Atlas Copco — Interim / Quarterly Report 2013

Jan 30, 2014

Press Release from the Atlas Copco Group

January 30, 2014

Atlas Copco Interim report on Q4 and full-year 2013 summary (unaudited)

Stable industrial demand – mining equipment remained weak

• Order intake decreased to MSEK 19 714 (21 101), organic decline of 4%
• Revenues decreased to MSEK 21 266 (22 748), organic decline of 4%
• Operating profit decreased 12% to MSEK 4 155 (4 699), including items affecting comparability of MSEK +57 (-192)
• Operating margin at 19.5% (20.7)
• Profit before tax amounted to MSEK 3 925 (4 488)
• Profit for the period was MSEK 2 903 (3 416)
• Basic earnings per share were SEK 2.39 (2.81)
• Operating cash flow at MSEK 2 563 (4 339)
• Acquisition of Edwards Group Ltd. finalized on January 9, 2014
• The Board of Directors proposes a dividend of SEK 5.50 (5.50) per share

	October - December			January - December
MSEK	2013	2012	%	2013	2012	%
Orders received	19 714	21 101	-7%	81 290	90 570	-10%
Revenues	21 266	22 748	-7%	83 888	90 533	-7%
Operating profit	4 155	4 699	-12%	17 056	19 266	-11%
– as a percentage of revenues	19.5	20.7		20.3	21.3
Profit before tax	3 925	4 488	-13%	16 266	18 562	-12%
– as a percentage of revenues	18.5	19.7		19.4	20.5
Profit for the period	2 903	3 416	-15%	12 082	13 933	-13%
Basic earnings per share, SEK	2.39	2.81		9.95	11.47
Diluted earnings per share, SEK	2.38	2.81		9.92	11.44
Return on capital employed, %	28	36

Near term demand outlook

The overall demand for the Group's products and services is expected to remain at the current level.

Previous near-term demand outlook (published October 25, 2013): The overall demand for the Group's products and services is expected to remain at the current level.

Atlas Copco Group Center

Atlas Copco Group Summary of full year 2013

Orders and revenues

Orders received in 2013 decreased by 10%, to MSEK 81 290 (90 570), corresponding to an organic decline of 7%. Revenues decreased by 7%, to MSEK 83 888 (90 533), corresponding to a 4% organic decline.

Sales bridge

January - December
Orders
received	Revenues
90 570	90 533
+1	+1
-4	-4
+1	+1
-8	-5
-10	-7
81 290	83 888

Results and cash flow

Operating profit decreased by 11% to MSEK 17 056 (19 266), corresponding to a margin of 20.3% (21.3). Items affecting comparability, including the effect of share-related long-term incentive programs of MSEK -62 (-217), amounted to MSEK +63 (-182). Adjusted operating margin was 20.3% (21.5). Changes in exchange rates compared with the previous year had a negative effect on the operating profit of MSEK –1 225 and affected the margin negatively with 0.4 percentage points.

Profit before tax amounted to MSEK 16 266 (18 562), corresponding to a margin of 19.4% (20.5). Profit for the period totaled MSEK 12 082 (13 933). Basic and diluted earnings per share were SEK 9.95 (11.47) and SEK 9.92 (11.44) respectively.

Operating cash flow before acquisitions, divestments and dividends totaled MSEK 9 931 (12 286).

Consolidation of internal insurance operations

In December, Atlas Copco consolidated its in-house insurance operations and divested Atlas Copco Reinsurance SA, the Luxembourg captive company. The insurance capacity remains unchanged, but is now fully concentrated to the Swedish-based captive. A gain of MSEK 90 relating to the transaction is recognized in the fourth quarter 2013.

Specialty Rental division to Construction Technique

On January 1, 2014, the Specialty Rental division moved from the Compressor Technique business area to the Construction Technique business area. The objective is to strengthen growth by further developing product and service synergies. Pro-forma data is available on page 16.

Personnel stock option program

The Board of Directors will propose to the Annual General Meeting a similar performance-based long-term incentive program as in previous years. For Group Management, participation in the plan will require own investment in Atlas Copco shares. It is proposed that the plan is covered as before through the repurchase of the company's own shares. The details of the proposals will be communicated in connection with the Notice of the Annual General Meeting.

Dividend

The Board of Directors proposes to the Annual General Meeting that a dividend of SEK 5.50 (5.50) per share be paid for the 2013 fiscal year. Excluding shares currently held by the company, this corresponds to a total of MSEK 6 675 (6 668).

Atlas Copco acquires Edwards, expanding into process vacuum solutions

On January 9, 2014, the acquisition of Edwards, a leading global supplier of vacuum and abatement solutions, was completed, and USD 9.25 per share was paid to Edwards's shareholders.

Based on Edwards' preliminary unaudited income statement for 2013 revenues reached approximately MGBP 680 (MSEK 6 950), and the adjusted EBITDA approximately MGBP 160 (MSEK 1 640).

If the preliminary statement is confirmed, the requirements as per the merger agreement dated August 19, 2013 for a maximum additional payment to Edwards' shareholders of USD 1.25 are met. Payment will be made immediately upon such confirmation which is expected within the first quarter of 2014.

In such a case, the total purchase price of USD 10.50 per share would correspond to an enterprise value of MSEK 9 900, whereof approximately MSEK 2 100 of net debt at the time of closing, and a prelimary purchase price allocation as outlined in the table to the right.

4 100
1 300
2 700
900
-3 000
-3 200
2 800
5 000
7 800

SEK / USD 6.5145 as at December 31, 2013.

Edwards will be consolidated as from January 2014 and is part of Atlas Copco's new Vacuum Solutions division within the Compressor Technique business area.

Atlas Copco estimates, based on above preliminary values, that amortization of intangibles will be approximately MSEK 250 in 2014.

Review of the fourth quarter Market development

The overall demand for the Atlas Copco's products and services was unchanged sequentially, compared to the previous quarter, with a stable order intake for most types of equipment.

Compared to the previous year, the order intake for equipment decreased, primarily due to continued low investments in mining equipment. The order intake increased for industrial tools and assembly systems and was largely unchanged for compressors and for construction equipment.

The service business grew organically compared to the previous year.

In North America, the orders received increased compared to the previous year for industrial tools and assembly systems and for gas- and process compressors. The order intake of industrial compressors and for construction equipment was stable, while it was lower for mining equipment.

