October 22, 1998
For the first nine months of 1998, the Atlas Copco Group achieved an operating profit 19 percent higher than for the first nine months of 1997. "More than half of the increase in operating profit resulted from the acquisition of Prime," said Giulio Mazzalupi, President and Chief Executive Officer of Atlas Copco. "The profit after financial items was up 5% with a margin above the 10% we aim for over a business cycle."
Atlas Copco’s revenues were up 15 percent, at SEK 24 895 m., and orders received were 10 percent higher at 24 917 m. After adjustments for acquisitions, orders received were up 1 % on the figure for the preceding year. "The financial crisis which began in Asia has spread to other parts of the world, including Russia and South America," commented Mazzalupi. "As a result, we have seen a slowdown in demand during the period, particularly for investment in larger industrial machinery. There were delays, and even some cancellations of orders, especially for large industrial and process compressors."
On the other hand, Atlas Copco foresees continued robust development in the field of equipment rental in the United States, which involves Prime Service, Inc.. "Through a combination of organic growth and acquisitions, Prime continues to grow at a fast pace. It reported strong revenues for the first nine months, 27 percent up on last year," said Mazzalupi, "Since joining the Group, Prime has acquired eight rental companies in the United States and Mexico. We have also recently combined the operations of Prime and our U.S. subsidiary Atlas Copco Rental, Inc., to better provide industrial firms with rental equipment. By taking this step we have further increased the growth opportunities for the Prime division."
Atlas Copco sees, in the short-term, customer demand remaining flat overall, but with a risk. "The present turmoil in financial markets is a threat to the overall level of industrial activity in the world."
Mazzalupi summarized the report by saying that earnings for the full year 1998 are expected to be higher than for 1997.