Atlas Copco Group

Atlas Copco Group Q3 Results October 24, 2002

Contents • Q3 Business Highlights • Market Development • Business Areas • Goodwill Impairment Charge • Financials • Outlook www.atlascopco-group.com

Q3 Business Highlights • Stable Order Volumes • Low capacity utilization affect demand, mostly for investment related products • Improvement for mining equipment and professional electric tools • Profit after financial items, before impairment charge, was 10.5% (9.9) or MSEK 1,241 (1,287) • Stable cash flow at high level • Strengthening of Rock Excavation Business • Integration of drill rig and loader/truck businesses into one dedicated division. www.atlascopco-group.com

Portion of Group Sales, % Change in %, Q3 2002 vs. Q3 2001 Orders received, Q3 2002 vs. Q3 2001 Change in Local Currency September 2002 31 +2 49 -6 10 +13 5 +25 3 -9 2 +6 www.atlascopco-group.com

49 -6 3 -9 Q3 - The Americas September 2002 • Mostly weak demand • Non-residential building deterioration affected rental business • Residential building activity supported demand for professional electric tools • Low capacity utilization continued to affect demand for investment related goods • Favorable mining industry mitigated overall weak demand in South America Portion of Group Sales, % Change in %, Q3 2002 vs. Q3 2001 www.atlascopco-group.com

31 +2 5 +25 Q3 - Europe and Africa/Middle East September 2002 • North better than south in Europe • Nordic and eastern Europe stay positive, German was stable, while southern Europe was weak • Motor vehicle industry and infrastructure construction exceptions from weak demand for investment goods. • Growth in consumables and service • Africa/Middle East • Solid demand from mining industry in southern Africa and construction projects in Middle East Portion of Group Sales, % Change in %, Q3 2002 vs. Q3 2001 www.atlascopco-group.com

10 +13 2 +6 Q3 - Asia and Australia September 2002 • Good demand from manufacturing and construction • China continued to drive growth in the region • Japan stabilized Portion of Group Sales, % Change in %, Q3 2002 vs. Q3 2001 www.atlascopco-group.com

Volume Growth per Quarter • Change in orders received in % vs. same Quarter previous year www.atlascopco-group.com

Group Total www.atlascopco-group.com

Compressor Technique • Order volume down 5% • Industrial compressors and after market business developed favorably • Portable compressors and Gas- and process compressors weaker than previous year • Strong growth in Asia continued • Sustained high profit margin • New test facility for small and medium sized industrial compressors www.atlascopco-group.com

Compressor Technique % www.atlascopco-group.com

Rental Service • Rental volume decreased 3% yoy • Sales of used equipment 53% lower than last year • Weak non-residential building • Market position strengthened • Rental volume and rental rates improved sequentially • Cost and capital efficiency further improved • Cash flow remained strong www.atlascopco-group.com

Rental Service % www.atlascopco-group.com

Industrial Technique • Order volumes up 7% compared with weak Q3 2001 • Improved demand from motor vehicle industry • Sales and profits increased for professional electric tools • Operating margin above 10% www.atlascopco-group.com

Industrial Technique % www.atlascopco-group.com

Construction & Mining Technique • Orders up 15% • Strong order development from the mining industry • Use of product revenues up • Drilling equipment for construction in good demand. • Light construction equipment recorded lower volumes • Loader/truck business to be integrated with drill rigs in Sweden www.atlascopco-group.com

Construction & Mining Technique % www.atlascopco-group.com

Goodwill Impairment Charge Rental Service • Goodwill impairment charge of MSEK 6,950, MUSD 700 at average exchange rate of 9.93 • Impairment test (RR 17 / IAS 36) is based upon discounted cash flow analysis • Assumptions used in test: • Resumed moderate growth • No general improvement in rental rates • Improved margins from current levels www.atlascopco-group.com

Value of Rental Service Current assessment vs. purchase price Purchase price - Acquisition timing - Lower average growth - Price pressure Write-down MUSD 700 - Outsourcing trend supports volume growth - Strong market position - Cost and capital efficiency - Atlas Copco synergies “Confirmed” assumptions Book value - Tangible assets www.atlascopco-group.com

Strategy Rental Service • Reasons behind strategy still valid • Outsourcing trend - to offer function instead of product - supports growth • Close to end-users - in line with “use-of-product” strategy • Rental Service is well positioned to improve profitability and growth • Reduction of annual operating costs (excl. depreciation) of approx. MSEK 450 since 2000 • Fleet reduction of MSEK 2,300 since 2000 • Higher time utilization of fleet than historically www.atlascopco-group.com

Goodwill Impairment Charge Atlas Copco Group • Impact on key figures, initial • No cash flow effect • No effect on dividend capacity • Debt/equity ratio from 60% to 79% • Equity/total assets ratio from 46% to 39% • Impact on key figures, run-rates • Earnings per share from SEK 13.07 to proforma SEK 14.07 • Return on capital employed from 12% to proforma 14% • Return on equity from 10% to proforma 15% www.atlascopco-group.com

Income Statement www.atlascopco-group.com

Balance Sheet September 30, 2002 www.atlascopco-group.com

Cash Flow www.atlascopco-group.com

Capital Expenditures in Tangible Fixed Assets Net rental fleet investment = MSEK 650 MSEK 12 months Quarterly 1998 1999 2000 2001 2002 www.atlascopco-group.com

Near-term Outlook Overall, thedemand for Atlas Copco’s products and services is expected to remain unchanged during the coming quarter. Demand for rental equipment in the United States is expected to stay at present level, adjusted for normal seasonal downturn in the fourth quarter. www.atlascopco-group.com

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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.” www.atlascopco-group.com

Contents • Q3 Business Highlights • Market Development • Business Areas • Goodwill Impairment Charge • Financials • Outlook • Additional Information www.atlascopco-group.com

Long Term Trend • Excluding goodwill impairment charge www.atlascopco-group.com

Compressor Technique www.atlascopco-group.com

Rental Service • Excluding goodwill impairment charge www.atlascopco-group.com

Industrial Technique www.atlascopco-group.com

Construction & Mining Technique www.atlascopco-group.com

Items Affecting Comparability www.atlascopco-group.com

Group Totalexcl. items affecting comparability www.atlascopco-group.com

Return on Capital Employed 12 month values 1998 1999 2000 2001 2002 • Excluding goodwill impairment charge www.atlascopco-group.com

Inventories, Customer Receivables and Net Rental Equipment Percent of Sales 12 Month Values 1998 1999 2000 2001 2002 www.atlascopco-group.com

Cash and Interest-Bearing Debt MSEK Net borrowings 10,052 Dec. 1998 19,325 Dec. 1999 22,270 Dec. 2000 20,078 Dec. 2001 15,783 Sept. 2002 www.atlascopco-group.com

Capital Structure Net Debt/Equity www.atlascopco-group.com

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Atlas Copco Group