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Atlas Copco Group

Atlas Copco Group. Q2 Results July 16, 2004. Contents. Q2 Business Highlights Market Development Business Areas Financials Outlook. Q2 - Highlights. Strong sales growth Improved profitability Strong volume gains across all product areas Efficiency improvements

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Atlas Copco Group

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  1. Atlas Copco Group Q2 Results July 16, 2004

  2. Contents • Q2 Business Highlights • Market Development • Business Areas • Financials • Outlook

  3. Q2 - Highlights • Strong sales growth • Improved profitability • Strong volume gains across all product areas • Efficiency improvements • Sharply improved margin in Rental Service • Decision to divest the professional electric tool business

  4. Q2 - Figures in summary • Order volume up 11% • Operating margin at 13.3% (11.7) • Profit after financial items MSEK 1 518 (1 212) • Negative currency effect MSEK 190 • Earnings per share at SEK 4.84 (3.87) • Operating cash flow at MSEK 821 (1 442) • ROCE at 19% (13)

  5. Contents • Q2 Business Highlights • Market Development • Business Areas • Financials • Outlook

  6. Orders received - Local currency June 2004 Group total +14% YTD (+14%, 3 months) 35 +8 +8 40 +11 +12 12 +32 +20 6 +13 +21 4 +33 +44 3 +35 +38 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, %

  7. Q2 - The Americas June 2004 • Continued improvement in North America • Increased demand from manufacturing and process industries • Activity remained relatively flat in non-residential construction • Strong demand from most customer segments in South America 40 +11 +12 4 +33 +44 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, %

  8. Q2 - Europe and Africa/Middle East June 2004 • Better demand in Europe • Increased demand from both manufacturing and construction customers for equipment and aftermarket products • Strong growth in Eastern and Southern Europe • Good development in Germany, France and the Nordic countries • Increased demand from in Africa/Middle East 35 +8 +8 6 +13 +21 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, %

  9. Q2 - Asia and Australia June 2004 • Continued strong growth in Asia • Strong growth in China, but with some signs of slower growth in primarily construction industry • Significant growth in India • Another quarter of positive development in Australia 12 +32 +20 3 +35 +38 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, %

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

  11. Group Total Sales Bridge

  12. Contents • Q2 Business Highlights • Market Development • Business Areas • Financials • Outlook

  13. Compressor Technique • Order volume up 17% • Strong new machine sales • Service products and increased presence support aftermarket growth • Double digit growth in all regions • Profit up 9% to MSEK 800 • Margins negatively affected by currency and sales mix

  14. Compressor Technique % %

  15. Rental Service • Flat non-residential construction activity • Rental revenues increased 8% in USD • Price +6%, volume +2% • Record fleet utilization rate • Profitability improved sharply • Operating margin at 13.5% (8.1) • Return on operating capital at 13%

  16. U.S. Construction July 1, 2004 Statistics until May 2004

  17. Rental Service Rental Revenue Volume Development %

  18. Industrial Technique • Decision to divest professional electric tool business • Order volume up 6% • Good growth for industrial tools, particularly in North America and Asia • Volumes for professional electric tools up in the United States and down in Europe • Record operating margin for Q2 at 11.4% (10.0)

  19. Industrial Technique % %

  20. Construction & Mining Technique • Order volume growth 14% • Strong demand from mining industry. Volume growth in all product areas. • Improved demand for construction equipment continued with growth in all important markets. • Profit margin improved • Higher revenue volume, price increases and efficiency improvements. • Acquisition of Ingersoll-Rand Drilling Solutions finalized

  21. Construction & Mining Technique % %

  22. Contents • Q2 Business Highlights • Market Development • Business Areas • Financials • Outlook

  23. Income Statement

  24. Balance Sheet June 30, 2004

  25. Cash Flow

  26. Capital Expenditures in Tangible Fixed Assets Net rental fleet investment = MSEK 1 647 MSEK 12 months Quarterly 2000 2001 2002 2003 2004

  27. Contents • Q2 Business Highlights • Market Development • Business Areas • Financials • Outlook

  28. Near-term Outlook The positive demand trend for Atlas Copco’s products and services is expected to continue. In North America, demand from the manufacturing and process industries is expected to increase, while the non-residential construction sector is expected to remain largely at present level. In Europe, demand is expected to continue to increase somewhat, with Eastern Europe still providing the best opportunities for growth. The strong development in Asia is foreseen to continue, but at lower rate than in the most recent quarters.

  29. 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.”

  30. Contents • Q2 Business Highlights • Market Development • Business Areas • Financials • Outlook • Additional Information

  31. Long Term Trend • Excluding goodwill impairment charge in Q3 2002

  32. Compressor Technique

  33. Rental Service • Excluding goodwill impairment charge in Q3 2002

  34. Industrial Technique

  35. Construction & Mining Technique

  36. Return on Capital Employed 12 month values 2000 2001 2002 2003 2004 • Excluding goodwill impairment charge in Q3 2002

  37. Atlas Copco Group Inventories, Customer Receivables and Net Rental Equipment Percent of Sales 12 Month Values 2000 2001 2002 2003 2004

  38. RR29 / IAS 19 Employee benefits Effects of change in accounting principle • Balance sheet (restatement of opening balance) • Equity decrease MSEK 424 • Provisions for pensions increase MSEK 773 • Balance is mainly deferred tax receivables • Income statement (Q2) • Pension costs net of employee contribution affected operating profit positively by MSEK 7 • Interest costs net of return on plan assets affected interest net negatively by MSEK 7

  39. Capital Structure Net Debt/Equity

  40. Cash and Interest-Bearing Debt MSEK Net borrowings 20 078 Dec. 2001 13 694 Dec. 2002 7 613 Dec. 2003 10 346 June 2004 8 386 Dec. 2003 Restated

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