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1April 27, 2006 www.atlascopco.com
Atlas Copco Group
Q1 Results
April 27, 2006
2April 27, 2006 www.atlascopco.com
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
3April 27, 2006 www.atlascopco.com
Q1 - Highlights
Very strong start of 2006
Strong growth in all Business Areas and regions – Good demand combined with improved market position
Record profit and margins for a first quarter
The divestment process of the equipment rental business is progressing according to plan
4April 27, 2006 www.atlascopco.com
Q1 - Figures in summary
Orders received up 39%, +22% in volume
Revenues up 33% to MSEK 14 863, up 17% in volume
Operating profit up 63% to MSEK 2 771, a margin of 18.6% (15.2)
Profit before tax at MSEK 2 606 (1 709), a margin of 17.5% (15.3)
Basic earnings per share were SEK 2.83 (1.90), up 49%
Operating cash flow totaled MSEK 536 (1 017)
ROCE at 30%
Including discontinued operations
5April 27, 2006 www.atlascopco.com
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
6April 27, 2006 www.atlascopco.com
Orders received - Local currencyGroup total +26% YTD – Group excluding Rental Service +28% YTD(Structural change +2% YTD)
March 2006
A B A = Portion of sales, last 12 months, %
B = Year-to-date vs. prev. year, %
5 +8
33 +19
7 +66
14 +35
4 +11
37 +27
+38Continuing operations
7April 27, 2006 www.atlascopco.com
Q1 - The Americas
Strong demand in North America– Increased demand from manufacturing and
process industries as well as from the construction industry
– High activity in the mining industry
Healthy demand in South America– Mining and motor vehicle industry
somewhat slower
March 2006
A B A = Portion of sales, last 12 months, %
B = Year-to-date vs. prev. year, %
5 +8
37 +27
+38Continuing operations
8April 27, 2006 www.atlascopco.com
Q1 - Europe and Africa/Middle East
Improvement in Europe– Increased demand for industrial and
construction equipment
– Positive development in most major markets
Very positive development in the Africa / Middle East region
March 2006
A B A = Portion of sales, last 12 months, %
B = Year-to-date vs. prev. year, %
33 +19
7 +66
9April 27, 2006 www.atlascopco.com
Q1 - Asia and Australia
Increased demand in Asia– Very good development for industrial
equipment – compressors and tools
– Strong growth in all major markets Japan, India, South Korea and China
March 2006
A B A = Portion of sales, last 12 months, %
B = Year-to-date vs. prev. year, %
14 +35
4 +11
10April 27, 2006 www.atlascopco.com
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
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4
01 Q
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4
Including discontinued operations
11April 27, 2006 www.atlascopco.com
Atlas Copco Group – Sales Bridge
January – March
Continuing operations
January – March
Group Total
MSEK
Orders Received
Revenues Orders Received
Revenues
2005 9 832 9 010 11 990 11 168 Structural change, % +2 +2 +2 +2 Currency, % +11 +11 +13 +12 Price, % +2 +2 +2 +2 Volume, % +24 +18 +22 +17 Total, % +39 +33 +39 +33 2006 13 699 11 948 16 614 14 863
12April 27, 2006 www.atlascopco.com
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
13April 27, 2006 www.atlascopco.com
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 Mar. 2006 Mar. 2006 Mar. 2006 Mar. 2006 Compressor Technique 21 889 4 355 19,9% 71% Construction and Mining Technique 16 510 2 429 14,7% 31% Industrial Technique 6 400 1 289 20,1% 64% Rental Service 12 439 3 023 24,3% 17% Eliminations/Common Group Functions -801 -617 Atlas Copco Group 56 437 10 479 18,6% 30% Rental Service, discontinued operations -11 678 Eliminations, discontiued operations 384 Atlas Copco Group, continuing operations 45 143 7 690 17.0%
14April 27, 2006 www.atlascopco.com
Compressor Technique
Very strong order growth– Highest in North America and Asia, robust in Western Europe
– Strong order intake for all types of compressors
Steady positive development of aftermarket
Operating profit up 40%. Margin above 20%– Supported by positive volume, price and currency development
15April 27, 2006 www.atlascopco.com
Compressor Technique
-10
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25
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Q3
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Q4
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
Operating margins restated (IFRS) from 2004
16April 27, 2006 www.atlascopco.com
Construction and Mining Technique
Strong demand from both mining and construction
Order volume up 24% – 16th consecutive quarter with volume growth
– Strong growth in North America, Africa / Middle East and Europe
Operating profit doubled
Acquisition of Canadian drilling consumables manufacturer
Launch of first loader, fully developed in Sweden
17April 27, 2006 www.atlascopco.com
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Q4
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
Construction and Mining Technique
Operating margins restated (IFRS) from 2004
18April 27, 2006 www.atlascopco.com
Industrial Technique
Order growth resumed after a slow Q4 2005
Strong sales to general industry and vehicle service
Mixed development in motor vehicle industry– Good in Asia and North America
– Weak in Europe
All-time high revenues, operating profit and margin.
