Atlas Copco AB

And a very warm welcome to all of you attending this quarterly EARNs call for the fourth quarter 2025. Before I hand over to Wagner to start the actual presentation, I will already now, as usual, remind you that when the Q&A session starts to just ask one question at a time. Please keep disciplined so everybody has an opportunity to ask their most important question Once we get through the first queue, of course, you can line up again for a second question afterwards, and we'll be happy to answer that. But that being said, no further ado, I'll hand over to Wagner Rego to guide us through the presentation.

Thank you, Peter, and welcome to this conference call. So first, we had in the first picture a wafer, just to remind you that we are exposed to the capex that is relevant for the wafer production. Then if you go to the first slide with the summary of the fourth quarter of 2025, First, we had good organic order growth driven by industrial compressors that went somewhat up. But not only, I think, also gas and process compressors also had delivered a very good quarter. And solid growth as well in vacuum equipment, and I would say including semi-equipment. In the other hand, we had weaker demand for industrial assembly and vision solution, followed by weaker demand on power and flow equipment, where we will go a little bit more in details later on. Once again, it was very good to see that our service divisions continue to deliver a very good result, and we are quite happy about that. Revenues, on the other hand, was unchanged, but we have a quite high level in 2024 as well. I think the level was not bad. and followed by a lower operating profit, mainly driven by negative currency effect, where Peter will come back with more details, followed by negative effect coming from the tariffs and also from acquisitions. In the quarter as well, due to the low demand industrial assembly system that is connected to the automotive business, we also decided to further adapt the organization of industrial technique, and we have booked a provision to make sure we keep at the good profit level. Cash flow was solid and we continue to work on our acquisition pipeline. We have acquired eight companies in Q4. So when it looks to the financials, I think we can see for the group, 4% organic growth that we are happy, driven by two divisions. Once again, organically, it wasn't changed in revenue. When it comes to profit margin, we delivered 20.5 in terms of adjusted profit margin. And we have booked this provision of $261 million to adapt the organization in industrial technique. So basic earnings per share, 1.36 SEC and strong cash flow is still good return on capital employed. If we then look to the summary of the year, and I would not spend too much time here, but we had overall a mixed demand with unchanged basically in terms of orders received and revenues. It was quite similar with some segments improving, some segments going down, but it was a flat year with quite a lot of challenges and had wins in the profitability. I would say. And the good thing, our strategy in our service divisions continue to deliver good profit and good growth, that we are quite happy. And we close the year with 29 acquisitions. And once again, Peter will come back with more details about our ordinary and extra ordinary dividend proposal. So, Once again, if we go to the full year financials, like I mentioned already, it was unchanged. It's more 1% organic growth in orders, 1% organic decline. But of course, we had the acquisitions that came on top of the organic growth. Quite a lot of currency had wind in our result. And with the bottom line of 20.3, if you adjust for the restructuring costs that we have done mainly in industrial technique and vacuum technique, the profitability, the adjusted operating margin was 20.7. Still solid cash flow and return on capital employed. If we then continue with our results, uh working looking more geographically around the world what what has happened if i started with asia we had in the quarter 13 percent growth that was a quite a good development mainly in compressor technique and vacuum technique i would say that was driven this driving this result um So, we end up the quarter with 13%. When it comes to Europe, I think we were quite positive. Happy to see 10% growth in Europe. Basically, all the divisions had positive growth. I think the only exception was industrial technique that was flat. So, all in all, considering the situation of automotive, I think we were happy with what we saw. um in europe but it's also fair to say the comparison based uh was lower but very good to see uh in north america we see eight percent growth and there the acquisition of nte has quite a big impact if you exclude that it's still positive growth of three percent we see a little bit more uh challenging environment in south america with the flat development in Q4 and also challenging in Africa, Middle East. But it's also fair to say, especially on Middle East, 2024 was a great year. So I think the level is good, but the comparison base is quite challenging. Then if we go to the next slide on the sales breach, Then you see the currency headwind that we have had in Q4 amounting 11%. So that was continue headwind coming from currency. I think the structural change that are mainly acquisition had a quite good development in orders. and revenues. Of course, that will later on generate an impact in the profitability as well. But I think the level of the acquisitions are quite good. I mean, we have done some acquisitions like NTE that's quite sizable. Then that means that we had an organic growth of 4% and unchanged organically in revenues. And we end up the year with 2% on