October 24, 2006 Atlas Copco Group Q3 Results October 24, 2006

1October 24, 2006 www.atlascopco.com

Atlas Copco Group

Q3 Results

October 24, 2006


Contents

Q3 Business Highlights

Market Development

Business Areas

Financials

Outlook


Q3 - Highlights

Value creation– High growth

Double digit growth in all regions

Good demand from most customer segments

Solid growth in the aftermarket business

– Increased profits All business areas improved profit margins

Atlas Copco sells majority stake of the equipment rental business


Q3 - Figures in summary

Orders received up 21%, +19% in volume

Revenues up 17% to MSEK 12 538, up 15% in volume

Operating profit up 29% to MSEK 2 306, a margin of 18.4% (16.6)

Profit before tax at MSEK 2 081 (1 800), a margin of 16.6% (16.9)

Including discontinued operations

Basic earnings per share were SEK 3.36 (2.71), up 24%

Operating cash flow totaled MSEK 434 (1 671)

ROCE at 36% (26)Revenues and operating profit including discontinued operations as per previously used accounting principles for comparison only

Revenues of MSEK 15 566 (13 479)

Operating profit of 3 176 (2 512), a margin of 20.4% (18.6)


Contents


Market Development

Business Areas

Financials

Outlook


Orders received - Local currencyGroup total +24% YTD, + 25% last 3 months(Structural change +2% YTD, +3% last 3 months)

September 2006

A B C

A = Portion of sales, Year-to-date, %

B = Year-to-date vs. prev. year, %

C = Last 3 months vs. prev. year, %

6 +15 +21

39 +17 +24

10 +57 +66

18 +32 +26

5 +17 +12

22 +18 +13


Q3 - The Americas

Continued strong demand from most customer segments in North America– Solid growth in most manufacturing and

process industry segments

– Increased sales of mining and construction equipment in the region

Sustained growth in South America– Manufacturing and process industries’

demand particularly strong

September 2006

A B C




6 +15 +21

22 +18 +13


Q3 - Europe and Africa/Middle East

Europe shows strength– High order intake for all types of compressed air

equipment

– Weaker demand for advanced assembly tools

– Increased demand from the construction and mining industries

– Very strong growth in Russia and improvements in many major markets in Western Europe

+66% in the Africa / Middle East region– Booming mining sector in Africa and strong overall

demand in the Middle East

September 2006

A B C




39 +17 +24

10 +57 +66


Q3 - Asia and Australia

Steady, high growth in Asia– Large compressor orders in China, on top of

already strong development

– High growth trend continues in India

Mining particularly strong in Australia

September 2006

A B C




18 +32 +26

5 +17 +12


Volume Growth per Quarter

Change in orders received in % vs. same Quarter previous year

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Atlas Copco Group, excluding Rental Service


July – September

MSEK

Orders Received

Revenues

2005 11 452 10 674 Structural change, % +3 +3 Currency, % -4 -3 Price, % +3 +2 Volume, % +19 +15 Total, % +21 +17 2006 13 847 12 538

Atlas Copco Group – Sales Bridge


Contents


Market Development

Business Areas

Financials

Outlook


Atlas Copco GroupOperating Profit and Return On Capital Employed (ROCE) by Business Areas

MSEK

Revenues Operating profit

Operating margin

ROCE

12 month values, period ending Sep. 2006 Sep. 2006 Sep. 2006 Sep. 2006 Compressor Technique 23 879 4 931 20.6% 72% Construction and Mining Technique 18 208 2 854 15.7% 34% Industrial Technique 6 514 1 345 20.6% 64% Rental Service 782 259 33.1% na. Eliminations/Common Group Functions -471 -504 Atlas Copco Group 48 912 8 885 18.2% 36%* * including discontinued operations


Compressor Technique

Strong order growth in all markets and all major product segments– Significant order growth in gas and process compressors

– Higher growth in Western Europe

Steady positive development of aftermarket

Operating profit up 31%. Margin at all-time high 21.5%– Positive effect from volume and price

New manufacturing plant for screw compressor elements in China


Compressor Technique

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Revenue volume growth: Change vs. same quarter previous year, %

Quarterly operating margin, %


Continued strong demand, particularly in mining

Order intake up 25%, excluding currency – 18th consecutive quarter with volume growth

– Significant growth in Europe

Record profit, up 34%

Launch of new crawler rig for surface applications

Construction and Mining Technique


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Construction and Mining Technique


Industrial Technique

Strong sales to general industry

Weaker demand from the motor vehicle industry– Sales declined in Europe and North America

Good development of the aftermarket business

Strategic acquisitions

Improved operating margin


Industrial Technique

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Rental Service

Rental revenues increased 20% in USD– Price +5%, volume +15%

Fleet utilization at 73.5%

Record operating margin

Continuing operations– Prime Energy and Prime Mexico will be

integrated into the rental operations in the Compressor Technique business area when the divestment is finalized



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Rental revenue volume growth: Change vs. same quarter previous year, %

