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Atlas Copco Group

Atlas Copco Group. Q4 Results February 1, 2007. Contents. Q4 Business Highlights Market Development Business Areas Financials Capital Distribution 2006 Summary Outlook. Q4 - Highlights. Continuous efforts to strengthen market presence and penetration pay off

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Atlas Copco Group

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  1. Atlas Copco Group Q4 Results February 1, 2007

  2. Contents • Q4 Business Highlights • Market Development • Business Areas • Financials • Capital Distribution • 2006 Summary • Outlook

  3. Q4 - Highlights • Continuous efforts to strengthen market presence and penetration pay off • Double digit growth in all regions • Record results • Significant capital distribution • 18.4 million B-shares repurchased in Q4 2006 for BSEK 3.8 • Proposed dividend and share redemption of BSEK 27.3 • SEK 44.75 per share • Completion of the equipment rental business divestment • Total gain of MSEK 7 789

  4. Q4 - Figures in summary • Organic order growth 21% • Revenues up 13% to MSEK 13 582, 18% organic growth • Operating profit up 15% to MSEK 2 464, a margin of 18.1% (17.9) • Includes one time charge of MSEK 83 related to pension provisions • Profit before tax at MSEK 2 382 (2 097), a margin of 17.5% (17.5) • Profit for the period of MSEK 9 172 (2 182) • from continuing operations MSEK 1 767 (1 535) • from discontinued operations MSEK 7 405 (647)

  5. Contents • Q4 Business Highlights • Market Development • Business Areas • Financials • Capital Distribution • 2006 Summary • Outlook

  6. Orders received - Local currency Group total +23% YTD, + 24% last 3 months (Structural change +3% YTD, +3% last 3 months) December 2006

  7. Q4 - The Americas • Continued strong demand from most customer segments in North America • Manufacturing industry investments at good level • Solid demand for mining and construction equipment in the region • Improvement in South America • Investments in mining, construction and compressed air equipment particularly strong December 2006

  8. Q4 - Europe and Africa/Middle East • Healthy growth in Europe • Continued strong growth for all types of compressed air equipment • Solid demand from the construction and mining industries • Strong growth for industrial tools to general industry but slow demand from the motor vehicle industry • Russia continued to grow rapidly • Strong growth in the Africa / Middle East region • Significant order increase for construction and industrial equipment in the Middle East December 2006

  9. Q4 - Asia and Australia • High growth in Asia • Strong development in all major markets • Large compressor orders in China, on top of already strong underlying growth • Significant growth for mining in Australia December 2006

  10. Volume Growth per Quarter Atlas Copco Group, continuing operations • Change in orders received in % vs. same Quarter previous year

  11. Atlas Copco Growth – Orders received Atlas Copco Group, excl. Professional Electric Tools and Rental Service

  12. Atlas Copco Group – Sales Bridge

  13. Contents • Q4 Business Highlights • Market Development • Business Areas • Financials • Capital Distribution • 2006 Summary • Outlook

  14. Atlas Copco Group Operating Profit and Return On Capital Employed (ROCE) by Business Areas

  15. Compressor Technique • Very strong order growth in all markets • Organic order growth 25% • Increased market presence and penetration support equipment and aftermarket growth • Several large orders won in the gas and process business • Operating profit up 12%. • Margin at 21%, excluding one-time pension provision • Prime Energy part of the Compressor Technique business area as of January 1, 2007 • New Specialty Rental Division

  16. Compressor Technique

  17. Construction and Mining Technique • Continued strong demand, particularly in mining • Organic order growth 26% • 19th consecutive quarter with volume growth • Operating profit up 23%. • Record margin at 16.6% • Launch of new range of small hydraulic breakers

  18. Construction and Mining Technique

  19. Industrial Technique • Strong growth within general industry • Weaker demand from the motor vehicle industry • Significant increase of the aftermarket business • Strategic acquisition in the vehicle service business • Record operating margin

  20. Industrial Technique

  21. Rental Service 2006 • Result of discontinued operations • Operating results, net of tax 1 324 • Effect of discontinued depreciation, IFRS 889 • Capital gain 6 900 • Profit from discontinued operations, net of tax 9 113 • Continuing operations in 2006 • Revenues MSEK 757 • Operating profit MSEK 252, margin 33,3% • Prime Energy and Prime Mexico will be integrated into the rental operations in the Compressor Technique business area on January 1, 2007

  22. Contents • Q4 Business Highlights • Market Development • Business Areas • Financials • Capital Distribution • 2006 Summary • Outlook

  23. Group Total

  24. Balance Sheet

  25. Cash Flow Including discontinued operations

  26. Contents • Q4 Business Highlights • Market Development • Business Areas • Financials • Capital Distribution • 2006 Summary • Outlook

  27. Capital Distribution Background • Substantial increase in Group profits in the last 3 years • Very strong financial position already before RSC divestment • Substantial cash proceeds from RSC divestment • Reduced operating risk after RSC divestment

  28. Atlas Copco Group Basic earnings per share, dividend and redemption * Proposed by the Board of Directors

  29. Dividend and Redemption * Proposed by the Board of Directors

  30. Redemption Procedure Example: Based on Board proposal • Split 3:1 • 2 new ordinary shares • 1 new redemption share • Redeemed automatically for SEK 40 1 share (A or B) 2 new shares (A or B) 1 new redemption share SEK 40

  31. Contents • Q4 Business Highlights • Market Development • Business Areas • Financials • Capital Distribution • 2006 Summary • Outlook

  32. 2006 Full Year Summary • Strong demand from most customer segments, double digit order growth in all regions, and improved market positions • Order intake up 23%, up 18% in volume • Revenues up 20% to MSEK 50 512, up 15% in volume • Operating profit up 33% to MSEK 9 203, a margin of 18.2% (16.4) • Profit before tax at MSEK 8 695 (6 863), a margin of 17.2% (16.3) • Significant capital distribution proposed

  33. Contents • Q4 Business Highlights • Market Development • Business Areas • Financials • Capital Distribution • 2006 Summary • Outlook

  34. Near-term Outlook The demand for Atlas Copco’s products and services, from most customer segments such as mining, construction, and the manufacturing and process industries, is expected to remain at the current high level.

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  36. 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.”

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