CEO comments on Atlas Copco's 1998 report

12 feb 1999

The Atlas Copco Group achieved an operating profit for full-year 1998 which was 14 percent higher than for 1997. "The operating profit improved thanks to the rental service business, somewhat higher volumes, and efficiency gains," said Giulio Mazzalupi, President and Chief Executive Officer of Atlas Copco. "Profit after financial items increased, giving a margin above the 10 percent we aim for over a business cycle."<BR>

"Positive development in Europe and the United States offset the effects of lower demand, mainly in Asia, caused by the financial crisis that proved to be longer and deeper than anticipated," Mazzalupi commented. "However, we saw demand slow even more towards the end of the year, particularly in investment in larger industrial and mining machinery. We expect this negative trend to continue in the first part of 1999." Atlas Copco's revenues were up 12 percent, at SEK 33,740m., and orders received were 7 percent higher, at SEK 32,979 m.

At the same time, Atlas Copco has experienced strong development in the field of equipment rental in the United States. Prime Service achieved revenues of SEK 4010 m. for 1998, which on a pro forma basis was 29 percent higher than last year. The operating margin was 14.2 percent, including amortization of goodwill on the initial acquisition. "Our strategy of aiming to increase revenues from use of products has proven itself the best contributor to a higher growth rate and operating margin. We have managed to enter a new business area that will be extremely important for our future growth," Mazzalupi said. "The results of the Prime acquisition are in line with "and in the case of dilution of earnings even better than our expectations of 18 months ago."

Since joining the Group, Prime has acquired eight rental companies in the United States and Mexico. It has also integrated the U.S. subsidiary Atlas Copco Rental, Inc., to better provide industrial firms with rental equipment, which opens up new growth opportunities for the Prime division.

New Fourth Business Area: The Rental Service business area was formed at January 1, 1999, and will be reported separately in the interim report for the first three months of 1999. The new business area is responsible for further exploring and developing of the customer-driven rental service. The business area consists of Prime -Prime Equipment and Prime Energy - a leading company in the equipment rental industry in the United States. For the time being, Atlas Copco's president and CEO Giulio Mazzalupi will act as Business Area Executive.

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 at the Group's web site:

More detailed information on the 1998 financial results is published in the preliminary report for 1998.

The interim report on the Atlas Copco Group's operations for the first three months of 1999 will be published on April 20, 1999.

For further information, please contact:
Annika Berglund, Vice President, Corporate Communications, (media)
phone +46 8 743 8070, mobile +46 70 322 8070, [email protected]
Hans Ola Meyer, Senior Vice President, Group Treasurer, (analysts)
mobile +46 70 588 8292, [email protected]