Atlas Copco — Interim / Quarterly Report 2017

Jul 17, 2017

Press Release from the Atlas Copco Group

July 17, 2017

Atlas Copco Second-quarter report 2017

Strong customer demand and record profit

The figures presented in this report refer to continuing operations unless otherwise stated.

• Orders increased 22% to MSEK 30 797 (25 207), organic increase of 11%
• Revenues were MSEK 29 030 (24 565), organic growth of 7%
• Operating profit increased 26% to MSEK 5 988 (4 769)
• Adjusted operating profit was MSEK 6 244 (4 816), corresponding to a margin of 21.5% (19.6)
• Profit before tax amounted to MSEK 5 620 (4 428)
• Profit for the period was MSEK 4 084 (3 198)
• Basic earnings per share were SEK 3.36 (2.63)
• Operating cash flow at MSEK 4 838 (3 487), including discontinued operations
• Power Technique: New name for Construction Technique
• Epiroc launched as the name for the business that is planned to be dividended out to shareholders in 2018

		April - June			January - June
MSEK	2017	2016		2017	2016
Orders received	30 797	25 207	22%	62 507	49 157	27%
Revenues	29 030	24 565	18%	57 057	47 018	21%
Operating profit	5 988	4 769	26%	11 699	8 939	31%
– as a percentage of revenues	20.6	19.4		20.5	19.0
Profit before tax	5 620	4 428	27%	11 116	8 417	32%
– as a percentage of revenues	19.4	18.0		19.5	17.9
Profit for the period from
continuing operations	4 084	3 198	28%	8 073	6 095	32%
Profit/loss for the period from
discontinued operations	-6	-10		1 8	1
Profit for the period	4 078	3 188	28%	8 091	6 096	33%
Basic earnings per share, SEK	3.36	2.62		6.66	5.01
- of which continuing operations	3.36	2.63		6.64	5.01
Diluted earnings per share, SEK	3.31	2.62		6.60	4.99
- of which continuing operations	3.32	2.63		6.58	5.00
Return on capital employed, %	2 9	2 8

Near-term demand outlook

The overall demand for the Group is expected to remain at current high level.

Previous near-term demand outlook (published April 26, 2017): The overall demand for the Group is expected to improve somewhat.

Atlas Copco Group Center

Sweden Nacka Reg. Office Nacka

Atlas Copco AB Visitors address: Telephone: +46 8 743 8000 A Public Company (publ) SE-105 23 Stockholm Sickla Industriväg 19 www.atlascopcogroup.com Reg. No: 556014-2720

Summary of half-year results

Orders received in the first six months of 2017 increased by 27% to MSEK 62 507 (49 157), corresponding to an organic increase of 14%. The currency effect was positive with 6% and acquisitions contributed with 7%. Revenues were MSEK 57 057 (47 018), corresponding to a 9% organic increase.

Operating profit increased by 31% to MSEK 11 699 (8 939). The operating margin was 20.5% (19.0). The

Review of the second quarter Market development

The overall demand for Atlas Copco´s products and services increased compared to the previous year, and order volumes increased for both equipment and service.

The order intake for industrial compressors and related services continued to increase steadily. Demand for vacuum equipment remained strong from the semiconductor industry and orders grew significantly year-on-year, while sequentially, orders were lower than the record level in Q1. Order volumes for mining equipment benefited from replacement investments, but also from expansions of existing mines. The demand for equipment for infrastructure projects also showed good development in the quarter. Order volumes for industrial assembly tools and solutions, including related service, increased, mainly due to good demand from the motor vehicle industry in North America and Asia. Portable compressor orders as well as orders for specialty rental applications increased significantly compared to the previous year.

Geographic distribution of orders received

	Atlas Copco Group
April - June 2017	Orders Received %,	Change %,*
North America	24	+18
South America	7	+11
Europe	29	+13
Africa/Middle East	7	-3
Asia	30	+32
Australia	3	-5
Atlas Copco Group	100	+17

*Change in orders received compared to the previous year in local currency.

Geographic distribution of orders received

positive impact of changes in exchange rates amounted to MSEK 1 070 for the first half-year.

Profit before tax was MSEK 11 116 (8 417), corresponding to a margin of 19.5% (17.9). Profit for the period totaled 8 073 (6 095). Basic and diluted earnings per share were SEK 6.64 (5.01) and 6.58 (5.00) respectively.

Operating cash flow before acquisitions, divestments and dividends totaled MSEK 8 348 (6 614).

Sales bridge

	April - June
	Orders
MSEK	received	Revenues
2016	25 207	24 565
Structural change, %	+6	+6
Currency, %	+5	+5
Price, %	+0	+0
Volume, %	+11	+7
Total, %	+22	+18
2017	30 797	29 030

Geographic distribution of orders received
	Compressor	Vacuum	Industrial	Mining and Rock	Power	Atlas Copco
April - June 2017	Technique %	Technique %	Technique %	Excavation Tech. %	Technique %	Group %
North America	2 1	1 8	3 4	2 4	2 4	2 4
South America	6	1	3	1 4	5	7
Europe	3 3	1 6	3 8	2 4	4 0	2 9
Africa/Middle East	8	2	1	1 2	1 0	7
Asia/Australia	3 2	6 3	2 4	2 6	2 1	3 3
	100	100	100	100	100	100

Revenues, profits and returns

Revenues increased 18% to MSEK 29 030 (24 565), corresponding to an organic increase of 7%. Currency and acquisitions contributed with 5% respectively 6%.

