October 22, 2004 1

Atlas Copco Group

Q3 Results

October 22, 2004

October 22, 2004 2

Contents

Q3 Business Highlights

Market Development

Business Areas

Financials

Outlook

October 22, 2004 3

Q3 - Highlights

Improved market position

Continued volume growth

Record profit– Operating margin above 15%– Improvement in all business areas, record profit

in Rental Service

Acquisitions of Baker Hughes Mining Tools, Rotex and Kolfor Plant

Agreement to sell the professional electric tool business to Techtronic Industries

October 22, 2004 4

Q3 - Figures in summary

Order volume up 6%

Operating margin at 15.4% (12.7)

Profit after financial items up 35% to MSEK 1 847 (1 368)– Negative currency effect MSEK 150

Earnings per share up 38% to SEK 5.86 (4.25)

Operating cash flow at MSEK 1 647 (1 702)

ROCE at 20% (16)

October 22, 2004 5

Contents

Q3 Business Highlights

Market Development

Business Areas

Financials

Outlook

October 22, 2004 6

September 2004

Orders received - Local currencyGroup total +14% YTD (+15%, 3 months)Structural change +3% YTD (+7%, 3 months)

+13 +1740

+34 +364

+8 +735

+9 +46

+49 +753

+26 +1612

B CAA= Portion of Group sales last 12 months, %B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

October 22, 2004 7

September 2004

Q3 - The Americas

Demand improved in North America– Increased demand from manufacturing and

process industries – The important non-residential construction

activity started to improve and other construction activities continued to grow

– Very strong demand from the mining industry

Strengthened demand in South America

B CAA= Portion of Group sales last 12 months, %B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

+13 +1740

+34 +364

October 22, 2004 8

Q3 - Europe and Africa/Middle East

Steady improvement in Europe– Good demand for equipment and aftermarket

products from manufacturing and process industries

– Demand from construction industry leveled off

Demand development slightly positive in Africa/Middle East

September 2004

B CAA= Portion of Group sales last 12 months, %B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

+8 +735

+9 +46

October 22, 2004 9

Q3 - Asia and Australia

Continued growth in Asia – Reduced growth in China– Very strong growth in India

Another quarter of positive development in Australia

September 2004

B CAA= Portion of Group sales last 12 months, %B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

+49 +753

+26 +1612

October 22, 2004 10

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

Volume Growth

-10

-5

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15

2099

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per Quarter

October 22, 2004 11

Group Total Sales Bridge

July – September January – September MSEK

Orders Received

Revenues Orders Received

Revenues

2003 11 607 11 598 34 008 33 146 Structural change, % +7 +6 +3 +3 Currency, % -4 -4 -5 -5 Price, % +2 +2 +2 +2 Volume, % +6 +6 +9 +8 Total, % +11 +10 +9 +8

2004 12 860 12 760 37 036 35 697

October 22, 2004 12

Contents

Q3 Business Highlights

Market Development

Business Areas

Financials

Outlook

October 22, 2004 13

Compressor Technique

Continued strong demand, order volume up 7%– Growth in all regions for industrial stationary

compressors – Aftermarket and specialty rental business

continued to increase steadily

Acquisition of Kolfor Plant– Specialized service and rental company targeting

the oil and gas industry

Operating profit margin above 19%– Volume, price and efficiency improvements.

Currency impact less pronounced than in recent quarters

October 22, 2004 14

Compressor Technique

%

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Volume growth: Change in revenues vs. same quarter previous year, %Quarterly operating margin, % %

October 22, 2004 15

Rental Service

Non-residential construction activity started to recover

Rental revenues increased 11% in USD– Price +7%, volume +4%

Fleet utilization rate at all-time-high at 70%

Profitability improved to record level– Operating margin at 19.2% (10.2)– Return on operating capital at 16%

October 22, 2004 16

U.S. Construction

Construction Put in PlaceSeasonally adjusted annual rateSource: U.S. Dep. of Commerce

200 000

220 000

240 000

260 000

280 000

300 000

320 000

340 000ja

n-97

jul-9

7

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600 000

660 000

720 000

780 000

840 000

900 000

960 000

1 020 000

Non-residential Construction (left axis)

Total Construction (right axis)

October 1, 2004Statistics until August 2004

October 22, 2004 17

-15

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Volume growth: Change in rental revenue vs. same quarter previous year, %Quarterly operating margin, % (Business Area)

Rental Service

%

Rental Revenue Volume Development

October 22, 2004 18

Industrial Technique

Order volume up 6%– Strong growth for industrial tools in all major

customer segments. Highest growth recorded in North America

– Modest volume increased for professional electric tools

Record operating margin at 12.4% (10.0)

Agreement to sell the professional electric tool business to Techtronic Industries for MUSD 713

October 22, 2004 19

%

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Volume growth: Change in revenues vs. same quarter previous year, %Quarterly operating margin, % %

Industrial Technique

October 22, 2004 20

Construction & Mining Technique

Order volume growth 9% – Strong demand from mining industry. Volume

growth in all product areas.– Good contribution from the acquired businesses,

primarily Drilling Solutions– Slightly positive development for construction

equipment

Operating profit margin 10.5%

Acquisition of Baker Hughes Mining Tools in the United States and Rotex in Finland