In South America, order volumes grew for Industrial Technique and Construction Technique. Compressor Technique had lower orders received for most types of equipment and the Mining and Rock Excavation Technique business area continued to be affected by the low mining equipment demand.

In Europe, orders received were largely unchanged compared to the previous year. Russia, France and Spain had a positive development compared to the previous year, but most other markets had a flat or slightly negative development. Orders for industrial tools and assembly systems increased, whereas compressed air solutions as well as construction equipment had a stable development, organically. The order intake for mining equipment decreased.

In Africa/Middle East, order volumes increased, primarily due to good performance of Construction Technique, but also the order intake for mining and rock excavation equipment was higher compared to the previous year.

The order volumes in Asia increased slightly compared to the previous year. The order intake was very strong for Industrial Technique, stable for Compressor Technique and

Geographic distribution of orders received

Mining and Rock Excavation Technique and slightly softer for Construction Technique.

The order intake in Australia decreased significantly compared to the previous year, due to lower demand from the mining industry.

Sales bridge

	October - December
	Orders
MSEK	received	Revenues
2012	21 101	22 748
Structural change, %	+1	+1
Currency, %	-4	-4
Price, %	+2	+1
Volume, %	-6	-5
Total, %	-7	-7
2013	19 714	21 266

%, last 12 months	Compressor	Industrial	Mining and Rock	Construction	Atlas Copco
incl. December 2013	Technique	Technique	Excavation Tech.	Technique	Group
North America	19	26	20	16	20
South America	7	5	14	13	10
Europe	35	46	21	34	32
Africa/Middle East	8	1	19	13	11
Asia/Australia	31	22	26	24	27
	100	100	100	100	100

Revenues, profits and returns

Revenues were MSEK 21 266 (22 748), corresponding to an organic decline of 4%.

Operating profit decreased by 12% to MSEK 4 155 (4 699), corresponding to an operating margin of 19.5% (20.7). The margin was affected by MSEK 70 (65) restructuring costs in Mining and Rock Excavation Technique (Construction Technique) and by two items in Common Group Functions; a gain of MSEK 90 related to the divestment of Atlas Copco Reinsurance SA, and a change in provision for share-related long-term incentive programs of MSEK +37 (-127). The adjusted operating margin was 19.3% (21.5). The operating margin was negatively affected by lower volumes, currency and dilution from acquisitions, which was partly compensated for by cost reductions and price increases. The net currency effect compared to the previous year was MSEK -210.

Net financial items were MSEK -230 (-211). Interest net was MSEK -233 (-177).

Profit before tax amounted to MSEK 3 925 (4 488), corresponding to a margin of 18.5% (19.7).

Profit for the period totaled MSEK 2 903 (3 416). Basic and diluted earnings per share were SEK 2.39 (2.81) and SEK 2.38 (2.81), respectively.

The return on capital employed during the last 12 months was 28% (36). Return on equity was 34% (46). The Group uses a weighted average cost of capital (WACC) of 8.0% as an investment and overall performance benchmark.

Income tax assessment in Belgium

The contingent liability for the tax assessment of MSEK 200 that was recognized in Q2 2013 has been withdrawn in the quarter, following an agreement with the tax authorities.

Operating cash flow and investments

Operating cash surplus reached MSEK 4 310 (5 357). Working capital decreased by MSEK 603 (1 168), as inventories decreased. Rental equipment, net, increased by MSEK 234 (309). Investments in property, plant and equipment were MSEK 353 (438).

Operating cash flow equaled MSEK 2 563 (4 339).

Net indebtedness

The Group's net indebtedness, adjusted for the fair value of interest rate swaps, amounted to MSEK 7 504 (9 262), of which MSEK 1 414 (2 149) was attributable to postemployment benefits. The Group has an average maturity of 4.4 years on interest-bearing liabilities. The net debt/EBITDA ratio was 0.4 (0.4). The net debt/equity ratio was 19% (27).

Acquisition and divestment of own shares

During the quarter, 241 918 series A shares and 113 500 series B shares were divested, for a net value of MSEK 62. These transactions are in accordance with mandates granted by the 2013 Annual General Meeting and relate to the Group's longterm incentive programs.

Employees

On December 31, 2013, the number of employees was 40 241 (39 811). The number of consultants/external workforce was 2 137 (2 109). For comparable units, the total workforce decreased by 718 from December 31, 2012. The number of employees increased in service and research and development, while it decreased in manufacturing.

Revenues and operating profit – bridge

		Volume, price,		One-time items	Share based
MSEK	Q4 2013	mix and other	Currency	Acquisitions	LTI programs	Q4 2012
Atlas Copco Group
Revenues	21 266	-842	-880	240	-	22 748
EBIT	4 155	-573	-210	75	164	4 699
%	19.5%	68.1%				20.7%

Compressor Technique

		October - December		January - December
MSEK	2013	2012	%	2013	2012	%
Orders received	8 297	8 367	-1%	33 823	35 469	-5%
Revenues	9 107	9 117	0%	33 839	34 714	-3%
Operating profit	2 092	2 207	-5%	7 823	8 017	-2%
– as a percentage of revenues	23.0	24.2		23.1	23.1
Return on capital employed, %	61	62

2% organic order growth

• The range of compressors with breakthrough energy efficiency was extended
• Acquisition of Edwards Group Ltd was finalized on January 9, 2014

Sales bridge

October - December
Orders
received	Revenues
8 367	9 117
+0	+0
-3	-3
+1	+1
+1	+2
-1	+0
8 297	9 107

Industrial compressors

The order volumes for small- and medium sized compressors were stable compared to the previous year and increased sequentially. Year on year, orders increased in Asia, but were lower in South America.

The order volumes for larger machines decreased compared to the previous year, but were stable sequentially. Year on year, orders increased in North America, but were lower in all other regions.

Service

The service business continued to grow in all major markets. The highest growth was achieved in North and South America and in Asia.

Gas and process compressors

Orders for gas and process compressors were higher compared to the previous year but were lower than in the third quarter. Orders increased year on year in North America and in Asia, but decreased in Europe.

Specialty rental

The specialty rental business improved compared to the previous year. The best development was achieved in Africa/Middle East and in South America.

