SLIDE 1
Mats Rahmström President and CEO Hans Ola Meyer CFO
Agenda
November 26, 2019 Atlas Copco Capital Markets Day
Recent performance update 1 This is what we do and how 2 Focus on sustained profitable growth 3
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Atlas Copco Group Mats Rahmstrm President and CEO Hans Ola Meyer - - PowerPoint PPT Presentation
Atlas Copco Group Mats Rahmstrm President and CEO Hans Ola Meyer - - PowerPoint PPT Presentation
Atlas Copco Group Mats Rahmstrm President and CEO Hans Ola Meyer CFO Agenda 1 Recent performance update 2 This is what we do and how 3 Focus on sustained profitable growth 4 Financial goals and performance Summary 5 November 26,
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SLIDE 3
Recent performance update
SLIDE 4
29% 35% 36%
Recent performance update
Q3 in brief
‒ Order growth despite uncertainties in the global economy ‒ Mixed equipment demand ‒ Continued growth for service in all business areas ‒ Order growth primarily driven by Asia and the Americas ‒ Revenue growth, 4% organically ‒ Operating profit margin at 21.9% ‒ Solid operating cash flow of MSEK 4 643
Near-term outlook
The demand for Atlas Copco’s products and services is expected to be somewhat lower than the level in the third quarter.
November 26, 2019 Atlas Copco Capital Markets Day
ORDERS RECEIVED YEAR TO DATE: = Q3 Year-on-Year =Q3 VS. Q2
+6% % 0% +21%
- 7%
+13%
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SLIDE 5
- Growth through a broad offer for critical
customer processes
- Innovation is key
- Supporting customers transformation towards
Industry 4.0 and automation
- Acceleration in service
Industrial Technique
November 26, 2019 Atlas Copco Capital Markets Day
Orders, revenues and operating margin
5 0% 8% 16% 24% 32% 40% 1 000 2 000 3 000 4 000 5 000
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Orders received, MSEK Revenues, MSEK Operating margin, % Adjusted operating margin, %
ROCE 36%
Self-pierce riveting Adhesive dispensing Flow drill fastening Tightening Drilling Material removal
SLIDE 6
- Growth through innovation and presence
- Solid operating margin
- Strong recurring business
- Increased focus on industrial solutions
Power Technique
November 26, 2019 Atlas Copco Capital Markets Day
ROCE 29%
0% 8% 16% 24% 32% 40% 1 000 2 000 3 000 4 000 5 000
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Orders received, MSEK Revenues, MSEK Operating margin, % Adjusted operating margin, % 6
Channel management Recurring business Developing generator and pump market Portable air and handheld tools Market coverage Digitalizing customer experience Increased focus
- n industrial
solutions
Orders, revenues and operating margin
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This is what we do and how
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Why we are doing what we are doing
November 26, 2019 Atlas Copco Capital Markets Day
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Our industrial ideas empower our customers to grow and drive society forward. This is how we create a
better tomorrow.
PEOPLE PLANET PROFIT
Sustainable, profitable growth
People Ethics Products and service Safety and well-being The Environment Profitability
SLIDE 9
SERVICES
This is what we do
– We help customers around the world to succeed
November 26, 2019 Atlas Copco Capital Markets Day
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ELECTRONICS PROCESS INDUSTRY CONSTRUCTION MOTOR VEHICLE INDUSTRY
* Percentage shows orders received by customer category 12 months end September 2019.
