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    ATCO A   SE0011166610

ATLAS COPCO AB

(ATCO A)
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Atlas Copco : Quarterly results presentation Q3 2020

10/22/2020 | 03:30am EDT

Q3 results

October 22, 2020

Q3 in brief

  • Year-on-yearorder decline
    • Still impacted by COVID-19
  • Sequential demand recovery
    • Both for service and equipment
  • Healthy operating profit level, given market conditions
  • Strong operating cash flow
  • Proposed dividend of SEK 3.50 per share to be paid in Q4

2

Atlas Copco - Q3 results 2020

Q3 figures in summary

  • Orders received were 24 246 (27 102), organic decline of 6%
  • Revenues were MSEK 24 849 (26 676), organic decline of 2%
  • Adjusted operating profit at MSEK 5 021 (5 880), margin of 20.2% (22.0)
    • Items affecting comparability of MSEK -261(-37)
    • Reported operating profit decreased to MSEK 4 760 (5 843), margin of 19.2% (21.9)
  • Profit for the period was MSEK 3 618 (4 424)
  • Basic earnings per share were SEK 2.98 (3.64)
  • Operating cash flow was MSEK 5 143 (4 643)
  • Return on capital employed was 24% (32)

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

Q1

Q2

Q3

201720172017201720182018201820182019201920192019202020202020

Orders received, MSEK

Revenues, MSEK

Operating margin, %

Adjusted operating margin, %

3

Atlas Copco - Q3 results 2020

Orders received - local currency

100 -5-3

30

-7

+3

23

-12

-8

38

+1

-4

5

-10

-2

4

-3

+4

September 30, 2020

Share of orders received,

Year-to-date vs.

Last3 months vs.

year-to-date, %

previous year, %

previous year, %

4

Atlas Copco - Q3 results 2020

Order growth per quarter

Organic growth, %

30

25

20

15

10

5

0 -5-10-15-20

11 Q1* 11 Q2*

11 Q3* 11 Q4*

12 Q1* 12 Q2*

12 Q3* 12 Q4* 13 Q1*

13 Q2* 13 Q3*

13 Q4* 14 Q1*

14 Q2* 14 Q3* 14 Q4* 15 Q1* 15 Q2*

15 Q3* 15 Q4*

16 Q1* 16 Q2* 16 Q3*

16 Q4* 17 Q1*

17 Q2* 17 Q3*

17 Q4* 18 Q1 18 Q2 18 Q3 18 Q4 19 Q1 19 Q2

19 Q3 19 Q4 20 Q1

20 Q2 20 Q3

*2011-2017 excluding Mining and Rock Excavation Technique business area (now part of Epiroc AB).

5

Atlas Copco - Q3 results 2020

Sales bridge

July - September

January - September

Orders

Orders

MSEK

received

Revenues

received

Revenues

2019

27 102

26 676

80 479

76 437

Structural change, %

+3

+2

+3

+3

Currency, %

-8

-7

-2

-2

Organic*, %

-6

-2

-8

-4

Total, %

-11

-7

-7

-3

2020

24 246

24 849

74 686

74 049

*Volume, price and mix.

6

Atlas Copco - Q3 results 2020

Orders by business area and organic order development*

Power

Technique

Org. order dev. -9%

12%

Industrial

Compressor

Technique

Technique

16%

Org. order dev. -2%

Org. order dev. -15%

47%

25%

Vacuum

Technique

Org. order dev. -6%

* Share of Group orders received 12 months ending September 2020. 3 month organic order development compared to previous year.

7

Atlas Copco - Q3 results 2020

Compressor Technique

  • Orders down 2% organically vs. previous year
    • Large compressors down - smaller increased organically
    • Growth for service
  • Sequential order increase in all areas
  • Revenues increased 4% organically year-on-year
  • Operating profit margin at 23.0% (23.5)
    • Negative sales mix
  • ROCE at 75% (93)

Innovation:

CD+ 20-335, the first compressed air dryer with solid desiccant, providing reduced energy consumption and health and environmental benefits compared to conventional dryers.

