Atlas Copco Group Q1 Results April 28, 2003. 2 Contents Q1 Business Highlights Market Development Business Areas Financials Outlook.
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Atlas Copco Group
Q1 Results
April 28, 2003
April 28, 2003 2
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
April 28, 2003 3
Q1 Highlights
Weaker demand - order volumes down 1%– Weak market conditions in the United States– Good growth in high potential markets
Operating margin at 10.3% (10.0)– Cost savings and price increases offset effect of lower
volumes– Large negative currency effects on sales and profits
Profit after financial items MSEK 956 (912)
EPS up 8% to SEK 3.03
April 28, 2003 4
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
April 28, 2003 5
-4 46
3
+153
33
+125
+1710
Orders received Change in Local Currency
Portion of Group Sales, %
Change in %, Q1 2003 vs. Q1 2002
March 2003
+6
+4
April 28, 2003 6
-446
+63
Portion of Group Sales, %
Change in %, Q1 2003 vs. Q1 2002
March 2003
Q1 - The Americas
Weak demand in the U.S.– Sluggish construction activity, low
manufacturing capacity utilization and effects of the war in Iraq affected market conditions
– Good level of mining activity
South America improved from low level
April 28, 2003 7
+433
+125
Portion of Group Sales, %
Change in %, Q1 2003 vs. Q1 2002
Q1 - Europe and Africa/Middle East
Demand in Europe remained on a relatively good level– Steady growth in Eastern Europe– Stable level of industrial demand offset
weak construction activity in Western Europe
– Good demand for consumables and service
Favorable development in Africa / Middle East, in spite of the war in Iraq.
March 2003
April 28, 2003 8
+153
+1710
Portion of Group Sales, %
Change in %, Q1 2003 vs. Q1 2002
Q1 - Asia and Australia
Another quarter of strong growth in China fuel growth in Asia
Continued growth in Australia
March 2003
April 28, 2003 9
– Change in orders received in % vs. same Quarter previous year
Volume Growth per Quarter
-10
-5
0
5
10
15
20
April 28, 2003 10
January – MarchMSEK Orders Received Revenues2002 12,058 11,635Structure, % +1 +1Currency, % -11 -11Price, % +1 +1Volume, % -1 -2Total, % -10 -112003 10,903 10,400
Group Total
April 28, 2003 11
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
April 28, 2003 12
Compressor Technique
Order volume up 1%
Growth continued for industrial compressors and aftermarket– New products and successful territory management
improve market position
Sales of portable compressors and generators negatively affected by weak construction market
China largest market for the business area
Profit margin improved, despite negative currency effects
April 28, 2003 13
Compressor Technique
%
-15
-10
-5
0
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20
-15
-10
-5
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2098
Q1
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Volume growth: Change in revenues vs. same quarter previous year, %Quarterly operating margin, % %
April 28, 2003 14
Rental Service
Non-residential building market remained weak
Industrial business increased
Rental volumes affected by weak demand and store closures– Flat same store rental revenues
Improved rental rates and higher fleet utilization
EBITDA margin unchanged
Strong cash flow continued
April 28, 2003 15
-15
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Volume growth: Change in rental revenue vs. same quarter previous year, %Quarterly operating margin, % (Business Area)
Rental ServiceRental Revenue Growth
% %
April 28, 2003 16
EBIT - Bridge
EBIT, MUSD Q1 2002 12 3.6%
Contribution Rental Revenue -8 Merchandise & Equipment -4 Used Equipment -2 -14 Price +3 Lower goodwill amortization +5 Cost savings, net +6
Q1 2003 12 4.2%
April 28, 2003 17
Industrial Technique
Order volume flat– Growth for industrial tools through improved
market position– Lower volumes for professional electric tools
in North America
Acquisition of DreBo Werkzeugfabrik completed April 4, 2003 – Turnover MSEK 230
Operating margin negatively affected by currency effects and lower revenues
April 28, 2003 18
%
-15
-10
-5
0
5
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-15
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Q1
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1
Volume growth: Change in revenues vs. same quarter previous year, %Quarterly operating margin, % %
Industrial Technique
April 28, 2003 19
Construction & Mining Technique
Sustained volume growth, + 3% – Increased investments from underground
mines – Continued growth for drilling equipment for
surface applications– Weak demand for light construction equipment
Restructuring charge MSEK 12
Margins negatively affected by weak US dollar
April 28, 2003 20
%
-20
-15
-10
-5
0
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03 Q
1
Volume growth: Change in revenues vs. same quarter previous year, %Quarterly operating margin, % %
Construction & Mining Technique
April 28, 2003 21
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
April 28, 2003 22
Income Statement
MSEK January - March Change2003 2002 %
Orders Received 10,903 12,058 -10Revenues 10,400 11,635 -11EBIT 1,072 1,166 -8- margin, % 10.3 10.0Profit after financialitems (PAFI)
956 912 +5
- margin, % 9.2 7.8
April 28, 2003 23
Balance Sheet March 31, 2003
MSEK Mar. 31,2003 %
Dec. 31,2002 %
Mar. 31,2002 %