Specialty Rental division to Construction Technique

On January 1, 2014, the Specialty Rental division moved to the Construction Technique business area.

Innovation

The following products have been launched:

The range of small oil-injected screw compressors that features a compact design and breakthrough energyefficiency was extended up to 37kW. These variable speed drive compressors can realize energy savings of 50% on average.

Acquisition

On January 9, 2014, the acquisition of Edwards, a leading global supplier of vacuum and abatement solutions, was completed. See page 2.

Revenues and profitability

Revenues reached MSEK 9 107 (9 117), corresponding to 3% organic growth.

Operating profit was MSEK 2 092 (2 207), corresponding to a margin of 23.0% (24.2). The margin was negatively impacted by currency and by dilution from acquisitions. Return on capital employed (last 12 months) was 61% (62).

Orders, revenues and operating profit margin

Industrial Technique

		October - December		January - December
MSEK	2013	2012		2013	2012
Orders received	2 548	2 254	13%	9 594	9 435	2%
Revenues	2 692	2 395	12%	9 501	9 566	-1%
Operating profit	621	533	17%	2 138	2 158	-1%
– as a percentage of revenues	23.1	22.3		22.5	22.6
Return on capital employed, %	42	43

Continued strong order intake from the motor vehicle and aerospace industry

• Operating margin improved to 23.1%, supported by volume
• Acquisitions of two solution providers for quality assembly and tightening

Sales bridge

October - December
Orders
received	Revenues
2 254	2 395
+4	+3
-1	-2
+0	+0
+10	+11
+13	+12
2 548	2 692

Motor vehicle industry

The orders received for advanced industrial tools and assembly systems from the motor vehicle industry continued to be strong and were stable sequentially. This corresponds to a significant growth compared to the previous year with a positive development in all major markets. The order intake was particularly strong in Asia and in North America.

General industry

The order volumes for industrial power tools for general industry improved somewhat both sequentially and compared to the previous year, supported by good development for the aerospace industry. Growth was achieved in the two largest regions Europe and North America, while orders received decreased somewhat in Asia.

Service

The service business developed well and the order intake increased both compared to the previous year and sequentially in most major markets. The growth was particularly strong in Asia and South America.

Innovation

The following products have been launched:

• A range of high torque electric pistol grip nutrunners that offers customers a compact, lightweight power tool solution where there are high demands for process quality and traceability.
• A new tightening process for the low-torque screwdriver range which ensures screws are fully seated as well as fastened to the correct torque. This feature is welcomed by customers in the electronics industry as a way to increase quality.

Acquisitions

• In October, Atlas Copco acquired Synatec, which provides quality improvement solutions mainly to the automotive industry. The company is based near Stuttgart, Germany, and had 120 employees and revenues of MSEK 105 in 2012.
• In November, Atlas Copco acquired UK-based Tentec Ltd., which develops and markets bolt-tightening solutions. The acquisition broadens Atlas Copco's range of products and services offered to the oil and gas, power generation and mining industries. The company had revenues of MSEK 105 in 2012 and 65 employees.

Revenues and profitability

Revenues reached MSEK 2 692 (2 395), corresponding to an organic increase of 11%.

Operating profit was MSEK 621 (533), corresponding to an operating margin of 23.1% (22.3), primarily supported by the volume increase. Return on capital employed (last 12 months) was 42% (43).

Mining and Rock Excavation Technique

		October - December	January - December
MSEK	2013	2012		2013	2012
Orders received	6 162	7 711	-20%	26 092	33 482	-22%
Revenues	6 709	8 496	-21%	29 013	34 054	-15%
Operating profit	1 190	2 026	-41%	6 083	8 335	-27%
– as a percentage of revenues	17.7	23.8		21.0	24.5
Return on capital employed, %	41	59

Continued weak demand for mining equipment

Operating margin at 18.8%, adjusted for MSEK 70 in restructuring costs

Acquisitions of oil and gas, and geotechnical drilling businesses

Sales bridge

	October - December
	Orders
MSEK	received	Revenues
2012	7 711	8 496
Structural change, %	+2	+1
Currency, %	-5	-5
Price, %	+3	+3
Volume, %	-20	-20
Total, %	-20	-21
2013	6 162	6 709

Mining equipment

The demand for mining equipment continued to be soft and the order intake decreased compared to the previous year for all types of equipment. Geographically, most major markets had a negative development, except for South Africa. Sequentially the orders received were slightly lower.

Civil engineering equipment

The order intake for equipment for infrastructure projects was lower compared to the previous year, but somewhat higher sequentially.

Service and consumables

The service and spare parts business was unchanged organically compared to the previous year, with a negative development in Australia and North America. The demand for exploration consumables remained very low. Sequentially, the volumes of service, spare parts and consumables were slightly lower.

Innovation

The following products have been launched:

• An underground loader for large mining operations, which is expected to be the most productive on the market. Several features contribute to safe operations and to an overall faster and more productive loading cycle.
• A surface drill rig tailor-made for the dimension stone industry.

Acquisitions

In October, Atlas Copco acquired operational assets of Archer Underbalanced Services, a service provider of drilling equipment and compressed air packages to U.S. land-based oil and gas drilling companies. The business had revenues in 2012 of MSEK 230 and 75 employees.

In January 2014, Atlas Copco agreed to acquire Swedenbased Geawelltech, which sells, rents out and manufactures well- and geotechnical drilling equipment. The company has 19 employees.

Adjustment of capacity and efficiency measures

Several actions to adjust capacity to the lower mining equipment demand have been implemented, including insourcing of final assembly. The total workforce for comparable units has been reduced by about 1 200 during the year.

Revenues and profitability

Revenues were MSEK 6 709 (8 496), corresponding to an organic decline of 17%.

Operating profit was MSEK 1 190 (2 026), including restructuring costs of MSEK 70. The adjusted operating margin was 18.8% (23.8), and was impacted negatively by lower volumes, currency and dilution from acquisitions. Return on capital employed (last 12 months) was 41% (59).

