currency

Group total +22% YTD, +21% last 3 months(Structural change +7% YTD, +3% last 3 months)

B CAA= Portion of Group sales last 12 months, %B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

September 2005

+24 +2037

+45 +215

+15 +1634

+32 +367

+22 +44

+24 +3613


Q3 - The Americas

Strong development in North America– Increased demand from manufacturing

and process industries

– Good demand for equipment and rental from construction industry

– Continued high activity in the mining industry

Continued positive development in South America


September 2005

+24 +2037

+45 +215


Q3 - Europe and Africa/Middle East

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


September 2005

+15 +1634

+32 +367


Q3 - Asia and Australia

Strong development in Asia– Accelerated growth in Japan, India,

South Korea and China

Investments in India to increase capacity

September 2005


+22 +44

+24 +3613


Volume Growth

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Change in orders received in % vs. same Quarter previous year


Group Total

Sales Bridge

July – September January – September

MSEK

Orders Received

Revenues Orders Received

Revenues

2004 reported 12 860 12 760 37 036 35 697 Discontinued operations -1 442 -1 435 -4 139 -4 097 2004 11 418 11 325 32 897 31 600 Structural change, % +3 +2 +8 +6 Currency, % +4 +4 0 0 Price, % +3 +3 +3 +3 Volume, % +15 +10 +11 +10 Total, % +25 +19 +22 +19 2005 14 257 13 479 40 085 37 709


Contents


Market Development

Business Areas

Financials

Outlook


Compressor Technique

Strong order intake in all regions and for all types of compressors and its aftermarket– Best development in North America, Eastern

Europe and Asia

Acquisitions within focused areas– Intermech – Compressed natural gas

Divestment of stationary generator business

Record revenues and operating profit– Operating profit more than 1 billion SEK and

highest operating margin ever


Compressor Technique

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Revenue volume growth: Change vs. same quarter previous year, %

Quarterly operating margin, %

Operating margins restated (IFRS) from 2004


Construction & Mining Technique

Continued strong demand from both mining construction

Order volume up 28% – 14th consecutive quarter with volume growth

– Very strong growth in Asia, North America and Eastern Europe

Product launches– Rigs for scaling, exploration drilling and silent

drilling

Record revenues and profits– Operating margin at all-time high 14.6%


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Construction & Mining Technique



Rental Service

Rental revenues increased 13% in USD– Price +8%, volume +5%

Fleet utilization at record level– Improved fleet quality with increased

investments in equipment

Profitability improved significantly– Increased rental volume and rental rates

combined with efficiency measures

– All-time high operating profit margin at 25.6%


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Rental revenue volume growth: Change vs. same quarter previous year, %

Quarterly operating margin, % (Business Area)

Rental Service

Rental Revenue Volume Development



Industrial Technique

Favorable sales growth in Asia and North America

Focus on sales and product development– Investment in sales engineers and

training activities

– New tools and aftermarket products

Agreement to acquire Fuji Air Tools

Record revenues and operating profit– Operating margin above 20%


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Contents


Market Development

Business Areas

Financials

Outlook


Income Statement

Jul. – Sept. Jan. – Sept. MSEK 2005 2004 % 2005 2004 %

Orders received 14 257 11 418 +25 40 085 32 897 +22 Revenues 13 479 11 325 +19 37 709 31 600 +19

Operating profit 2 562 1 962 +31 6 591 4 867 +35 – as a percentage of revenues 19.0 17.3 17.5 15.4

Profit after financial items 2 470 1 851 +33 6 263 4 584 +37 – as a percentage of revenues 18.3 16.3 16.6 14.5 Net profit from continuing operations 1 670 1 281 +30 4 298 3 202 +34 Net profit from discontinued operations - 64 - 177 Net profit 1 670 1 345 +24 4 298 3 379 +27 Earnings per share, SEK 2) 2.65 2.13 1) 6.81 5.35 1) Equity capital per share, SEK 2) 37 35 Return on capital employed, % 26 1) 1) Including discontinued operations. 2) Earnings per share and equity capital per share are adjusted for share split.


Balance Sheet

MSEK Sep 30 2005 Dec. 31 2004 Sep 30 2004 Property, plant and equipment Rental equipment 12 712 24% 9 154 19% 10 424 21% Other property, plant and equipment 4 266 8% 3 742 8% 3 789 8% Intangible assets 10 250 20% 8 559 18% 9 358 19% Other fixed assets 1 692 3% 1 825 4% 1 587 3% Inventories 7 137 14% 5 647 12% 5 896 12% Receivables 12 700 24% 10 687 22% 10 818 21% Short-term investments 325 1% 327 1% 356 1% Cash and cash equivalents 3 364 6% 2 386 5% 1 939 4% Assets held for sale - 0% 5 841 12% 6 150 12% Total assets 52 446 48 168 50 317 Total Equity 23 145 44% 22 601 47% 22 213 44% Interest-bearing loans and borrowings 11 303 22% 10 573 22% 12 589 25% Non-interest-bearing loans and borrowings 17 998 34% 12 782 27% 12 993 26% Liabilities held for sale - 0% 2 212 5% 2 522 5% Total shareholders’ equity and liabilities 52 446 48 168 50 317


Cash Flow

July - September January – September MSEK 2005 2004 2005 2004

Operating cash surplus after tax 2 796 2 381 7 276 5 713 of which depreciation added back 875 838 2 391 2 313 Change in working capital 362 403 287 296

Cash flow from operations 3 158 2 784 7 563 6 009 Investments in tangible fixed assets -2 174 -1 728 -5 674 -4 191 Sale of tangible fixed assets 635 588 1 824 1509 Other investments, net 52 17 -70 -30

Cash flow from investments -1 487 -1 123 -3 920 -2 712

Operating cash flow 1 671 1 661 3 643 3 297 Company acquisitions / divestments -150 -793 3 650 -2 524 Dividends paid -2 - -1 890 -1 575 Share redemption - - -4 192 - Unclaimed shares from bonus issue 1989 - 2 - 2 Change in interest-bearing liabilities -1 434 -923 -957 -1 060

Net cash flow 85 -53 254 -1 860


Capital Expenditures

in Tangible Fixed Assets

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Machinery & buildings, quarterly Net, Rental Equipment, quarterlyNet. Rental Eq.+Mach.& buildings, 12 months Net, Rental Equipment, 12 monthsNet. Rental Eq.+Mach.& buildings, quarterly

2005

MSEK

Quarterly 12 months

Net rental fleet investment = MSEK 3 220

20042002 20032001


Contents


Market Development

Business Areas

Financials

Outlook


Near-term Outlook

The demand for Atlas Copco’s products and services is expected to remain at a high level.

Demand from manufacturing and process industries is expected to stay favorable. Activity in the construction industry is expected to continue to increase somewhat. Demand from the mining industry is expected to remain strong.


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.”

October 21, 2005 Atlas Copco Group Q3 Results October 21, 2005.

Documents

Transcript of October 21, 2005 Atlas Copco Group Q3 Results October 21, 2005.