The operating profit increased to MSEK 5 988 (4 769) and includes a non-cash change in provision for sharerelated long-term incentive programs of MSEK -186 (-47), and MSEK -70 for costs associated with the proposed split of the Group. Both items are reported in Common Group Functions.

The adjusted operating profit increased 30% to MSEK 6 244 (4 816), corresponding to a margin of 21.5% (19.6). The higher profit was due to the organic revenue growth, and a favorable effect from changes in exchange rates. The net currency effect was MSEK +500. Recent acquisitions had a negative, dilutive, effect on the operating margin.

Net financial items were MSEK -368 (-341). Interest net was MSEK -311 (-182), including a one-time interest charge of MSEK -125, related to the EU challenge of Belgian tax rulings (see below). Other financial items were MSEK -57 (-159) and include a one-time cost of MSEK -39 related to the proposed split of the Group and public bond loans. Last year included one-time costs for the repurchase of public USD bonds.

Profit before tax amounted to MSEK 5 620 (4 428), corresponding to a margin of 19.4% (18.0).

Profit for the period totaled MSEK 4 084 (3 198) with an effective tax rate of 27.3% (27.8). Basic and diluted earnings per share were SEK 3.36 (2.63) and SEK 3.32 (2.63), respectively.

The return on capital employed during the last 12 months was 29% (28). Return on equity was 27% (24). The Group uses a weighted average cost of capital (WACC) of 8.0% as an investment and overall performance benchmark.

European Commission's decision on Belgium's tax rulings

Following the European Commission's decision in January 2016 on Belgium's tax rulings, Atlas Copco has provided, in total MEUR 313 (MSEK 2 952). Atlas Copco has appealed the decision, but it will likely take several years until a final judgment from the European Court of Justice is known. In order to stop further interest charges from accruing, Atlas Copco has paid the full amount, whereof MEUR 68 (MSEK 655) in the second quarter 2017.

Operating cash flow and investments (including discontinued operations)

Operating cash surplus reached MSEK 7 528 (5 665). Working capital decreased by MSEK 346 (441). Net investments in rental equipment were MSEK 246 (196). Net investments in property, plant and equipment were MSEK 329 (292).

In total, operating cash flow, adjusted for currency hedges of loans and the tax payment related to the tax rulings in Belgium, reached MSEK 4 838 (3 487). See page 14.

Net indebtedness

The Group's net indebtedness, adjusted for the fair value of interest rate swaps, amounted to MSEK 12 305 (15 460) of which MSEK 3 332 (2 471) was attributable to postemployment benefits. The Group has an average maturity of 5.2 years on interest-bearing liabilities.

In the quarter, payments for the first installment of the annual dividend was made of MSEK 4 126. The second installment of the annual dividend will be paid in November 2017 and is recorded as a liability. The net debt/EBITDA ratio was 0.5 (0.7). The net debt/equity ratio was 24% (34).

Acquisition and divestment of own shares

During the quarter, 1 209 094 A shares, net, were sold for a value of MSEK 399. These transactions are in accordance with mandates granted by the Annual General Meeting and relate to the Group's long-term incentive programs.

Employees

On June 30, 2017, the number of employees was 45 973 (41 878). The number of consultants/external workforce was 3 878 (2 891). For comparable units, the total workforce increased by 2 378 from June 30, 2016.

Proposal to split the Group

As announced in January 2017, Atlas Copco is working on a proposed split of the Group into two listed companies. The preparation for the split is progressing according to plan. Epiroc was launched in the quarter as the name for the mining and civil engineering business that is planned to be dividended out to Atlas Copco's shareholders in 2018.

Revenues and operating profit – bridge

		Volume, price,		One-time items	Share based
MSEK	Q2 2017	mix and other	Currency	Acquisitions	LTI programs*	Q2 2016
Atlas Copco Group
Revenues	29 030	1 770	1 125	1 570	-	24 565
Operating profit	5 988	698	500	160	-139	4 769
%	20.6%	39.4%				19.4%

*LTI=Long Term Incentive

Compressor Technique

		April - June			January - June
MSEK	2017	2016		2017	2016
Orders received	10 279	9 293	11%	20 404	17 813	15%
Revenues	9 597	8 976	7%	18 958	17 132	11%
Operating profit	2 242	2 007	12%	4 344	3 799	14%
– as a percentage of revenues	23.4	22.4		22.9	22.2
Return on capital employed, %	71	67

• Good order development except for gas and process compressors

• Continued solid growth for service
• Operating margin improved

Sales bridge

	April - June
	Orders
MSEK	received	Revenues
2016	9 293	8 976
Structural change, %	+2	+2
Currency, %	+4	+4
Price, %	+0	+0
Volume, %	+5	+1
Total, %	+11	+7
2017	10 279	9 597

Industrial compressors

The order intake for industrial compressors increased compared to the previous year. The growth rate for small and medium sized compressors was similar to large compressors.

The order volumes increased in all regions except Europe and Africa/Middle East where the order development was more or less flat.

Compressor service

The compressor service business continued to achieve organic growth in all regions.

Gas and process compressors

The order volumes decreased both compared to the previous year and sequentially.

Asia and South America countered the overall negative development and increased compared to the previous year.

