Atlas Copco Group Q1 Results April 29, 2002. Page 2 April 29, 2002 Contents Q1 Highlights and...

Atlas Copco Group

Q1 ResultsApril 29, 2002

April 29, 2002 www.atlascopco-group.com

Contents

Q1 Highlights and Strategic Moves Market Development Business Areas Financials Outlook


Q1 Highlights

Weaker demand - as anticipated Order volumes down 7%

Low invoicing, primarily rental revenues and investment-related products, affected profit

Operating margin 10.0% (12.1) Profit after financial items MSEK 912

Continued strong operating cash flow of MSEK 1,523


Actions & Strategic moves

Short-term and long-term actions Ongoing adjustment to low demand situation Investing in market- and product development,

production- and logistics efficiency Priority to Use-of-Products projects

Strategic moves Build presence in China and Russia Acquisitions Launch of Milwaukee brand in Europe


Contents



Group Total

MSEK January - March Change2002 2001 %

Orders Received 12,058 12,488 -3 - volume -7Revenues 11,635 12,101 -4 - volume -8


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

Volume Growth per Quarter

-10

-5

0

5

10

15

2098

Q1

98 Q

2

98 Q

3

98 Q

4

99 Q

1

99 Q

2

99 Q

3

99 Q

4

00 Q

1

00 Q

2

00 Q

3

00 Q

4

01 Q

1

01 Q

2

01 Q

3

01 Q

4

02 Q

1


-1150

-164

+122

-730

+145

09

Orders received, Q1 2002 vs. Q1 2001

Change in Local Currency -7

Portion of Group Sales, %

Change in %, Q1 2002 vs. Q1 2001

March 2002


-1150

-164


Change in %, Q1 2002 vs. Q1 2001

March 2002

Q1 - The Americas

Weak demand in North America Non-residential building and

manufacturing industry affected equipment rental negatively

Low demand for investment related goods

Slightly improved demand for production related equipment

South America Negative development in most

markets


-730

+145

March 2002


Change in %, Q1 2002 vs. Q1 2001

Q1 - Europe and Africa/Middle East

Negative trend in Europe Continue Low construction activity except for

the Nordic Region Slowdown for investment-related

products in most customer segments

Africa/Middle East Construction projects and bulk

orders behind good quarter


+122

09

March 2002


Change in %, Q1 2002 vs. Q1 2001

Q1 - Asia and Australia

Mixed Situation in Asia Continued growth in China and

positive trend in Korea Decline in demand in Japan and

India Electronics industry in South-East

Asia continue to be weak


Contents



-20

-15

-10

-5

0

5

10

15

20

25

CompressorTechnique

Volume Growth Compressor Technique

Change in orders received vs. same quarter previous year, %


Compressor Technique

Weak demand Order volumes decline 5 percent Large industrial compressors declined

most, while after-sales is still growing Europe showing a volume drop and the

Americas still weak Continued growth in China

Lower volumes affect operating margin Acquisition of Liutech finalized in April


Volume Growth Rental Service


-20

-15

-10

-5

0

5

10

15

20

25

Rental Service


Rental Service

Demand remain weak Weak non-residential building segment Low activity in manufacturing industry Profit margin affected by low demand

and price compression Actions

More fleet available for rent and improved mix

Reinforced sales organization Continued strong cash generation


Volume Growth Industrial Technique


-20

-15

-10

-5

0

5

10

15

20

25

IndustrialTechnique


Industrial Technique

Order volumes decline 8 percent Low order intake from motor vehicle

industry - major producers slowed/stopped investments

Weak demand from general industry and automotive aftermarket continue

Stable development for professional electric tools in the U.S., while weak trend continue in Europe

Profit margin affected by lower volume and an unfavorable product mix

Launch of Milwaukee in Europe


Volume Growth Construction & Mining Technique


-20

-15

-10

-5

0

5

10

15

20

25

Construction &Mining Technique


Construction & Mining Technique

Stable performance Increase in use-of-products revenues Lower demand for large investment-

related equipment for tunnelling and mining and for prospecting equipment

Surface drill rigs and construction tools show positive development

Stable profit margin Acquisition of MAI finalized in April and

Krupp is on schedule for Q2


Contents

Q1 Highlights and strategic moves Market Development Business Areas Financials Outlook