Orders, revenues and operating profit margin

Orders received, MSEK Revenues, MSEK Operating margin, %

Construction Technique

		October - December			January - December
MSEK	2013	2012		2013	2012
Orders received	2 960	3 035	-2%	12 471	13 001	-4%
Revenues	3 003	2 911	3%	12 257	12 888	-5%
Operating profit	254	143	78%	1 214	1 332	-9%
– as a percentage of revenues	8.5	4.9		9.9	10.3
Return on capital employed, %	10	10

Stable demand

• Operating margin at 8.5%, negatively affected by currency
• Specialty Rental division will move to the business area as from January 1, 2014

Sales bridge

	October - December
	Orders
MSEK	received	Revenues
2012	3 035	2 911
Structural change, %	+1	+1
Currency, %	-4	-4
Price, %	+0	+0
Volume, %	+1	+6
Total, %	-2	+3
2013	2 960	3 003

Construction equipment

The order volumes for construction equipment were largely unchanged compared to the previous year. Geographically, organic order intake increased in South America and in Africa/Middle East, but decreased somewhat in the much larger regions of Europe, Asia and North America. The order volumes for road construction equipment increased compared to the previous years, while other equipment categories were flat or decreased slightly.

Compared to the previous quarter, the order intake increased for all types of equipment, supported by normal seasonal effects.

Service

The service business remained healthy and grew organically compared to the previous year. The order intake improved in most markets, most significantly in North America.

Innovation

The following products have been launched:

• A compact material feeder for non-stop paving, which combines easy and cost effective transport with impressive feeding capacity.
• Several portable compressors, mainly for the Chinese market.
• A range of hydraulic breakers targeting emerging markets.

Specialty Rental division to Construction Technique

On January 1, 2014, the Specialty Rental division moved from the Compressor Technique business area to the Construction Technique business area. The objective is to strengthen growth by further developing product and service synergies. Pro-forma data is available on page 16.

Revenues and profitability

Revenues reached MSEK 3 003 (2 911), corresponding to an organic increase of 6%.

Operating profit was MSEK 254 (143). Previous year includes restructuring costs of MSEK 65 and the adjusted operating margin was 8.5% (7.1), and was negatively affected by currency. Return on capital employed (last 12 months) was 10% (10).

Orders, revenues and operating profit margin

Accounting principles

The consolidated accounts of the Atlas Copco Group are prepared in accordance with International Financial Reporting Standards (IFRS) as disclosed in the Annual Report 2012. The interim report is prepared in accordance with IAS 34 Interim Financial Reporting.

New and amended accounting standards

IASB has issued several new and amended standards and interpretations effective from January 1, 2013.

Amendment to IAS 19 Employees Benefits

The amended version of IAS 19 Employee Benefits was adopted by Atlas Copco as from January 1, 2013 with full retrospective application. As a consequence, the income statement and balance sheet for previous year have been restated. The effects on relevant lines are detailed in the table below:

Balance sheet, MSEK	Dec. 31, 2012
Other financial assets	-507
Deferred tax assets	152
Equity	-947
Post-employment benefits	748
Deferred tax liabilities	-198
Other liabilities and provisions	42
Income statement, MSEK	2012
Operating profit	38
Profit before tax	24
Profit for the period	19

Other new and amended IFRS standards and IFRIC interpretations

The other new or amended IFRS standards and IFRIC interpretations have not had any material effect on the consolidated financial statements.

Risks and factors of uncertainty

Market risks

The demand for Atlas Copco's products and services is affected by changes in the customers' investment and production levels. A widespread financial crisis and economic downturn affects the Group negatively both in terms of revenues and profitability. However, the Group's sales are well diversified with customers in many industries and countries around the world, which limits the risk.

Financial risks

Atlas Copco is subject to currency risks, interest rate risks and other financial risks. In line with the overall goals with respect to growth, return on capital, and protecting creditors, Atlas Copco has adopted a policy to control the financial risks to which the Group is exposed. A financial risk management committee meets regularly to manage and follow up financial risks, in line with the policy.

Many components are sourced from sub-suppliers. The availability is dependent on the sub-suppliers and if they have interruptions or lack capacity, this may adversely affect production. To minimize these risks, Atlas Copco has established a global network of sub-suppliers, which means that in most cases there are more than one sub-supplier that can supply a certain component.

Atlas Copco is also directly and indirectly exposed to raw material prices. Cost increases for raw materials and components often coincide with strong end-customer demand and can partly be offset by increased sales to mining customers and partly compensated for by increased market prices.

Acquisitions

Atlas Copco has the ambition to grow all its business areas, primarily through organic growth, complemented by selected acquisitions. The integration of acquired businesses is a difficult process and it is not certain that every integration will be successful. Therefore, costs related to acquisitions can be higher and/or synergies can take longer to materialize than anticipated.

For further information, see the Annual Report 2012.

Forward-looking statements

Some statements in this report are forward-looking, and the actual outcome could be materially different. In addition to the factors explicitly discussed, other factors could have a material effect on the actual outcome. Such factors include, but are not limited to, general business conditions, fluctuations in exchange rates and interest rates, political developments, the impact of competing products and their pricing, product development, commercialization and technological difficulties, interruptions in supply, and major customer credit losses.

Atlas Copco AB

Atlas Copco AB and its subsidiaries are sometimes referred to as the Atlas Copco Group, the Group or Atlas Copco. Atlas Copco AB is also sometimes referred to as Atlas Copco. Any mentioning of the Board of Directors or the Directors refers to the Board of Directors of Atlas Copco AB.

Consolidated income statement

		3 months ended	12 months ended
	Dec. 31	Dec. 31	Dec. 31	Dec. 31
MSEK	2013	2012	2013	2012
Revenues	21 266	22 748	83 888	90 533
Cost of sales	-13 323	-14 096	-51 766	-55 771
Gross profit	7 943	8 652	32 122	34 762
Marketing expenses	-2 163	-2 197	-8 338	-8 646
Administrative expenses	-1 212	-1 280	-4 801	-4 973
Research and development costs	-572	-504	-2 117	-2 034
Other operating income and expenses	159	28	190	157
Operating profit	4 155	4 699	17 056	19 266
- as a percentage of revenues	19.5	20.7	20.3	21.3
Net financial items	-230	-211	-790	-704
Profit before tax	3 925	4 488	16 266	18 562
- as a percentage of revenues	18.5	19.7	19.4	20.5
Income tax expense	-1 022	-1 072	-4 184	-4 629
Profit for the period	2 903	3 416	12 082	13 933
Profit attributable to
- owners of the parent	2 902	3 413	12 072	13 920
- non-controlling interests	1	3	10	13
Basic earnings per share, SEK	2.39	2.81	9.95	11.47
Diluted earnings per share, SEK	2.38	2.81	9.92	11.44
Basic weighted average number
of shares outstanding, millions	1 213.3	1 214.9	1 212.8	1 213.8
Diluted weighted average number
of shares outstanding, millions	1 214.5	1 215.9	1 214.2	1 215.6

Key ratios
Equity per share, period end, SEK	33	28
Return on capital employed, 12 month values, %	28	36
Return on equity, 12 month values, %	34	46
Debt/equity ratio, period end, %	19	27
Equity/assets ratio, period end, %	45	42
Number of employees, period end	40 241	39 811

2012 figures restated for amended IAS 19, see page 9.