Acquisitions

Pressure Compressores, a Brazilian manufacturer of piston compressors and related equipment, was acquired in May. The company has about 150 employees and had revenues in 2016 of about MSEK 145.

Innovation

A new range of desiccant dryers was introduced to the market. With an unique valve system and electronic controller, the dryers provide minimized pressure drop, low energy cost, and low noise level.

Revenues and profitability

Revenues were MSEK 9 597 (8 976), corresponding to an organic increase of 1%.

The operating profit increased to MSEK 2 242 (2 007), corresponding to a margin of 23.4% (22.4). A favorable sales mix and currency affected the margin positively, while recent acquisitions diluted it. Return on capital employed (last 12 months) was 71% (67).

Orders, revenues and operating profit margin

Vacuum Technique

		April - June		January - June
MSEK	2017	2016		2017	2016
Orders received	4 989	2 784	79%	11 056	6 059	82%
Revenues	4 777	2 953	62%	9 545	5 489	74%
Operating profit	1 198	693	73%	2 379	1 197	99%
– as a percentage of revenues	25.1	23.5		24.9	21.8
Return on capital employed, %	22	15

• Record revenues and profit

• Strong order development for semiconductor and strong growth in industrial vacuum
• Growth in service, both for semiconductor and general industry

Sales bridge

	April - June
	Orders
MSEK	received	Revenues
2016	2 784	2 953
Structural change, %	+48	+45
Currency, %	+6	+5
Price, %	+0	+1
Volume, %	+25	+11
Total, %	+79	+62
2017	4 989	4 777

Semiconductor and flat panel display

The demand for equipment for the semiconductor and flat panel industries remained very strong. The order intake increased substantially compared to the previous year for both applications, while sequentially, order volumes decreased from the record levels seen in the first quarter.

Geographically and compared to the previous year, Asia and North America were the main drivers for the strong order development.

Industrial and high vacuum

Orders received for rough, industrial and high vacuum equipment increased significantly compared to the previous year. Strong growth was achieved both organically and through the recently acquired Leybold business.

Compared to the previous year, the order intake increased in all major regions with the highest growth in Asia.

Service

Orders received for the service business increased compared to the previous year.

Growth was achieved in all major regions, with the highest growth in Europe and Asia.

Innovation

A new plasma based abatement system was introduced. It is a non-fuel, and hence cost efficient solution, eliminating potentially toxic or harmful gases from the exhaust in the semiconductor manufacturing process. The system comes with a dual capability option offering the customer 100% uptime if required.

Revenues and profitability

Revenues increased to a record MSEK 4 777 (2 953), corresponding to an organic increase of 12%.

The operating profit increased 73% to MSEK 1 198 (693) and the operating margin reached 25.1% (23.5). The margin was supported by higher volume and currency, but diluted by acquisitions. Return on capital employed (last 12 months) was 22% (15).

Orders, revenues and operating profit margin

Industrial Technique

		April - June			January - June
MSEK	2017	2016		2017	2016
Orders received	4 230	3 862	10%	8 533	7 374	16%
Revenues	4 154	3 622	15%	8 185	7 039	16%
Operating profit	964	799	21%	1 897	1 536	24%
– as a percentage of revenues	23.2	22.1		23.2	21.8
Return on capital employed, %	38	31

• Demand from the motor vehicle industry remained at a high level

• Record revenues and solid profit level
• Continued healthy growth in service

Sales bridge

	April - June
	Orders
MSEK	received	Revenues
2016	3 862	3 622
Structural change, %	+1	+0
Currency, %	+4	+4
Price, %	+0	+1
Volume, %	+5	+10
Total, %	+10	+15
2017	4 230	4 154

Motor vehicle industry

The demand for advanced industrial tools and assembly solutions from the motor vehicle industry remained robust, and the orders received increased compared to the previous year. Sequentially, the order volumes were largely unchanged.

Compared to the previous year, the order intake increased in all major regions. The strongest growth was achieved in Asia.

General industry

The order volumes for industrial power tools from the general manufacturing industries increased compared to the previous year.

Geographically, the growth was mainly driven by North America and Asia.

Service

The service business, including maintenance and calibration services, continued to grow year-on-year, and all regions achieved growth compared to the previous year.

Innovation

A new system for fixtured tightening applications was introduced. The system supports production line rebalancing, floor space reduction, and flexible positioning thanks to its small size. For example, the system can be directly mounted on rail systems or robots.

Revenues and profitability

Revenues increased to a record MSEK 4 154 (3 622), corresponding to an organic increase of 11%.

Operating profit was MSEK 964 (799), corresponding to an operating margin of 23.2% (22.1). The margin improvement came primarily from the higher sales volume. Return on capital employed (last 12 months) was 38% (31).

Mining and Rock Excavation Technique

		April - June			January - June
MSEK	2017	2016		2017	2016
Orders received	8 068	6 393	26%	15 975	12 122	32%
Revenues	7 157	6 124	17%	14 039	11 860	18%
Operating profit	1 414	1 041	36%	2 775	1 907	46%
– as a percentage of revenues	19.8	17.0		19.8	16.1
Return on capital employed, %	38	31

• Strong growth for both mining and civil engineering equipment

• • Continued solid growth for service and consumables
• • Operating margin supported by volume and currency

Sales bridge

	April - June
	Orders
MSEK	received	Revenues
2016	6 393	6 124
Structural change, %	+0	+0
Currency, %	+6	+6
Price, %	+0	+0
Volume, %	+20	+11
Total, %	+26	+17
2017	8 068	7 157

Mining equipment

The demand for mining equipment improved, driven both by replacement investments and expansions of existing mines. The order intake increased year-on-year, but was largely unchanged sequentially.

