atlas copco group q2 results july 18, 2002. page 2 july 18, contents q2 highlights market...

Atlas Copco Group

Q2 ResultsJuly 18, 2002

July 18, 2002 www.atlascopco-group.com

Contents

Q2 Highlights Market Development Business Areas Financials Outlook


Q2 Highlights

Order volumes stabilized North America still weak Europe better than anticipated China continued strong Order volumes down 1% overall (-7% in Q1)

Profit after financial items MSEK 1,074 (1,310) Operating margin 10.8% (13.1) Low volume and lower rental rates in Rental Service

primary reason for margin drop Negative currency effect


Q2 Highlights (cont.)

Strong operating cash flow of MSEK 1,029 Relocation of assembly operations in Atlas

Copco Electric Tools Launch of Milwaukee brand in Europe Building presence in China and Russia

Liutech acquisition finalized Organic growth in Russia


Contents



-450

-304

+32

+230

+215

+199

Orders received, Q2 2002 vs. Q2 2001

Change in Local Currency

Portion of Group Sales, %

Change in %, Q2 2002 vs. Q2 2001

June 2002


-450

-304


Change in %, Q2 2002 vs. Q2 2001

June 2002

Q2 - The Americas

Demand below previous year Low activity in non-residential building

and manufacturing industry affecting the rental business

Low capacity utilization affected demand for investment related goods

Slightly improved demand for production-related equipment and tools

Negative development continued in most South American markets


+230

+215

June 2002


Change in %, Q2 2002 vs. Q2 2001

Q2 - Europe and Africa/Middle East

Stable Europe Low capacity utilization affected

demand Demand from construction industry

unchanged Nordic and Eastern Europe positive,

France and U.K. negative, Germany mixed

Africa/Middle East Large projects enhance continued

growth in region


+32

+199

June 2002


Change in %, Q2 2002 vs. Q2 2001

Q2 - Asia and Australia

Overall good demand in Asia Strong demand in China continued Most industry segments improved,

while electronics industry remained weak

Weak development in Japan Good development in Australia


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

Volume Growth per Quarter

-10

-5

0

5

10

15

20


Group Total

MSEK April - June Change January - June Change2002 2001 % 2002 2001 %

Orders Received 12,641 13,200 -4 24,699 25,688 -4 - volume -1 -4 - currency -4 0Revenues 12,105 12,880 -6 23,740 24,981 -5 - volume -2 -5 - currency -4 0


Contents



-20

-15

-10

-5

0

5

10

15

20

25

CompressorTechnique

Volume Growth Compressor Technique

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


Compressor Technique

Orders received up 1% Standard industrial compressors enjoy

good demand. Mixed demand for large industrial and

portable compressors China still strong and European market

better than expected Liutech acquisition finalized Operating margin 19.1%


Volume Growth Rental Service


-20

-15

-10

-5

0

5

10

15

20

25

Rental Service


Rental Service

Weak market Non-residential building and

maintenance activities in industrial segment remain weak

Rental rates below previous year Rental revenues decline 5% in volume

Actions Capital efficiency measures - reduced

rental fleet but more fleet available Rationalization of support functions

Strong cash generation


Volume Growth Industrial Technique


-20

-15

-10

-5

0

5

10

15

20

25

IndustrialTechnique


Industrial Technique

Demand for fastening tools from motor vehicle industry continued to be weak

Improved demand for professional electric tools in North America

Plan to relocate some assembly operations from Germany to Czech Republic

Change in mix and lower volume affected profit margin


Volume Growth Construction & Mining Technique


-20

-15

-10

-5

0

5

10

15

20

25

Construction &Mining Technique


Construction & Mining Technique

Orders up 3% Drilling equipment for surface and

underground construction saw increased demand

Orders from mining industry flat After-market business improved further

Krupp and MAI acquisitions finalized Annual sales approx. MSEK 670

Operating profit 10.4%


Contents



Income Statement

MSEK 3 months ended 6 months endedJune 30

2002June 30

2001June 30

2002June 30

2001Revenues 12,105 12,880 23,740 24,981Operating expenses -10,801 -11,188 -21,270 -21,826Operating profit* 1,304 1,692 2,470 3,155As a percentage of revenues 10.8 13.1 10.4 12.6