Intangible fixed assets 12,598 26 12,956 27 21,909 35Rental equipment 10,616 22 11,294 23 14,770 23Other fixed assets 6,463 14 6,726 14 7,461 12Inventories 6,300 13 5,782 12 6,505 10Receivables 10,225 21 10,554 22 11,094 18Cash and bank 1,516 3 1,356 3 1,486 2Total assets 47,718 48,668 63,225
Equity 20,643 43 20,194 41 27,578 44Minority interest 63 0 160 0 218 0Interest-bearing liabilities 13,749 29 15,050 31 19,682 31Non-interest-bearing liabilities 13,263 28 13,264 27 15,747 25Total liabilities and equity 47,718 48,668 63,225
April 28, 2003 24
Cash Flow
January – MarchMSEK 2003 2002Operating cash surplus after tax 1,425 1,553Of which depreciation added back 837 1,057Change in working capital -36 668 Cash flow from operations 1,389 2,221Investments in tangible fixed assets -496 -1,174Sale of tangible fixed assets 342 502Other investments, net -44 -26Cash flow from investments -198 -698 Operating cash flow 1,191 1,523Company acquisitions / divestments -207 -5Dividend paid 0 -4 Net Cash flow 984 1,514
April 28, 2003 25
Capital Expenditures in Tangible Fixed Assets
-500
0
500
1000
1500
2000
2500
-1000
0
1000
2000
3000
4000
5000
Machinery & buildings, quarterly Net, Rental Equipment, quarterlyNet. Rental Eq.+Mach.& buildings, 12 months Net, Rental Equipment, 12 monthsNet. Rental Eq.+Mach.& buildings, quarterly
1999 2000 2001 2002 2003
MSEKQuarterly 12 months
Net rental fleet investment = MSEK 353
April 28, 2003 26
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
April 28, 2003 27
Near-term Outlook
Demand in the Group’s two main regions, North America and Europe, is not expected to show any material change in the near term. Key business indicators such as capacity utilization, industrial production and building and construction activity in these regions are still weak.
Demand from the mining industry and the overall demand in Asia is expected to remain favorable.
April 28, 2003 28
The
face
of i
nter
actio
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April 28, 2003 29
Cautionary Statement
“Some statements herein are forward-looking and the actual outcome could be materially different. In addition to the factors explicitly commented upon, the actual outcome could be materially effected by other factors like for example, the effect of economic conditions, exchange-rate and interest-rate movements, political risks, impact of competing products and their pricing, product development, commercialization and technological difficulties, supply disturbances, and the major customer credit losses.”
April 28, 2003 30
Contents
Q1 Business Highlights
Market Development
Business Areas
Financials
Outlook
Additional Information
April 28, 2003 31
0
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9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112 02120
1000
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7000
Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)
Long Term Trend
Excluding goodwill impairment charge in Q3 2002
April 28, 2003 32
0
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9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112 02120
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Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)
Compressor Technique
April 28, 2003 33
Rental Service
0
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9712 9812 9912 0012 0112 02120
500
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Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)
Excluding goodwill impairment charge in Q3 2002
April 28, 2003 34
Industrial Technique
0
5000
10000
15000
9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112 02120
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Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)
April 28, 2003 35
Construction & Mining Technique
-3000
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9012 9112 9212 9312 9412 9512 9612 9712 9812 9912 0012 0112 0212-300
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Revenues, 12 month values, MSEK (left axis)Earnings before interest and tax, MSEK (right axis)
April 28, 2003 36
Items Affecting Comparability
MSEK Q1 ‘03 Q4 ‘02 Q3 ‘02 Q2 ‘02 Q1 ‘02Rental Service Goodwill impairment charge -6,950 Reduced goodwill amortization +45 +51Industrial Technique Restructuring cost AET/Milwaukee -48Construction & Mining Technique Restructuring cost Wagner -12 -68Group Total +33 -17 -6,950 -48 0
April 28, 2003 37
Group Totalexcl. items affecting comparability
MSEK January - March Change2003 2002 %
Orders Received 10,903 12,058 -10Revenues 10,400 11,635 -11EBIT 1,039 1,166 -11- margin, % 10.0 10.0Profit after financialitems (PAFI)
923 912 +1
- margin, % 8.9 7.8
April 28, 2003 38
Return on Capital Employed
12 month values
0%
5%
10%
15%
20%
25%
ROCE Weighted average cost of capital (WACC), pre-tax
1999 2000 2001 2002 2003
Excluding goodwill impairment charge in Q3 2002
April 28, 2003 39
Inventories, Customer Receivables and Net Rental Equipment
0
5
10
15
20
25
30
35Inventories Customer receivables Net Rental Equipment
Percent of Sales12 Month Values
1999 2000 2001 2002 2003
April 28, 2003 40
Cash and Interest-Bearing Debt
12,233
Mar.2003
Net borrowings
-8192 -9987 -8091 -2450
-11999-11594
-10822-10543
-1450
1286 13431237 1356 1516
-1388
-10969
-1521
-1736
-1778-1818
Cash Short-term loans Long-term loans PensionsMSEK
13,694
Dec.2002
19,325
Dec.1999
22,270
Dec.2000
20,078
Dec.2001
April 28, 2003 41
The
face
of i
nter
actio
n
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