15% 22% 10% 19% 13% 7%
GENERAL MANUFACTURING
SLIDE 10
EXAMPLE:
Power Equipment Manufacturer in USA
SERVICES CONSTRUCTION
– Our customers’ success is our success
November 26, 2019 Atlas Copco Capital Markets Day
CUSTOMER NEEDS:
- Improve rework process in the production of electrical
cabinets which is causing excessive warranty claims, customer dissatisfaction and potential thermal events in the field (safety concerns) OUR SOLUTION:
- Introduced a full error proofing solution combining
- perator guidance and tightening equipment to secure
quality control CUSTOMER VALUE:
- Elimination of failures in the field, estimated around
$40,000 per year
- Improved tightening traceability and operator guidance
in the rework process
OTHERS MOTOR VEHICLE INDUSTRY PROCESS INDUSTRY
GENERAL MANUFACTURING
ELECTRONICS
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SLIDE 11
CONSTRUCTION SERVICES
November 26, 2019 Atlas Copco Capital Markets Day
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CUSTOMER NEEDS:
- Reduce energy and operating costs
- Increase performance and process up-time
OUR PATENTED SOLUTION:
- Innovative efficient and compact pumping mechanism
- Application optimized materials and utility controls
CUSTOMER VALUE:
- Reduced energy costs by up to 60% per pump
- Higher process throughput from each pump
- Extended service intervals increasing uptime
OTHERS PROCESS INDUSTRY GENERAL MANUFACTURING
ELECTRONICS
MOTOR VEHICLE INDUSTRY
EXAMPLE:
Semiconductor customer
– Our customers’ success is our success
SLIDE 12
EXAMPLE:
Ford Power Train, Detroit, USA
GENERAL MANUFACTURING OTHERS
November 26, 2019 Atlas Copco Capital Markets Day
CUSTOMER NEEDS:
- Increase asset utilization
- Decrease line-length and line footprint
- Allow for efficient multi-variant production
OUR SOLUTION:
- Replaced three robot and tool stations with
- nly one station
CUSTOMER VALUE:
- Reduction of floor space
- Ease of rebalancing (one station instead of three)
- Multiple transmission variants capabilities in one station
SERVICES CONSTRUCTION ELECTRONICS
MOTOR VEHICLE INDUSTRY
PROCESS INDUSTRY
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– Our customers’ success is our success
SLIDE 13
GENERAL MANUFACTURING
November 26, 2019 Atlas Copco Capital Markets Day
CUSTOMER NEEDS:
- Reduce energy costs
OUR SOLUTION:
- Air Scan audit
- Replaced old compressors with VSD compressors
- Upgrade of air control system for optimized usages
CUSTOMER VALUE:
- Reduced energy usage of more than 1 000 000 kWh
in one year (= 30% energy savings)
OTHERS SERVICES ELECTRONICS MOTOR VEHICLE INDUSTRY
PROCESS INDUSTRY
CONSTRUCTION
EXAMPLE:
Crisp bread factory
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– Our customers’ success is our success
SLIDE 14
ELECTRONICS
November 26, 2019 Atlas Copco Capital Markets Day
CUSTOMER NEEDS:
- New drilling compressors that delivers high performance
at low fuel consumption OUR SOLUTION:
- Test of newly developed portable compressors to validate
potential energy savings
- Replaced current compressors with Atlas Copco DrillAir range
CUSTOMER VALUE:
- Outperformance of comparable products, resulting
in 20% fuel savings for the customers
GENERAL MANUFACTURING OTHERS MOTOR VEHICLE INDUSTRY PROCESS INDUSTRY
CONSTRUCTION
SERVICES
EXAMPLE:
Cimentaciones Abando
– A geotechnical drilling company in Spain
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– Our customers’ success is our success
SLIDE 15
MOTOR VEHICLE INDUSTRY ELECTRICAL AND TECHNOLOGY
November 26, 2019 Atlas Copco Capital Markets Day
CUSTOMER NEEDS:
- 24/7 without failures – aeration process can never stop
- Very low noise – no community impact
- Very low energy consumption
OUR SOLUTION:
- Two high efficient screw blower ZS110VSD
- Total responsibility service plan
CUSTOMER VALUE:
- Adaption delivery of compressed air to the amount
- f water in tanks
- 100% clean air
- Energy savings of 50% compared to previous
installation equals to 4 500 euro/month
GENERAL MANUFACTURING OTHERS PROCESS INDUSTRY CONSTRUCTION
SERVICES
EXAMPLE:
Waste water treatment Lake Michigan, USA
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– Our customers’ success is our success
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Focus on profitable niches and delivering lasting value
November 26, 2019 Atlas Copco Capital Markets Day
- Leading positions in our defined markets
- Leading, differentiated technology
- Key products in customers’ operations
- Smaller part of customers’ investment
- Healthy service potential
- Balance sheet agility
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Long term growth and profitability
Atlas Copco Capital Markets Day November 26, 2019
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0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 90 000 100 000 110 000 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2018
- Sep. 2019
12M Revenues, MSEK Operating margin, % Adjusted operating margin, % ROCE, %
MSEK
* Figures for the years 2010-2016 are best estimated numbers, as the effects of the distribution of Epiroc and restatements for IFRS15 are not fully reconciled.
