This is how we do business

Atlas Copco is characterized by focused businesses in a decentralized organization, global presence, a stable service business, professional people, and an asset-light and flexible manufacturing setup. By providing professional service, technical competence, application knowledge and digital capabilities the Group builds close customer relationships through direct and indirect channels.

Vision, strategy and financial goals

Atlas Copco’s vision is to become and remain First in Mind—First in Choice of its customers and other principal stakeholders. The Group aims to continuously deliver sustainable, profitable growth with an increased positive impact on society and the environment, thus creating shared value. Read more about our strategy and focus areas here.

Financial goals:

* Annual revenue growth of 8% over a business cycle

* Sustained high return on capital employed

* Annual dividend distribution about 50% of earnings per share

Structure and governance

Atlas Copco’s organization is based on the principle of decentralized responsibilities and authorities (see organization chart below). The organization consists of both operating and legal units. Each operating unit has a business board reflecting the operational structure of the Group. The duty of the business board is to serve in an advisory and decision-making capacity concerning strategic and operative issues. It also ensures the implementation of controls and assessments. Each legal company has a legal board focusing on compliance and reflecting the legal structure of the Group. The Board of Directors is responsible for the organization and management of the Group, regularly assessing the Group’s financial situation and financial, legal, social and environmental risks, and ensuring that the organization is designed for satisfactory control. The President and CEO is responsible for the daily management of the Group following the Board’s guidelines and instructions. The President and CEO is responsible for ensuring that the organization works towards achieving the goals for sustainable, profitable growth. The President and CEO leads the Group Management, which also consists of the business area presidents and four functional heads. The business areas are responsible for developing their respective operations by implementing and following up on strategies and objectives to achieve sustainable, profitable growth. The divisions are separate operational units, responsible for delivering results in line with the strategies and objectives set by the business area. Each division has global responsibility for a specific product or service offering. A division can have one or more product companies (units responsible for product development, manufacturing and product marketing), distribution centers, and several customer centers (units responsible for customer contacts, sales and service) dedicated or shared with other divisions. Regional holding functions are established world-wide to support the divisional structure of the Group and to represent Group Management.

Organization structure of Atlas Copco in 2021

Sales and service

Customer focus is a guiding principle for Atlas Copco. The ambition is to build close relationships with customers and help them increase their productivity in a sustainable way. Customer engagement, sales and service take place through direct and indirect channels (mainly distributors), online as well as offline, to maximize market presence. Digital interaction becomes increasingly important and creates opportunities. Atlas Copco aims at always being available to customers when they need us, wherever we can best support them. The Group has a global reach with sales in more than 180 countries. Sales of equipment is performed by engineers with strong application knowledge and the ambition to offer the best solution for the customer’s specific application. Service and maintenance performed by skilled technicians is an integral part of the Group’s offer. Service is the responsibility of dedicated divisions in each business area. This includes the development of service products, sales and marketing, technical support, and service delivery and follow-up, all supported by data analysis from connected equipment.

Manufacturing and logistics

The philosophy is to manufacture inhouse those components that are critical to the performance of the equipment. For other components, Atlas Copco leverages the capacity and the competence of business partners and cooperates with them to continuously achieve product and process improvements. Approximately 75% of the production cost of equipment represents purchased components and about 25% are internally manufactured core components, assembly costs and overhead. Equipment represents about 64% of revenues and Atlas Copco has organized its manufacturing and logistics to be able to quickly adapt to changes in demand. The manufacturing of equipment is primarily based on customer orders and only some standard, high-volume equipment is manufactured based on projected demand. The assembly of equipment is, to a large degree, carried out in own facilities, and we take responsibility for the products’ functionality and quality. The assembly is typically lean and flow-oriented and the final product is normally shipped directly to the end user. The organization works continuously to use human, natural and capital resources more efficiently, while ensuring highest quality. 

Innovation

Atlas Copco believes that there is always a better way of doing things.Innovation and product development are of greatest importance and products are designed internally. A key activity is to design new or improved products that provide sustainable and tangible benefits in terms of productivity, energy efficiency and/or lower life-cycle cost for the customer, and at the same time can be efficiently produced. Atlas Copco protects technical innovations with patents. Innovation also includes better processes to improve flow and utilization of assets and information. Innovation will improve customer satisfaction and contribute to strengthening customer relations, the brand, as well as financial performance. Overcapacities and inefficiencies must always be challenged. 

Read more about Innovation

Investments in fixed assets and working capital

The need for investments in property, plant and equipment are moderate due to the manufacturing philosophy and can be adapted to short and medium-term changes in demand. Most investments are related to machining equipment for core manufacturing activities and to production facilities, primarily for core component manufacturing and assembly operations. The Group’s working capital requirements are affected by the relatively high share of sales through own customer centers, which affects the amount of inventory and receivables. In an improving business climate with higher volumes, more working capital will be tied up. If the business climate deteriorates, working capital will be released.

Acquisitions

Acquisitions are primarily made in, or very close to, existing core businesses. All divisions are required to map and evaluate businesses that are adjacent and that may offer tangible synergies to existing businesses. All acquired businesses are expected to contribute positively to economic value added. You can find a list of significant acquisitions here.

Reporting

Financial statements are prepared in accordance with law and International Financial Reporting Standards. However, financial results are not the only measure of success, which is why Atlas Copco also integrates sustainability and social responsibility into its business reporting. You can find more information on audit and financial reporting here.

Leadership and human capital

In Atlas Copco, leadership is defined as the ability to create lasting results. Atlas Copco believes that competent and committed leaders are crucial to achieve sustainable profitable growth. All managers are entitled to a mission statement from their manager, outlining the long-term expectations and goals in both quantitative and qualitative terms. The timeframe of a mission is typically three to five years. Based on the mission statement, the manager is expected to develop a vision, clarifying how the mission will be achieved, including the strategies, the organization and the people needed to make it happen. Atlas Copco strives to be a good employer to attract and develop qualified and motivated people. All employees are responsible for their own professional career, supported by continuous competence development and the internal job market. Employees are encouraged to grow professionally and to take up new positions. If the company needs to adapt its capacity in a deteriorating business climate, the first action is to stop recruitment. Layoffs are the last resort.