Geographically and compared to the previous year, the order volumes increased in all regions except Australia, where last year included a big order of automation units.

Civil engineering equipment

The orders received for equipment for infrastructure projects increased compared to the previous year.

Geographically, the main contributors to the growth were Europe and Africa/Middle East.

Service and consumables

The demand for service and consumables was positively impacted by higher activities within both infrastructure projects and in mines. Orders received increased compared to the previous year, and the development was unchanged sequentially.

Compared to the previous year, the order volumes increased in all regions.

Innovation

A new Powerbit range for top hammer surface drilling was introduced. With its optimized shape and its surface treatment technology, the new drill bits offer improved wear resistance, better penetration rate and increased productivity compared to previous models.

Acquisition

In June, an agreement was signed to acquire 34% of Mobilaris MCE AB, a Sweden-based company that provides advanced software for optimization of underground mining operations. The acquisition was completed in July 2017.

Revenues and profitability

Revenues were MSEK 7 157 (6 124) corresponding to an organic increase of 11%.

Operating profit increased 36% to MSEK 1 414 (1 041), corresponding to a margin of 19.8% (17.0). The margin was supported by the increased revenue volumes and currency, but negatively affected by unfavorable sales mix. Return on capital employed (last 12 months) was 38% (31).

Power Technique

	April - June January - June
MSEK	2017	2016		2017	2016
Orders received	3 471	3 006	15%	7 039	6 067	16%
Revenues	3 496	3 042	15%	6 673	5 760	16%
Operating profit	616	484	27%	1 136	892	27%
– as a percentage of revenues	17.6	15.9		17.0	15.5
Return on capital employed, %	19	18

• Strong growth for portable compressors and specialty rental

• • Healthy operating margin
• • Power Technique: New name for Construction Technique

Sales bridge

	April - June
	Orders
MSEK	received	Revenues
2016	3 006	3 042
Structural change, %	+1	+1
Currency, %	+5	+5
Price, %	+0	+1
Volume, %	+9	+8
Total, %	+15	+15
2017	3 471	3 496

Equipment

The demand for equipment increased, and the order intake increased compared to the previous year. The growth was primarily due to good order development for portable compressors. Sequentially, and following a normal seasonal pattern, the order intake decreased for both portable compressors and construction tools.

Compared to the previous year, orders received increased in North America, Europe, and Asia, while decreased in South America and Africa/Middle East.

Specialty rental

Order volumes for the specialty rental business increased compared to the previous year and sequentially.

Geographically, and compared to the previous year, the order intake was higher in all regions except Asia where the volumes were down.

Service

The service business was unchanged compared to the previous year and sequentially.

Geographically and compared to the previous year, the order intake increased in all regions except South America and Africa/Middle East.

Innovation

The range of light towers was expanded with the launch of new advanced LED models. Specially designed directional glass optics provide high performance, and robust housing support long operating lifetime.

Acquisition

In May, Atlas Copco acquired the Brazilian Itubombas Locação Comércio Importação e Exportação, which rents out pumps to professional customers in the oil and gas, construction and mining sector. The acquired company with about 40 employees had revenues of about MSEK 50 in 2016.

Change of business area name

The name of the business area has been changed from Construction Technique to Power Technique, in order to better reflect the current products and customer segments.

Revenues and profitability

Revenues reached MSEK 3 496 (3 042), corresponding to an organic increase of 9%.

Operating profit was MSEK 616 (484), corresponding to a margin of 17.6% (15.9). The increased margin was primarily due to the higher revenue volume. Return on capital employed (last 12 months) was 19% (18).

Accounting principles

The consolidated accounts of the Atlas Copco Group are prepared in accordance with International Financial Reporting Standards (IFRS). The description of the accounting principles and definitions are found in the annual report 2016. The interim report is prepared in accordance with IAS 34 Interim Financial Reporting. Non-IFRS measures are also presented in the report since they are considered to be important supplemental measures of the company´s performance. For further information on how these measures have been calculated, please visit: http://www.atlascopcogroup.com/investor-relations.

Risks and factors of uncertainty

Market risks

The demand for Atlas Copco's equipment 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, tax 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.

Production risks

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 2016.

