atlas copco group

1February 2, 2009, www.atlascopco.com

Atlas Copco Group

Q4 Results

February 2, 2009


Contents

Q4 Business Highlights

Market Development

Business Areas

Financials

2008 Summary

Outlook


Q4 - Highlights

Declining demand from most customer segments– Sharpest drop and order cancellations within the mining business

Continued growth of the aftermarket business

Measures taken in all three business areas to reduce capacity and costs

Unchanged dividend proposed


Q4 - Figures in summary

-19% organic order intake, -27% including cancellations

Revenues of MSEK 19 731; 3% organic growth

Operating profit at MSEK 3 288 (3 361)– Including redundancy costs of MSEK 258

– MSEK 350 in positive currency effect compared to last year

– Adjusted for non-recurring items, operating margin at 18.0% (19.3)

Profit before tax at MSEK 3 508 (2 134)– Including capital gains of MSEK 939 (tax-free) and MSEK 33

Earnings per share for continuing operations SEK 2.39 (1.12)

Operating cash flow MSEK 2 401 (926)


Contents


Market Development

Business Areas

Financials

2008 Summary

Outlook


Orders received - Local currencyGroup total +7% YTD, -27% last 3 months

(Structural change +5% YTD, 0% last 3 months)

December 2008 A = Portion of sales, Year-to-date, %

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

18 0 -36

39 +1 -30

12 +29 -4

18 +3 -26

5 +9 -228 +23 -15

A B CA = Portion of sales, Year-to-date, %


C = Last 3 months vs. prev. year, %

(-19% organically)


Q4 - The Americas

Demand declined in North America– The construction and automotive industries

remained weak

– Low demand and order cancellations from the mining industry

– Relatively stable demand for compressors

Drop in demand from most mining customers in South America, other segments holding up better

December 2008

A B C

8 +23 -15

18 0 -36

A = Portion of sales, Year-to-date, %




Q4 - Europe and Africa/Middle East

Weak Europe– Continued low activity in the construction

segment

– Deteriorating demand from many manufacturing industries

– Mining segment in Eastern Europe weak

Demand declined also in Africa / Middle East but to a lesser extent.

December 2008

A B C

39 +1 -30

12 +29 -4

A = Portion of sales, Year-to-date, %




Q4 - Asia and Australia

Substantial slowdown in Asia – Weaker demand from most customer

segments in the major countries

– Good development of the aftermarket business

– Good quarter in Japan

Weaker demand in Australia– Mining segment relatively better than

in other regions

December 2008 A = Portion of sales, Year-to-date, %


C = Last 3 months vs. prev. year, %A B C

18 +3 -26

5 +9 -22


Organic* Growth per Quarter

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

Atlas Copco Group, continuing operations

-30

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*Volume and price

Order cancellations


Atlas Copco

14%

21%

0%

10%

20%

30%

2004 2005 2006 2007 2008Organic growth, % Structural changes, %

CAGR, 2004 - 2008, organic growth CAGR, 2004 - 2008, total excl. currency

Growth – Orders receivedContinuing operations (excl. Professional Electric Tools and Rental Service)


Atlas Copco Group – Sales Bridge

October - December January - DecemberOrders Revenues Orders Revenues

MSEK Received Received

2007 18 816 17 549 69 059 63 355Structural change, % 0 0 +5 +5Currency, % +9 +9 0 0Price, % +3 +3 +3 +3Cancellations, % -8 - - -Volume, % -22 0 -1 +9Total, % -18 +12 +7 +172008 15 437 19 731 73 572 74 177


Contents


Market Development

Business Areas

Financials

2008 Summary

Outlook


Revenues Operating Operating ROCEMSEK profit margin12 month values, period ending Dec. 2008 Dec. 2008 Dec. 2008 Dec. 2008

Compressor Technique 35 587 7 291 20.5% 57%Construction and Mining Technique 31 660 5 602 17.7% 29%Industrial Technique 7 450 1 328 17.8% 43%Eliminations/Common Group Functions -520 -415Atlas Copco Group 74 177 13 806 18.6% 34%

Atlas Copco GroupOperating Profit and Return On Capital Employed (ROCE) by Business Area


Compressor Technique


15% organic order decline– Lower demand in most customer segments and regions

– Good aftermarket sales

Sustained high operating margin– 21.4% adjusted for MSEK 93 in

Acquisition of Aggreko’s European

redundancy costs

compressor rental business



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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


Sharp decline in order intake– Organic order decline of 27% and -16% from

cancellations, mainly from mining customers

– Good growth for aftermarket products

Operating profit up 4%, including MSEK 100 in redundancy costs– Comparable operating margin unchanged at 17.2%,

supported by currency

Construction and Mining Technique


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Construction and Mining Technique

*Volume and price


Industrial Technique

20% organic order decline– Both general and motor vehicle industry down

– Service business still growing

Adjusted operating profit margin at 16.0%, excluding redundancy costs of MSEK 59– Previous year at 23.1% adjusted for restructuring costs

– Margin negatively affected by sales mix, production disturbances related to restructuring of pneumatic tools manufacturing, currency and under-absorption of fixed costs



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*Volume and price


Contents


Market Development

Business Areas

Financials

2008 Summary

Outlook


Group Total

October - December January - DecemberMSEK 2008 2007 % 2008 2007 %

Orders received 15 437 18 816 -18 73 572 69 059 +7

Revenues 19 731 17 549 +12 74 177 63 355 +17

Operating profit 3 288 3 361 -2 13 806 12 066 +14

- as a percentage of revenues 16.7* 19.2* 18.6 19.0

Profit before tax 3 508 2 134 +64 13 112 10 534 +24

- as a percentage of revenues 17.8 12.2 17.7 16.6

Profit from continuing operations 2 919 1 376 +112 10 006 7 416 +35

Profit from discontinued operations, net of tax - - 184 53

Profit for the period 2 919 1 376 10 190 7 469

Basic earnings per share, SEK 2.39 1.12 8.33 6.09

- of which continuing operations, SEK 2.39 1.12 8.18 6.05

Return on capital employed, % 34 29

* Adjusted operating margins 18.0% in 2008 and 19.3% in 2007


Profit BridgeOctober – December, 2008 vs 2007

Organic Growth One-time items

MSEK Price/Volume Acq./Div.

Atlas Copco Group

Revenues 19 731 457 1 620 105 17 549

EBIT 3 288 -203 350 -220 3 361

% 16.7% -44% - - 19.2%

Q4 2008 Currency Q4 2007

One-time items include redundancy costs as well as reversal of previous year’s one-time items.


Profit Bridge – by Business AreaOctober – December, 2008 vs 2007

One-time items include redundancy costs in all three business areas as well as reversal of previous year’s one-time items.

Q4 2008 Organic Growth Currency One-time items Q4 2007

MSEK Price/Volume Acq./Div.


Revenues 9 866 270 900 20 8 676

EBIT 2 016 45 205 -120 1 886

% 20.4% 17% - - 21.7%

Construction & Mining Technique

Revenues 8 007 346 505 35 7 121

EBIT 1 280 -93 240 -95 1 228

% 16.0% -27% - - 17.2%


Revenues 2 001 -189 215 55 1 920

EBIT 261 -140 20 -45 426

% 13.0% - - - 22.2%


Balance Sheet

The large increase in total assets is partly explained by currency translation effects that have had an impact of MSEK 4 000 since September and MSEK 5 400 since December 2007

MSEK Dec 31, 2008 Sep 30, 2008 Dec 31, 2007

Intangible assets 12 916 17% 12 177 19% 11 665 21%

Rental equipment 2 282 3% 1 992 3% 1 906 3%

Other property, plant and equipment 6 353 8% 5 698 9% 4 894 9%

Other fixed assets 7 977 11% 4 797 7% 4 245 7%

Inventories 17 106 23% 16 371 25% 12 725 22%

Receivables 21 603 29% 19 770 30% 16 627 29%

Current financial assets 1 659 2% 1 531 2% 1 124 2%

Cash and cash equivalents 5 455 7% 3 403 5% 3 473 6%

Assets classified as held for sale 43 0% 39 0%

TOTAL ASSETS 75 394 65 778 56 659

Total equity 23 768 32% 18 759 29% 14 640 26%

Interest-bearing liabilities 30 404 40% 27 694 42% 24 397 43%

Non-interest-bearing liabilities 21 222 28% 19 325 29% 17 622 31%

TOTAL EQUITY AND LIABILITIES 75 394 65 778 56 659


0,90,6

0,8 0,8

-1,1 -1,1

1,91,6

1,41,2

1,4 1,4 1,4

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2005 2006Q1

2006Q2

2006Q3

2006 2007Q1

2007Q2

2007Q3

2007 2008Q1

2008Q2

2008Q3

2008

Capital Structure Net Debt*/EBITDA

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


0

1000

2000

3000

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9000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Public Bonds Bank Loans

Atlas Copco AB’s Loan Maturity Profile


Cash FlowContinuing operations

October- December January - DecemberMSEK 2008 2007 2008 2007

Operational cash surplus after tax 3 300 2 693 11 857 10 005 of which depreciation added back 597 498 2 080 1 800Change in working capital 112 -865 -2 991 -2 326 Cash flows from operational activities 3 412 1 828 8 866 7 679Investments in tangible fixed assets -891 -652 -2 899 -2 359Sale of tangible fixed assets 145 180 515 712Other investments, net -265 -430 -1 731 -1 443Cash flow from investments -1 011 -902 -4 115 -3 090 Operating cash flow 2 401 926 4 751 4 589Company acquisitions/ divestments -55 32 -278 -5 718


2,00 1,92 2,33 2,44 2,32 2,613,71

6,09

8,33

0,79 0,88 0,92 0,96 1,25 1,502,13 2,38

3,00 3,00

5,22

12,24

0,72

22,38

4,84

0

5

10

15

20

25

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*

Earnings pershare

Dividend pershare

Dividend +redemptionof share

Atlas Copco GroupEarnings per Share, Dividend and Redemption

* Proposed by the Board of Directors


Contents


Market Development

Business Areas

Financials

2008 Summary

Outlook


0

10 000

20 000

30 000

40 000

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2004 2005 2006 2007 20080

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Revenues, MSEK Operating margin, %

MSEK %

Revenues and operating margin

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2004 2005 2006 2007 2008

Operating profit, MSEK

MSEK %

2004 pro forma, excluding divested businesses

2008 - Figures in summary


2008 - Figures in summary

Strong demand from most customer segments and high growth in all regions until September, partly offset by a weak fourth quarter

Order intake up 7%, 2% organic growth

Revenues up 17% to 74 177, 12% organic growth

Operating profit up 14% to MSEK 13 806, a margin of 18.6% (19.0)

Profit before tax at MSEK 13 112 (10 534)

Proposed dividend for 2008, at SEK 3.00 (3.00) per share


Contents


Market Development

Business Areas

Financials

2008 Summary

Outlook


Near-term Outlook

The current economic situation makes the outlook very uncertain but demand is expected to remain very weak in most industries and regions.


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 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.”

atlas copco group

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