Atlas Copco AB

Thank you, operator, and good morning, good afternoon, good evening to all participants to this Q1 earnings call for Atlas Copco Group. Before I hand over to Wagner, I will, as usual, already now ask you to limit yourself to one question at a time, especially today, because we are on a very tight schedule as we will be heading to the annual general meeting of shareholders today. So we have even a little bit less time than usual. But without further ado, I will now hand over to Wagner, who will start today's call.

Thank you, Peter, and welcome to this conference call where we report the earnings of the first quarter of 2026. So first, the summary. We have seen flat orders when it comes to compressor technique, but very good development in vacuum technique. Compressor technique I will elaborate a little bit further because gas and process compressors were down quite significantly. We are not concerned about that, but we will give you more details later on. Again, vacuum technique, very good organic growth. We saw weaker demand coming from automotive that impacts our industrial and assembly and vision solution. And when it comes to power technique, we have seen growth in most business lines within power technique. Also, our service business continued to develop very well according to our strategy. And we are also quite happy and proud to see this continued development. Organic revenues was up, which we are also quite happy. About it, it was good to see a bend in the revenue trend and also stable profit margin despite of currency headwinds. We continue to deploy our M&A strategy and this quarter we acquired four companies. so when it comes to the financials the level we have had 45.3 billion swedish crown is quite a strong level we saw an increase in activity level in q1 we were quite happy to see mainly driven by vacuum equipment that led us to five percent organic growth that you will see an increase in our overall organic growth in q4 we had four percent now five percent i think was good to see that development quite happy with that also revenues reached 40 billion so and again happy to see organic development of three percent So operating margin at 20.4. We have an adjustment in power technique. We have communicated in the past that we were not happy with the profit level. We took some measures and we had an adjusted margin of 8.3 billion Swedish kronor. and a margin of 20.5%. So earnings per share ended up at 1.28, strong operational cash flow, but impacted by the inventories and return on capital employed, we end up at 20.3%. percent but all we know we are happy with the development in orders and revenue considering the level and we should also consider that we had minus 11 percent currency on our orders received and revenues so when when you look to the geographical uh spread of our orders So if I start with Asia, plus 7%, very good development. The main driver there was vacuum technique and positive development as well in industrial technique. The negative development that we saw in gas and process was mainly coming from Asia. So we will explain when we talk about compressor technique. In Europe, again, positive development, despite of an environment that is not so good. Good with all the instabilities that are going on. Good development. Also happy to see good development in North America with plus 17% growth. And it's also fair to say that now also vacuum technique has a good development in North America. And a little bit more weaker on the weak side in South America. And in the Middle East, we saw weaker development, especially in compressor technique and power technique. Those are the two biggest business areas in the Middle East. When we combine everything, then we see structural changes of 3% coming mainly from our acquisitions. Currency continued to be negative at minus 11% in revenues and in orders. And like I mentioned before, organic growth of 5% and 6% with the total growth of minus 3% and minus 5%. If we then look into our orders and organic per business area, You see now compressor technique being 45% of our business in orders received in the last 12 months and in the quarter delivered minus three organic growth. Vacuum technique now 23% and plus 32% driven mainly by semiconductor market. Power technique also delivered positive organic growth and minus two in industrial technique if we then go deeper into the business areas starting with compressor technique And here, the industrial business in general was more basically flat, a little bit more favorable in larger compressors coming from some dedicated market segment like petrochemical, aerospace, batteries. But the overall market was basically flat. Then our orders for gas and process were notably down, like we mentioned. And here we have high comparison base in Q1 2025. We had basically one of the biggest orders that we ever received in Asia that was booked in Q1 last year. We managed to get one part was this big order that we had last year. On the other hand as well, we had quite a lot of wins last year and brought a very strong result into Q1 2025. and now we have a high comparison base. We see that the decision process for some market segments that are relevant for us, it will be more step by step this year. So not too many decisions in