Atlas Copco AB (



Q3 2010 Earnings Call

October 22, 2010 08:30 am ET


Ronnie Leten - President & CEO

Hans Ola Meyer- SVP of Controlling and Finance


Nico Dil - JPMorgan

James Moore - Redburn

Daniel Cunliffe - RBS

Ben Maslen - Merrill Lynch

Ola Kinnander - Bloomberg

Colin Gibson - HSBC

Fredric Stahl - UBS

Arnaud Brossard - Exane BNP Paribas


Hans Ola


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Thank you [Pereira] and very welcome to everybody to this presentation of the Third Quarter Results for Atlas Copco. I particularly welcome also the participants on the telephone conference of course. We will do the usual format. I will very soon hand over to Ronnie who will takes us through his comments on the quarter results and the trends and after that we will immediately jump into the Q&A session. So I don’t think I waste anymore than just to hand it over to you Ronnie.



Thank you Hans Ola and as usually, I will refer to the slides so that we are sure we are talking about the same slides. Let’s go immediately to the highlights so slide number two. We were very pleased to see this strong order growth in all regions if you see later on the slides and also we see that happening in all customer segments. Record order intake and I think it’s not a surprise for anyone when you see this regions Asia, South America and Australia and we should not forget but we had a very, very good development in the after market.

Record operations margins and record operating profit also in absolute terms coming from good lot in all the different areas, a good after market, solid pricing efficiencies measure which we have taken for many, many months and the years before. And last but not least, I think one thing what is paying back now is also our continuous push in innovation and common but state of the art products which our customers also like to work with. The statement also on the market organization. We keep investing further intensifying our network. You have seen lately we opened also a special office in Panama and also we are having in overrating tool, logistic sent us one in US for giving better service to our customers and supporting our after market and also in Nanjing in China for giving a better performance in Asia on that topic.

If we then go to a bit on the figures, 35% organic growth which I believe is a very good achievement. Revenue plus 18, I think we see stress in the supply chain but it doesn’t really effect us so much that we cannot keep it going on the output. And then, I guess third point and I would like to spend a minute on that 21.9% as the margin and 3.782 billion when it comes to operating profit. And of course we also know that we had this 100 million SEK restructuring. I think I must say a very strong achievement on the operating profit.

And the operating cash flow of course now, we entering in other phase. We are investing in our business in receivables and inventory but Hans Ola will show you a little bit later on that where it comes from. So summarized, I think a very good achievement in quarter three. All this you received globally, you see all very strong development in all regions but let’s go immediately to slide number five when we talk about the Americans. A very strong North America, you see surplus 49% and then we see that as well for equipment as for aftermarket and we see that also in the industry and we see also an improvement on the construction part. Rental companies are ordering so that makes it good for us. Quincy, the acquisition we did early January is performing very well and is representing a little bit less than 10% of the growth. So if you take that away, it would around the 40%. So a very solid development in North America which we also see in Canada and Mexico. South America continue, it is maybe a boring story when I say it but it really goes on continuously good development in Brazil, in Peru and Chile. So that’s going on and of course, you can see only a plus 30% but they came a bit earlier in the recap last year. So we comparing here also, they be very strong, relative strong you should say quarter, last year.

Europe, talk first on that. Plus 26 okay as it is also said on the slide to be compared with week quarter three but anyhow plus 26. A bit of a mix too where we see Nordic, East Europe, Russia doing very well where than say maybe south of (inaudible) where you can see a bit of doubt in the development. We then look at Africa, Middle East. There we have a bit of mix picture where southern part of Africa is doing well. So you see it’s of course the mining industry where it’s a little bit softer in the Middle East but anyhow also here we had last year a very solid quarter also.

In all these areas as well in Europe as in African, Middle East we see good development of the aftermarket. Asia, Australia I don’t know what I have to say on this it all goes up, up, up. You see it also at plus 60, plus 96 for Australia. We had a record from Kazakhstan which was the highest we ever had here and also for the business area so we are very proud that we got that but we also see extremely good development in India. Everybody talks these days about China but we should not forget that India is very strong market for us and it is now already number four for Altas Copco.

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