Atlas Copco sales and profits up despite declining demand

By Becca Wilkins03 February 2009

Atlas Copco president and CEO Gunnar Brock

Atlas Copco president and CEO Gunnar Brock

Atlas Copco's construction and mining division has recorded fourth quarter sales of SEK 8 billion (US$ 959 million) up +12% on the SEK 7.1 billion (US$ 853 million) during the same period in 2007.

Operating profit increased by +4% in the fourth quarter to SEK 1.3 billion (US$ 153 million) against a total of SEK 1.2 billion (US$ 147 million) recorded during the same period last year.

For the full year the sector recorded sales of SEK 31.66 billion (US$ 3.8 billion) up +26% on last year's figure of SEK 25 billion (US$ 3 billion). Meanwhile, operating profits were up by +28% to SEK 5.6 billion (US$ 670 million) from SEK 4.4 billion (US$ 525 million).

However, according to Atlas Copco there was a "significant drop in demand" for equipment during the final quarter although growth in the aftermarket continued. Excluding redundancy costs of SEK 100 million (US$ 12 million), the adjusted operating margin was unchanged at 17.2 %. The company added currency fluctuations affected the margin positively by approximately 2%.

There were some order cancellations within the construction segment and sales of surface drill rigs for use in quarries and road construction, as well as underground rigs for infrastructure, declined in all markets compared to the previous year. An exception was sales of surface drilling rigs in South America.

Total sales of light equipment declined compared to 2007 but good growth was recorded in South America and Asia. The demand for road construction equipment was "significantly lower" than in the previous year in all regions but Asia.

The company said government stimulus packages are expected to support construction equipment demand but are unlikely to have any major impact in the short term.

Atlas Copco Group's fourth quarter sales show a +12% increase to SEK 19.73 billion (US$ 2.4 billion) from SEK 17.55 billion (US$ 2 billion) last year. The group showed growth in fourth quarter profits from SEK 1.38 billion (US$ 165 million) in 2007 to SEK 2.92 billion (US$ 349 million).

For the full year the Group saw increases in sales of +17% to SEK 74 billion (US$ 8.9 billion) from SEK 63 billion (US$ 7.6 billion) in 2007 and profits increased to SEK 10 billion (US$ 1.2 billion) from SEK 7.5 billion (US$ 895 million) during the same period last year.

Atlas Copco president and CEO, Gunnar Brock said, "Overall we are pleased with our financial performance during the quarter, and we have acted quickly and decisively in adapting to the rapid and substantial decline in demand, particularly within the mining industry. Our businesses have achieved a great deal and their work will continue throughout 2009."

During the fourth quarter Atlas Copco shed 1350 jobs across the three business areas and a further 3000 redundancies are now expected.

The company said, "The current economic situation makes the outlook very uncertain but demand is expected to remain very weak in most industries and regions."

Delivered directly to your inbox, World Construction Week Newsletter features the pick of the breaking news stories, product launches, show reports and more from KHL's world-class editorial team.
Longer Reads
10 ways to join the hydrogen power revolution
Interest in the use of hydrogen has soared over the past few years as the construction industry races to reduce its carbon footprint. We roundup some recent initiatives
Telescopic boom lifts - the trends
Higher capacities and 100% electric models are the trend. And what lies ahead for 200ft models, or above?
How construction can become sustainable
The construction industry is undergoing a transformative shift to adapt more environmentally friendly practices
Andy Brown Editor, International Construction Tel: +44 (0) 1892 786 224 E-mail:
Simon Kelly Sales Manager Tel: +44 (0) 1892 786 223 E-mail: