October 23, 2001
Stockholm, Sweden, October 23, 2001 - In the third quarter of 2001, the Atlas Copco Group’s earnings increased, and orders grew 10 percent and revenues 11 percent. Giulio Mazzalupi, President and CEO commented, "I am pleased with the results, considering the market conditions, and particularly with the continued very strong cash flow that was generated - this is crucial to the business."
Revenues increased to MSEK 13,041 (11,795). The operating margin dropped to 12.5 percent (14.4). All business areas but Rental Service stayed solid. “Lower rental volume, and a larger proportion of used equipment sales, reduced the margin for the Rental Service business area.” Profit after financial items increased 3 percent, to MSEK 1,287 (1,245), including positive exchange rate effects of about MSEK +125. The margin was 9.9 percent (10.6).
Order intake for larger industrial and portable compressors developed favorably. Sales of tools and construction equipment were fragile. North American industrial and professional electric tool sales and rental revenue were affected by the events of September 11, in particular.
“Major investments in product development are paying off, and we have gained market shares for compressors. Following the use-of-products strategy, we increased the proportion of after-market activities, which positively supports results in this period of weakening business conditions.”
The Group is making adjustments to its production structure. “In India, we have consolidated the production of construction tools. We are concentrating manufacturing of rock tools to one site in Sweden, and are launching programs to improve production efficiency in the electric tool business.” In the Rental Service business area, activities to further improve capital efficiency and territory management continue.
In the third quarter, the Atlas Copco Group took important steps in line with strategy. “We have increased our presence in China in terms of production capacity, sales, and service. Yesterday, a new laboratory in Belgium was inaugurated, which will enable shorter time-to-market for new product development.”
Atlas Copco is basing its near-term activities on the current demand situation, which is as follows:
Still weak in North America and relatively good in Europe, the Middle East, and Africa. In South America and Asia, the demand is now declining from recent good level. Contingency plans to cope with a more negative scenario have been implemented or are ready to be executed.
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Atlas Copco is an international group of industrial companies with its head office in Stockholm, Sweden. In 2000, the Group had revenues of more than SEK 46 billion, with 98 percent of revenues outside Sweden, and more than 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 web site, www.atlascopco-group.com, which provides access to current news about the Company.
Some statements in this report are forward-looking, and the actual outcomes could be materially different. In addition to the factors explicitly discussed, other factors could have a material effect on the actual outcomes. Such factors include but are not limited to general business conditions, fluctuations in exchange rates and interest rates, political developments, the impact of competing products and their pricing, product development, commercialization and technological difficulties, interruptions in supply, and major customer credit losses.
More detailed information on results is published in the interim report for the period.