october 24, 2006 atlas copco group q3 results october 24, 2006
TRANSCRIPT
1October 24, 2006 www.atlascopco.com
Atlas Copco Group
Q3 Results
October 24, 2006
2October 24, 2006 www.atlascopco.com
Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
3October 24, 2006 www.atlascopco.com
Q3 - Highlights
Value creation– High growth
Double digit growth in all regions
Good demand from most customer segments
Solid growth in the aftermarket business
– Increased profits All business areas improved profit margins
Atlas Copco sells majority stake of the equipment rental business
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Q3 - Figures in summary
Orders received up 21%, +19% in volume
Revenues up 17% to MSEK 12 538, up 15% in volume
Operating profit up 29% to MSEK 2 306, a margin of 18.4% (16.6)
Profit before tax at MSEK 2 081 (1 800), a margin of 16.6% (16.9)
Including discontinued operations
Basic earnings per share were SEK 3.36 (2.71), up 24%
Operating cash flow totaled MSEK 434 (1 671)
ROCE at 36% (26)Revenues and operating profit including discontinued operations as per previously used accounting principles for comparison only
Revenues of MSEK 15 566 (13 479)
Operating profit of 3 176 (2 512), a margin of 20.4% (18.6)
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Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
6October 24, 2006 www.atlascopco.com
Orders received - Local currencyGroup total +24% YTD, + 25% last 3 months(Structural change +2% YTD, +3% last 3 months)
September 2006
A B C
A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
6 +15 +21
39 +17 +24
10 +57 +66
18 +32 +26
5 +17 +12
22 +18 +13
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Q3 - The Americas
Continued strong demand from most customer segments in North America– Solid growth in most manufacturing and
process industry segments
– Increased sales of mining and construction equipment in the region
Sustained growth in South America– Manufacturing and process industries’
demand particularly strong
September 2006
A B C
A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
6 +15 +21
22 +18 +13
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Q3 - Europe and Africa/Middle East
Europe shows strength– High order intake for all types of compressed air
equipment
– Weaker demand for advanced assembly tools
– Increased demand from the construction and mining industries
– Very strong growth in Russia and improvements in many major markets in Western Europe
+66% in the Africa / Middle East region– Booming mining sector in Africa and strong overall
demand in the Middle East
September 2006
A B C
A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
39 +17 +24
10 +57 +66
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Q3 - Asia and Australia
Steady, high growth in Asia– Large compressor orders in China, on top of
already strong development
– High growth trend continues in India
Mining particularly strong in Australia
September 2006
A B C
A = Portion of sales, Year-to-date, %
B = Year-to-date vs. prev. year, %
C = Last 3 months vs. prev. year, %
18 +32 +26
5 +17 +12
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Volume Growth per Quarter
Change in orders received in % vs. same Quarter previous year
-10
-5
0
5
10
15
20
25
00 Q
1
00 Q
2
00 Q
3
00 Q
4
01 Q
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01 Q
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02 Q
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02 Q
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02 Q
4
03 Q
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03 Q
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03 Q
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03 Q
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04 Q
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04 Q
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05 Q
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06 Q
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06 Q
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06 Q
4
Atlas Copco Group, excluding Rental Service
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July – September
MSEK
Orders Received
Revenues
2005 11 452 10 674 Structural change, % +3 +3 Currency, % -4 -3 Price, % +3 +2 Volume, % +19 +15 Total, % +21 +17 2006 13 847 12 538
Atlas Copco Group – Sales Bridge
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Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
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Atlas Copco GroupOperating Profit and Return On Capital Employed (ROCE) by Business Areas
MSEK
Revenues Operating profit
Operating margin
ROCE
12 month values, period ending Sep. 2006 Sep. 2006 Sep. 2006 Sep. 2006 Compressor Technique 23 879 4 931 20.6% 72% Construction and Mining Technique 18 208 2 854 15.7% 34% Industrial Technique 6 514 1 345 20.6% 64% Rental Service 782 259 33.1% na. Eliminations/Common Group Functions -471 -504 Atlas Copco Group 48 912 8 885 18.2% 36%* * including discontinued operations
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Compressor Technique
Strong order growth in all markets and all major product segments– Significant order growth in gas and process compressors
– Higher growth in Western Europe
Steady positive development of aftermarket
Operating profit up 31%. Margin at all-time high 21.5%– Positive effect from volume and price
New manufacturing plant for screw compressor elements in China
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Compressor Technique
-10
-5
0
5
10
15
20
25
-10
-5
0
5
10
15
20
25
00
Q1
00
Q2
00
Q3
00
Q4
01
Q1
01
Q2
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Q3
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Q4
02
Q1
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Q2
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Q3
02
Q4
03
Q1
03
Q2
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Q3
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Q4
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Q1
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Q2
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Q3
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Q4
05
Q1
05
Q2
05
Q3
05
Q4
06
Q1
06
Q2
06
Q3
06
Q4
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
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Continued strong demand, particularly in mining
Order intake up 25%, excluding currency – 18th consecutive quarter with volume growth
– Significant growth in Europe
Record profit, up 34%
Launch of new crawler rig for surface applications
Construction and Mining Technique
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-10
-5
0
5
10
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20
25
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Q1
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Q2
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Q3
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Q2
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Q1
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Q2
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Q3
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Q4
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Q1