SLIDE 18
Customers
Product driven – Customer Focused
November 26, 2019 Atlas Copco Capital Markets Day
Products
21 Divisions
Compressor Technique Service Industrial Air Oil-free Air Professional Air Gas and Process Medical Gas Solutions Airtec Vacuum Technique Service Semiconductor Service Semiconductor Scientific Vacuum Industrial Vacuum Industrial Technique Service MVI Tools and Assembly Systems General Industry Tools and Assembly Systems Chicago Pneumatic Tools Industrial Assembly Solutions Power Technique Service Specialty Rental Portable Air Power and Flow
Business Areas
COMPRESSOR TECHNIQUE VACUUM TECHNIQUE INDUSTRIAL TECHNIQUE POWER TECHNIQUE
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SLIDE 19
Transparency
– Clear responsibilities with more than 500 P&L
November 26, 2019 Atlas Copco Capital Markets Day
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GROUP MANAGEMENT
BUSINESS AREA AND CORPORATE FUNCTIONS Divisions generally conduct business through product companies, distribution centers and customer centers
- Equipment and service
- 7 divisions
- 136 customer centers
- 5 distribution centers
- 36 product companies
- Equipment and service
- 5 divisions
- 94 customer centers
- 3 distribution centers
- 14 product companies
- Equipment and service
- 5 divisions
- 77 customer centers
- 4 distribution centers
- 20 product companies
- Equipment, service and
specialty rental
- 4 divisions
- 77 customer centers
- 4 distribution centers
- 10 product companies
COMPRESSOR TECHNIQUE VACUUM TECHNIQUE INDUSTRIAL TECHNIQUE POWER TECHNIQUE
3% of employees
SLIDE 20
Diversified, agile and resilient
RESILIENT AGILE
- Outsourced parts manufacturing
‒ 75% of equipment production cost is purchased components
- Flexible workforce
- Continuous scenario planning
- Leadership model with direct
accountability
- Transparent organization with
clear follow up
- 36% of sales is service business
- Asset light operations
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Atlas Copco Capital Markets Day November 26, 2019
DIVERSIFIED
- Diverse customer base
- About 1/3 of sales in Asia, 1/3
in Americas, and 1/3 in EMEA
- Operations in Europe, Asia
and America
SLIDE 21
Focus on sustained profitable growth
SLIDE 22
OPERATIONAL EXCELLENCE INNOVATION
Pillars for sustained profitable growth
November 26, 2019 Atlas Copco Capital Markets Day
PEOPLE PRESENCE SERVICE
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People - Creating a culture of innovation and growth
November 26, 2019 Atlas Copco Capital Markets Day
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- Leadership is defined as the ability
to create lasting results
- Passionate people create
exceptional things
- Diversity makes us stronger
SLIDE 24
- We want to be part of our customers
future and their success
November 26, 2019 Atlas Copco Capital Markets Day
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PRIORITIZING INNOVATION
Research and development costs 2010 – 2019
0% 1% 2% 3% 4% 5% 1 000 2 000 3 000 4 000 5 000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* Research and development expenses, including capitalized expenditures, MSEK Total as % of revenues
* 12M Sep 2019
Innovation – Important part of our strategy to grow
SLIDE 25
Product development
November 26, 2019 Atlas Copco Capital Markets Day
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- Understand customer needs before
- ffering a product
- Focus innovation on where it has
the biggest effect for our customers
- Split and measure by long term
technical development and near- term product developments
PRIORITIZING INNOVATION
SLIDE 26
Understanding the customers generates results
November 26, 2019 Atlas Copco Capital Markets Day
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EXAMPLE: TBP Pulse Tool – A low reaction battery pulse tightening tool offering state of the art ergonomics high productivity.
