Interim report at June 30, 2002 (unaudited)

[REMOVED GRAPHICS] July 18, 2002 ATLAS COPCO Interim report at June 30, 2002 (unaudited) Order volumes stabilized · Order volumes down 1% from Q2 2001, compared to 7% drop in Q1. Currency translation effects turned negative. · Profit after financial items was MSEK 1,074 (1,310). · Industrial Technique took restructuring provision of MSEK 48. · Operating margin equaled 10.8% (13.1) · Earnings per share were SEK 3.22 (3.99). · Operating cash flow totaled MSEK 1,029 (1,280). Note: All comparative figures are for the second quarter of 2001, unless otherwise stated. April-June Chang January- Chang e June e MSEK 2002 2001 % 2002 2001 % Orders received 12,6 13,2 -4 24,6 25,6 -4 41 00 99 88 Revenues 12,1 12,8 -6 23,7 24,9 -5 05 80 40 81 Operating profit* 1,30 1,69 -23 2,47 3,15 -22 4 2 0 5 - as a percentage of 10.8 13.1 10.4 12.6 revenues Profit after 1,07 1,31 -18 1,98 2,35 -16 financial items* 4 0 6 9 - as a percentage of 8.9 10.2 8.4 9.4 revenues *Items affecting +93 0 +192 -60 comparability Earnings per share, 3.22 3.99 6.02 7.22 SEK Equity capital per 122 127 share, SEK Return on capital 12 14 employed (12-month value) *Net effect of restructuring provisions and accounting adjustments. Near-term demand outlook Overall, the demand for Atlas Copco's products and services is expected to remain at the present level. Investment in the two main regions, North America and Europe, is not expected to increase, while recent increases in manufacturing output in the United States are likely to support ongoing modest growth in demand for production-related equipment and tools in that market. Demand for rental equipment in the United States is expected to remain unchanged in the next quarter. Demand in Asia is expected to continue to develop favorably. Summary of half-year results Atlas Copco Group Orders received by the Atlas Copco Group in the first six months of 2002 decreased 4%, to MSEK 24,699 (25,688), all related to a decrease in volumes for comparable units. The translation effect from foreign exchange rate fluctuations was neutral in the first six months. Revenues declined 5%, to MSEK 23,740 (24,981), corresponding to a 5% decline in volume. The Group's operating profit decreased, to MSEK 2,470 (3,155), down 22% and corresponding to a profit margin of 10.4% (12.6). Profit after financial items amounted to MSEK 1,986 (2,359), down 16% and corresponding to a margin of 8.4% (9.4). The impact of foreign exchange rate fluctuations on profit after financial items was neutral for the first half-year. Operating cash flow before acquisitions and dividends equaled MSEK 2,552 (2,478). Review of second quarter Atlas Copco Group Market development The demand in North America improved from the first quarter but remained clearly below the level of the preceding year. Rental equipment saw some seasonal demand improvement in northern parts of the region following the winter season, as expected. However, the level of activity in the crucial non-residential building and industrial sectors remained well below the previous year's. Demand for investment-related products for large projects, including the automotive industry, also remained lower than in the same period the preceding year. Low capacity utilization and general concerns over the strength of the economic recovery in the United States were the main reasons for this. Production-related equipment and tools experienced a slight improvement in demand from a low level, reflecting growth in manufacturing output. With few exceptions, markets and customer segments in South America had a negative development. In Brazil, demand was satisfactory for some product groups, but businesses suffered overall from political and financial uncertainties. Demand in Europe remained stagnant owing to relatively low capacity utilization in most manufacturing and process industries, but no further deterioration was noted. Demand from the construction industry was also largely unchanged. The trend for demand in France and Great Britain was clearly negative for most sectors, while Germany was mixed, with no overall trend apparent. In the Nordic and East European regions, demand increased. Thanks to some large projects, growth continued in the Middle East. In southern Africa, demand deteriorated somewhat. In Asia, demand from manufacturing and construction customers rose significantly. Apart from Japan, where the negative development continued, most markets contributed to growth. China reported outstanding advances again, thanks to large projects and increased demand from ongoing business. Orders and revenues Orders received totaled MSEK 12,641 (13,200), down 4% from the second quarter of 2001. This