Financial income and expenses -230 -382 -484 -796Profit after financial items* 1,074 1,310 1,986 2,359As a percentage of revenues 8.9 10.2 8.4 9.4

*Items affecting comparability +93 +192 -60

Taxes -379 -464 -693 -828Minority interest -21 -10 -32 -19Net profit 674 836 1,261 1,512

Earnings per share, SEK 3.22 3.99 6.02 7.22


Balance Sheet June 30, 2002

MSEK June 30,2002

% Dec 31,2001

% June 30,2001

%

Intangible fixed assets 19,951 34 22,600 35 23,354 34Rental equipment 12,634 22 14,935 23 16,594 24Other fixed assets 7,002 12 7,887 12 7,798 11Inventories 6,249 11 5,987 9 6,658 10Receivables 11,105 19 11,605 18 12,352 18Cash and bank 1,300 2 1,343 2 2,470 3Total assets 58,241 64,357 69,226

Equity 25,338 44 27,568 43 26,423 38Minority interest 208 0 221 0 247 0Interest-bearing liabilities 18,484 32 21,421 33 25,670 37Non-interest-bearing liabilities 14,211 24 15,147 24 16,886 25Total liabilities and equity 58,241 64,357 69,226


Cash Flow

April - June January – JuneMSEK 2002 2001 2002 2001Operating cash surplus after tax 1,605 1,762 3,158 3,454Of which depreciation added back 1,012 1,119 2,069 2,178Change in working capital -19 84 649 -51 Cash flow from operations 1,586 1,846 3,807 3,403Investments in tangible fixed assets -882 -1,064 -2,056 -1,831Sale of tangible fixed assets 446 546 948 1,006Other investments, net -121 -48 -147 -100Cash flow from investments -557 -566 -1,255 -925 Operating cash flow 1,029 1,280 2,552 2,478Company acquisitions / divestments -696 -63 -701 -135Dividend paid -1,159 -1,121 -1,163 -1,122 Net cash flow -826 96 688 1,221


Capital Expenditures in Tangible Fixed Assets

345426 470

649

382 377

927

756

265

2372

1636

606

333 338261

724

501625

-500

0

500

1000

1500

2000

2500

-1000

0

1000

2000

3000

4000

5000

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

1998 1999 2000 2001 2002

MSEKQuarterly 12 months

Net rental fleet investment = MSEK 819


Contents



Near-term Outlook

Overall, the demand for Atlas Copco’s products and services is expected to remain at the present level. Investment in the two main regions, North America and Europe, is not expected to increase, while recent increases in manufacturing output in the United States are likely to support ongoing modest growth in demand for production-related equipment and tools in that market.Demand for rental equipment in the United States is expected to remain unchanged in the next quarter. Demand in Asia is expected to continue to develop favorably.


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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

Q2 Highlights Market Development Business Areas Financials Outlook Additional Information


Orders received, Jan. - June. 2002Group Total MSEK 24,699 -4

12 months, Portion of Group Sales, %

Change 2002 / 2001, %

-750

-224

+112

-130

+55

+89


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 April - June Change January – June Change2002 2001 % 2002 2001 %

Orders Received 4,301 4,260 +1 8,543 8,476 +1Revenues 4,039 4,189 -4 7,824 8,117 -4EBIT 771 831 -7 1,428 1,569 -9- margin, % 19.1 19.8 18.3 19.3ROCE, %12 month value

67 67


0

10000

20000

30000

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

1000

2000

3000

Revenues, 12 month values EBIT



Rental Service


Revenues 3,357 3,940 -15 6,754 7,599 -11EBIT 169 430 -61 290 758 -62- margin, % 5.0 10.9 4.3 10.0ROCE, %12 month value