October 22, 2004 21

%

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Volume growth: Change in revenues vs. same quarter previous year, %Quarterly operating margin, % %

Construction & Mining Technique

October 22, 2004 22

Contents

Q3 Business Highlights

Market Development

Business Areas

Financials

Outlook

October 22, 2004 23

Income Statement

MSEK July - September Change January – September Change

2004 2003 % 2004 2003 %

Orders Received 12 860 11 607 +11 37 036 34 008 +9

Revenues 12 760 11 598 +10 35 697 33 146 +8

EBIT 1 969 1 469 +34 4 892 3 847 +27

- margin, % 15.4 12.7 13.7 11.6

Profit after financial items (PAFI)

1 847 1 368 +35 4 576 3 536 +29

- margin, % 14.5 11.8 12.8 10.7

Net Profit 1 229 891 +38 3 062 2 337 +31

Earnings per share 5.86 4.25 +38 14.61 11.15 +31

October 22, 2004 24

Balance Sheet September 30, 2004

MSEK Sept. 30, 2004

%

Dec. 31, 2003

%

Sept. 30, 2003

%

Intangible fixed assets 12 080 24 11 276 25 11 751 25 Rental equipment 10 430 21 9 127 20 9 966 21 Other fixed assets 6 040 12 5 741 13 6 036 13 Inventories 6 842 14 5 412 12 5 692 12 Receivables 11 654 24 10 128 22 10 263 22 Cash and bank 2 330 5 4 178 9 2 813 6 Total assets

49 376 45 862 46 521

Equity 22 166 45 21 015 46 20 401 44 Minority interest 68 0 53 0 52 0 Interest-bearing liabilities 11 553 23 11 791 26 12 255 26 Non-interest-bearing liabilities 15 589 32 13 003 28 13 813 30 Total liabilities and equity

49 376 45 862 46 521

October 22, 2004 25

Cash Flow

July – Sept. January – Sept. MSEK 2004 2003 2004 2003 Operating cash surplus after tax 2 380 1 991 5 713 5 080 of which depreciation added back 901 855 2 506 2 515 Change in working capital 403 501 296 1 091 Cash flow from operations 2 783 2 492 6 009 6 171 Investments in tangible fixed assets - 1657 -1 150 -3 992 -2 807 Sale of tangible fixed assets 587 452 1 507 1 178 Other investments, net -66 -92 -219 -225 Cash flow from investments -1 136 -790 -2 704 -1 854 Operating cash flow 1 647 1 702 3 305 4 317 Company acquisitions / divestments -793 -49 -2 524 -682 Dividend paid 0 -1 -1 575 -1 219 Unclaimed shares from bonus issue 1989 2 2 Net Cash flow 856 1 652 -792 2 416

October 22, 2004 26

Capital Expendituresin Tangible Fixed Assets

-500

0

500

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2500

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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

2000

MSEKQuarterly 12 months

Net rental fleet investment = MSEK 1 956

20042001 2002 2003

October 22, 2004 27

Contents

Q3 Business Highlights

Market Development

Business Areas

Financials

Outlook

October 22, 2004 28

Near-term Outlook

In North America, the non-residential construction sector is expected to improve and the demand from the manufacturing and process industries is foreseen to stay unchanged at the current favorable level. The overall demand in Western Europe is also expected to remain at the current level, while Eastern Europe still provides good opportunities for growth. The growth of demand in Asia is expected to continue, but at a slower rate compared to the most recent quarters.

October 22, 2004 29

October 22, 2004 30

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.”

October 22, 2004 31

Contents

Q3 Business Highlights

Market Development

Business Areas

Financials

Outlook

Additional Information

October 22, 2004 32

0

10000

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30000

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70000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112 0212 0312 04120

1000

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7000

Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)

Long Term Trend

Excluding goodwill impairment charge in Q3 2002

October 22, 2004 33

0

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35000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112 0212 0312 04120

500

1000

1500

2000

2500

3000

3500

Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)

Compressor Technique

October 22, 2004 34

Rental Service

0

5000

10000

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9712 9812 9912 0012 0112 0212 0312 04120

500

1000

1500

2000

Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)

Excluding goodwill impairment charge in Q3 2002

October 22, 2004 35

Industrial Technique

0

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15000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112 0212 0312 04120

500

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Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)

October 22, 2004 36

Construction & Mining Technique

-3000

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12000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112 0212 0312 0412-300

0

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Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)

October 22, 2004 37

Return on Capital Employed

12 month values

0%

5%

10%

15%

20%

25%

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

Excluding goodwill impairment charge in Q3 2002

2001 2002 2003 20042000

October 22, 2004 38

Capital Structure

4%

30%

16%

75%

59%

92% 92%

72%67%

36%

41%41%

0%

20%

40%

60%

80%

100%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 sep-04

Net Debt/Equity Net Debt/Equity (restated for 2003)

Net Debt/Equity

October 22, 2004 39

Cash and Interest-Bearing Debt

Net borrowings

-8091 -2450 -3042 -3042

-10822-6957 -6957

-7320

134341781356 4178 2330

-1670

-11594

-1736

-1778

-1792 -2565-2563

Cash Short-term loans Long-term loans PensionsMSEK

8 386

Dec.2003

Restated

9 223

September2004

7 613

Dec.2003

13 694

Dec.2002

20 078

Dec.2001

October 22, 2004 40