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

Q1

Q2

Q3

201720172017201720182018201820182019201920192019202020202020

Orders received, MSEK

Revenues, MSEK

Operating margin, %

8

Atlas Copco - Q3 results 2020

Vacuum Technique

Orders down 6% organically vs. high level in Q3 2019

8 000

40%

‒ Semi equipment down - industrial equipment up

7 000

35%

‒ Double-digit growth in service

6 000

30%

Sequential order growth

5 000

25%

Revenues up 3% organically year-on-year

Operating profit margin at 22.8% (24.7)

4 000

20%

‒ Negative currency

3 000

15%

ROCE at 19% (23)

2 000

10%

1 000

5%

0

0%

Innovation:

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

201720172017201720182018201820182019201920192019202020202020

nEXT730 and EXT930 turbomolecular pumps offering

customer high pumping speed flexible installation and

Orders received, MSEK

Revenues, MSEK

intelligent monitoring and control options.

Operating margin, %

Adjusted operating margin, %

9

Atlas Copco - Q3 results 2020

Industrial Technique

  • Order intake down 15% organically vs. previous year
    • Lower demand across most customer segments
    • Service orders down
  • Sequential improvement vs. low second quarter
  • Revenue decline of 17% organically year-on-year
  • Adjusted operating profit margin at 15.9% (22.0)
    • Large volume drop and dilution from acquisitions
  • ROCE at 16% (36)

Innovation:

Smart.Adjust, a new product that combines visual bead inspection and industrial dispensing optimizing in the application process in battery production.

5 000

40%

4 000

32%

3 000

24%

2 000

16%

1 000

8%

0

0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

201720172017201720182018201820182019201920192019202020202020

Orders received, MSEK

Revenues, MSEK

Operating margin, %

Adjusted operating margin, %

10

Atlas Copco - Q3 results 2020

Power Technique

  • 9% organic order decrease year-on-year
    • Equipment, specialty rental and service all remained below previous year's level
  • Sequential order growth vs. low second quarter
  • Revenues decreased 13% organically
  • Operating profit margin at 14.0% (16.4)
  • ROCE at 19% (29)

Innovation:

HiLight H6+, a new light tower with the lowest noise level on the market, and next generation LED lights to ensure low operational costs for customer.

