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Atlas Copco Group. Q3 Results October 23, 2008. Contents. Q3 Business Highlights Market Development Business Areas Financials Outlook. Q3 - Highlights. Good order growth across all business areas and most regions Continued strong development of the aftermarket business
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Atlas Copco Group Q3 Results October 23, 2008
Contents • Q3 Business Highlights • Market Development • Business Areas • Financials • Outlook
Q3 - Highlights • Good order growth across all business areas and most regions • Continued strong development of the aftermarket business • Record operating profit and margin • Price increases continue to offset component cost increases • Neutral currency effect • Solid financial structure • Increased interest costs but very favorable loan maturity profile
Q3 - Figures in summary • 9% organic order growth • Revenues of MSEK 18 440; 13% organic growth • Operating profit up 16% to MSEK 3 640 • Operating margin at 19.7% (19.0) • Profit before tax at MSEK 3 224 (2 708) • Earnings per share for continuing operations SEK 1.99 (1.54) • Operating cash flow MSEK 1 054 (1 586)
Contents • Q3 Business Highlights • Market Development • Business Areas • Financials • Outlook
Orders received - Local currency Group total +19% YTD, +9% last 3 months (Structural change +6% YTD, 0% last 3 months) September 2008
Q3 - The Americas • Overall healthy quarter in North America • Mining segment still strong, especially coal in the US • Weaker demand for construction equipment and from automotive industry • Strong growth in Mexico • Continued strong demand from all customer segments in South America September 2008
Q3 - Europe and Africa/Middle East • Growth in Europe • Good mining demand continues • Low activity in the construction segment and weaker demand from consumer goods related industries in Western Europe • Good growth in Eastern Europe, the Nordic countries, and Germany • Continued strong demand in Africa / Middle East September 2008
Q3 - Asia and Australia • Stable demand development in Asia • Good order growth for mining equipment and industrial tools • Fewer large compressor orders and somewhat slower industrial growth in China affect compressor sales • Mining equipment high in demand in Australia September 2008
Organic* Growth per Quarter Atlas Copco Group, continuing operations • Change in orders received in % vs. same quarter previous year *Volume and price
Contents • Q3 Business Highlights • Market Development • Business Areas • Financials • Outlook
Atlas Copco Group Operating Profit and Return On Capital Employed (ROCE) by Business Area
Compressor Technique • 4% organic order growth • Slow-down in demand for smaller industrial compressors in Western Europe • Favorable demand for large industrial compressors • Strong aftermarket sales • Operating margin at 21.3% • Previous year 20.7% adjusted for capital gain 14 October 23, 2008, www.atlascopco.com
Compressor Technique *Volume and price Quarterly operating margins include Prime Energy from Q1 2006.
Construction and Mining Technique • Continued high order growth; 17% organically • Demand from the mining industry still strong • Construction demand slower in North America and Western Europe, specifically for light equipment • Operating profit up 30%, margin at 18.8% (16.9) • Two new factories inaugurated • Drilling consumables factory in Canada • Road construction equipment factory in India
Construction and Mining Technique *Volume and price
Industrial Technique • 4% organic order growth • Growth in motor vehicle industry • Strong aftermarket business • Operating profit margin at 18.8% (22.5, adjusted for restructuring costs) • Margin affected negatively by sales mix and production disturbances related to restructuring of pneumatic tools manufacturing • Acquisition of US distributor
Industrial Technique *Volume and price
Contents • Q3 Business Highlights • Market Development • Business Areas • Financials • Outlook
Profit Bridge July – September, 2008 vs 2007
Profit Bridge – by Business Area July – September, 2008 vs 2007 One-time items in the previous year include a capital gain in Compressor Technique and restructuring costs in Industrial Technique, both affecting the one-time items column reversely
Capital Structure Net Debt/EBITDA
Cash Flow Continuing operations
Contents • Q3 Business Highlights • Market Development • Business Areas • Financials • Outlook
Near-term Outlook The overall demand for Atlas Copco’s products and services is expected to decrease somewhat compared to the most recent quarters. Demand from the mining industry is foreseen to decrease from the current high level and construction in North America and Western Europe will remain weak. The recent strong growth in emerging markets is expected to moderate.
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 major customer credit losses.”