Consolidated statement of comprehensive income

		3 months ended	12 months ended
	Dec. 31	Dec. 31	Dec. 31	Dec. 31
MSEK	2013	2012	2013	2012
Profit for the period	2 903	3 416	12 082	13 933
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans	13	-495	45	-479
Income tax relating to items that will not be reclassified	-13	120	-18	116
	0	-375	27	-363
Items that may be reclassified subsequently to profit or loss
Translation differences on foreign operations	1 101	573	444	-1 903
- realized and reclassified to income statement	15	-	16	-
Hedge of net investments in foreign operations	-579	-390	-712	645
Cash flow hedges	-117	-28	-31	-22
Available-for-sale investments	-	-	-	-
- realized and reclassified to income statement	-	-	-	-
Income tax relating to items that may be reclassified	352	444	410	-265
	772	599	127	-1 545
Other comprehensive income for the period, net of tax	772	224	154	-1 908
Total comprehensive income for the period	3 675	3 640	12 236	12 025
Total comprehensive income attributable to
- owners of the parent	3 671	3 639	12 229	12 016
- non-controlling interests	4	1	7	9

Consolidated balance sheet

MSEK	Dec. 31, 2013	Dec. 31, 2012	Jan. 1, 2012
		restated	restated
Intangible assets	17 279	15 879	15 352
Rental equipment	2 420	2 030	2 117
Other property, plant and equipment	6 907	6 846	6 538
Financial assets and other receivables	2 440	2 219	2 501
Deferred tax assets	961	1 262	1 114
Total non-current assets	30 007	28 236	27 622
Inventories	16 826	17 653	17 579
Trade and other receivables	21 726	21 155	21 996
Other financial assets	1 697	1 333	1 773
Cash and cash equivalents	17 633	12 416	5 716
Assets classified as held for sale	2	1	55
Total current assets	57 884	52 558	47 119
TOTAL ASSETS	87 891	80 794	74 741
Equity attributable to owners of the parent	39 647	34 131	28 159
Non-controlling interests	147	54	63
TOTAL EQUITY	39 794	34 185	28 222
Borrowings	19 997	20 150	17 013
Post-employment benefits	1 414	2 149	1 878
Other liabilities and provisions	1 074	1 127	1 085
Deferred tax liabilities	1 027	1 678	1 207
Total non-current liabilities	23 512	25 104	21 183
Borrowings	5 595	902	3 422
Trade payables and other liabilities	17 925	19 412	20 708
Provisions	1 065	1 191	1 206
Total current liabilities	24 585	21 505	25 336
TOTAL EQUITY AND LIABILITIES	87 891	80 794	74 741

2012 figures restated for amended IAS 19, see page 9.

Consolidated statement of changes in equity

	Equity attributable to
	owners of the	non-controlling
MSEK	parent	interests	Total equity
Opening balance, January 1, 2013	34 131	54	34 185
Changes in equity for the period
Total comprehensive income for the period	12 229	7	12 236
Dividends	-6 668	-1	-6 669
Change of non-controlling interests	-2	87	85
Acquisition and divestment of own shares	24	-	24
Share-based payments, equity settled	-67	-	-67
Closing balance, December 31, 2013	39 647	147	39 794

		Equity attributable to
	owners of the	non-controlling
MSEK	parent	interests	Total equity
Opening balance, January 1, 2012	28 776	63	28 839
Changes in accounting policy	-617	-	-617
Restated balance, January 1, 2012	28 159	63	28 222
Changes in equity for the period
Total comprehensive income for the period	12 016	9	12 025
Dividends	-6 069	-1	-6 070
Change of non-controlling interests	-90	-17	-107
Acquisition and divestment of own shares	271	-	271
Share-based payments, equity settled	-156	-	-156
Closing balance, December 31, 2012	34 131	54	34 185

Consolidated statement of cash flows

		October - December		January - December
MSEK	2013	2012	2013	2012
Cash flows from operating activities
Operating profit	4 155	4 699	17 056	19 266
Depreciation, amortization and impairment (see below)	705	691	2 703	2 664
Capital gain/loss and other non-cash items	-550	-33	-554	-347
Operating cash surplus	4 310	5 357	19 205	21 583
Net financial items received/paid	-71	19	-523	-592
Taxes paid	-1 348	-1 111	-4 622	-5 053
Pension funding and payment of pension to employees	-591	-93	-634	-119
Change in working capital	603	1 168	-538	-1 366
Investments in rental equipment	-347	-338	-1 456	-1 299
Sale of rental equipment	113	29	435	550
Net cash from operating activities	2 669	5 031	11 867	13 704
Cash flows from investing activities
Investments in property, plant and equipment	-353	-438	-1 255	-1 672
Sale of property, plant and equipment	12	26	64	67
Investments in intangible assets	-299	-259	-1 009	-920
Sale of intangible assets	1	3	12	7
Acquisition of subsidiaries and associated companies	-358	-146	-1 493	-1 195
Sale of subsidiaries	-57	-	-56	-
Other investments, net	-58	-117	-735	981
Net cash from investing activities	-1 112	-931	-4 472	-2 732
Cash flows from financing activities
Dividends paid	-	-	-6 668	-6 069
Dividends paid to non-controlling interest	-1	-	-1	-1
Acquisition of non-controlling interest	-	-	-3	-107
Repurchase and sales of own shares	62	-210	24	271
Change in interest-bearing liabilities	-440	-310	4 113	1 702
Net cash from financing activities	-379	-520	-2 535	-4 204
Net cash flow for the period	1 178	3 580	4 860	6 768
Cash and cash equivalents, beginning of the period	16 056	8 772	12 416	5 716
Exchange differences in cash and cash equivalents	399	64	357	-68
Cash and cash equivalents, end of the period	17 633	12 416	17 633	12 416
Depreciation, amortization and impairment
Rental equipment	188	161	695	681
Other property, plant and equipment	307	291	1 195	1 123
Intangible assets	210	239	813	860
Total	705	691	2 703	2 664
Calculation of operating cash flow
		October - December		January - December
MSEK	2013	2012	2013	2012
Net cash flow for the period	1 178	3 580	4 860	6 768
Add back:
Change in pensions	591	93	634	119
Change in interest-bearing liabilities	440	310	-4 113	-1 702
Repurchase and sales of own shares	-62	210	-24	-271
Dividends paid	-	-	6 668	6 069
Dividends paid to non-controlling interest	1	-	1	1
Acquisition of non-controlling interest	-	-	3	107
Acquisitions and divestments	415	146	1 549	1 195
Investments of cash liquidity	-	-	353	-
Operating cash flow	2 563	4 339	9 931	12 286