quarter one. The level also that we had in Gazem Process also was not so low. I mean, we had sequential growth between Q4 to Q1 2025 in Gazem Process, I think. And we should also remember it's a business that we have Sometimes book orders in a quarter, sometimes we don't have, and then you create this comparison basis. But our portfolio, our quotation pipeline is quite good. There is good interaction with our customers, good pipeline. I think we will see the development over the coming quarters. So also there we continue to have growth in our service business and revenues were up 1% organic. Our order, we have a solid order book that we continue to invoice. Last year we had organic growth in revenues. We believe we can continue to have good development in revenues considering the order book we have. Operating margin at 23.8. And here we have currency headwinds and also a little bit of pay tariffs that are playing a role on the profitability. But the level of almost 24% profitability is also quite good. Doesn't mean we cannot do better, but that's a good level in terms of profitability for us. and positive contribution of volume, price and mix effect. Return on capital employed also quite solid. And we continue to invest in innovation. Here you see a new type of dryer that is used together with turbo compressors, large volume of compressed air, This application, you can basically, this type of dryer can be basically used in manufacturing systems, companies like semiconductor, pharmaceutical, whenever you require a very low pressure, very high volumes of compressed air with very low pressure dew points. Continue to invest in innovation. so when we move then to vacuum technique here we see quite happy to report 32 percent uh in orders received growth with the significant growth in the semi market but not only also we had positive development in the industrial market and then also in scientific vacuum equipment positive development we have also two service divisions in vacuum technique that are also growing organically so good development also nice to see a band in the trend when it comes to revenues that was a challenge last year now we see abandoned the trend and a lot of focus now to ramp up production in vacuum technique profitability also was 20.5, so nice to see as well, above 20%, supported clearly by increasing volume and also improved in operational efficiency. It's still some currency headwinds as well in vacuum technique. Also, in vacuum technique, we see product development continues. We just released this new turbo molecular pump that is utilized within the tool that goes into the chip manufacturing, and this new pump has a quite strong development, quite strong improvement in terms of efficiency with 45% performance gain. So if you look to the right, to the level of orders received in vacuum, you see that we are close to record levels that we have had in 2023. So then moving to industrial technique here we had the negative organic growth of two percent but i'm quite happy with the development in the general industry there we saw positive development offsetting the headwinds that we have in the automotive market and also good growth in service. We continue to develop the service business in industrial technique. Revenues are flat. And profitability at 19.1, which we are happy to see the development as well, considering that they have currency headwinds and trade tariffs as well, playing against the operating profit margin. So return on capital employed at 16%. Also there we continue to develop our product development journey. Here you see a product that was developed and is dedicated for the Chinese market, developed in China, for China, and we see now quite a good development when it comes to orders in this product range in China. So if we move then to power technique, we see also here 4% organic growth, solid growth in equipment, good growth as well in our rental business and continued growth in our service business as well, good development. Revenues was also up 4% organically. Also quite happy to see that. And when it comes to profitability, I think last quarter we mentioned that we were not happy with the level. We took some actions, including looking to our rental fleet, and we took a decision to adjust our rental fleet. And the underlying profitability, we see a bend in the trend. And we will keep on working to continue that trend when it comes to profitability. And they also had positive contribution from volume, price, and mix effect. Also there, nice innovation. We have released a new hybrid generator. What is a hybrid generator? It's a generator that combines a battery power pack. together and regulation software is really important because not only to work with the power pack is also work with the grid, with different systems, with the micro grid. We believe this product has been quite well accepted. We see that it's quite well accepted in the market and we believe it can be very successful as well. Quite happy with that new development. So with that, so just a summary orders received 45.4 billion sec very strong level revenues 40.5 So EBITDA, excluding the depreciation of intangibles coming from acquisitions, the level was 22%. But to continue to talk about the P&L, now Peter will take it over. Please, Peter.