acquisitions and a total currency headwind of 6%. If we then go to the orders received per BA, you see that very nice to see compressor technique developing with plus 7% organic growth. Very good to see vacuum technique now, plus 13% organic growth, with good contribution from many divisions within vacuum technique. Power technique, a little bit more challenging, but I will come back later when I talk about power technique. And industrial technique, minus 1%, considering the environment. think it was also a good achievement although we don't have organic growth that we'd like to but considering the overall environment i think it was a good achievement in terms of orders received now going more into details of the business areas we can see compressor techniques uh with seven percent organic growth driven by industrial compressors that were up And there we see a little bit more on larger compressors than on the smaller compressors in terms of robot, both with good development. gas and process compressors. But again, it's also fair to say Q4 2024 was also a challenging quarter for gas and process. So they had a low comparison. The service, like I mentioned, continued to grow. We continue to grow with the good profitability. We're quite happy with the development of service in all business areas. Revenue continue to increase, 3% organic growth. We have a good order book in compressor technique that will allow us to continue to deliver good revenue or organic revenue growth. So considering the other book. Profitability was in a good level, 24.3, still a good level if you consider there was impact coming from acquisition, sales, and the trade tariffs. So I think we are quite happy with the development of compressor technique. And also we continue to innovate, delivering new products. Here is just an example of a nitrogen system that is dedicated for laser cutting applications. So completely tailored for this type of application. So if we then move to vacuum technique, we saw good odor growth of 13%. notable growth for semi equipment. And there I think is also fair to say that the comparison was quite low in Q4 2024. So and then we saw, that's why we mentioned notable growth, but it was a low comparison. But anyhow, is good to see the environment. And it's good to see growth in semi-equipment. Solid growth as well in industrial and scientific vacuum and growth in the service. Basically, I think it was a good development in all the divisions of vacuum technique. We still have the challenge with the order book. So revenues were 3% down. I think we still have to overcome that challenge. And operating margin was at 19.2%. So, negatively affected by currency and dilution from acquisitions. So, they also continue to develop the new products, and a new compact product for the semiconductor, this vertical booster that are dedicated for semiconductor was also released. The capital markets, there you also saw some other innovation, and here we continue to come with innovation in vacuum technology. When it comes to industrial technique, then we saw an order decline of 1%, basically driven by automotive, because when we look, to the general industry, we had a good development. Also is where we focus to find some new growth. And I think still quite a lot of transformation that can be done in the general industry. And that's where we focus. Service orders essentially unchanged. And revenues, they also have a challenge. challenges with the order book and the revenues went down 3% organically. The adjusted profitability was 19.8. We want to highlight here the underlying profitability because The profitability was 15.9, of course, affected by the 261 million in provision for the restructuring cost. We still continue to invest in innovation, even in a tough environment that we have now. We continue to release, and we continue to combine the solutions we have with the vision technology that we have in also in the portfolio so i think also here continues very nice innovation so if we then move to power technique we had a ordered drop of six percent and i think it's also fair to say that we had a little bit more than normal cancellations because we had the other book that was a bit too old with old prices and we decided to to to take actions on those orders either the customer would have to take those machines or we will not carry on the orders uh with old prices so it was a little bit proactive from our side, when it when it comes to this, let's say is likely higher than normal orders, but still would be negative, but not as much as 6%. Service business continued to grow. And we saw some challenges in the quarter in our rental business, that all we know also that the drove the revenue down 4%. And the operating profit was at 16% affected by currency, but also by lower utilization of our rental fleet. And I think that's the level of profitability that we are not happy with. Definitely, we'll take some actions to drive the profitability back from the levels we want to have. Anyhow, they continue to innovate. Now, you know, we have invested in several pump assets. This one is more connected to dewatering. So we have a new product that can be used now by our distributors, but also by our own rental companies, because with the acquisition of NTE, we also have now a rental company in the US, rental company in Australia, rental company in Brazil, dedicated for pumps. And we are also supporting them with our own products. So if we then move to the next slide, you see then the profitability, the FTA at 21.4% in the quarter and the profit of, if you don't adjust for the the restructuring cost 19.8. But then perhaps it's time now to pass to you, Peter, that you continue to explain our profit.

