Atlas Copco : Quarterly Report Q4 2021

Press release from Atlas Copco AB

January 25, 2022

Atlas Copco

Interim report on Q4 and full-year summary 2021

Continued high demand, record revenues and operating profit

The comparison figures presented in this report refer to previous year unless otherwise stated.

• Orders received increased 30% to MSEK 33 525 (25 868), organic growth of 26%
• Revenues increased 15% to MSEK 29 533 (25 738), organic growth of 12%
• Operating profit increased 16% to MSEK 6 248 (5 373), corresponding to a margin of 21.2% (20.9)
• • Adjusted operating profit, excluding items affecting comparability, was MSEK 6 462 (5 402), corresponding to a margin of 21.9% (21.0)
• Profit before tax amounted to MSEK 6 250 (5 293)
• Basic earnings per share were SEK 4.01 (3.45)
• Operating cash flow at MSEK 6 650 (6 459)
• Return on capital employed was 27% (23)
• The Board of Directors proposes:
• • Ordinary dividend for 2021 of SEK 7.60 (7.30) per share, to be paid in two installments
  • Extra distribution of SEK 8.00 per share through mandatory redemption of shares
  • 4:1 share split of ordinary shares

	October - December		January - December
MSEK	2021	2020		2021	2020
Orders received	33 525	25 868	30%	129 545	100 554		29%
Revenues	29 533	25 738	15%	110 912	99 787		11%
EBITA*	6 615	5 723	16%	25 015	20 473		22%
- as a percentage of revenues	22.4	22.2		22.6	20.5
Operating profit	6 248	5 373	16%	23 559	19 146		23%
- as a percentage of revenues	21.2	20.9		21.2	19.2
Profit before tax	6 250	5 293	18%	23 410	18 825		24%
- as a percentage of revenues	21.2	20.6		21.1	18.9
Profit for the period	4 889	4 196	17%	18 134	14 783		23%
Basic earnings per share, SEK	4.01	3.45		14.89	12.16
Diluted earnings per share, SEK	4.00	3.44		14.85	12.14
Return on capital employed, %	27	23

* Operating profit excluding amortization of intangibles related to acquisitions.

Near-term demand outlook

Atlas Copco expects that the customers' business activity level will remain at the current high level.

Previous near-term demand outlook (published October 21, 2021):

Atlas Copco expects that the customers' business activity level will remain high, but weaken compared to the very high level in the third quarter.

Quarterly and annual financial data in Excel format can be found at: https://www.atlascopcogroup.com/en/investor-relations/financial-reports-presentations/latest-results

Atlas Copco Group Center
Atlas Copco AB	Visitors address:	Telephone: [phone]	A Public Company (publ)
SE-105 23 Stockholm	Sickla Industriväg 19	www.atlascopcogroup.com	Reg. No: 556014-2720
Sweden	Nacka		Reg. Office Nacka

Atlas Copco - Q4 2021

Summary of full-year 2021

Orders and revenues

Orders received in 2021 increased 29% to record MSEK

129 545 (100 554), corresponding to an organic growth of 33%. Revenues also reached a record and increased 11% to MSEK 110 912 (99 787), corresponding to a 14% organic increase.

Sales bridge

	January - December
	Orders
MSEK	received	Revenues
2020	100 554	99 787
Structural change, %	+2	+2
Currency, %	-6	-5
Organic*, %	+33	+14
Total, %	+29	+11
2021	129 545	110 912
*Volume, price and mix.

Orders, revenues and operating profit margin

140 000										35%
120 000										30%
100 000										25%
80 000										20%
60 000										15%
40 000										10%
20 000										5%
0									0%
2011* 2012* 2013* 2014* 2015* 2016*	2017	2018	2019	2020	2021
			Orders received, MSEK			Revenues, MSEK
			Operating margin, %			Adjusted operating margin, %

• 2011-2016figures are best estimated numbers, as the effects of the split of the Group and restatements for IFRS 15 are not fully reconciled.

Results and cash flow

Operating profit increased 23% to record MSEK 23 559

(19 146), corresponding to a margin of 21.2% (19.2). Items affecting comparability includes a change in provision for share-relatedlong-term incentive programs, reported in Common Group Items of MSEK -687(-312). Previous year also included other items affecting comparability of MSEK -540. Adjusted operating profit increased 21% to MSEK

2 (19)

24 246 (19 998) corresponding to a margin of 21.9% (20.0). The higher operating margin was mainly explained by increased revenue volumes. Profit before tax amounted to MSEK 23 410 (18 825), corresponding to a margin of 21.1% (18.9). Income tax expense amounted to MSEK 5 276

(4 042), corresponding to an effective tax rate of 22.5 (21.5%).

Profit for the period was MSEK 18 134 (14 783). Basic and diluted earnings per share were SEK 14.89 (12.16) and SEK 14.85 (12.14), respectively.

Operating cash flow (important internal KPI, but not an IFRS measurement, and hence reconciled on page 14) before acquisitions, divestments and dividends reached MSEK 19 378 (18 910).