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		6 months ended		12 months ended
	Jun. 30	Jun. 30	Jun. 30	Jun. 30	Jun. 30	Jun. 30	Dec. 31
MSEK	2017	2016	2017	2016	2017	2016	2016
Continuing operations
Revenues	29 030	24 565	57 057	47 018	111 395	96 943	101 356
Cost of sales	-16 812	-14 891	-33 163	-28 312	-66 088	-58 100	-61 237
Gross profit	12 218	9 674	23 894	18 706	45 307	38 843	40 119
Marketing expenses	-3 122	-2 652	-6 144	-5 197	-11 991	-10 475	-11 044
Administrative expenses	-1 961	-1 611	-3 924	-3 113	-7 635	-6 079	-6 824
Research and development costs	-880	-745	-1 732	-1 486	-3 342	-3 136	-3 096
Other operating income and expenses	-267	103	-395	2 9	219	-11	643
Operating profit	5 988	4 769	11 699	8 939	22 558	19 142	19 798
- as a percentage of revenues	20.6	19.4	20.5	19.0	20.3	19.7	19.5
Net financial items	-368	-341	-583	-522	-1 054	-970	-993
Profit before tax	5 620	4 428	11 116	8 417	21 504	18 172	18 805
- as a percentage of revenues	19.4	18.0	19.5	17.9	19.3	18.7	18.6
Income tax expense	-1 536	-1 230	-3 043	-2 322	-5 741	-7 168	-5 020
Profit for the period from continuing operations	4 084	3 198	8 073	6 095	15 763	11 004	13 785
Discontinued operations
Profit/loss for the period from discontinued operation	-6	-10	1 8	1	-1 820	-72	-1 837
Profit for the period	4 078	3 188	8 091	6 096	13 943	10 932	11 948
Profit attributable to
- owners of the parent	4 073	3 185	8 080	6 092	13 919	10 927	11 931
- non-controlling interests	5	3	1 1	4	2 4	5	1 7
Basic earnings per share, SEK	3.36	2.62	6.66	5.01	11.45	8.98	9.81
- of which continuing operations	3.36	2.63	6.64	5.01	12.95	9.04	11.32
Diluted earnings per share, SEK	3.31	2.62	6.60	4.99	11.36	8.94	9.79
- of which continuing operations	3.32	2.63	6.58	5.00	12.86	9.01	11.30
Basic weighted average number
of shares outstanding, millions	1 213.5	1 216.1	1 213.9	1 215.8	1 215.2	1 216.6	1 216.1
Diluted weighted average number
of shares outstanding, millions	1 215.1	1 216.3	1 215.4	1 216.0	1 216.4	1 216.9	1 216.8
Key ratios
Equity per share, period end, SEK 1)					4 3	3 7	4 4
Return on capital employed, 12 month values, %					2 9	2 8	2 7
Return on equity, 12 month values, % 1)					2 7	2 4	2 4
Debt/equity ratio, period end, % 1)					2 4	3 4	2 8
Equity/assets ratio, period end, % 1)					4 4	4 3	4 6
Number of employees, period end					45 973	41 878	44 695

Number of employees, period end 45 973 41 878 44 695 1) Including discontinued operations

Consolidated statement of comprehensive income, including discontinued operations

		3 months ended			6 months ended 12 months ended
	Jun. 30	Jun. 30	Jun. 30	Jun. 30	Jun. 30		Jun. 30 Dec. 31
MSEK	2017	2016	2017	2016	2017	2016	2016
Profit for the period	4 078	3 188	8 091	6 096	13 943	10 932	11 948
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans	-2	-85	-172	-264	-21	503	-113
Income tax relating to items that will not be reclassified	2	1 5	5 6	6 0	-7	-95	-3
	0	-70	-116	-204	-28	408	-116
Items that may be reclassified subsequently to profit or loss
Translation differences on foreign operations	-982	1 538	-948	1 353	900	-64	3 201
Hedge of net investments in foreign operations	-230	-317	-198	-503	-457	-374	-762
- realized and reclassified to income statement
Cash flow hedges	7 9	-9	109	-	8 4	-21	-25
Income tax relating to items that may be reclassified	126	201	100	319	268	240	487
	-1 007	1 413	-937	1 169	795	-219	2 901
Other comprehensive income for the period, net of tax	-1 007	1 343	-1 053	965	767	189	2 785
Total comprehensive income for the period	3 071	4 531	7 038	7 061	14 710	11 121	14 733
Total comprehensive income attributable to
- owners of the parent	3 070	4 527	7 028	7 059	14 680	11 123	14 711
- non-controlling interests	1	4	1 0	2	3 0	-2	2 2

Consolidated balance sheet

TOTAL EQUITY AND LIABILITIES	119 049	106 775	115 892
Total current liabilities	38 266	37 293	33 043
classified as held for sale
Liabilities directly associated with assets	878	-	811
Provisions	1 903	1 609	2 139
Trade payables and other liabilities	33 616	29 873	28 519
Borrowings	1 869	5 811	1 574
Total non-current liabilities	28 991	23 262	29 672
Deferred tax liabilities	617	1 121	1 028
Other liabilities and provisions	1 727	1 569	1 589
Post-employment benefits	3 332	2 471	3 907
Borrowings	23 315	18 101	23 148
TOTAL EQUITY	51 792	46 220	53 177
Non-controlling interests	74	149	72
Equity attributable to owners of the parent	51 718	46 071	53 105
TOTAL ASSETS	119 049	106 775	115 892
Total current assets	66 509	56 389	61 001
Assets classified as held for sale	3 231	10	2 491
Cash and cash equivalents	14 550	8 891	11 458
Other financial assets	1 754	2 170	2 455
Trade and other receivables	28 941	27 021	27 685
Inventories	18 033	18 297	16 912
Total non-current assets	52 540	50 386	54 891
Deferred tax assets	1 616	1 689	1 889
Other property, plant and equipment Financial assets and other receivables	9 450 2 287	9 037 2 216	9 793 2 286
Rental equipment	2 892	2 993	3 095
Intangible assets	36 295	34 451	37 828
MSEK	Jun. 30, 2017	Jun. 30, 2016*	Dec. 31, 2016

*Including assets and liabilities related to discontinued operations

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 of bonds are based on level 1 and the fair values of derivatives and other loans are based on level 2 in the fair value hierarchy. Compared to 2016, no transfers have been made between different levels in the fair value hierarchy for derivatives and borrowings and no significant changes have been made to valuation techniques, inputs or assumptions.