Revenues by business area

	2011				2012				2013
MSEK (by quarter)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Compressor Technique	6 989	7 676	8 264	8 831	8 306	8 692	8 599	9 117	7 842	8 556	8 334	9 107
- of which external	7 000	7 699	8 171	8 804	8 287	8 672	8 584	9 095	7 825	8 539	8 333	9 094
- of which internal	-11	-23	93	27	19	20	15	22	17	17	1	13
Industrial Technique	1 768	1 800	1 816	2 437	2 471	2 420	2 280	2 395	2 183	2 243	2 383	2 692
- of which external	1 763	1 792	1 807	2 429	2 464	2 414	2 271	2 387	2 177	2 233	2 374	2 679
- of which internal	5	8	9	8	7	6	9	8	6	10	9	13
Mining and Rock
Excavation Technique	6 516	6 994	7 642	8 204	8 434	8 846	8 278	8 496	7 562	7 857	6 885	6 709
- of which external	6 485	6 987	7 609	8 183	8 418	8 807	8 265	8 508	7 545	7 851	6 882	6 704
- of which internal	31	7	33	21	16	39	13	-12	17	6	3	5
Construction Technique	3 063	3 599	3 292	2 964	3 206	3 697	3 074	2 911	2 761	3 403	3 090	3 003
- of which external	2 930	3 422	3 090	2 784	3 006	3 477	2 910	2 726	2 613	3 188	2 867	2 768
- of which internal	133	177	202	180	200	220	164	185	148	215	223	235
Common Group functions/
Eliminations	-113	-118	-275	-146	-163	-218	-137	-171	-121	-216	-140	-245
Atlas Copco Group	18 223	19 951	20 739	22 290	22 254	23 437	22 094	22 748	20 227	21 843	20 552	21 266

Operating profit by business area

	2011				2012				2013
MSEK (by quarter)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Compressor Technique	1 701	1 840	1 990	2 061	1 834	1 911	2 065	2 207	1 792	1 969	1 970	2 092
- as a percentage of revenues	24.3	24.0	24.1	23.3	22.1	22.0	24.0	24.2	22.9	23.0	23.6	23.0
Industrial Technique	401	392	398	576	593	552	480	533	487	482	548	621
- as a percentage of revenues	22.7	21.8	21.9	23.6	24.0	22.8	21.1	22.3	22.3	21.5	23.0	23.1
Mining and Rock
Excavation Technique	1 537	1 641	1 959	2 059	2 077	2 196	2 036	2 026	1 771	1 738	1 384	1 190
- as a percentage of revenues	23.6	23.5	25.6	25.1	24.6	24.8	24.6	23.8	23.4	22.1	20.1	17.7
Construction Technique	449	499	390	122	344	489	356	143	263	381	316	254
- as a percentage of revenues	14.7	13.9	11.8	4.1	10.7	13.2	11.6	4.9	9.5	11.2	10.2	8.5
Common Group functions/
Eliminations	-101	-195	63	-222	-234	-120	-12	-210	-157	-37	-6	-2
Operating profit	3 987	4 177	4 800	4 596	4 614	5 028	4 925	4 699	4 156	4 533	4 212	4 155
- as a percentage of revenues	21.9	20.9	23.1	20.6	20.7	21.5	22.3	20.7	20.5	20.8	20.5	19.5
Net financial items	69	-96	-97	-160	-120	-185	-188	-211	-111	-254	-195	-230
Profit before tax	4 056	4 081	4 703	4 436	4 494	4 843	4 737	4 488	4 045	4 279	4 017	3 925
- as a percentage of revenues	22.3	20.5	22.7	19.9	20.2	20.7	21.4	19.7	20.0	19.6	19.5	18.5

Key figures by quarter

	2011				2012				2013
SEK	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Basic earnings per share	2.48	2.46	2.96	2.78	2.81	2.98	2.87	2.81	2.46	2.58	2.52	2.39
Diluted earnings per share	2.47	2.45	2.91	2.77	2.80	2.97	2.86	2.81	2.45	2.56	2.51	2.38
Equity per share	25	18	22	23	26	24	25	28	30	28	30	33
Operating cash flow per share	1.66	0.47	1.75	1.30	1.19	1.56	3.80	3.53	1.34	2.71	1.98	2.11
%
Return on capital employed,
12 months value	32	34	36	37	37	39	37	36	34	32	30	28
Return on equity, 12 months value	41	44	47	48	49	52	48	46	42	40	37	34
Debt/equity ratio, period end	17	69	53	52	43	62	40	27	23	37	27	19
Equity/assets ratio, period end	41	34	37	38	38	37	39	42	42	39	42	45
Number of employees, period end	33 595	34 976	36 638	37 579	38 623	39 332	39 921	39 811	40 344	40 369	40 116	40 241

Pro-forma revenues by business area Adjusted for the move of Specialty Rental division

