Interim report at March 31, 2001 (unaudited)

Interim report at March 31, 2001 (unaudited) Slower growth - improved results * Order volumes 4 percent above first quarter 2000. * Slowdown of orders in the U.S. * Adjustments of cost structure to current demand level. * Operating profit up 10 percent, at MSEK 1,463, including non- recurring costs of MSEK -60. * Profit after financial items up 11 percent to MSEK 1,049. Positive currency effect about MSEK 100 compared to Q1 2000. * Earnings per share increased 15 percent, to SEK 3.23. January - March Change MSEK 2001 2000 % Orders received 12,488 11,088 +13 Revenues 12,101 10,517 +15 Operating profit 1,463 1,328 +10 - as a percentage of revenues 12.1 12.6 Profit after financial items 1,049 943 +11 - as a percentage of revenues 8.7 9.0 Earnings per share*, SEK 3.23 2.80 +15 Return on capital employed (12 14 15 month value) * Number of shares: 209.6 m. Near-term outlook In North America, the demand for equipment and consumables related to manufacturing and construction output is expected to remain weak. Demand for equipment rental is expected to continue at a higher level than the underlying markets, supported by the outsourcing trend. Overall, the demand in Europe is foreseen to prevail at the present good level. In Asia, the high level of demand is expected to continue, particularly in China. In summary, overall demand for Atlas Copco's products and services is expected to remain unchanged, even though the degree of uncertainty in the outlook has increased. Review of first-quarter business Atlas Copco Group Market development The demand in North America slowed down during the first quarter. Customer purchases from equipment manufacturers decreased compared to the same period last year, partly due to the lower level of activity in the U.S. economy and partly due to a substantial de-stocking within the distribution channels. Demand for rental equipment, however, continued to increase although at a somewhat slower pace than in previous quarters. The demand for investment-related products within the manufacturing and process industry remained favorable as a result of continued productivity enhancing investments. Demand from the mining industry in this region decreased compared to last year. In Europe, the overall level of demand continued to improve, but imbalance still exists in the region. Among the major markets, Italy, France and the U.K. recorded the best demand development in the region with a steady growth, while demand in Germany, primarily from the construction industry, remained relatively low. Demand from both manufacturing and mining industry improved further in Russia. The overall positive development in Asia continued in the quarter. India and South Korea recorded improved demand while the already high level remained in China and southeast Asia. Orders and revenues Orders received totaled MSEK 12,488 (11,088), up 13 percent from the first quarter of 2000. The increase consists of a 4 percent volume gain and a positive translation effect of 9 percentage points. The volume gain was achieved thanks to a further increase in orders for industrial compressors and for rental equipment, while sales of equipment to the construction industry, primarily professional electric tools, decreased. Geographically, the overall positive sales development in Europe and Asia managed to offset the negative impact of a slowing U.S. economy. Revenues increased 15 percent, to MSEK 12,101 (10,517), corresponding to a 5 percent volume gain for comparable units. Earnings and returns Operating profit for the first quarter increased 10 percent, to MSEK 1,463 (1,328), corresponding to a margin of 12.1 percent (12.6). These figures include MSEK 60 in restructuring charges for the Rental Service business area. Favorable foreign exchange effects from a weak Swedish Krona added about MSEK 150 to operating profit compared to last year. A large part of this was attributable to translation effects in March. Adjusted for currency effects and the non-recurring items, the margin was approximately 12 percent. Net financial items amounted to MSEK -414 (-385), of which net interest items accounted for MSEK -423 (-378) and foreign exchange differences for MSEK +9 (-7). The interest cost was negatively affected by the high USD/SEK ratio, while lower short-term interest in the U.S. had a positive effect compared to last year. Profit after financial items rose 11 percent, to MSEK 1,049 (943), corresponding to a margin of 8.7 percent (9.0). The total currency effect was about MSEK 100 positive compared to previous year. Net profit for the quarter totaled MSEK 676 (586), or SEK 3.23 per share (2.80). The return on capital employed was 14 percent (15), and the return on shareholders' equity totaled 13 percent (14) during the past 12 months. The Group's weighted average cost of capital (WACC) is approximately 7.5 percent (8), corresponding to a pretax cost of capital of approximately 11.5 percent. Cash flow and net indebtedness The operating cash surplus after tax for the first quarter reached MSEK 1,692 (1,296). Working capital increased MSEK 135 (decreased 20) in the quarter. Total cash flow from operations reached MSEK 1,557 (1,316), corresponding to 13 percent (13) of Group revenues. Net investments in tangible fixed assets were MSEK 359 (229). Net cash flow after dividends and acquisitions reached MSEK 1,125 (953). Summary cash-flow analysis January - March MSEK 2001 2000 Operating cash surplus 1,692 1,296 after tax of which depreciation 1,059 870 added back Change in working capital -135 20 Cash flow from operations 1,557 1,316 Investments in tangible -767 -775 fixed assets Sale of tangible fixed 408 546 assets Company -72 -134 acquisitions/divestments Cash flow from investments -431 -363 Dividends paid -1 0 Net cash flow 1,125 953 Change in interest-bearing -1,097 -1,379 liabilities Cash flow after financing 28 -426 Liquid funds at beginning 1,237 1,286 of period Translation difference 54 -3 Liquid funds at end of 1,319 857 period The Group's net indebtedness (defined as the difference between interest- bearing liabilities and liquid assets) amounted to MSEK 22,402 (18,782), of which MSEK 1,624 (1,395) was attributable to pension provisions. The debt/equity ratio (defined as net indebtedness divided by shareholders' equity) was 85 percent (87). Investments and depreciation Gross investments in property, machinery, and buildings totaled MSEK 208 (196). Gross investments in rental equipment amounted to MSEK 559 (579). Depreciation on these two asset groups equaled MSEK 231 (222) and MSEK 655 (492) respectively, while amortization of intangible assets was MSEK 173 (156). People At March 31, 2001, the number of employees was 26,442 (26,053). For comparable units, the number of employees decreased by 124 from March 2000. The corresponding decrease for the first quarter 2001 was approximately 600 employees. Share capital Share capital totaled MSEK 1,048 (1,048) at the end of the period, distributed as follows. Class of share Shares outstanding A shares 139,899,016 B shares 69,703,168 Total 209,602,184 Accounting principles This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation RR20, Interim reports. A number of new accounting standards were implemented in Sweden as of January 1, 2001. The application of these new standards did not have any material effect on the Group's financial statements. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/26/20010426BIT01180/bit0001.doc The full report http://www.bit.se/bitonline/2001/04/26/20010426BIT01180/bit0001.pdf The full report