Income Statement

MSEK 3 months ended 12 months endedMar. 31

2002Mar. 31

2001Mar. 31

2002Mar. 31

2001Revenues 11,635 12,101 50,673 48,111Operating expenses -10,469 -10,638 -44,840 -41,584Operating profit* 1,166 1,463 5,833 6,527 - as a percentage of revenues 10.0 12.1 11.5 13.6

Financial income and expenses -254 -414 -1,270 -1,732Profit after financial items* 912 1,049 4,563 4,795 - as a percentage of revenues 7.8 8.7 9.0 10.0

*Items affecting comparability +99 -60 -101 -86

Taxes -314 -364 1,572 -1,740Minority interest -11 -9 -13 -41Net profit 587 676 2,978 3,014

Earnings per share, SEK 2.80 3.23 14.21 14.38


MSEK Q1 2002

Operating profit, as reported 1,166

less - capitalization of development cost 54- useful life estimates on rental fleet, net 45

Pro-forma operating profit, “old” rules 1,057

Income Statement(accounting changes)


Balance Sheet March 31, 2002

MSEK Mar. 31,2002

% Dec. 31,2001

% Mar. 31,2001

%

Intangible fixed assets 21,909 35 22,600 35 22,516 34Rental equipment 14,770 23 14,935 23 16,044 24Other fixed assets 7,461 12 7,887 12 7,601 12Inventories 6,505 10 5,987 9 6,346 10Receivables 11,094 18 11,605 18 11,844 18Cash and bank 1,486 2 1,343 2 1,319 2Total assets 63,225 64,357 65,670

Equity 27,578 44 27,568 43 25,980 40Minority interest 218 0 221 0 251 0Interest-bearing liabilities 19,682 31 21,421 33 23,721 36Non-interest-bearing liabilities 15,747 25 15,147 24 15,718 24Total liabilities and equity 63,225 64,357 65,670


Capital Structure Net Debt/Equity

4%

30%

16%

75%

59%

92% 92%

72%65%

0%

20%

40%

60%

80%

100%

1994 1995 1996 1997 1998 1999 2000 2001 March2002

Net Debt/Equity


Atlas Copco Group Return on Capital Employed

12 month values

17,2%

14,1% 14,5%12,6%

12,1%

0%

5%

10%

15%

20%

25%

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

1998 1999 2000 2001 2002


Cash Flow

January – MarchMSEK 2002 2001Operating cash surplus after tax 1,553 1,692Of which depreciation added back 1,057 1,059Change in working capital 668 -135 Cash flow from operations 2,221 1,557Investments in tangible fixed assets -1174 -767Sale of tangible fixed assets 502 460Other investments, net -26 -52Cash flow from investments -698 -359 Operating cash flow 1,523 1,198Company acquisitions / divestments -5 -72Dividend paid -4 -1 Net Cash flow 1,514 1,125


Capital Expenditures in Tangible Fixed Assets

345426 470

649

382 377

927

756

265

2372

1636

606

333 338261

724625

-500

0

500

1000

1500

2000

2500

-1000

0

1000

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

1998 1999 2000 2001 2002

MSEKQuarterly 12 months

Net rental fleet investment = MSEK 921


Earnings per Share and Dividend

20021997 1998 1999 2000

4,08 4,324,75

5,25 5,50

13,95

11,5011,9611,56

14,2114,63

0

5

10

15Quarterly values12 month valuesDividend

2001*Proposed by the Board of Directors

*


Contents



Near-term Outlook

Overall, demand for our products and services is foreseen to stay at the present level in the near-term. The demand for large investment-related equipment in North America is foreseen to remain weak, while the recent increases in consumption and industrial production in the U.S. should positively affect the demand for production-related equipment and tools. Demand for rental equipment is foreseen to show normal seasonal increases in the next two quarters. In Europe, the business cycle is expected to lag behind North America and consequently, no improvement of demand is foreseen in the near-term.Demand in Asia is expected to be good, supported by continued strong growth in China.


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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.”