Capital distribution and proposed share split

The Board of Directors proposes to the Annual General Meeting an ordinary dividend of SEK 7.60 (7.30) per share for the 2021 fiscal year. In order to facilitate a more efficient cash management, the ordinary annual dividend is proposed to be paid in two installments, the first with record date April 28, 2022, and the second with record date October 21, 2022. The first installment amount will be SEK

1. per share. The second installment amount will be SEK

1. per share (or SEK 0.95 per share if the proposed 4:1 split is decided by the Annual General Meeting).
   The Board also proposes to the Annual General Meeting a share redemption procedure, whereby every share is split into one (1) ordinary share and one (1) redemption share.
   The redemption share is automatically redeemed at SEK

1. per share. Combined with the proposed ordinary dividend shareholders will receive SEK 15.60 per share which corresponds to a total capital distribution of MSEK
   19 004 to shareholders. This excludes shares currently held by the company. If the Annual General Meeting 2022 decides in accordance with the Board's proposal the payment of the redemption share would be made around June 13, 2022.
   Finally the Board proposes to the Annual General Meeting a 4:1 split of the ordinary share (A and B shares).

Personnel stock option program

The Board of Directors will propose to the Annual General Meeting a similar performance-basedlong-term incentive program as in the previous years, increasing the number of possible candidates in the program from 335 to 500. For Group Management, participation in the plan will require own investment in Atlas Copco shares. It is proposed that the plan is covered as before through the repurchase of the company's own shares. The details of the proposal will be communicated in connection with the Notice of the Annual General Meeting.

Atlas Copco - Q4 2021

Review of the fourth quarter

Market development

The overall order intake for Atlas Copco's products and services increased significantly compared to the previous year. The order intake for all compressor types, vacuum pumps, and power equipment grew strongly. Solid order growth was also achieved for industrial assembly solutions, machine vision solutions, and the Group's service businesses.

Sequentially, and compared to the previous quarter, the customers' activity level remained high. However, order volumes for industrial compressors, vacuum equipment, and industrial assembly solutions decreased, while order volumes for power equipment and the service business grew.

Year-on-year, solid order growth was achieved in all major regions and in all business areas.

Geographic distribution of orders received

	Atlas Copco Group
October - December 2021	Orders Received, %	Change*, %
North America	24	+36
South America	3	+8
Europe	30	+28
Africa/Middle East	4	-15
Asia/Oceania	39	+32
Atlas Copco Group	100	+28

*Change in orders received compared to the previous year in local currency.

3 (19)

Sales bridge

	October - December
	Orders
MSEK	received	Revenues
2020	25 868	25 738
Structural change, %	+2	+2
Currency, %	+2	+1
Organic*, %	+26	+12
Total, %	+30	+15
2021	33 525	29 533
*Volume, price and mix.

Orders, revenues and operating profit margin

35 000											35%
30 000											30%
25 000											25%
20 000											20%
15 000											15%
10 000											10%
5 000											5%
0											0%
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
2019	2019	2019	2019	2020	2020	2020	2020	2021	2021	2021	2021

Orders received, MSEK		Revenues, MSEK
Operating margin, %		Adjusted operating margin, %

Geographic distribution of orders received and revenues

October - December 2021	Compressor Technique, %	Vacuum Technique, %	Industrial Technique, %	Power Technique, %	Atlas Copco, %
	Orders	Revenues	Orders	Revenues	Orders	Revenues	Orders	Revenues	Orders	Revenues
	received		received		received		received		received
North America	23	22	20	21	30	32	31	28	24	24
South America	5	5	0	0	2	3	7	8	3	4
Europe	37	33	14	14	38	33	40	36	30	28
Africa/Middle East	6	6	1	1	2	2	7	8	4	4
Asia/Oceania	29	34	65	64	28	30	15	20	39	40
	100	100	100	100	100	100	100	100	100	100

Atlas Copco - Q4 2021

Revenues, profits and returns

Revenues reached record MSEK 29 533 (25 738), corresponding to an organic growth of 12%. Currency had a positive effect of 1%, and acquisitions added 2%.

The operating profit increased 16% to 6 248 (5 373) and includes a change in provision for share-relatedlong-term incentive programs, reported in Common Group Items of MSEK -214(-29).

Adjusted operating profit increased 20% to MSEK 6 462 (5 402), corresponding to a margin of 21.9% (21.0). Increased revenue volumes and currency were the main explanations for the higher operating margin. Acquisitions had a small negative effect on the margin (see revenue and operating profit bridge below).

Net financial items were MSEK +2 (-80) whereof interest net at MSEK -57(-43). Other financial items, including financial exchange differences were MSEK +59 (-37). Profit before tax amounted to MSEK 6 250 (5 293), corresponding to a margin of 21.2% (20.6). Corporate income tax amounted to MSEK -1 361 (-1 097), corresponding to an effective tax rate of 21.8% (20.7).