Atlas Copco Group	22 254	23 437	22 094	22 748	90 533	20 227	21 843	20 552	21 266	83 888
Common Group functions/ Eliminations	-102	-167	-99	-102	-470	-74	-144	-27	-130	-375
Construction Technique	3 593	4 156	3 557	3 352	14 658	3 173	3 850	3 495	3 449	13 967
Mining and Rock Excavation Technique	8 434	8 846	8 278	8 496	34 054	7 562	7 857	6 885	6 709	29 013
Industrial Technique	2 471	2 420	2 280	2 395	9 566	2 183	2 243	2 383	2 692	9 501
Compressor Technique	7 858	8 182	8 078	8 607	32 725	7 383	8 037	7 816	8 546	31 782
MSEK	Q1	Q2	Q3	Q4	Year	Q1	Q2	Q3	Q4	Year
	2012				2012	2013				2013

Pro-forma operating profit by business area Adjusted for the move of Specialty Rental division

2012				2012	2013				2013
Q1	Q2	Q3	Q4	Year	Q1	Q2	Q3	Q4	Year
1 730	1 769	1 912	2 063	7 474	1 671	1 834	1 826	1 948	7 279
22.0	21.6	23.7	24.0	22.8	22.6	22.8	23.4	22.8	22.9
593	552	480	533	2 158	487	482	548	621	2 138
24.0	22.8	21.1	22.3	22.6	22.3	21.5	23.0	23.1	22.5
2 077	2 196	2 036	2 026	8 335	1 771	1 738	1 384	1 190	6 083
24.6	24.8	24.6	23.8	24.5	23.4	22.1	20.1	17.7	21.0
426	621	479	299	1 825	384	511	454	384	1 733
11.9	14.9	13.5	8.9	12.5	12.1	13.3	13.0	11.1	12.4
-212	-110	18	-222	-526	-157	-32	0	12	-177
4 614	5 028	4 925	4 699	19 266	4 156	4 533	4 212	4 155	17 056
20.7	21.5	22.3	20.7	21.3	20.5	20.8	20.5	19.5	20.3
-120	-185	-188	-211	-704	-111	-254	-195	-230	-790
4 494	4 843	4 737	4 488	18 562	4 045	4 279	4 017	3 925	16 266
20.2	20.7	21.4	19.7	20.5	20.0	19.6	19.5	18.5	19.4

Acquisitions

			Revenues	Number of
Date	Acquisitions	Business area	MSEK*	employees*
2014 Jan. 9	Edwards Group	Compressor Technique	6 950	3 400
2013 Nov. 22	Tentec Ltd	Industrial Technique	105	65
2013 Oct. 17	Archer Underbalanced Services	Mining & Rock Excavation Tech.	230	75
2013 Oct. 14	Synatec	Industrial Technique	105	120
2013 Sep. 10	Pneumatic Holdings	Construction Technique	73	16
2013 Sep. 9	Dost Kompresör Distributor	Compressor Technique		16
	Turkey
2013 May 3	National Pump & Compressor Distributor USA	Compressor Technique		45
2013 May 2	Saltus-Werk Max Forst	Industrial Technique	70	65
2013 Apr. 23	Rapid-Torc	Industrial Technique	75	30
2013 Apr. 3	MEYCO	Mining & Rock Excavation Tech.	190	45
2013 Mar. 5	Shandong Rock Drilling Tools Co., Ltd	Mining & Rock Excavation Tech.	420	687
2013 Feb. 28	Air et Techniques Energies Provence	Compressor Technique	50	30
	Distributor France
2012 Oct. 26	NewTech Drilling Products	Mining & Rock Excavation Tech.	45	20
2012 Aug. 2	Ekomak Group	Compressor Technique	200	160
2012 Aug. 1	Gazcon A/S	Compressor Technique	30	21
2012 Mar. 16	Guangzhou Linghein Compressor	Compressor Technique	100	160
2012 Feb. 13	Wuxi Shengda Air/Gas Purity Equipment	Compressor Technique	85	130
2012 Jan. 31	Neumatica Distributor Colombia	Mining & Rock Excavation Tech.		15
2012 Jan. 31	GIA Industri AB	Mining & Rock Excavation Tech.	230	113
2012 Jan. 12	Perfora S.p.A.	Mining & Rock Excavation Tech.	90	43
2012 Jan. 4	Houston Service Industries, Inc.	Compressor Technique	240	123

* Annual revenues and number of employees at time of acquisition. No revenues are disclosed for former Atlas Copco distributors. A preliminary purchase price allocation for Edwards Group is shown on page 2. Due to the relatively small size of the other acquisitions, full disclosure as per IFRS 3 is not given in this interim report. The annual report for 2013 will include all stipulated disclosures for acquisitions made during 2013. See the annual report for 2012 for disclosure of acquisitions and divestments made in 2012.

Fair value of derivatives and borrowings

The carrying value and fair value of the Group's outstanding derivatives and borrowings are shown in the tables below. The fair values are based on level 2 in the fair value hierarchy. Compared to 2012, no transfers have been made between different levels in the fair value hierarchy and no significant changes have been made to valuation techniques, inputs used or assumptions.

Outstanding derivative instruments recorded to fair value
MSEK	Dec. 31, 2013	Dec. 31, 2012
Non-current assets and liabilities
Assets	188	258
Liabilities	24	82
Current assets and liabilities
Assets	250	200
Liabilities	243	781

Carrying value and fair value of borrowings

MSEK	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2012
	Carrying value	Fair value	Carrying value	Fair value
Bonds	18 630	19 793	14 140	15 866
Other loans	6 964	7 053	6 912	7 023
	25 593	26 846	21 052	22 889

Parent company

Income statement

October - December		January - December
2013	2012	2013	2012
-78	-144	-379	-453
37	65	337	217
-41	-79	-42	-236
3 351	-4	9 102	-532
5 070	4 728	5 070	4 728
8 380	4 645	14 130	3 960
-1 020	-1 066	-855	-936
7 360	3 579	13 275	3 024

Balance sheet

	Dec. 31	Dec. 31
MSEK	2013	2012
Total non-current assets	93 770	93 359
Total current assets	20 126	15 382
TOTAL ASSETS	113 896	108 741
Total restricted equity	5 785	5 785
Total non-restricted equity	41 194	35 452
TOTAL EQUITY	46 979	41 237
Untaxed reserves	0	1 255
Total provisions	797	1 056
Total non-current liabilities	39 456	48 945
Total current liabilities	26 664	16 248
TOTAL EQUITY AND LIABILITIES	113 896	108 741
Assets pledged	198	94
Contingent liabilities	7 570	368

Accounting principles

Atlas Copco AB is the ultimate Parent Company of the Atlas Copco Group. The financial statements of Atlas Copco AB have been prepared in accordance with the Swedish Annual Accounts Act and the accounting standard RFR 2, Accounting for Legal Entities. The same accounting principles and methods of computation are followed in the interim financial statements as compared with the most recent annual financial statements. See also accounting principles, page 9.