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Q2
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Q3
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Q4
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Q1
06
Q2
06
Q3
06
Q4
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
Construction and Mining Technique
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Industrial Technique
Strong sales to general industry
Weaker demand from the motor vehicle industry– Sales declined in Europe and North America
Good development of the aftermarket business
Strategic acquisitions
Improved operating margin
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Industrial Technique
-5
0
5
10
15
20
-5
0
5
10
15
20
03
Q1
03
Q2
03
Q3
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Q4
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Q1
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Q2
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Q3
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Q4
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Q1
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Q2
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Q3
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Q4
06
Q1
06
Q2
06
Q3
06
Q4
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
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Rental Service
Rental revenues increased 20% in USD– Price +5%, volume +15%
Fleet utilization at 73.5%
Record operating margin
Continuing operations– Prime Energy and Prime Mexico will be
integrated into the rental operations in the Compressor Technique business area when the divestment is finalized
Including discontinued operations
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-15
-10
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30
-15
-10
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Q1
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Q2
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Q3
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Q4
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Q1
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Q3
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Q2
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Q3
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Q1
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Q2
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Q3
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Q4
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Q1
06
Q2
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Q3
06
Q4
Rental revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, % (Business Area)
Rental Service
Operating margins for Q2 and Q3 2006 include depreciation expense for discontinued operations, as per previously used accounting principles, to enhance comparability
Rental Revenue Volume Development, incl. discontinued operations
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Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
23October 24, 2006 www.atlascopco.com
Group Total
July – Sept. Jan. – Sept. MSEK 2006 2005 % 2006 2005 %
Orders received 13 847 11 452 +21 41 108 32 599 +26 Revenues 12 538 10 674 +17 36 930 30 223 +22
Operating profit 2 306 1 781 +29 6 739 4 792 +41 – as a percentage of revenues 18.4 16.7 18.2 15.9
Profit before tax 2 081 1 800 +16 6 313 4 766 +32 – as a percentage of revenues 16.6 16.9 17.1 15.8 Profit for the period from continuing operations
1 475
1 272
+16
4 493
3 429
+31
Profit for the period from discontinued operations, net of tax
642
437
1 708
970
Profit for the period 1) 2 117 1 709 +24 6 201 4 399 +41 Basic earnings per share, SEK 1) 3.36 2.71 +24 9.83 6.97 +41 Equity per share, SEK 1) 45 37 Return on capital employed, % 1) 36 26 1) Including discontinued operations. Earnings for Q2 and Q3 2006 do not include depreciation on assets held for sale and the earnings for Q2 2006 have thus been restated for the effect of the depreciation.
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Balance Sheet
Including discontinued operations MSEK Sep. 30, 2006 Dec. 31, 2005 Sep. 30, 2005
Intangible assets 4 240 7% 10 607 19% 10 250 19% Rental equipment 2 072 3% 13 456 24% 12 712 24% Other property, plant and equipment 3 722 6% 4 503 8% 4 266 8% Other fixed assets 2 050 3% 1 818 3% 1 692 3% Inventories 8 522 14% 7 215 13% 7 137 14% Receivables 12 573 21% 13 240 24% 12 853 24% Current financial assets 597 1% 389 1% 325 1% Cash and cash equivalents 2 616 4% 3 727 7% 3 364 6% Assets classified as held for sale 24 107 40% - - TOTAL ASSETS 60 499 54 955 52 599
Total equity 28 449 47% 25 808 47% 23 255 44% Interest-bearing liabilities 11 197 19% 11 345 21% 11 303 21% Non-interest-bearing liabilities 13 447 22% 17 802 32% 18 041 34% Liabilities associated with assets classified as held for sale
7 406
12%
-
-
TOTAL EQUITY AND LIABILITIES 60 499 54 955 52 599
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Capital Structure
4%
30%
16%
75%
59%
92% 92%
72%67%
46%
28%31%32%
0%
20%
40%
60%
80%
100%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Sept.2006
Adjusted for IFRS from 2004. Including discontinued operations.
Net Debt/Equity
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Cash Flow
July – September January – September MSEK 2006 2005 2006 2005
Operating cash surplus after tax 2 772 2 796 8 861 7 276 of which depreciation added back -379 -875 -1 700 -2 391 Change in working capital -569 362 -1 140 287
Cash flow from operations 2 203 3 158 7 721 7 563 Investments in tangible fixed assets -1 868 -2 054 -6 617 -5 383 Sale of tangible fixed assets 486 635 1 711 1 824 Other investments, net -387 -68 -1 046 -361
Cash flow from investments -1 769 -1 487 -5 952 -3 920
Operating cash flow 434 1 671 1 769 3 643 Company acquisitions / divestments -637 -150 -1 050 3 650 Dividends paid - -2 -2 675 -1 890 Share redemption - - - -4 192 Change in interest-bearing liabilities -138 -1 434 973 -957
Net cash flow -341 85 -983 254
Including discontinued operations
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Cash Flow in SummaryContinuing and discontinued operations
January – September 2006 MSEK
Continuing operations
Discont. operations
Total
Net cash from — operating activities 4 551 3 170 7 721 whereof change in working capital - 1 582 442 -1 140 — investing activities -3 296 -3 706 -7 002 whereof acquisitions/divestments -1 050 0 -1 050
Operating cash flow before acquisitions/divestments
2 305 -536 1 769
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Capital Expenditures and Depreciation
0
200
400
600
800
1000
1200
1400
1600
1800
2000
YTD 2005 YTD 2006
Property and machinery Rental equipment, net Depreciation, tangible assetsMSEK
Tangible fixed assets, continuing operations
29October 24, 2006 www.atlascopco.com
Contents
Q3 Business Highlights
Market Development
Business Areas
Financials
Outlook
30October 24, 2006 www.atlascopco.com
Near-term Outlook
The demand for Atlas Copco’s products and services, from most customer segments such as mining, construction, and the manufacturing and process industries, is expected to remain at the current high level.
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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.”