5 000

40%

4 000

32%

3 000

24%

2 000

16%

1 000

8%

0

0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020

Orders received, MSEK

Revenues, MSEK

Operating margin, %

Adjusted operating margin, %

11

Atlas Copco - Q3 results 2020

Group total

July - September 2020 vs. 2019

July - September

MSEK

2020

2019

Orders received

24 246

27 102

-11%

Revenues

24 849

26 676

-7%

Operating profit

4 760

5 843

-19%

- as a percentage of revenues

19.2

21.9

Net financial items

-64

-65

Profit before tax

4 696

5 778

-19%

- as a percentage of revenues

18.9

21.7

Income tax expense

-1 078

-1 354

-20%

- as a percentage of profit before tax

23.0

23.4

Profit for the period

3 618

4 424

-18%

Basic earnings per share, SEK

2.98

3.64

Return on capital employed, %

24

32

Return on equity, 12 month values, %

27

39

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

Q1

Q2

Q3

201720172017201720182018201820182019201920192019202020202020

Orders received, MSEK

Revenues, MSEK

Operating margin, %

Adjusted operating margin, %

12

Atlas Copco - Q3 results 2020

Profit bridge

July - September 2020 vs. 2019

Items affecting

Volume, price,

comparability and

Share-based

*

MSEK

Q3 2020

mix and other

Currency

acquisitions

LTI* programs

Q3 2019

Atlas Copco Group

Revenues

24 849

-542

-1 955

670

26 676

Operating profit

4 760

-184

-660

-175

-64

5 843

19.2%

21.9%

*LTI = Long term incentive

13

Atlas Copco - Q3 results 2020

Profit bridge - by business area

July - September 2020 vs. 2019

Items affecting

Volume, price,

comparability and

MSEK

Q3 2020

mix and other

Currency

acquisitions

Q3 2019

Compressor Technique

Revenues

11 890

486

-985

75

12 314

Operating profit

2 729

122

-280

-10

2 897

23.0%

23.5%

Vacuum Technique

Revenues

5 928

186

-415

50

6 107

Operating profit

1 354

81

-230

-5

1 508

22.8%

24.7%

Industrial Technique

Revenues

4 221

-822

-285

545

4 783

Operating profit

513

-283

-95

-160

1 051

12.2%

22.0%

Power Technique

Revenues

2 932

-490

-275

0

3 697

Operating profit

410

-141

-55

0

606

14.0%

16.4%

14

Atlas Copco - Q3 results 2020

Balance sheet

MSEK

Sep. 30, 2020

Sep. 30, 2019

Dec. 31, 2019

Intangible assets

48 795

37 956

36 549

Fixed assets and other non-current assets

17 576

18 765

17 680

Inventories

14 704

15 446

14 501

Receivables

27 464

28 504

27 861

Cash and current financial assets

10 394

13 859

15 131

Total assets

118 933

114 530

111 722

Total equity

57 073

50 582

53 290

Interest-bearing liabilities

29 051

27 063

27 143

Non-interest-bearing liabilities

32 809

36 885

31 289

Total equity and liabilities

118 933

114 530

111 722

15

Atlas Copco - Q3 results 2020

Cash flow

July - September

January - September

MSEK

2020

2019

2020

2019

Operating cash surplus

6 023

6 798

18 223

20 012

of which depreciation added back

1 300

1 240

3 877

3 452

Net financial items

310

-60

68

-638

Taxes paid

-1 729

-1 510

-3 905

-4 346

Pension funding

-78

-103

-236

-264

Change in working capital

1 707

237

984

-3 170

Increase in rental equipment, net

-59

-336

-327

-820

Cash flows from operating activities

6 174

5 026

14 807

10 774

Investments of property, plant & eq., net

-333

-176

-1 047

-856

Other investments, net

-362

-229

-938

-750

Cash flow from investments

-695

-405

-1 985

-1 606

Adjustment, currency hedges of loans

-336

22

-371

373

Operating cash flow

5 143

4 643

12 451

9 541

Company acquisitions/ divestments

-123

-6 525

-12 921

-7 527

16

Atlas Copco - Q3 results 2020

Earnings and dividends

25.00

20.00

15.00

15.00

12.00

13.73

13.45

10.00

9.00

11.47

13.60

10.68

9.95

10.01

9.62

9.81

8.16

6.80

Proposed by the

6.30

7.00

6.30

7.00

5.00

6.00

3.50

Board of Directors

5.00

5.50

5.50

4.00

3.50

0.00

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Ordinary dividend per share, SEK

Earnings per share, SEK

Extra ordinary items, SEK

Dividend and redemption per share, SEK

Continuing operations after the

distribution of Epiroc AB

17

Atlas Copco - Q3 results 2020

Near-term outlook

Although the world's economic development remains uncertain, Atlas Copco expects that

the demand for the Group's products and services will remain at current level.

18

Atlas Copco - Q3 results 2020

atlascopcogroup.com

Forward-looking statements

"Some statements herein are forward-looking and the actual outcome could be materially different. In addition to the factors explicitly commented uponother factors could have a material effect on the actual outcome. Such factors include, but are not limited to, general business conditions, fluctuations in exchange rates and interest rates, political developments, the impact of competing products and their pricing, product development, commercialization and technological difficulties, interruptions in supply, and major customer credit losses."

20

Atlas Copco - Q3 results 2020

Disclaimer

Atlas Copco AB published this content on 22 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 October 2020 07:29:10 UTC


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Financials
Sales 2021 110 B 13 192 M 13 192 M
Net income 2021 18 048 M 2 169 M 2 169 M
Net Debt 2021 5 955 M 716 M 716 M
P/E ratio 2021 34,3x
Yield 2021 1,52%
Capitalization 594 B 71 397 M 71 413 M
EV / Sales 2021 5,47x
EV / Sales 2022 5,05x
Nbr of Employees 40 482
Free-Float 82,1%
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Technical analysis trends ATLAS COPCO AB
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Income Statement Evolution
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Mean consensus HOLD
Number of Analysts 23
Average target price 499,71 SEK
Last Close Price 512,00 SEK
Spread / Highest target 24,0%
Spread / Average Target -2,40%
Spread / Lowest Target -41,4%
EPS Revisions
Managers and Directors
NameTitle
Mats Rahmstr÷m President, Chief Executive Officer & Director
Hans-Ola Meyer Chief Financial Officer, SVP-Controlling & Finance
Hans Torgny Strňberg Chairman
Johan Patrik Lennart Forssell Independent Director
Peter ┼ke Wallenberg Independent Director
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