– The Voice of the Customer
PARTNERING WITH CUSTOMERS PRIORITIZING INNOVATION
- > 100 interviews with
customers
- Studied customer behavior at
customer site to identify unspoken needs
SLIDE 27
Understanding the customers generates results
- > 100 interviews with
customers
- Studied customer behavior at
customer site to identify unspoken needs
- Created a mockup of a
production environment to increase the understanding of customer needs
November 26, 2019 Atlas Copco Capital Markets Day
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PARTNERING WITH CUSTOMERS PRIORITIZING INNOVATION
SLIDE 28
Outcome
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PRIORITIZING INNOVATION PARTNERING WITH CUSTOMERS
- MOST IMPORTANT IDENTIFIED CUSTOMER NEEDS:
‒ Reduce reaction forces to minimize need for reaction arms and improve ergonomics ‒ Reduce weight, sound and vibrations ‒ Increase number of tightening per minute (productivity) ‒ Traceability
- DEVELOPING NEW TECHNOLOGY BASED ON CUSTOMER NEEDS:
‒ New innovative pulse mechanism ‒ Efficient motor control and advanced tightening algorithms ‒ High accuracy ‒ Low weight ‒ Low sound and vibration levels ‒ High productivity
SLIDE 29
Result
November 26, 2019 Atlas Copco Capital Markets Day
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- Tangible customer values
- One of our biggest sales
successes in industrial tools
PRIORITIZING INNOVATION PARTNERING WITH CUSTOMERS THERE IS ALWAYS A BETTER WAY
EXAMPLE: TBP Pulse Tool – A low reaction battery pulse tightening tool offering state of the art ergonomics high productivity.
SLIDE 30
Creating a culture of innovation and growth
November 26, 2019 Atlas Copco Capital Markets Day
PRIORITIZING INNOVATION PARTNERING WITH CUSTOMERS THERE IS ALWAYS A BETTER WAY
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PART OF OUR STRATEGY TO GROW TEST – EVALUATE – MOVE ON
Additional Innovation Power
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Presence
– Committed people and a strong brand portfolio around the world
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Develop local competences Direct and indirect presence Create high brand awareness with a strong brand portfolio Develop digital presence
SLIDE 32
Operational excellence
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Dedicated divisions focused
- n recurring business
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Vacuum Technique Service Compressor Technique Service
SERVICE
Semiconductor Service Industrial Technique Service Power Technique Service Specialty Rental
SLIDE 34
Growing service business generates resilience
November 26, 2019 Atlas Copco Capital Markets Day
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* Figures for the years 2010-2016 are best estimated numbers, as the effects of the distribution of Epiroc and restatements for IFRS15 are not fully reconciled.