Outstanding derivative instruments recorded to fair value
MSEK	Jun. 30, 2017	Dec. 31, 2016
Non-current assets and liabilities
Assets	2	-
Liabilities	107	126
Current assets and liabilities
Assets	766	128
Liabilities	218	730

Carrying value and fair value of borrowings

MSEK	Jun. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Dec. 31, 2016
	Carrying value	Fair value	Carrying value	Fair value
Bonds	15 693	16 235	15 611	16 385
Other loans	9 491	9 634	9 111	9 268
	25 184	25 869	24 722	25 653

Consolidated statement of changes in equity

	Equity attributable to
	owners of	non-controlling
MSEK	the parent	interests	Total equity
Opening balance, January 1, 2017	53 105	7 2	53 177
Changes in equity for the period
Total comprehensive income for the period	7 028	1 0	7 038
Dividends	-8 246	-3	-8 249
Change of non-controlling interests	-12	-5	-17
Acquisition and divestment of own shares	-121	-	-121
Share-based payments, equity settled	-36	-	-36
Closing balance, June 30, 2017	51 718	7 4	51 792

		Equity attributable to
	owners of	non-controlling
MSEK	the parent	interests	Total equity
Opening balance, January 1, 2016	46 591	159	46 750
Changes in equity for the period
Total comprehensive income for the period	14 711	2 2	14 733
Dividends	-7 665	-22	-7 687
Change of non-controlling interests	-68	-87	-155
Acquisition and divestment of own shares	-470	-	-470
Share-based payments, equity settled	6	-	6
Closing balance, December 31, 2016	53 105	7 2	53 177

		Equity attributable to
	owners of	non-controlling
MSEK	the parent	interests	Total equity
Opening balance, January 1, 2016	46 591	159	46 750
Changes in equity for the period
Total comprehensive income for the period	7 059	2	7 061
Dividends	-7 659	-12	-7 671
Acquisition and divestment of own shares	6 5	-	6 5
Share-based payments, equity settled	1 5	-	1 5
Closing balance, June 30, 2016	46 071	149	46 220

Consolidated statement of cash flows, including discontinued operations

		April - June		January - June
MSEK	2017	2016	2017	2016
Cash flows from operating activities
Operating profit, continuing operations	5 988	4 769	11 699	8 939
Operating profit, discontinued operations	1	6	1 8	6
Depreciation, amortization and impairment (see below)	1 138	1 042	2 296	2 077
Capital gain/loss and other non-cash items	401	-152	676	-79
Operating cash surplus	7 528	5 665	14 689	10 943
Net financial items received/paid	608	8 2	-215	9 1
Taxes paid	-2 616	-3 609	-4 436	-4 999
Pension funding and payment of pension to
employees	-885	-36	-994	-37
Change in working capital	346	441	-179	554
Investments in rental equipment	-349	-291	-583	-540
Sale of rental equipment	103	9 5	192	231
Net cash from operating activities	4 735	2 347	8 474	6 243
Cash flows from investing activities
Investments in property, plant and equipment	-359	-322	-722	-613
Sale of property, plant and equipment	3 0	3 0	4 5	5 8
Investments in intangible assets	-230	-283	-481	-555
Sale of intangible assets	-	1	2	3
Acquisition of subsidiaries and associated companies	-124	-357	-185	-964
Other investments, net	3 3	-109	4 1	-168
Net cash from investing activities	-650	-1 040	-1 300	-2 239
Cash flows from financing activities
Dividends paid	-4 126	-3 830	-4 125	-3 830
Dividends paid to non-controlling interest	-	-	-	-12
Acquisition of non-controlling interest	-23	-	-17	-
Repurchase and sales of own shares	399	9 6	-121	6 5
Change in interest-bearing liabilities	-343	-381	850	-212
Net cash from financing activities	-4 093	-4 115	-3 413	-3 989
Net cash flow for the period	-8	-2 808	3 761	1 5
Cash and cash equivalents, beginning of the period	15 191	11 490	11 492 *	8 861
Exchange differences in cash and cash equivalents	-178	209	-166	1 5
Cash and cash equivalents discontinued operations	-455	-	-537	-
Cash and cash equivalents, end of the period	14 550	8 891	14 550	8 891
*Includes cash and cash equivalents of 34 related to discontinued operations
Depreciation, amortization and impairment
Rental equipment	246	236	508	482
Other property, plant and equipment	440	402	891	795
Intangible assets	452	404	897	800
Total	1 138	1 042	2 296	2 077

Calculation of operating cash flow

Calculation of operating cash flow
		April - June	January - June
MSEK	2017	2016	2017	2016
Net cash flow for the period	-8	-2 808	3 761	1 5
Add back:
Change in pensions	772	-	772	-
Change in interest-bearing liabilities	343	381	-850	212
Repurchase and sales of own shares	-399	-96	121	-65
Dividends paid	4 126	3 830	4 125	3 830
Dividends paid to non-controlling interest	-	-	-	1 2
Acquisition of non-controlling interest	2 3	-	1 7	-
Acquisitions and divestments	124	357	185	964
Currency hedges of loans	-798	-427	-438	-604
Tax payment related to Belgian tax rulings	655	2 250	655	2 250
Operating cash flow	4 838	3 487	8 348	6 614

Discontinued operations

Road Construction Equipment division within the Power Technique business area

On January 19, 2017 Atlas Copco announced the agreement to sell its Road Construction Equipment division to the French industrial and construction company Fayat Group. The divestment is expected to be completed during Q3 2017.