corresponds to a 1% decrease in volumes after adjusting for a 4% negative translation effect and a small positive acquisition effect. The comparison was affected by a slightly longer second quarter this year, a couple of working days more. In North America, representing 50% of Group sales, volumes remained somewhat lower than in the same quarter in 2001, while in Europe, representing 30% of sales, a small volume increase was noted. Asia/Australia and Africa/Middle East, representing 11% and 5% of total sales respectively, grew considerably. South America, 4% of the total, reported a sharp drop in sales. Revenues decreased 6%, to MSEK 12,105 (12,880), corresponding to a 2% volume drop for comparable units. Earnings and profitability Operating profit dropped 23%, to MSEK 1,304 (1,692), corresponding to a margin of 10.8% (13.1). The decrease in the margin resulted primarily from lower volumes and lower rental rates in the Rental Service business area. Operating profit includes a restructuring provision of MSEK 48, for the planned move of certain assembly operations for electric tools from Germany to the Czech Republic. New accounting standards regarding capitalization of development costs and the adjustment of rental fleet useful life estimates had a positive effect on profit of MSEK 96 and MSEK 45 respectively. Excluding the effects of these items, MSEK +93 in total, the operating margin was 10.0%. Net financial items amounted to MSEK -230 (-382), of which net interest items accounted for MSEK -199 (-382) and foreign exchange differences MSEK -31 (0). Interest expense declined year-on-year owing to strong cash flow and lower effective interest rates. Profit after financial items decreased 18%, to MSEK 1,074 (1,310), for a margin of 8.9% (10.2). Following several quarters of net positive foreign exchange effects, in Q2 2002 these items produced a net negative of about MSEK 50. The negative effects were caused primarily by the depreciation of some Latin American currencies. Net profit totaled MSEK 674 (836), or SEK 3.22 (3.99) per share. The return on capital employed during the 12 months to June 30, 2002, was 12% (14), and the return on shareholders' equity 11% (13). The Group's weighted average cost of capital (WACC) is calculated at 8.5% (7.5), corresponding to a pretax cost of capital of approximately 13%. Cash flow and net indebtedness The operating cash surplus after tax reached MSEK 1,605 (1,762), corresponding to 13% (14) of Group revenues. Working capital increased marginally, MSEK 19 (decrease of 84). Total cash flow from operations reached MSEK 1,586 (1,846). Net investment in tangible fixed assets was MSEK 436 (518). continued healthy level of activity in residential building supported demand in the United States. Sales through U.S. industrial/construction distributors increased again, following a long period of flat or negative sales growth. The launch of a premium line of Milwaukee-branded professional electric tools in Europe started successfully in Great Britain during the quarter. The launch will continue throughout the region during Q3 and Q4. A restructuring plan for the Atlas Copco Electric Tools division was announced in the quarter. This includes a relocation of certain assembly operations from Germany to the Czech Republic. Revenues were MSEK 2,827 (3,054), down 7%. This corresponded to a 4% drop in volumes. Operating profit was MSEK 188 (303), corresponding to a margin of 6.7% (9.9). The operating profit includes a restructuring provision of MSEK 48. Apart from the restructuring provision, the lower operating margin reflects the drop in revenues and the negative effect of a smaller proportion of sales in industrial tools compared to professional electric tools. Return on capital employed (past 12 months) was 12% (15). For further information: Media Annika Berglund Senior Vice President Group Communications Phone: +46 8 743 8070 Mobile: +46 70 322 8070 Analysts Mattias Olsson Investor Relations Manager Phone: +46 8 743 8291 Mobile: +46 70 518 8291 Internet site for the Atlas Copco Group Presentations from Atlas Copco For your convenience, a PowerPoint presentation of Atlas Copco's second- quarter results will be published on > Investor Relations > Presentations Interim report at September 30, 2002 The third quarter report will be published on October 24, 2002. Capital Market Days - September 19-20, 2002 Atlas Copco will host capital market days in Antwerp, Belgium, on September 19-20, 2002. Please, look at > Investor Relations > Calendar ------------------------------------------------------------ This information was brought to you by Waymaker The following files are available for download: The full report The full report