August 4, 1998
Stockholm, August 4, 1998 --- For the first six months of 1998, the Atlas Copco Group achieved operating profit 26 percent stronger than in the first half of 1997. "Despite higher financial costs for our expansion into the equipment rental business in the U.S., profit after financial items was up 6 percent on last year," said Giulio Mazzalupi, President and Chief Executive Officer of Atlas Copco.
Atlas Copco maintained or strengthened its strong competitive position in most markets. Revenues were up 22 percent, at SEK 16,784 m., and orders received were 14 percent higher at 16,913 m. After adjusting for acquisitions, orders received remained at last year's level. "Positive development in Europe was offset by a drop in Asia, while U.S. demand remained at a high level," Mazzalupi commented.
"Comparable units were stronger than last year. In spite of market conditions, the Construction and Mining business area delivered better results, thanks to various initiatives to increase their internal efficiency. At the same time, we stepped up our R&D spending in all areas this spring to invest in tomorrow's business product technology as well as business processes."
Atlas Copco made a forceful move into the field of equipment rental by acquiring Prime Service, Inc., in the United States, one year ago. "The equipment rental market in the Unites States is estimated at USD 20 billion today and forecast to continue growing 15-20 percent a year," said Mazzalupi, "This is one of the most interesting businesses in our industry. Also, since joining the Group, Prime has acquired six rental companies in the U.S. and one in Mexico. And their revenues for the first six months of 1998 were approximately 30 percent higher than last year."
"Financing costs for entering the equipment rental business somewhat diluted our net profit. This dilution was less than 5 percentage points. However, we have achieved excellent growth, even higher than anticipated. And this is what we need to help us reach our target of 8 percent volume growth per year."
Mazzalupi summarized the report by saying that earnings for the full year 1998 are expected to be higher than in 1997.
Atlas Copco is an international group of industrial companies with its head office in Stockholm, Sweden, and 97 percent of revenues outside Sweden. Atlas Copco companies develop, manufacture, and market electric and pneumatic tools, compressors, construction and mining equipment, assembly systems, and motion control products. Additional information about Atlas Copco is available on our World Wide Web site: www.atlascopco.com
More detailed information on the financial results will be published in the interim report for the first six months of 1998.
The interim report on the Atlas Copco Group's operations during the first nine months of 1998 will be published on October 22, 1998.
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