Vacuum Technique Capital Markets Day 2019 Geert Follens, Business Area President
Agenda 1 Facts in brief 2 The market and business fundamentals 3 Strategy for growth 4 Summary November 26, 2019 2 Atlas Copco Capital Markets Day
Facts in brief
Vacuum Technique ROCE 23% Orders, revenues and operating margin Growth drivers • Climate change (Drive for efficiency, batteries) 7 000 35% • Miniaturization (Moores law) 6 000 30% • New industrial production processes 5 000 25% • Digitalization (IOT, 5G, VR, AI…) 4 000 20% • Sophisticated healthcare 3 000 15% • Service 24/7 (Connectivity) 2 000 10% • Global to local investments 1 000 5% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 Orders received, MSEK Revenues, MSEK Operating margin, % November 26, 2019 4 Atlas Copco Capital Markets Day
Orders received – Local currency Q3 2019 25% 16% 59% SHARE OF ORDERS RECEIVED YEAR TO DATE: = Q3 VS. Q2 0% % = Q3 Year-on-Year +48% +17% November 26, 2019 5 Atlas Copco Capital Markets Day
The market and business fundamentals
The markets we operate in General manufacturing • Market leader in the global steel degassing industry. 4% • Increasing applications due to new industrial 2% 15% processes. 17% Electronics • Consumers demand ‘electronics as necessity’. Orders • Presence in all semiconductor fabs. received by • Semiconductor technology advances and customer manufacturing capability are critical. category Process industry • Taking market share across the process industry – food, chemical, metallurgy. Other – Scientific 62% • Enabling progress in space simulation. Service November 26, 2019 7 Atlas Copco Capital Markets Day
Vacuum – a growing market Data Economy Healthcare Climate Change Transportation User interface Miniaturization Global/ • Moore’s law • Exhaust • Connectivity • Personalised • Autonomous • Foldable Oled Technology trends regulations medicine driving • Low power use • AI • Electronics • CO 2 footprint • Life sciences • Electric cars as necessity • 3D structures • Machine • Hyperloop learning Data Analysis Energy / Legal Processing power Vacuum intensity Electrical Connectivity Customer • EUV • LED & Solar • Quantum • MRI • Lithium-ion • Mobility Applications computing batteries • Minimal foot- • Efficiency • Wearables • 5G • Memory • Electric vehicle print systems • Abatement • Mass • VR applications • Edge Computing performance spectrometers November 26, 2019 8 Atlas Copco Capital Markets Day
Data growth estimates and driving forces DATA GROWTH DRIVES COMPUTE, STORAGE, NETWORK DEMAND PROCESS EVERYTHING STORE MORE MOVE FASTER STORAGE DEMAND NETWORK DEMAND COMPUTE DEMAND 5x 1x 2013 2018 2023 2013 2018 2023 2013 2018 2023 Compute Demand Data Centers (MIPS) Stored Data, Data Centers (ZB) Global Internet Traffic (ZB) Sources: Global Internet Traffic; Cisco VTNI Forecasts (2016,2017,20180. Stored Data, IDC Data Age 2025 (2018). Compute demand, Intel analysis. Processed and analysed by Atlas Copco. November 26, 2019 9 Atlas Copco Capital Markets Day
Extensive and innovative product offering across applications Edwards Ezenith integrated vacuum Atlas Copco GHS central vacuum system Leybold steel degassing vacuum system & abatement system Edwards CTI & Edwards Polycold cryo pumps Edwards nXRi multi stage roots EUV and coldheads November 26, 2019 10 Atlas Copco Capital Markets Day
Market trends and driving forces Battery production Automotive electronics Hyperloop Technology in healthcare Quantum computing Freeze drying November 26, 2019 11 Atlas Copco Capital Markets Day
Sustainable profitable growth
Strategy for profitable growth - Summary Miniaturization Product innovation Growth in general vacuum Service Opportunities in China People Cryogenics Agility and resilience November 26, 2019 13 Atlas Copco Capital Markets Day
Product offering from rough to ultra high vacuum Extensive • Product pump range coverage 70% • Multi brand strategy • Modular design Vacuum • Customer systems applications • Innovation centers • Localized systems delivery Accessories November 26, 2019 14 Atlas Copco Capital Markets Day
Strategy for profitable growth – Innovation Patented Innovation Continuous Improvement People Modular Platforms 800+FTE Processes 16 Global Sites Application Product Expertise Solutions Product Application Knowledge Talent Pipeline Enhanced Productivity Digital Connectivity Reduced CO 2 & TCoO November 26, 2019 15 Atlas Copco Capital Markets Day