Yes, thank you, Rangar. Net financial items slightly negative, a little bit higher than last year. mostly because of somewhat higher financial exchange rate difference and lower interest income in the company. But we also expect it would be probably on a similar level going forward in the next quarter. Then the income tax expense, which is on the low side, I would say, if we take the effective tax rate of 20.5%, that's definitely... A low number. We are benefiting from all the activities we do around our innovation and the tax relief that we can get there. But we also had quite a couple of positive one-offs throughout the fourth quarter. So that is why we have this low effective tax rate. Then going forward, when we think of the next quarter, then this low effective tax rate is not maintainable, because these one-offs that we benefited from will not repeat themselves, and therefore we expect the tax rates for the first quarter to be at around 22.5%. That is currently our best estimate. If I move then on to slide number 14, where we can dig a little bit deeper into the profit bridge. There's quite a few comments here to be made, how we get from 21.8 to 19.8. There's a minor impact from the share-based LTI programs, as you can see. We had items affecting comparability of 220 million SEC in the bridge. It's a combination of quite many things. Wagner already mentioned the restructuring cost this quarter of 261. million Swedish krona in industrial technique business area and basically the difference between those 261 and the 220 are a list of a number of items that we corrected for last year. leading up to the 220 million and diluting the margin obviously somewhat. Also the acquisition dilute the margin in a similar way as the items affecting comparability. We are in the first year of the acquisition here and of course there's a lot of integration costs while the synergies are not fully maturing yet and that is the reason why we see that lower profitability on the revenue within the acquisitions. Then I guess one item that is requiring the most explanation here is then the currency effect, which has been quite negative, both on the top line as well as on the bottom line. And in fact, if I summarize it fairly simply, I would say we have translation effects, transaction effects, and we have the revaluations of the balance sheet items. And the first two items, translation and transaction effect in terms of margin, basically compensate each other. One is slightly positive from a margin point of view, the other one is slightly negative from a margin point of view and they basically end up to zero. So you could say that the entire difference that we see here is caused by the revaluation of the balance sheet items. And there I would like to remind you that last year in the same quarter we had a huge revaluation positive impact in the income statement. which was mostly linked to vacuum technique at the time, also partly to compressor technique, but mostly to vacuum technique, and led at the time to a very positive currency effect, which of course now in the bridge creates the opposite effect, because we have not repeated the same positive currency revaluation in the balance sheet items. And that is also why you see later on in the next page the very high currency impact on vacuum technique specifically. Then when we then look at the organic development here, I think despite a negative development of the top line, we are actually seeing a positive development on the bottom line. And of course that is more explained if I go to the next slide, 36, if I take it business area by business area, as there are quite a number of different positive aspects that add up to this number. So if we take it business area by business area, then we can start with compressor technique. Acquisitions, dilutive, across all the business areas in fact, somewhat more, somewhat less, depending on the specific business area, but basically all dilutive, generating positive profitability, but not as much as we are used to within the respective business areas, so dilutive effect across the four business areas. The currency impact for compressor technique is, even though negative in absolute terms, in relative terms is quite mild. And then we see a margin organically that is quite in line, slightly higher, but only marginally higher than what we are used to in Q4 2024. And that leads us to the 24.3 result of compressor technique, which I think we continue to consider as a good and healthy level for compressor technique to perform. So here you could say despite also tariff impact and despite acquisitions, we maintain a good level there. On the vacuum technique side, the main detractor by far is the currency. which has a huge impact due to the fact that we had this huge positive last year, which we don't repeat this year. In fact, revaluations across all business areas, but also on the group as a total, is actually quite limited this quarter. Basically not a value to be mentioned in the bigger scheme of things. It was mostly the effect of last year that basically