3 5


0

4000

8000

12000

16000

20000

9612 9712 9812 9912 0012 01120

400

800

1200

1600

2000Revenues, 12 month values EBIT

Rental Service



MSEK April – June Change January - June Change2002 2001 % 2002 2001 %

Orders Received 2,935 3,115 -6 5,802 6,084 -5Revenues 2,827 3,054 -7 5,650 5,892 -4EBIT 188 303 -38 436 580 -25- margin, % 6.7 9.9 7.7 9.8ROCE, %12 month value

12 15


0

3000

6000

9000

12000

15000

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

300

600

900

1200






Orders Received 2,041 1,986 +3 3,834 3,780 +1Revenues 1,952 1,828 +7 3,736 3,656 +2EBIT 203 182 +12 389 367 +6- margin, % 10.4 10.0 10.4 10.0ROCE, %12 month value

23 22


-3000

0

3000

6000

9000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112-300

0

300

600




Group Total

MSEK April - June Change January – June Change2002 2001 % 2002 2001 %

Orders Received 12,641 13,200 -4 24,699 25,688 -4Revenues 12,105 12,880 -6 23,740 24,981 -5EBIT 1,304 1,692 -23 2,470 3,155 -22- margin, % 10.8 13.1 10.4 12.6Profit after financialitems (PAFI)

1,074 1,310 -18 1,986 2,359 -16

- margin, % 8.9 10.2 8.4 9.4


Items Affecting Comparability

MSEK Q2 2002 Q1 2002 Q4 2001 Q1 2001Rental Service Adjustment of fleet depreciation +45 +45 Restructuring of operations/stores -100 -60Industrial Technique Restructuring cost AET/Milwaukee -48 -100Group (CT, IT and CMT) New accounting standard +96 +54Group Total +93 +99 -200 -60


Group Totalexcl. items affecting comparability MSEK April - June Change January – June Change

2002 2001 % 2002 2001 %Orders Received 12,641 13,200 -4 24,699 25,688 -4Revenues 12,105 12,880 -6 23,740 24,981 -5EBIT 1,211 1,692 -28 2,278 3,215 -29- margin, % 10.0 13.1 9.6 12.9Profit after financialitems (PAFI)

981 1,310 -25 1,794 2,419 -26

- margin, % 8.1 10.1 7.6 9.7


Earnings Before Interest and Taxes

MSEK %

1988 1990 1992 1994 1996 1998 2000

12 month values

EBIT margin excluding items affecting comparability1999 = 12.1%, 2000 = 13.8%, 2001 = 12.5%, 2002 June = 10.9%

2002June

1741 14861099 1172 1225

18902665 2931

38134345 4470

6392 61305445

1179

9,2

11,6

9,3

7,3 7,36,5

9,0

10,911,7

12,7 12,912,3 12,0

10,9

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


Return on Capital Employed

12 month values

0%

5%

10%

15%

20%

25%

ROCE Weighted average cost of capital (WACC), pre-tax

1998 1999 2000 2001 2002


Earnings per Share and Dividend

20021997 1998 1999 2000

4,08 4,324,75

5,25 5,50

13,95

11,5011,9611,56

13,4414,63

0,00

5,00

10,00

15,00 Quarter values12 month valuesDividend

2001


Taxes

1137

1723 16221487

1322

36,3

33,3

36,734,5 34,3

0

500

1000

1500

2000

2500

0

10

20

30

40

12 month values 12 month values in % of profit before taxesMSEK %

1998 1999 2000 2001 2002June


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 2001


Cash and Interest-Bearing Debt

17,184

Jun.2002

10,052

Dec.1998

19,325

Dec.1999

22,270

Dec.2000

Net borrowings

-4922 -8192 -9987 -8091 -6233

-10969-11999

-11594

-10453-1940

2118 12371286 1343 1300

-5308

-1450

-1521-1736

-1798

Cash Short-term loans Long-term loans Pensions

20,078

Dec.2001

MSEK


Capital Structure Net Debt/Equity

4%

30%

16%

75%

59%

92% 92%

72%67%

0%

20%

40%

60%

80%

100%

1994 1995 1996 1997 1998 1999 2000 2001 June2002

Net Debt/Equity


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atlas copco group q2 results july 18, 2002. page 2 july 18, contents q2 highlights market...

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