Stockholm, Sweden-based Atlas Copco last week reported third-quarter results with good order growth and record operating profit. Sales of mining equipment and aftermarket products were strong, and all three business areas recorded sales and order growth.
Revenues during the quarter increased 12 percent to SEK 18.4 billion (about U.S. $2.4 billion), with organic growth of 13 percent. The organic growth in orders received was 9 percent. Operating profit increased 16 percent to SEK 3.6 billion (U.S. $466.4 million), corresponding to an operating margin of 19.7 percent, the group’s highest ever.
“We are proud to have achieved another record result, with increased profitability thanks to our good market positions and higher revenue volumes,” said Gunnar Brock, president and CEO. “We were also able to compensate for higher component costs with price increases. It is especially pleasing to note the strength of the aftermarket, which increased by 15 to 20 percent in all business areas.”
Sales were good in most geographical regions, with the largest growth in South America and Africa. In general, demand in emerging markets continued to be very favorable.
In the near term, the overall demand for Atlas Copco’s products and services is expected to decrease somewhat compared to the most recent quarters. Demand from the mining industry is foreseen to decrease from the current high level, and construction in North America and Western Europe will remain weak. The recent strong growth in emerging markets is expected to moderate.
“It is evident that we are now also in the midst of a financial crisis, but the extent of the influence that this will have on our operations is very difficult to judge,” Brock said. “We are therefore implementing contingency measures aimed at reducing operating costs and increasing productivity.”
Basic and diluted earnings per share in the quarter were SEK 1.99 (U.S. $0.25) from SEK 1.54 (U.S. $0.20) in the year-ago period.
Atlas Copco is a world-leading provider of industrial productivity solutions. The products and services range from compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems, to related aftermarket and rental.