Profit for the period was MSEK 4 889 (4 196). Basic and diluted earnings per share were SEK 4.01 (3.45) and SEK 4.00 (3.44), respectively.

The return on capital employed during the last 12 months was 27% (23). Return on equity was 30% (27). The Group uses a weighted average cost of capital (WACC) of 8.0% as an investment and overall performance benchmark.

Revenues and operating profit - bridge

4 (19)

Operating cash flow and investments Operating cash surplus increased to MSEK 7 626

(6 858). Net financial items and taxes paid amounted to MSEK 123 (-450). Change in working capital was positive by MSEK 524 (positive 1 182). The positive impact of increased liabilities was partly offset by increased inventories, which was the main explanation for the relatively smaller working capital improvement. Net investments in rental equipment were MSEK -119(-89) and net investments in property, plant and equipment were MSEK -628(-373).

Operating cash flow (important internal KPI, but not an IFRS measurement, and hence defined on page 14) reached MSEK 6 650 (6 459).

Net indebtedness

The Group's net indebtedness amounted to MSEK 8 151 (16 421), of which MSEK 3 114 (3 488) was attributable to post-employment benefits. The Group's interest-bearing liabilities have an average maturity of 4.1 years. The net debt/EBITDA ratio 0.3 (0.7) and the net debt/equity ratio was 12% (31).

Acquisition and divestment of own shares

During the quarter, 507 277 series A shares, net, were acquired for a net value of MSEK 303. These transactions are in accordance with mandates granted by the Annual General Meeting and relate to the Group's long-term incentive programs. See page 18.

Employees

On December 31, 2021, the number of employees was 42 862 (40 160). The number of consultants/external workforce was 3 762 (2 907). For comparable units, the total workforce increased by 3 249 from December 31, 2020.

		Volume, price,			Items affecting	Share-based
MSEK	Q4 2021	mix and other	Currency	Acquisitions	comparability	LTI* programs	Q4 2020
Atlas Copco Group
Revenues	29 533	2 995	340	460	-	-	25 738
Operating profit	6 248	620	435	5	0	-185	5 373
	21.2%						20.9%

*LTI= Long term incentive

Atlas Copco - Q4 2021						5 (19)
Compressor Technique
	October - December		January - December
MSEK	2021	2020		2021	2020
Orders received	13 834	11 867	17%	55 012	47 401	16%
Revenues	13 131	12 446	6%	49 657	47 329	5%
EBITA*	3 233	3 034	7%	12 205	10 952	11%
- as a percentage of revenues	24.6	24.4		24.6	23.1
Operating profit	3 141	2 965	6%	11 874	10 658	11%
- as a percentage of revenues	23.9	23.8		23.9	22.5
Return on capital employed, %	93	79

• Operating profit excluding amortization of intangibles related to acquisitions.

• Continued strong demand and record revenues
• Strong growth for all compressor types, and continued growth for service
• Steady margin at 23.9%

Sales bridge

	October - December
	Orders
MSEK	received	Revenues
2020	11 867	12 446
Structural change, %	+2	+2
Currency, %	+1	+1
Organic*, %	+14	+3
Total, %	+17	+6
2021	13 834	13 131
*Volume, price and mix.

Industrial compressors

The order intake for industrial compressors increased significantly compared to the previous year, with a similar pace for large and smaller-sized compressors. The strong year-on-year growth was generated by improved demand in all major geographical regions.

Sequentially, and compared to the previous quarter, order volumes decreased somewhat, primarily due to lower demand in Asia.

Gas and process compressors

Order volumes for gas and process compressors increased considerably compared to the previous year but were basically unchanged sequentially.

Geographically, and compared to the previous year, the order intake increased in most regions.

Compressor service

The demand for service remained high, and the order intake increased in all regions.

Innovation

A new range of oil-injected screw compressors, the GA 22-

37 VSDS, was introduced. The new GA 22-37 VSDS range is even more energy-efficient than the previous VSD+ models and provides energy savings by up to 60% compared to fixed speed compressors.

Acquisitions

In the quarter, the business area acquired S.T.E.R.I. srl, an Italian compressor distributor and service provider with 19 employees.

Revenues and profitability

Revenues reached record MSEK 13 131 (12 446), corresponding to an organic increase of 3%.

The operating profit reached MSEK 3 141 (2 965), corresponding to a margin of 23.9% (23.8). Currency and increased organic revenue volumes supported the margin, while increased costs related to supply chain constraints, investments in marketing and digitalization, and acquisitions affected the margin negatively. Return on capital employed (last 12 months) increased to 93% (79).

Orders, revenues and operating profit margin

15 000	30%
12 500	25%
10 000	20%
7 500	15%
5 000	10%
2 500	5%
0	0%

	Q1	Q2	Q3	Q4	Q1		Q2	Q3	Q4	Q1	Q2	Q3	Q4
2019	2019	2019	2019	2020	2020	2020	2020	2021	2021	2021	2021
	Orders received, MSEK			Revenues, MSEK			Operating margin, %