created this negative currency effect in the bridge. Otherwise also the acquisitions were dilutive. We also didn't have the items affecting comparability this year that we had last year, which was a one-off that we benefited from at the time. The positive news I would like to add on vacuum technique is the strong development of the margin also here. Negative development on the top line. We just heard from Wagner how the organic growth of vacuum technique on the revenues has developed. But the operating profit on the other hand is positive. And this is thanks to basically the effect that materializes from all the efforts in the business area to restructure, to reorganize, to cut costs in order to adjust the size of the suit to the size of the body. And that's how we end up with the 19.2% here. On industrial technique, 19.4 to 15.9, obviously the restructuring cost is a big item. Wagner mentioned 261 million SEK this year. Last year in the same quarter we also did a round of restructuring for about 134 million SEK, so the net is 127, having a dilutive effect on the margin this year still. Acquisitions were in this case not adding too much from a dilution point of view, but the currency also there had a bigger impact. Although in this case not so much due to the revaluation items, a bit more related to the transaction effect, but in the end a bit negative on the margin. And then finally, I would say from the bottom line perspective also here, a negative development of the top line given the difficult climate in the industry. but no negative impact on the bottom line. So that is also positive that we see that the negative impact doesn't immediately pull down the margin. And of course, with the restructuring we are doing now, we expect to continue to create savings that will support the organic development of the business area. And then last, in the row power technique, Here we dropped the margin from 17.8 to 16.0, as Weiler already implied. Not the level that we are absolutely pleased with. Acquisitions have a moderate dilutive effect here. The currency is also a bit negative, but also organically we are not seeing a positive development. And here it's mostly the utilization of the rental fleet. as well as continued investments in A&M. that we are doing within the business area. We are thinking of, for example, building up customer centers for the industrial flow business. We're also thinking about having dedicated sales people for the portable power and flow business, for example, and also continued investments that we started up in upgrading our ERP platforms across the different divisions that are creating quite a bit of cost investments that are necessary for the future. But with the current business climate of course a bit in conflict with the top line development. When we then look at the foreign exchange development going forward, I would say that we are not at the end of the negative development of the currencies. Both on the top line as well as on the bottom line we foresee still a quite negative development. and estimate that on the bottom line we would see an effect of at least around 1 billion SEC negative impact from currencies in the first quarter 2026. Then I would move to slide number 16 to briefly comment on the balance sheet. In fact, not so much to comment. On the one hand, of course, we've seen currency effects pulling down many of the values. But at the same time, we also see some organic improvements such as in the inventories, for example, which will also be noticeable in the cash flow. And we also see the increase of the rental equipment and the intangible assets, which is both, in fact, mostly linked to the acquisitions we recently added. NTE was already mentioned that of course increased the fleet as well as the intangible assets. I think on the balance on the liability side and equity side there's not so much to mention I think to save time let's say. If we then move on to the cash flow development, we think that the 6.8 billion cash flow that we generated throughout the last quarter of 2025 remains solid, but of course, as you can see, at a lower level than last year. The main reason for this is, I would say, two things. On the one hand, the changing working capital, which actually is still positive with 650 million Swedish kronor, but last year was even much more positive with 2.3 billion. And the second item that of course influences the cash flow negatively here is then the lower operating cash surplus, which goes hand in hand, I would say, with the operating profit development. that we have seen. And those are the two main items that basically pull down the cash flow compared to last year. And then finally maybe just to point out that for the year we concluded with 26.8 billion Swedish Krone, 11.6 billion, let's say 12 billion of which was used to finance our acquisitions, and two-thirds of those were actually taking place in the last quarter with 8 billion Swedish Krone. So with that, I conclude my comments on the financial statements and give back to Wagner to comment on the near-term outlook.