19April 27, 2006 www.atlascopco.com
Industrial Technique
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Q2
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Q3
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Q4
Revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, %
Operating margins restated (IFRS) from 2004
20April 27, 2006 www.atlascopco.com
Rental Service
Rental revenues increased 25% in USD– Price +6%, volume +19%
Fleet utilization at 71%– Seasonal weakness mitigated by high utilization and
positive rate development
– Increased investments in equipment to support demand and further improve fleet quality
Operating profit up 92%.
Including discontinued operations
21April 27, 2006 www.atlascopco.com
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Rental revenue volume growth: Change vs. same quarter previous year, %
Quarterly operating margin, % (Business Area)
Rental Service
Operating margins restated (IFRS) from 2004
Rental Revenue Volume Development, incl. discontinued operations
22April 27, 2006 www.atlascopco.com
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
23April 27, 2006 www.atlascopco.com
Group Total
January – March continuing operations
January – March including discontinued
operations MSEK 2006 2005 % 2006 2005 %
Orders received 13 699 9 832 +39 16 614 11 990 +39 Revenues 11 948 9 010 +33 14 863 11 168 +33 Operating profit 2 096 1 344 +56 2 771 1 695 +63 – as a percentage of revenues 17.5 14.9 18.6 15.2 Profit before tax 2 264 1 498 +51 2 606 1 709 +52 – as a percentage of revenues 18.9 16.6 17.5 15.3 Profit for the period 1 602 1 078 +49 1 786 1 198 +49 Basic earnings per share, SEK 2.54 1.71 +49 2.83 1.90 +49 Equity per share, SEK 44 39 Return on capital employed, % 30 23
24April 27, 2006 www.atlascopco.com
Balance Sheet Including discontinued operations
MSEK March 31, 2006 Dec. 31, 2005 March 31, 2005
Intangible assets 10 556 18% 10 607 19% 9 248 18% Rental equipment 13 719 24% 13 456 24% 10 022 20% Other property, plant and equipment 4 674 8% 4 503 8% 3 923 8% Other fixed assets 1 850 3% 1 818 3% 1 790 4% Inventories 8 055 14% 7 215 13% 6 447 13% Receivables 13 969 24% 13 240 24% 11 191 22% Current financial assets 577 1% 389 1% 287 1% Cash and cash equivalents 3 885 7% 3 727 7% 7 316 15% TOTAL ASSETS 57 285 54 955 50 224
Total equity 27 355 48% 25 808 47% 24 827 49% Interest-bearing liabilities 11 024 19% 11 345 21% 10 531 21% Non-interest-bearing liabilities 18 906 33% 17 802 32% 14 866 30% TOTAL EQUITY AND LIABILITIES 57 285 54 955 50 224
25April 27, 2006 www.atlascopco.com
Capital Structure
4%
30%
16%
75%
59%
92% 92%
72%67%
46%
28%24%
32%
0%
20%
40%
60%
80%
100%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 March2006
Adjusted for IFRS, but including discontinued operations
Net Debt/Equity
26April 27, 2006 www.atlascopco.com
Cash Flow
January – March MSEK 2006 2005 Operating cash surplus after tax 2 693 1 993 of which depreciation added back 924 718 Change in working capital -578 -122 Cash flow from operations 2 115 1 871 Investments in tangible fixed assets - 1 936 -1 336 Sale of tangible fixed assets 680 566 Other investments, net -323 -84 Cash flow from investments -1 579 -854
Operating cash flow 536 1 017 Company acquisitions / divestments -268 3 899 Dividends paid - -2 Change in interest-bearing liabilities -94 -379 Net cash flow 174 4 535
27April 27, 2006 www.atlascopco.com
Capital Expenditures
-500
0
500
1000
1500
2000
2500
-1000
0
1000
2000
3000
4000
5000
Machinery & buildings, quarterly Net, Rental Equipment, quarterly
Net. Rental Eq.+Mach.& buildings, 12 months Net, Rental Equipment, 12 months
2005
MSEK
Quarterly 12 months
Net rental fleet investment = MSEK 4 419
20042002 20032001 2006
Tangible Fixed Assets
28April 27, 2006 www.atlascopco.com
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
29April 27, 2006 www.atlascopco.com
Near-term Outlook
The demand for Atlas Copco’s products and services, from all major customer segments such as mining, infrastructure and other non-residential construction, manufacturing and process industry, is expected to remain at the current high level.
30April 27, 2006 www.atlascopco.com
31April 27, 2006 www.atlascopco.com
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.”