Recent product launches Continuous focus on innovation with more than 20 new products launched in past year Industrial & Scientific Semiconductor Cryogenics MaxCool 2000 Leybold – Novadry Edwards – EDO, dry scroll iXH XCEDE iXM XCEDE Atlas Copco – DSS dry scroll Edwards – EXDM New Atlas high flow iForest EVO environmental Leybold – TURBOVAC Edwards – nXR50/80i technology MAGiNTEGRA MAG2207iS Multi Stage Roots November 26, 2019 16 Atlas Copco Capital Markets Day
Cryogenics Cryo Polycold ‒ Industrial coating ‒ PVD coating and Ion implant processes ‒ Sample cooling ‒ Oled evaporation and encapsulation ‒ Wafer chuck cooling ‒ Industrial coating ‒ Cryogenics refrigerators: MRI scanners ‒ Space simulation ‒ Dilution refrigerators: quantum computing November 26, 2019 17 Atlas Copco Capital Markets Day
Miniaturization – Support technology investments • Pumps working in extreme harsh conditions ‒ Temperature: cooling + heating ‒ Corrosive gasses used: XCEDE coating ‒ Deep etch and deposition • Enhanced lithography ‒ EUV: H2 pumping and recycling • Footprint reduction ‒ Matching envelope of the tool ‒ Integrated systems • Foreline temperature management ‒ Controlled TMS • Meeting all legislative requirements ‒ Abatement with exhaust control ‒ NOx management November 26, 2019 18 Atlas Copco Capital Markets Day
Growth in general vacuum • New products • New processes ‒ Lithium-ion batteries ‒ Steel degassing ‒ Food processing ‒ Centralised installations ‒ Point of use mass spectrometry • New territories November 26, 2019 19 Atlas Copco Capital Markets Day
China • Sales capability ‒ Highly technical application knowledge ‒ Global Semiconductor understanding ‒ Customer proximity • Service Capability ‒ Investments in hub capacity ‒ Training centres HEILONGJIANG • Investments JILIN XINJIANG HEBEI LIAONING NEI MONGOL BEIJING SHI ‒ Qingdao factory BEIJIING TIANJIN NINGXIA SHANXI QINGHAI SHANDONG ‒ Shanghai Innovation Centre GANSU SHAANXI HENAN XIZANG JIANGSU • Product Capability ANHUI HUBEI SHANGHAI SICHUAN CHONGQING ZHEJIA NG JIANGXI HUNAN ‒ Integrated systems GUIZHOU YUNNAN FUJIAN ‒ Environmental solutions GUANGXI TAIWAN GUANGDONG HONG KONG MACAU HAINAN November 26, 2019 20 Atlas Copco Capital Markets Day
Talent framework aligned to career levels Individual Contributor VT business area Responsible for one's own work as well as Early Careers supporting and guiding others. VT business area Team Leader Programs Directly responsible for managing at progresses least one employee, leading project teams, or applying expertise that participants directly impacts the work of others. towards business Business Leader leadership roles Directly responsible for the results of a business unit or a major segment thereof, responsible for a specific functional area of the business unit, or Atlas Copco applies expertise on a national basis. Programs Global Leader from GM-1 Directly responsible for the P&L of a global business, or a major segment thereof, responsible for a specific function of the global business or applies expertise on a global basis. November 26, 2019 21 Atlas Copco Capital Markets Day
Strategy for profitable growth – Service Vacuum Technique Service • Leading edge technology & advanced service solutions to maximize customers' uptime providing low total cost of ownership in general vacuum applications. • Convenience, quality & customer value. • Mission to be present in every customer’s service experience. • Supporting efficiency in processes and enterprise systems. Semiconductor Service • Supports the process vacuum and environmental needs our customers depend on in the semiconductor, display, LED and PV solar industries. • Provide and support customer-based data-driven outcomes, with the clear aim of maximising customer throughput and uptime. • Field Service, Service Product Management and Service Technology Centres. November 26, 2019 22 Atlas Copco Capital Markets Day
Vacuum Technique – Service CAGR Service 24% Equipment 21% 20 000 40% 15 000 30% 10 000 20% Equipment revenues, MSEK Service revenues, MSEK Service, share of revenues, % 5 000 10% 0 0% 2014 2015 2016 2017 2018 2019 November 26, 2019 23 Atlas Copco Capital Markets Day
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