The Road Construction Equipment division has been reported as discontinued operations and assets held for sale in the Atlas Copco Group's financial statements, with a retrospective restatement of previous periods unless otherwise stated.

The following tables present the income statement, condensed balance sheet and cash flow for the Road Construction Equipment division.

Assets and Liabilities held for sale

	Jun. 30	Dec. 31
MSEK	2017	2016
Total non-current assets	395	450
Total current assets	2 826	2 037
Total Assets	3 221	2 487
Total non-current liabilities	40	42
Total current liabilities	838	769
Total Liabilities	878	811

Income Statement

	3 months ended		6 months ended		12 months ended
	Jun. 30	Jun. 30	Jun. 30	Jun. 30	Jun. 30	Jun. 30	Dec. 31
MSEK	2017	2016	2017	2016	2017	2016	2016
Discontinued operations
Revenues	1 051	873	1 808	1 557	3 163	2 937	2 912
Cost of sales	-887	-712	-1 494	-1 238	-2 671	-2 404	-2 415
Gross profit	164	161	314	319	492	533	497
Marketing expenses	-79	-79	-156	-159	-307	-316	-310
Administrative expenses	-57	-32	-91	-61	-155	-122	-125
Research and development costs	-16	-37	-35	-70	-109	-140	-144
Other operating income and expenses	-11	-7	-14	-23	6	-15	-3
Operating profit/loss	1	6	1 8	6	-73	-60	-85
- as a percentage of revenues	0.1	0.7	1.0	0.4	-2.3	-2.0	-2.9
Net financial items	-5	-14	-2	-6	-8	-9	-12
Profit/loss before tax	-4	-8	1 6	0	-81	-69	-97
- as a percentage of revenues	-0.4	-0.9	0.9	0.0	-2.6	-2.3	-3.3
Income tax expense	-2	-2	2	1	1 5	-3	1 4
Loss on remeasurement to fair value less cost to sell
Impairment of intangible assets					-2 094		-2 094
Income tax on remeasurement					340		340
Impairment of intangible assets, net of tax					-1 754		-1 754
Profit/Loss for the period from discontinued operations	-6	-10	1 8	1	-1 820	-72	-1 837
Basic earnings per share, SEK	0.00	-0.01	0.02	0.00	-1.50	-0.06	-1.51

Cash flows from discontinued operations

		April - June		January - June
MSEK	2017	2016	2017	2016
Cash flows from
Operating activities	-41	82	-91	24
Investing activities	-27	-25	-49	-51
Financing activities	-97	-1	-97	-1
Net cash flow for the period	-165	56	-237	-28

Revenues by business area

	2015				2016				2017
MSEK (by quarter)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
Compressor Technique	8 610	8 922	9 261	9 489	8 156	8 976	9 421	9 803	9 361	9 597
- of which external	8 512	8 838	9 193	9 431	8 075	8 894	9 359	9 723	9 283	9 507
- of which internal	98	84	68	58	81	82	62	80	78	90
Vacuum Technique	2 439	2 540	2 614	2 362	2 536	2 953	3 511	4 635	4 768	4 777
- of which external	2 439	2 540	2 614	2 362	2 536	2 953	3 511	4 635	4 768	4 777
- of which internal	0	0	0	0	0	0	0	0	0	0
Industrial Technique	3 394	3 697	3 668	3 819	3 417	3 622	3 841	4 137	4 031	4 154
- of which external	3 382	3 684	3 656	3 806	3 406	3 611	3 830	4 125	4 017	4 140
- of which internal	12	13	12	13	11	11	11	12	14	14
Mining and Rock
Excavation Technique	6 756	6 870	6 481	6 558	5 736	6 124	6 212	6 971	6 882	7 157
- of which external	6 724	6 856	6 451	6 527	5 723	6 111	6 204	6 957	6 849	7 155
- of which internal	32	14	30	31	13	13	8	14	33	2
Pow er Technique	2 910	3 236	3 055	2 911	2 718	3 042	2 961	3 073	3 177	3 496
- of which external	2 849	3 144	2 968	2 791	2 628	2 954	2 890	3 001	3 061	3 390
- of which internal	61	92	87	120	90	88	71	72	116	106
Common Group functions/
Eliminations	-152	-174	-157	-136	-110	-152	-103	-124	-192	-151
Atlas Copco Group				23 957 25 091 24 922 25 003 22 453 24 565 25 843 28 495 28 027 29 030