Quarterly operating margin, % (Business Area)

Rental Service

Operating margins for Q2 and Q3 2006 include depreciation expense for discontinued operations, as per previously used accounting principles, to enhance comparability

Rental Revenue Volume Development, incl. discontinued operations


Contents


Market Development

Business Areas

Financials

Outlook


Group Total

July – Sept. Jan. – Sept. MSEK 2006 2005 % 2006 2005 %

Orders received 13 847 11 452 +21 41 108 32 599 +26 Revenues 12 538 10 674 +17 36 930 30 223 +22

Operating profit 2 306 1 781 +29 6 739 4 792 +41 – as a percentage of revenues 18.4 16.7 18.2 15.9

Profit before tax 2 081 1 800 +16 6 313 4 766 +32 – as a percentage of revenues 16.6 16.9 17.1 15.8 Profit for the period from continuing operations

1 475

1 272

+16

4 493

3 429

+31

Profit for the period from discontinued operations, net of tax

642

437

1 708

970

Profit for the period 1) 2 117 1 709 +24 6 201 4 399 +41 Basic earnings per share, SEK 1) 3.36 2.71 +24 9.83 6.97 +41 Equity per share, SEK 1) 45 37 Return on capital employed, % 1) 36 26 1) Including discontinued operations. Earnings for Q2 and Q3 2006 do not include depreciation on assets held for sale and the earnings for Q2 2006 have thus been restated for the effect of the depreciation.


Balance Sheet

Including discontinued operations MSEK Sep. 30, 2006 Dec. 31, 2005 Sep. 30, 2005

Intangible assets 4 240 7% 10 607 19% 10 250 19% Rental equipment 2 072 3% 13 456 24% 12 712 24% Other property, plant and equipment 3 722 6% 4 503 8% 4 266 8% Other fixed assets 2 050 3% 1 818 3% 1 692 3% Inventories 8 522 14% 7 215 13% 7 137 14% Receivables 12 573 21% 13 240 24% 12 853 24% Current financial assets 597 1% 389 1% 325 1% Cash and cash equivalents 2 616 4% 3 727 7% 3 364 6% Assets classified as held for sale 24 107 40% - - TOTAL ASSETS 60 499 54 955 52 599

Total equity 28 449 47% 25 808 47% 23 255 44% Interest-bearing liabilities 11 197 19% 11 345 21% 11 303 21% Non-interest-bearing liabilities 13 447 22% 17 802 32% 18 041 34% Liabilities associated with assets classified as held for sale

7 406

12%

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TOTAL EQUITY AND LIABILITIES 60 499 54 955 52 599


Capital Structure

4%

30%

16%

75%

59%

92% 92%

72%67%

46%

28%31%32%

0%

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100%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Sept.2006

Adjusted for IFRS from 2004. Including discontinued operations.

Net Debt/Equity


Cash Flow

July – September January – September MSEK 2006 2005 2006 2005

Operating cash surplus after tax 2 772 2 796 8 861 7 276 of which depreciation added back -379 -875 -1 700 -2 391 Change in working capital -569 362 -1 140 287

Cash flow from operations 2 203 3 158 7 721 7 563 Investments in tangible fixed assets -1 868 -2 054 -6 617 -5 383 Sale of tangible fixed assets 486 635 1 711 1 824 Other investments, net -387 -68 -1 046 -361

Cash flow from investments -1 769 -1 487 -5 952 -3 920

Operating cash flow 434 1 671 1 769 3 643 Company acquisitions / divestments -637 -150 -1 050 3 650 Dividends paid - -2 -2 675 -1 890 Share redemption - - - -4 192 Change in interest-bearing liabilities -138 -1 434 973 -957

Net cash flow -341 85 -983 254



Cash Flow in SummaryContinuing and discontinued operations

January – September 2006 MSEK

Continuing operations

Discont. operations

Total

Net cash from — operating activities 4 551 3 170 7 721 whereof change in working capital - 1 582 442 -1 140 — investing activities -3 296 -3 706 -7 002 whereof acquisitions/divestments -1 050 0 -1 050

Operating cash flow before acquisitions/divestments

2 305 -536 1 769


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YTD 2005 YTD 2006

Property and machinery Rental equipment, net Depreciation, tangible assetsMSEK

Tangible fixed assets, continuing operations


Contents


Market Development

Business Areas

Financials

Outlook


Near-term Outlook

The demand for Atlas Copco’s products and services, from most customer segments such as mining, construction, and the manufacturing and process industries, is expected to remain at the current high level.



Cautionary Statement

“Some statements herein are forward-looking and the actual outcome could be materially different. In addition to the factors explicitly commented upon, the actual outcome could be materially effected by other factors like for example, the effect of economic conditions, exchange-rate and interest-rate movements, political risks, impact of competing products and their pricing, product development, commercialization and technological difficulties, supply disturbances, and the major customer credit losses.”

Documents

October 24, 2006 Atlas Copco Group Q3 Results October 24, 2006