Parent Company

Distribution of shares Share capital equaled MSEK 786 (786) at the end of the period, distributed as follows:

Class of share	Shares
A shares	839 394 096
B shares	390 219 008
Total	1 229 613 104
- of which A shares
held by Atlas Copco	-15 414 812
- of which B shares
held by Atlas Copco	-645 379
Total shares outstanding, net of
shares held by Atlas Copco	1 213 552 913

Personnel stock option program

The Annual General Meeting 2013 approved a performancebased long-term incentive program. For Group Executive Management, the plan requires management's own investment in Atlas Copco shares. The intention is to cover Atlas Copco's obligation under the plan through the repurchase of the company's own shares. For further information, see www.atlascopco.com/agm.

There will be no grant for the Performance Stock Option Plan 2013.

Transactions in own shares

Atlas Copco has mandates to purchase and sell own shares as per below:

• The purchase of not more than 4 250 000 series A shares, whereof a maximum 3 500 000 may be transferred to personnel stock option holders under the Performance Stock Option Plan 2013.

• The purchase of not more than 70 000 series A shares, later to be sold on the market in connection with payment to Board members who have opted to receive synthetic shares as part of their board fee.

• The sale of not more than 55 000 series A shares to cover costs related to previously issued synthetic shares to Board members.

• The sale of maximum of 8 100 000 series A and series B shares in order to cover the obligations under the

performance stock option plans 2008, 2009 and 2010. The shares may only be purchased or sold on NASDAQ OMX Stockholm and only at a price per share within the registered trading range in effect from time to time.

During 2013, 42 163 series A shares, net, were acquired and 172 901 series B shares, net, were divested in accordance with mandates granted.

The company's holding of own shares on December 31, 2013 appears in the table to the left.

Risks and factors of uncertainty

Financial risks

Atlas Copco is subject to currency risks, interest rate risks and other financial risks. In line with the overall goals with respect to growth, return on capital, and protecting creditors, Atlas Copco has adopted a policy to control the financial risks to which Atlas Copco AB and the Group is exposed. A financial risk management committee meets regularly to manage and follow up financial risks, in line with the policy.

For further information, see the 2012 Annual Report.

Related parties

There have been no significant changes in the relationships or transactions with related parties for the Group or Parent Company compared with the information given in the Annual Report 2012.

This is Atlas Copco

Atlas Copco is a world-leading provider of sustainable productivity solutions. The Group serves customers with innovative compressors, vacuum solutions and air treatment systems, construction and mining equipment, power tools and assembly systems. Atlas Copco develops products and service focused on productivity, energy efficiency, safety and ergonomics. The company was founded in 1873, is based in Stockholm, Sweden, and has a global reach spanning more than 180 countries. In 2013, Atlas Copco had revenues of BSEK 84 (BEUR 9.7) and more than 40 000 employees.

Business areas

Atlas Copco has four business areas. The business areas are responsible for developing their respective operations by implementing and following up on strategies and objectives to achieve sustainable, profitable development.

The Compressor Technique business area provides industrial compressors, vacuum solutions, gas and process compressors and expanders, air and gas treatment equipment and air management systems. The business area has a global service network and innovates for sustainable productivity in the manufacturing, oil and gas, and process industries. Principal product development and manufacturing units are located in Belgium, Germany, the United States, China and India.

The Industrial Technique business area provides industrial power tools, assembly systems, quality assurance products, software and service through a global network. The business area innovates for sustainable productivity for customers in the automotive and aerospace industries, industrial manufacturing and maintenance, and in vehicle service. Principal product development and manufacturing units are located in Sweden, France and Japan.

The Mining and Rock Excavation Technique business area provides equipment for drilling and rock excavation, a complete range of related consumables and service through a global network. The business area innovates for sustainable productivity in surface and underground mining, infrastructure, civil works, well drilling and geotechnical applications. Principal product development and manufacturing units are located in Sweden, the United States, Canada, China and India.

The Construction Technique business area provides construction and demolition tools, portable compressors, pumps and generators, lighting towers, and compaction and paving equipment. The business area offers specialty rental and provides service through a global network. Construction Technique innovates for sustainable productivity in infrastructure, civil works, oil and gas, energy, drilling and road construction projects. Principal product development and manufacturing units are located in Belgium, Germany, Sweden, the United States, China, India and Brazil.

Vision, mission and strategy

The Atlas Copco Group's vision is to become and remain First in Mind—First in Choice® of its customers and other principal stakeholders. The mission is to achieve sustainable, profitable development. Sustainability plays an important role in Atlas Copco's vision and it is an integral aspect of the Group's mission. An integrated sustainability strategy, backed by ambitious goals, helps the company deliver greater value to all its stakeholders in a way that is economically, environmentally and socially responsible. See the annual report 2012 for a summary of all Group goals and for more information.

For further information

Analysts and investors Mattias Olsson Vice President Investor Relations Phone: +46 8 743 8295 or +46 72 729 8295 ir@se.atlascopco.com

Media

Ola Kinnander Media Relations Manager Phone: +46 8 743 8060 or +46 70 347 2455 media@se.atlascopco.com

Conference call

A conference call to comment on the results will be held on January 30 at 3.00 PM CET. The dial-in numbers are:

• Sweden: +46 850 556 481
• UK: +44 207 660 2079
• US: +1 8557 161 597

The conference call will be broadcasted live via the Internet. Please see the Investor Relations section of our website for the link, presentation material, and further details: www.atlascopco.com/ir

The webcast and the recorded audio presentation will be available on our homepage following the call.

Report on Q1 2014

The report on Q1 2014 will be published on April 29, 2014.

Annual General Meeting

The Annual General Meeting for Atlas Copco AB will be held April 29, 2014 at 4 p.m. in Aula Magna, Stockholm University, Frescativägen 6, Stockholm, Sweden.