Atlas Copco : Quarterly results presentation Q3 2020

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, %

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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).

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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.

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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, %

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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, %

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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%

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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."

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Atlas Copco - Q3 results 2020