0% 5% 10% 15% 20% 25% 30% 35% 40% 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2018
- Sep. 2019
12M
Equipment revenues, MSEK Service revenues, MSEK Service, share of revenues, % CAGR Service 11% Equipment 10%
SLIDE 35
Three horizons – securing sustainable results
November 26, 2019 Atlas Copco Capital Markets Day
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DEVELOP AND DEFEND CORE BUILD NEW BUSINESSES CREATE OPTIONS
SLIDE 36
Application knowledge Efficient manufacturing and product development processes Capacity to swiftly market products and services globally
Acquisitions
November 26, 2019 Atlas Copco Capital Markets Day
CHARACTERISTICS
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Industry-to-industry Geographically spread customer base Leadership in niche markets Differentiated core technology Strong base of business partners Healthy service potential
LEVERAGING
– Businesses in, or close to existing core competencies
SLIDE 37
Financial goals and performance
SLIDE 38
Our financial goals
November 26, 2019 Atlas Copco Capital Markets Day
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8% average growth per year over a business cycle Sustained high return on capital employed (ROCE) 50% of net profit in annual dividend
REVENUES RETURNS CASH DIVIDEND
SLIDE 39
Long term growth
Atlas Copco Capital Markets Day November 26, 2019
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- 2.5%
2.5% 7.5% 12.5% 17.5% 22.5% 27.5%
- 10 000
10 000 30 000 50 000 70 000 90 000 110 000 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2018
- Sep. 2019
12M Revenues, MSEK Yearly growth, % MSEK
* Figures for the years 2010-2016 are best estimated numbers, as the effects of the distribution of Epiroc and restatements for IFRS15 are not fully reconciled.
Average growth, % Goal, %
SLIDE 40
Sustained high Return on Capital Employed
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0% 5% 10% 15% 20% 25% 30% 35% 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017* 2018
- Sep. 2019,
12M Return on Capital Employed %
* Figures for the years 2010-2017 are best estimated numbers, as the effects of the distribution of Epiroc and restatements for IFRS15 are not fully reconciled.
SLIDE 41
Operating profit per share
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SEK 71% 79% 2 4 6 8 10 12 14 16 18 20 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2018**
- Sep. 2019,
12M**
Financial Net Income tax expense Earnings per share
* Including Epiroc until 2016 ** Financial Net includes a tax-free gain of SEK 0.3 per share from repatriation to Sweden of Euro-denominated equity
Operating profit per share
SLIDE 42
Operating profit - Strong performance across currency fluctuations
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10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 24.0% 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2018
- Sep. 2019,
12M Operating profit margin
- Reported
Operating profit margin
- Currency adjusted
* Figures for the years 2010-2016 are best estimated numbers, as the effects of the distribution of Epiroc and restatements for IFRS15 are not fully reconciled.
SLIDE 43
Capital employed turnover ratio
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0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017 2018
- Sep. 2019,
12M
* Including Epiroc until 2016
SLIDE 44
12% 22% 9%
- 4%
- 2%
- 2%
0% 10% 8%
- 5%
0% 5% 10% 15% 20% 25%
- 5 000
5 000 10 000 15 000 20 000 25 000 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017* 2018
- Sep. 2019
12M Operating cash flow, MSEK Change in net working capital, MSEK Gross investments in property, plant and equipment, MSEK Organic growth, %
Organic revenue growth
Cash generation
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MSEK
* Including Epiroc until 2017
SLIDE 45
Sustainable cash distribution
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SEK 2 4 6 8 10 12 14 16 2010 2011 2012 2013 2014 2015 2016 2017 2018
Redemption per share, SEK Dividend per share, SEK Earnings per share, SEK
SLIDE 46
Summary
SLIDE 47
Summary
November 26, 2019 Atlas Copco Capital Markets Day
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- Focus on profitable business niches
- Use our core competencies to develop the niches
- Strong execution through a decentralized leadership
model
- Diversified, agile and resilient business
- Strong focus on innovation to create lasting values
- Sustained strong financial performance
- There is always a better way
SLIDE 48
atlascopcogroup.com
SLIDE 49
Forward looking statements
“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 and adversely affected by other factors such as the effect of economic conditions, exchange-rate and interest-rate movements, political risks, the impact of competing products and their pricing, product development, commercialization and technological difficulties, supply disturbances, and major customer credit losses.”
Atlas Copco Capital Markets Day
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November 26, 2019