Contents

Q1 Highlights and Strategic Moves Market Development Business Areas Financials Outlook Additional Information


Orders received, Jan. - Mar. 2002Group Total MSEK 12,058 -3

12 months, Portion of Group Sales, %

Change 2002 / 2001, %

-550

-144

+182

-530

+65

+49


0

10000

20000

30000

40000

50000

60000

70000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 01120

1000

2000

3000

4000

5000

6000

7000Revenues, 12 month values Earnings bef. Int + tax

Long Term Trend



MSEK Jan. - March2002

Jan. - March2001

Change%

Orders Received 4,242 4,216 +1Orders Invoiced 3,785 3,928 -4EBIT 657 738 -11- margin, % 17.4 18.8ROCE, %12 month value

67 65


0

10000

20000

30000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 01120

1000

2000

3000

Revenues, 12 month values EBIT



Rental Service


Jan. - March2001

Change%

Orders Invoiced 3,397 3,659 -7EBIT* 121 328 -63- margin, % 3.6 9.0*Items affecting comparability +45 -60ROCE, %12 month value

3 5

* Net adjustment of fleet depreciation in 2002 and restructuring charges in 2001


0

4000

8000

12000

16000

20000

9612 9712 9812 9912 0012 01120

400

800

1200

1600

2000Revenues, 12 month values EBIT

Rental Service




Jan. - March2001

Change%

Orders Received 2,867 2,969 -3Orders Invoiced 2,823 2,838 -1EBIT 248 277 -10- margin, % 8.8 9.8ROCE, %12 month value

12 15


0

3000

6000

9000

12000

15000

9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 01120

300

600

900

1200






Jan. - March2001

Change%

Orders Received 1,793 1,794 0Orders Invoiced 1,784 1,828 -2EBIT 186 185- margin, % 10.4 10.1ROCE, %12 month value

22 22


-3000

0

3000

6000

9000

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

0

300

600




Group Total

MSEK January - March Change2002 2001 %

Orders Received 12,058 12,488 -3Revenues 11,635 12,101 -4EBIT 1,166 1,463 -20- margin, % 10.0 12.1Profit after financialitems (PAFI)

912 1,049 -13

- margin, % 7.8 8.7


Items Affecting Comparability

MSEK Q1 2002 Q4 2001 Q1 2001Rental Service Adjustment of fleet depreciation +45 Restructuring of operations/stores -100 -60Industrial Technique Restructuring cost Milwaukee -100Group (CT, IT and CMT) New accounting standard +54Group Total +99 -200 -60


Group Totalexcl. items affecting comparability MSEK January - March Change

2002 2001 %

Orders Received 12,058 12,488 -3Revenues 11,635 12,101 -4EBIT 1,067 1,523 -30- margin, % 9.2 12.6Profit after financialitems (PAFI)

813 1,109 -27

- margin, % 7.0 9.2


Earnings Before Interest and Taxes

MSEK %

1988 1990 1992 1994 1996 1998 2000

12 month values

EBIT margin excluding items affecting comparability1999 = 12.1%, 2000 = 13.8%, 2001 = 12.5%, 2002 March = 11.7%

2002March

1741 14861099 1172 1225

18902665 2931

38134345 4470

6392 6130 5833

1179

9,2

11,6

9,3

7,3 7,36,5

9,0

10,911,7

12,7 12,912,3 12,0

11,5

15

13,7

0

1000

2000

3000

4000

5000

6000

7000

0,0

5,0

10,0

15,0

20,0EBIT EBIT margin, % Group EBIT target


Taxes

1137

1723 1622 15721322

36,3

33,3

36,734,5 34,5

0

500

1000

1500

2000

2500

0

10

20

30

40

12 month values 12 month values in % of profit before taxesMSEK %

1998 1999 2000 2001 2002March


Inventories, Customer Receivables and Net Rental Equipment

0

5

10

15

20

25

30

35Inventories Customer receivables Net Rental Equipment

Percent of Sales12 Month Values

1997 1998 1999 2000 2001


Cash and Interest-Bearing Debt

18,196

Mar.2002

10,052

Dec.1998

19,325

Dec.1999

22,270

Dec.2000

Net borrowings

-4922 -8192 -9987 -8091 -6592

-10969-11999

-11594-11370-1940

2118 12371286 1343 1486

-5308

-1450

-1521-1736

-1720

Cash Short-term loans Long-term loans Pensions

20,078

Dec.2001

MSEK


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Atlas Copco Group Q1 Results April 29, 2002. Page 2 April 29, 2002 Contents Q1 Highlights and...

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