Atlas Copco Group

Atlas Copco Group Q4 Results February 2, 2005

Contents • Q4 Business Highlights • Market Development • Business Areas • Financials/IFRS • 2004 Summary • Outlook

Q4 - Highlights • Accelerated order growth • Strong performance from acquired units • Continued improvement in Rental Service • Price increases and efficiency improvements across all business areas • Improved operating profits and margins in all business areas • Divestment of professional electric tool business finalized on January 3, 2005

Q4 - Figures in summary • Orders received increased 18%, volume up 12% • Operating profit at MSEK 1 808, a margin of 14.0% (12.8) • Profit after financial items up 31% to MSEK 1 804 (1 377) • Earnings per share increased 27% to SEK 5.69 (4.47) • Operating cash flow at MSEK 1 198 (1 292) • ROCE at 21% (17)

Orders received - Local currency December 2004 Group total +17% YTD (+24%, 3 months)Structural change +4% YTD (+9%, 3 months) 35 +9 +12 40 +17 +27 12 +23 +11 6 +15 +34 4 +53 +105 3 +48 +46 A= Portion of Group sales last 12 months, % A B C B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

Q4 - The Americas December 2004 • Strong demand in North America • Very good demand from the mining industry • Improved demand from manufacturing and process industries • Slight improvement in non-residential construction activity and favorable development in other construction activities • Continued strong demand in South America 40 +17 +27 4 +53 +105 A= Portion of Group sales last 12 months, % A B C B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

Q4 - Europe and Africa/Middle East December 2004 • Improvement in Europe • The manufacturing and process industries increased investments in compressed air equipment and industrial tools • Overall demand for construction and mining equipment good in Eastern Europe, but improved only moderately in Western Europe. • Weak demand for professional electric tools • Positive demand development in Africa / Middle East 35 +9 +12 6 +15 +34 A= Portion of Group sales last 12 months, % A B C B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

Q4 - Asia and Australia December 2004 • Sustained growth in Asia • Robust demand for standard industrial compressors and industrial tools • Demand for large equipment in China negatively affected by restrictions • Strong performance in India and Japan • Positive development in Australia, primarily due to mining demand 12 +23 +11 3 +48 +46 A= Portion of Group sales last 12 months, % A B C B= Year-to-date vs prev. year, % C= Last 3 months vs prev. year, %

Volume Growth per Quarter • Change in orders received in % vs. same Quarter previous year

Group Total Sales Bridge

Compressor Technique • Volume growth rate increased to 9% • Growth in all regions for stationary industrial compressors and related aftermarket business • Good development for portable compressors and specialty rental business • Operating margin above 19% • Volume, price and efficiency improvements more than offset the negative currency impact

Compressor Technique % %

Rental Service • Slight recovery in non-residential construction activity continued in the quarter • Rental revenues increased 14% in USD • Price +8%, volume +6% • Fleet utilization the highest ever in a fourth quarter • Profitability improved significantly • Operating margin above 17% • Return on operating capital (last 12 months) at 19% • Strengthened brand identity

Rental Service Price development vs. Private non-residential construction

Rental Service Rental Revenue Volume Development %

Industrial Technique • Order volume up 6% • Double digit growth for industrial tools in all regions and good demand from all major customer segments. • Flat volume for professional electric tools • Record operating margin at 13.2% (12.1) • Agreement to acquire Scanrotor, a Swedish tool specialist. • Divestment of electric tools business finalized on January 3, 2005.

Industrial Technique % %

Construction & Mining Technique • Order volumes up 32% • Continued strong demand from mining industry. Volume growth in all product areas. • Slight improvement in demand for construction equipment • Strong contribution from recently acquired businesses • Operating profit margin above 11% before restructuring costs • Agreement to acquire Lifton, a leading manufacturer of hydraulic handheld breaker equipment

Construction & Mining Technique % %

Income Statement

Balance Sheet December 31, 2004

Cash Flow

Capital Expenditures in Tangible Fixed Assets Net rental fleet investment = MSEK 2 050 MSEK 12 months Quarterly 2000 2001 2002 2003 2004

Atlas Copco Group - Currency Effects Policy • Transaction exposure: Match the currency flows as much as possible. • In case of a mismatch, the divisions can hedge actual and forecasted flows with the Internal Bank, to secure short-term stability of profits. The result of these hedges affects the Business Area operating profit, but is offset by the result in Corporate in the Group’s consolidated results. • The Group use option contracts to hedge total downside risk. Currently at index 95 and 90 of Atlas Copco currency index and 12 month ahead. The result of Group hedges is reported as part of Corporate items. • Translation exposure: match assets and liabilities in the same currencies as much as possible. A mismatch is left unhedged.

Atlas Copco Group - Currency Effects Q4 2004 vs. Q4 2003 effect on operating profit • The change in hedging policy in 2004 had the effect that the Group was directly impacted by the unfavorable change in exchange rates during Q4. However, the purchased currency options give down-side protection throughout 2005 and unlimited upside potential in the event of a change to more favorable exchange rates. • Business Areas’ Currency Effect MSEK -170 • Includes positive results, approximately MSEK 100, from hedging contracts with the Internal Bank/Corporate… • …and approximately MSEK -270 from all other exchange rate effects compared to effective exchange rates in Q4 2003. • Includes both transaction and translation effect • Corporate Cost (Internal Bank) MSEK -140 • The cost includes negative results, approximately MSEK 100, from hedging contracts with Business Areas and premiums to external counterparts for option contracts to hedge total downside risk.

Atlas Copco Group - Currency Effects Currency effect on operating profit MSEK Index The change in exchange rates between Q3 and Q4 2004 affected the corporate costs for internal hedges significantly in Q4 2004

Currency Development USD/SEK

Atlas Copco Group - IFRS • Summary of the preliminary effects on the financial position of the Group in 2004 of the adoption of IFRS. • The most significant effect on the profit and shareholders’ equity of the adoption of IFRS is that the amortization for goodwill is not being recorded.

2004 Full Year Summary • Improved business climate and market position • Strong volume growth of 10% • Record profitability with operating margin 13.8% (11.9) and ROCE 21% (17) • Strong cash flow with operating cash flow, MSEK 4 503 (5 609) • Proposed 4:1 split and distribution to shareholders of SEK 29.00 per share through • annual dividend for 2004, SEK 9.00 (7.50) per share and • extra distribution of SEK 20.00 per share through mandatory redemption

Earnings per Share, Dividend and Redemption ¤ * * Proposed by the Board of Directors ¤ Earnings per share excluding goodwill impairment charge

Dividend and Redemption * * Proposed by the Board of Directors

Redemption procedure • Example • Share price SEK 326 February 1, 2005 • Less dividend SEK 9 / share • 3 new ordinary shares • SEK 99 each • 1 new redemption share • Redeemed at SEK 20 SEK 326 SEK 317 SEK 99 SEK 20

Near-term Outlook The demand for Atlas Copco’s products and services is expected to remain at current high level during the beginning of 2005. Demand from manufacturing and process industries is expected to be stable at the current favorable level in North America and Europe. Demand from those customer segments in Asia is expected to grow. Activity in the construction industry is expected to increase modestly in North America and in most developing countries, while the demand in Europe remains relatively weak. Demand from the mining industry is expected to remain strong.

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.”

Atlas Copco Group