Thank you, Wagner. So, as already indicated, operating profit at 20.4%. The net financial items are basically flattish, and we also expect that that will continue to be similar in the near term, next quarter. Profit before tax, 8.1 billion, and the income tax expense of 1.9 billion, which represents an effective tax rate of 22.9%. For Q2, we expect that the tax rate will be quite similar to what we saw same quarter last year, so somewhere around 22.5%, slightly lower than Q1, because we typically see less adjustments that are related to the previous year in the second quarter. This is typically happening in Q1 when we are preparing for the tax declarations and everything. and so in Q2 we will see a little bit less of that and therefore a lower effective tax rate of 22.5% roughly is what we anticipate. If I then move from the group total to the profit bridge to dig a little bit deeper into the operating profit margin development starting from 20.1% in Q1 2025 a very minimal positive impact from the share-based LTI programs, as you can see with 40 million Swedish Krone. There was an OTI, or items affecting comparability, of 156 million, consisting of 232 million related to vacuum technique from last year. That was a cost then. But we also have now the 76 million set from power technique related to the adjustments to the higher fleet, as well as some restructuring costs that we initiated within the power technique business area. The acquisitions were, I would say, almost as usual, a little bit dilutive to the group's margin. The currency, of course, had a much more significant impact, negative impact in this case, diluting the margin quite a bit. And then on the other hand, I think the very good news was that the organic development of the margin was actually quite positive. And that even considering the fact that we have a negative impact from tariffs. across the group. We always said that the impact was not huge and well below 1%, but it's still there, of course, and it basically pulls down the margin slightly. But despite that effect, we still see a positive organic development. of the gross margin. So we're very pleased with that development. When it comes to the currency, quite negative on the margin. Also, as Wagner already indicated, quite negative on the top line of the orders and the revenues. How do we see the foreign exchange development for Q2? Well, basically, we expect that if the exchange rates remain at the current level at the end of March, basically, then we would assume that the currency would be having hardly any effect on the margin. You could say basically somewhere around the zero point is what we anticipate for Q2, all things being equal, of course. If I then move to page 13, where we split a little bit further into the different business areas, Then I think the picture is fairly similar on the items affecting comparability already mentioned the vacuum technique costs from last year that now comes in as a positive. And on the other hand, the fleet impairment as well as the restructuring that we have done within power technique. The acquisitions dilutive across the different business area for power technique. Very minor also for industrial technique, very minor impact. The currency then across all business areas having a negative impact, mostly in industrial technique, quite dilutive. While for the others, the impact is a little bit more mild, but still negative for all business areas. And then when it comes to the organic development, positive for all four business areas. Of course, there are impacts related to volume price mix that help this development, while the tariffs are offsetting in most cases that to some extent. But we should also not forget that all the activities we have done over the last several years, whether it has been in vacuum technique, whether it's in industrial technique or even now in power technique, are starting or are generating positive results from a leverage point of view and that is one of the reasons why we also see this positive effect despite the typical volume price mix effects that contribute across many of the different business areas so overall i would say even though at first sight maybe the margin is slightly is not as high, 20.4%. The fact that the organic development is positive across all business areas is really encouraging for our team to continue working on this going forward. If I then move to the balance sheet, Not so much to say here, to be honest. The main development we see is that if we look at the asset side, is of course the impact of the acquisitions, adding especially the intangible assets, but also a little bit on the property and equipment and other type of investments. As well as, and that is then the second most important point in the balance sheet, I would say, the development of the inventories and receivables that we will also see back in the cash flow on the next page. Besides that, I would just like to highlight the fact that we will soon be approaching the payout of the dividend, or at least the first installment of the dividend. The ex-dividend date will be tomorrow, the record date will be April 30th, and the payout date will be on May 6th. Then moving to page number 15 in the slide deck, the cash flow. The cash flow, you could say, is operational cash flow quite a bit weaker compared to the same quarter last year. This is not so much coming from the operating cash surplus, which is even though slightly lower, but I would say relatively on a similar level. But the main detractor here is the changing working capital of 2.2 billion in the quarter. Not entirely surprising that this happens in Q1. We tend to have always a low working capital at the end of the year, following lower orders, higher level of invoicing in Q4. And of course, now also adding the improvement of some of the underlying demand factors. in vacuum technique for example we of course also need to prepare for that and we are also building up a little bit of inventory although we of course try to monitor that very closely from a relative point of view though the working capital is not really fundamentally changing the inventories are in relative terms down the payables are in relative terms somewhat up and the receivables are quite stable so from that point of view no reason for concern from my perspective And with that, I would like to hand back to Wagner to comment on our forward-looking statement.