Atlas Copco AB (ATLCY) Q3 2024 Earnings Call Highlights: Navigating Challenges with Strategic ...

GuruFocus News
3 min read

In This Article:

  • Orders Received: SEK42 billion, with organic growth of 1%.

  • Revenue: SEK43.1 billion, with an organic decline of 1%.

  • Operating Profit: SEK21.7 billion, compared to SEK22.7 billion last year.

  • Profit for the Period: SEK7.1 billion.

  • Basic Earnings Per Share: SEK1.47.

  • Operating Cash Flow: SEK7.5 billion.

  • Return on Capital Employed: 28%.

  • Compressor Technique Operating Margin: 26.1%.

  • Vacuum Technique Organic Growth: 10%.

  • Industrial Technique Organic Decline: 7%.

  • Power Technique Operating Margin: 18%.

  • Acquisitions Completed: 10 acquisitions in the quarter.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Atlas Copco AB (ATLCY) reported a stable operating profit and solid operating cash flow for Q3 2024.

  • The service business performed well, showing growth across all business areas.

  • The company completed 10 acquisitions during the quarter, contributing to structural growth.

  • Compressor Technique achieved a solid operating margin of 26.1%, supported by currency and volume price mix effects.

  • Vacuum Technique experienced a positive organic growth of 10%, driven mainly by the semiconductor market in Asia and Europe.

Negative Points

  • Orders received were flat overall, with specific declines in Gas and Process compressors and Industrial Technique, mainly driven by the automotive industry.

  • The operating profit margin decreased from 22.7% last year to 21.7% this quarter, impacted by restructuring costs and negative currency effects.

  • Industrial Technique saw a 7% organic decline, primarily due to weakness in the automotive sector.

  • Power Technique experienced a 5% decline in revenues, with margins negatively affected by lower revenue volumes and recent acquisitions.

  • The company faced a 4% negative impact from currency headwinds, affecting overall financial performance.

Q & A Highlights

Q: Can you explain the low 2% organic growth in Compressor Technique sales and whether this is a temporary issue? A: The lower revenues are primarily due to long lead times in Gas and Process compressors, which are expected to be temporary. Orders for long-term projects, such as those in the marine business, will contribute to future sales.

Q: What is driving the order intake growth in Vacuum Technique, particularly in Asia? A: The growth is not limited to China but is spread across countries active in the semiconductor market. Europe also saw positive orders, while the U.S. was more subdued.

Q: Can you provide more details on the restructuring costs in Vacuum Technique and their impact on margins? A: The restructuring costs are primarily focused on the industrial and scientific vacuum areas. Despite these costs, the drop-through has improved due to cost management and restructuring efforts.

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