Atlas Copco: Strong end to a record year

Atlas Copco: Strong end to a record year

31 January 2018

Atlas Copco, a leading provider of sustainable productivity solutions, reported double-digit organic growth in revenue, earnings, and orders. This development boosts its share price. In the near future, total demand for the Group is expected to stay at current high level, according to its current press release.

Mats Rahmström, president and CEO of the Atlas Copco Group notified that orders received in the fourth quarter of 2017 organically grew to 14% compared with Q4 2016. Revenues were SEK 116bn in 2017, and increased 8.5% compared with Q4 2016. The operating profit margin was 20.2% and increased 8% to SEK 6,233 million (5,785 in Q4 2016). The Vacuum Technique segment contributed to the biggest order intake growth of 29%. In general, Atlas Copco published a sound fourth quarter report and long-term prospects remain very good.

Split and further acquisitions

Last year, the Board of Directors declared that a split of the Group into two companies will be proposed to the Annual General Meeting on 24 April 2018: Atlas Copco, focuses on industrial customers, and Epiroc, focuses on mining and civil engineering customers. The plan is to have both companies listed on the Nasdaq Stockholm Stock Exchange. The ongoing split of the Group is proceeding according to plan.

The Swedish company will carry on with strategic acquisitions to grow further. Therefore, Atlas Copco also announced the acquisitions of a French steam boiler rental company, a U.S. mining distributor, a South African exploration manufacturing business, and an Australian rock drills specialist, in its company press release.

Technical Analysis

The Board proposes a distribution to shareholders of SEK 15.00 per share through an annual dividend for 2017 of SEK 7.00 per share and through an extra distribution of SEK 8.00 per share via mandatory redemption of shares.

Atlas Copco AB currently has a total float of 1.17 billion shares. Currently shares are traded at SEK 369.20 (31.01.2018). The stock reached its annual high at SEK 380.80 (19.01.2018) and its low at SEK 274.86 (31.01.2017). The twelve-month target price is estimated with SEK 381.74. Atlas Copco had 8 buy recommendations, 17 holds and 2 sells previously. Bloomberg analysts estimate a dividend yield of 4.86% and a 26.80 P/E ratio. Its market capitalization equals SEK 438,231.9 million.

The future share performance will depend on various corporate-, industry- and economic factors. Investors should consider the risks before taking any investment decisions. The performance of the underlying might differ from investors’ expectations and lead to a potential capital loss.

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09/12/2022 17:10:36


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