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March 20, 2001
Houston and Scottsdale, U.S., March 20, 2001-Atlas Copco Rental Service today announced a slow start of the year. "The rationalization and efficiency measures announced in relation to the merger between Prime and RSC have been executed, but we must take further actions to achieve targeted operating results," said Tom Bennett, Business Area Executive for Rental Service.
"The slowdown in the construction and manufacturing industry activity has affected us more than anticipated. Also, we experienced weather conditions worse than normal for the season. This has reduced our revenue growth for rental products in the first quarter of the year,” said Bennett. The demand from the equipment rental market continues to grow, but at a slower pace than anticipated. "Our rental business also had some negative effects on revenues from 28 store consolidations. However, we consider those as being short-term and related to the first quarter only." Bennett said, “The operating costs for Rental Service are too high and the rental fleet is too big for the present level of operation." The Rental Service business area is reducing fixed and variable costs, including a reduction of the workforce of 10-15 percent, while maintaining the present high service level to their customers. About half of the reduction has already been executed, and is related to the previously announced merger between Prime and RSC last fall. The effect from these actions will materialize gradually during the year. The new measures include a restructuring into a more flat organization with fewer management layers, to safeguard quick reactions to any type of changes. The new slimmer and more effective organization will be fully operational during the second quarter. Investments for new rental equipment will be adjusted in accordance to demand. “I am confident that our organization has the right capabilities to carry through these changes. We have strong brands, excellent people, and a territory coverage which will support any step to boost efficiency.” Following the reorganization, Art Droege, Deputy Executive of the Rental Service business area will step into the position of Chief Operating Officer and President of Rental Service Corporation. Bennett concluded, “As the chairman of the company, I will work closely with Art and the other key management of Rental Service Corporation, to have an efficient rationalization process.” Atlas Copco Rental Service is a business area within Atlas Copco, with one division Rental Service Corporation. The division operates with three brands, RSC, Prime Industrial, and Prime Energy serving construction rental customers and industry rental customers in North America. More information is found on www.rentalservice.com. Atlas Copco is an international group of industrial companies with its head office in Stockholm, Sweden. In 2000, the Group had revenues of over SEK 46 billion, with 98 percent of revenues outside Sweden, and over 26,000 employees. Atlas Copco companies develop, manufacture, and market industrial and professional tools, compressed air equipment, construction and mining equipment, and assembly systems, and offer related service and equipment rental. Additional information about Atlas Copco is available at the Group’s website, www.atlascopco-group.com, which provides access to current news about the Company. For further information, please contact: Art Droege, Deputy Senior Executive Vice President, Atlas Copco Rental Service Phone +1 480 905 33 90, mobile +1 602 206 8515, [email protected] Kim Edwards, Communications Director, Atlas Copco Rental Service (ISP) Phone +1 480 905 33 46, mobile +1 602 432 37 34, [email protected] Annika Berglund, Senior Vice President, Group Communications phone +46 8 743 8070, mobile +46 70 322 8070, [email protected] Hans Ola Meyer, CFO Phone +46 8 743 8292, mobile +46 70 588 8292, [email protected]