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Atlas Copco Group

Atlas Copco Group. Q4 Results February 2, 2004. Contents. 2003 Summary Q4 Business Highlights Market Development Business Areas Financials Outlook. 2003 Summary. Resumed volume growth, up 2% Increased market presence, good development of aftermarket and continued flow of new products

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Atlas Copco Group

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  1. Atlas Copco Group Q4 Results February 2, 2004

  2. Contents • 2003 Summary • Q4 Business Highlights • Market Development • Business Areas • Financials • Outlook

  3. 2003 Summary • Resumed volume growth, up 2% • Increased market presence, good development of aftermarket and continued flow of new products • Improved profitability, in spite of currency development • Operating margin 12% (11) and ROCE 17% (12) • Cash flow remained very strong • Operating cash flow, MSEK 5,609 (5,599) • Net cash flow, MSEK 3,620 (3,722) • Board propose 30% rise in dividend to 7.50 • Revised dividend policy - to distribute approximately 40-50% of earnings per share (previously 30-40%).

  4. Earnings per Share and Dividend SEK ¤ * * Proposed by the Board of Directors ¤ Earnings per share excluding goodwill impairment charge

  5. Contents • 2003 Summary • Q4 Business Highlights • Market Development • Business Areas • Financials • Outlook

  6. Q4 - Highlights • Increased volume • Improved demand from manufacturing and process industries • Stability in construction and mining • Improved profitability • Positive volume and price development • Negative currency effect continued • Continued efficiency improvement • Cash flow remained strong

  7. Q4 - Figures in summary • Order volume up 5% • Operating margin at 12.8% (11.6) • Profit after financial items MSEK 1,377 (1,254) • Negative currency effect MSEK 245 • Earnings per share at SEK 4.47 • Operating cash flow at MSEK 1,292 (1,402)

  8. Contents • 2003 Summary • Q4 Business Highlights • Market Development • Business Areas • Financials • Outlook

  9. Orders received - Local currency December 2003 Group total +4% YTD (+7%, 3 months) 35 +7 +7 42 -1 +3 11 +22 +22 6 +4 +4 3 +12 +37 3 +13 +22 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. Q4 - The Americas December 2003 • Gradual improvement in North America • Demand from manufacturing and process industries improved somewhat, but… • …low capacity utilization affect investments • …U.S. non-residential building remained at recent low levels, affecting demand for rental equipment • Strengthened demand in South America 42 -1 +3 3 +12 +37 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, %

  11. Q4 - Europe and Africa/Middle East December 2003 • Improved demand in Europe • Increased demand for compressors and tools and related aftermarket products and services from the manufacturing and process industries • Strong growth in Russia and good development in Germany and France • Slight improvement in Africa/Middle East 35 +7 +7 6 +4 +4 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, %

  12. Q4 - Asia and Australia December 2003 • Positive development continued • Strong growth in China • Increased demand for compressors in most markets in the region • Another quarter of positive development in Australia 11 +22 +22 3 +13 +22 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, %

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

  14. Group Total Sales Bridge

  15. Contents • 2003 Summary • Q4 Business Highlights • Market Development • Business Areas • Financials • Outlook

  16. Compressor Technique • Order volume up 7% • Aftermarket products and services grew in all regions • Healthy growth for industrial compressors • Portable compressors and generators saw demand improve from low levels • Asia, South America and many markets in Europe had a strong quarter • Margin at 18.4% (19.2) • Revenue volumes, prices and efficiency measures mitigate large negative currency effects

  17. Compressor Technique % %

  18. Rental Service • Continued weak non-residential building activity • Rental revenues increased 2% in USD • Price increase of 3,5% • Fleet utilization close to 65% in the quarter • Operating margin at 9.3% (6.2) • EBITDA at 28% (26) • Successful management of rental rates • Cost savings in payroll and depreciation partially offset by rising health care and insurance cost

  19. U.S. Construction October, 2003

  20. Rental Service Rental Revenue Volume Development % %

  21. Industrial Technique • Order volume up 4% • Good demand from motor vehicle industry drive growth in industrial tools • Volumes for professional electric tools improved • Aftermarket products, services and accessories, assisted by acquired business, showed good growth in all regions • Restructuring projects close to finalization • Operating margin at 12.1% (11.0)

  22. Industrial Technique % %

  23. Construction & Mining Technique • Order volume growth 7% • Mining orders continued to be strong • Continued good development for surface drilling rigs and flat order intake for underground drilling rigs for construction • Growth in aftermarket business in all regions • Move of loaders business to Sweden near completion • Profit margin improved • Higher revenue volume and price increases offset negative impact from currency

  24. Construction & Mining Technique % %

  25. Contents • 2003 Summary • Q4 Business Highlights • Market Development • Business Areas • Financials • Outlook

  26. Income Statement

  27. Balance Sheet December 31, 2003

  28. Cash Flow

  29. Capital Expenditures in Tangible Fixed Assets Net rental fleet investment = MSEK 1 175 MSEK 12 months Quarterly 1999 2000 2001 2002 2003

  30. Contents • 2003 Summary • Q4 Business Highlights • Market Development • Business Areas • Financials • Outlook

  31. Near-term Outlook The recent positive demand development for Atlas Copco’s products and services is expected to continue. The manufacturing and process industries are expected to increase their investments in productivity enhancing equipment and demand more aftermarket products and services. The demand from the construction and mining industries is expected to remain at present levels.

  32. The face of interaction

  33. 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.”

  34. Contents • 2003 Summary • Q4 Business Highlights • Market Development • Business Areas • Financials • Outlook • Additional Information

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

  36. Compressor Technique

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

  38. Industrial Technique

  39. Construction & Mining Technique

  40. Return on Capital Employed 12 month values 1999 2000 2001 2002 2003 • Excluding goodwill impairment charge in Q3 2002

  41. Atlas Copco Group Inventories, Customer Receivables and Net Rental Equipment Percent of Sales 12 Month Values 1999 2000 2001 2002 2003

  42. Capital Structure Net Debt / Equity

  43. Cash and Interest-Bearing Debt MSEK Net borrowings 19 325 Dec. 1999 22 270 Dec. 2000 20 078 Dec. 2001 13 694 Dec. 2002 7 613 Dec. 2003

  44. The face of interaction

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