Stockholm, Sweden-based Atlas Copco last week announced that the impact of the global economic crisis led to a fall in revenues and profits in the first quarter. Revenues during the quarter decreased 3 percent to SEK 16.58 billion (about U.S. $2.06 billion) from SEK 17.12 billion (U.S. $2.13 billion) a year ago, supported by positive currency effects. The organic decline was 17 percent. Order intake dropped 33 percent organically. The operating profit was MSEK 2.17 billion (U.S. $270.5 million) compared with SEK 3.25 billion (U.S. $404.5 million) a year ago. Excluding redundancy costs of SEK 230.0 million (U.S. $28.6 million), the profit corresponds to an operating margin of 14.5 percent, down from 18.9 percent in the year-ago period.
Actions to reduce capacity and costs were implemented at a high pace throughout the period.
“Our profitability is still very good bearing in mind the sharp fall in sales, the high costs for redundancy measures and under-absorption in most of our business units,” said Gunnar Brock, president and CEO of the Atlas Copco Group. “This is a proof of the resilience of our business model.”
Since October 2008, major efforts have been carried out in order to adapt capacity and costs to the present low demand level. During these six months, 3,800 people have left the company and the workforce is likely to be reduced by nearly 1,200 more during the coming quarters, the company announced, resulting in an annual cost saving of more than SEK 2.0 billion (U.S. $249.1 million).
“Although sales of equipment are down considerably, we are pleased to have been able to maintain a good price level,” Brock said. “Additionally, the aftermarket business is holding up very well.”
The economic situation still makes the outlook very uncertain. Demand is expected to remain weak in most industries and regions and stay around the current level.
“In these difficult times it is particularly important to concentrate on the aftermarket business and continue to invest in research and development,” Brock said. “Our financial strength allows us to focus on this and will help us come out of the crisis an even stronger company.”
Atlas Copco is an international 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.
