atlas copco q1/2011 results

Atlas Copco Group

Q1 Results

April 20, 2011

Q1 - highlights

Very strong order intake– Record orders received in all business areas

Record operating margin– All business areas improved

New business area structure as of July 1

April 20, 20112

Strengthen focus on specific product and customer segments

Capture more of the aftermarket potential

Increase sales and service synergies between construction related divisions

New business area structureWhy?

3April 20, 2011

Four business areasCompressor

TechniqueIndustrial Technique

Mining and Rock Excavation

Technique

Construction Technique

Industrial compressors Gas and process compressors Air and gas treatment Service

Industrial tools Assembly systems Service

Rock drilling equipment - underground and surface Loaders and trucks Mobile crushing Exploration drilling and ground engineering Rock drilling tools Service

Light construction equipment Road development equipment Portable compressors and generators Service

2010 figures pro-forma

• Revenues BSEK 30.0

• Operating margin ~25%

2010 figures reported

• Revenues BSEK 6.5

• Operating margin 19.5%

2010 figures pro-forma

• Revenues BSEK 22.5

• Operating margin ~22%

2010 figures pro-forma

• Revenues BSEK 11.2

• Operating margin ~10%

April 20, 20114

New business area presidentMining and Rock ExcavationTechnique

Bob Fassl

5April 20, 2011

Q1 - figures in summary

Orders received MSEK 21 675, 33% organic growth

Revenues of MSEK 18 223; 27% organic growth

Operating profit increased 52% to MSEK 3 987– Operating margin at 21.9% (17.2)

Profit before tax at MSEK 4 056 (2 497)– MSEK 151 capital gain related to sale of shares in Rental Service

Basic earnings per share SEK 2.48 (1.53)

Operating cash flow MSEK 2 026 (2 223)

April 20, 20116

Orders received - local currencyGroup total +36% YTDStructural change +3% YTD

March 2011

19 +50

A = Share of orders received, year-to-date, %

B = Year-to-date vs. previous year, %

10 +24

A B

29 +24

10 +26

25 +53

7 +23

7April 20, 2011

Q1 - the Americas

Strong growth in North America– Record quarter for the mining business

– Order intake for compressed air equipment and industrial tools remained strong

– Favorable demand development for construction equipment

Record orders received in South America– Strong demand from all customer segments

April 20, 20118

March 2011 A = Share of orders received, year-to-date, %

B = Year-to-date vs. previous year, %A B

19 +50

10 +24

Q1 - Europe and Africa/Middle East

April 20, 20119

Order growth in all parts of Europe– Strong growth in western and eastern Europe, moderate in

the south

– Orders received for all major types of equipment improved

– Solid growth in the aftermarket

Africa / Middle East remained strong– Strong demand in southern Africa, especially from mining

– Turmoil in northern Africa and the Middle East had a slight negative impact

March 2011 A = Share of orders received, year-to-date, %

B = Year-to-date vs. previous year, %A B

29 +24

10 +26

Q1 - Asia and Australia

Strong demand for all types of equipment in Asia– Record orders received

– Very strong order intake in China

– Great quarter in India

Record orders received in Australia– Continued strong demand in mining

April 20, 201110

March 2011 A = Share of orders received, year-to-date, %

B = Year-to-date vs. previous year, %A B

25 +53

7 +23

Organic* growth per quarter

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

April 20, 201111

Atlas Copco Group, continuing operations

*Volume and price

- 50

- 40

- 30

- 20

- 10

0

10

20

30

40

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

08 Q

108

Q2

08 Q

308

Q4

09 Q

109

Q2

09 Q

309

Q4

10 Q

110

Q2

10 Q

310

Q4

11 Q

111

Q2

11 Q

311

Q4

Organic growth, % Order cancellations, %

Atlas Copco Group – sales bridge

12April 20, 2011

January - March

Orders

MSEK Received Revenues

2010 17 267 15 301

Structural change, % +3 +2

Currency, % -10 -10

Price, % +2 +2

Volume, % +31 +25

Total, % +26 +19

2011 21 675 18 223

Compressor Technique

Strong demand and record order intake – 31% organic order growth vs. Q1 2010

– Strong order intake for stationary industrial compressors as well as for portable compressors and generators

– Improved sales for gas and process compressors

– Continued good development in the aftermarket business

Operating margin at 23.9% (20.6)– Supported by volume and price

Acquisition of cryogenic pump business

April 20, 201113

Compressor Technique

14April 20, 2011

*Volume and price

-25-20-15-10-5051015202530

- 25

- 20

- 15

- 10

- 5

0

5

10

15

20

25

30

06 Q1

06 Q2

06 Q3

06 Q4

07 Q1

07 Q2

07 Q3

07 Q4

08 Q1

08 Q2

08 Q3

08 Q4

09 Q1

09 Q2

09 Q3

09 Q4

10 Q1

10 Q2

10 Q3

10 Q4

11 Q1

11 Q2

11 Q3

11 Q4

Organic* revenue growth: Change vs. same quarter previous year, %

Quarterly operating margin, %

Construction and Mining Technique

Record order intake – 35% organic order growth– Very strong demand from the mining industry

– Further improvement for construction equipment

Record operating profit and margin– Operating margin at 20.6% (15.4), supported by higher production

volumes and price. Negative currency effect.

Several new products launched

April 20, 201115

Construction and Mining Technique

16April 20, 2011

*Volume and price

-40

-30

-20

-10

0

10

20

30

40

- 40

- 30

- 20

- 10

0

10

20

30

40

06 Q1

06 Q2

06 Q3

06 Q4

07 Q1

07 Q2

07 Q3

07 Q4

08 Q1

08 Q2

08 Q3

08 Q4

09 Q1

09 Q2

09 Q3

09 Q4

10 Q1

10 Q2

10 Q3

10 Q4

11 Q1

11 Q2

11 Q3

11 Q4

Organic* revenue growth: Change vs. same quarter previous year, %

Quarterly operating margin, %

Industrial Technique

Record orders received– 33% organic order growth vs. Q1 2010

– Good demand from all customer segments

– Strong development in the Americas, Europe and Asia

Operating profit increased 65%– Operating margin at 22.7% (16.4)

– Positively affected by increased higher volumes and price

April 20, 201117

Industrial Technique

18April 20, 2011

*Volume and price

-50

-40

-30

-20

-10

0

10

20

30

40

- 50

- 40

- 30

- 20

- 10

0

10

20

30

40

06 Q1

06 Q2

06 Q3

06 Q4

07 Q1

07 Q2

07 Q3

07 Q4

08 Q1

08 Q2

08 Q3

08 Q4

09 Q1

09 Q2

09 Q3

09 Q4

10 Q1

10 Q2

10 Q3

10 Q4

11 Q1

11 Q2

11 Q3

11 Q4

Organic* revenue growth: Change vs. same quarter previous year, %

Quarterly operating margin, %

Group total

19April 20, 2011

MSEK 2011 2010 %

Orders received 21 675 17 267 +26

Revenues 18 223 15 301 +19

Operating profit 3 987 2 627 +52

- as a percentage of revenues 21.9 17.2

Profit before tax 4 056 2 497 +62

- as a percentage of revenues 22.3 16.3

Profit for the period 3 033 1 855 +64

Basic earnings per share, SEK 2.48 1.53

Return on capital employed, % 32 19

January - March

Organic Growth One-time items

MSEK Price/Volume Acq./Div.

Atlas Copco Group

Revenues 18 223 4 022 -1 475 375 15 301

EBIT 3 987 1 860 -545 45 2 627

% 21.9% 46% - - 17.2%

Q1 2011 Currency Q1 2010

Profit bridgeJanuary – March, 2011 vs 2010

20April 20, 2011

Organic Growth One-time items

MSEK Price/Volume Acq./Div.

Compressor Technique

Revenues 8 405 1 241 -745 250 7 659

EBIT 2 006 649 -240 20 1 577

% 23.9% 52% - - 20.6%

Construction & Mining Technique

Revenues 8 163 2 420 -565 75 6 233

EBIT 1 681 1 036 -315 0 960

% 20.6% 43% - - 15.4%

Industrial Technique

Revenues 1 768 405 -170 50 1 483

EBIT 401 183 -50 25 243

% 22.7% 45% - - 16.4%

Q1 2011 Currency Q1 2010

Profit bridge – by business areaJanuary – March, 2011 vs 2010

21April 20, 2011

Balance sheet

22April 20, 2011

MSEK Mar 31, 2011 Dec 31, 2010 Mar 31, 2010

Intangible assets 13 154 18% 13 464 19% 13 607 20%

Rental equipment 1 774 2% 1 843 3% 1 981 3%

Other property, plant and equipment 5 555 8% 5 702 8% 5 974 9%

Other non-current assets 4 080 6% 4 123 6% 5 681 8%

Inventories 13 969 19% 12 939 18% 11 632 17%

Receivables 17 586 24% 17 474 24% 15 896 23%

Current financial assets 1 369 2% 1 734 2% 1 632 2%

Cash and cash equivalents 14 412 20% 14 264 20% 11 958 17%

Assets classified as held for sale 59 0% 79 0% 64 0%

TOTAL ASSETS 71 958 71 622 68 425

Total equity 29 730 41% 29 321 41% 26 384 39%

Interest-bearing liabilities 21 003 29% 21 692 30% 24 612 36%

Non-interest-bearing liabilities 21 225 29% 20 609 29% 17 429 25%

TOTAL EQUITY AND LIABILITIES 71 958 71 622 68 425

Capital structure

23

Net Debt*/EBITDA

* Net Debt adjusted for the fair value of interest rate swaps

April 20, 2011

Cash flow

24April 20, 2011

January - MarchMSEK 2011 2010

Operating cash surplus after tax 4 447 2 449 of which depreciation added back 586 574Change in working capital -2 350 275Increase in rental equipment, net -126 -63 Cash flows from operating activities 1 971 2 661Investments of property, plant & eq. -301 -177Sale of property, plant & eq. 16 12Other investments, net 340 -273Cash flow from investments 55 -438 Operating cash flow 2 026 2 223Company acquisitions/ divestments -813 -1 361

Near-term outlook

The overall demand for the Group’s products and services is expected to increase somewhat. The demand in the emerging markets as well as from the mining industry is expected to stay strong. Most other markets, except southern Europe and northern Africa, are expected to continue to develop positively.

25April 20, 2011

Committed tosustainable productivity.

26April 20, 2011

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 and adversely affected by other factors such as the effect of economic conditions, exchange-rate and interest-rate movements, political risks, the impact of competing products and their pricing, product development, commercialization and technological difficulties, supply disturbances, and major customer credit losses.”

28April 20, 2011