Operating profit by business area

	2015				2016				2017
MSEK (by quarter)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2
Compressor Technique	1 976	2 092	2 215	2 218	1 792	2 007	2 173	2 143	2 102	2 242
- as a percentage of revenues	23.0	23.4	23.9	23.4	22.0	22.4	23.1	21.9	22.5	23.4
Vacuum Technique	416	511	494	402	504	693	732	1 131	1 181	1 198
- as a percentage of revenues	17.1	20.1	18.9	17.0	19.9	23.5	20.8	24.4	24.8	25.1
Industrial Technique	770	865	866	854	737	799	897	997	933	964
- as a percentage of revenues	22.7	23.4	23.6	22.4	21.6	22.1	23.4	24.1	23.1	23.2
Mining and Rock	1 276	1 258	1 296	1 163	866	1 041	1 163	1 395	1 361	1 414
Excavation Technique
- as a percentage of revenues	18.9	18.3	20.0	17.7	15.1	17.0	18.7	20.0	19.8	19.8
Pow er Technique	458	427	546	452	408	484	449	428	520	616
- as a percentage of revenues	15.7	13.2	17.9	15.5	15.0	15.9	15.2	13.9	16.4	17.6
Common Group functions/
Eliminations	-369	-111	-96	-207	-137	-255	-340	-309	-386	-446
Operating profit	4 527	5 042	5 321	4 882	4 170	4 769	5 074	5 785	5 711	5 988
- as a percentage of revenues	18.9	20.1	21.4	19.5	18.6	19.4	19.6	20.3	20.4	20.6
Net financial items	-229	-220	-270	-178	-181	-341	-304	-167	-215	-368
Profit before tax	4 298	4 822	5 051	4 704	3 989	4 428	4 770	5 618	5 496	5 620
- as a percentage of revenues	17.9	19.2	20.3	18.8	17.8	18.0	18.5	19.7	19.6	19.4

Acquisitions and divestments

	Acquisitions and divestments			Revenues	Number of
Date	Acquisitions	Divestments	Business area*	MSEK**	employees**
2017 May 3	Itubombas Locação Comércio		Construction Technique	5 0	4 0
	Importação e Exportação
2017 May 3	Pressure Compressores		Compressor Technique	145	150
2017 Mar. 2	Orcan Basincli		Compressor Technique		1 7
	Distributor Turkey
2017 Feb. 2	Erkat Spezialmaschinen und		Construction Technique	110	3 8
	Service
2017 Jan. 3	hb Kompressoren Druckluft		Compressor Technique		1 0
	und Industrietechnik
	Distributor Germany
2016 Dec. 22	Air Power of Nebraska		Compressor Technique		1 2
	Distributor USA
2016 Nov. 24	Phillip-Tech		Industrial Technique		4 5
	Distributor China
2016 Sep. 1	Leybold		Compressor Technique*	3 150	1 600
2016 Aug. 5	CSK		Compressor Technique*	870	400
2016 Aug. 2	Schneider Druckluft		Compressor Technique	250	110
2016 Jul. 4	Roxel Rental		Construction Technique	1 2	2
2016 Jun. 14	Bondtech		Industrial Technique	3 2	1 2
2016 May 2	Kohler Druckluft		Compressor Technique		3 0
	Distributor Austria, Switzerland
	and Liechtenstein
2016 Apr. 15	Scales Industrial Technologies		Compressor Technique		180
	Distributor USA
2016 Apr. 4	Air et Fluides Lyonnais		Compressor Technique		6
	Distributor France
2016 Mar. 2	FIAC		Compressor Technique	640	400
2016 Jan. 12	Varisco		Construction Technique	270	135
2016 Jan. 5	Capitol Research Equipment		Compressor Technique*	2 2	1 5

*Effective July 17, 2017, Construction Technique has changed name to Power Technique. As of January 1, 2017, Leybold, CSK and Capitol Research Equipment belong to Vacuum Technique business area.

**Annual revenues and number of employees at time of acquisition/divestment. No revenues are disclosed for former Atlas Copco distributors. Due to the relatively small size of the acquisitions and divestments made in 2017, full disclosure as per IFRS 3 is not given in this interim report. Disclosure will be given in the annual report 2017. See the annual report for 2016 for disclosure of acquisitions made in 2016.

Parent company

Income statement

	April - June		January - June
MSEK	2017	2016	2017	2016
Administrative expenses	-208	-137	-399	-258
Other operating income and expenses	-26	38	11	72
Operating profit/loss	-234	-99	-388	-186
Financial income and expenses	5 550	1 876	5 341	1 961
Appropriations	-	-	-	-
Profit/loss before tax	5 316	1 777	4 953	1 775
Income tax	360	85	445	183
Profit/loss for the period	5 676	1 862	5 398	1 958

Balance sheet

	Jun. 30	Jun. 30	Dec. 31
MSEK	2017	2016	2016
Total non-current assets	112 194	111 088	110 912
Total current assets	14 653	8 215	12 186
TOTAL ASSETS	126 847	119 303	123 098
Total restricted equity	5 785	5 785	5 785
Total non-restricted equity	32 589	28 834	35 578
TOTAL EQUITY	38 374	34 619	41 363
Total provisions	566	251	413
Total non-current liabilities	54 524	48 385	53 200
Total current liabilities	33 383	36 048	28 122
TOTAL EQUITY AND LIABILITIES	126 847	119 303	123 098
Assets pledged	337	752	988
Contingent liabilities	8 348	8 012	8 161

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	-15 291 067
- of which B shares
held by Atlas Copco	-332 659
Total shares outstanding, net of
shares held by Atlas Copco	1 213 989 378

Performance-based personnel option plan

The Annual General Meeting 2017 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.atlascopcogroup.com/agm.

Transactions in own shares

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

• Acquisition of not more than 2 950 000 series A shares, whereof a maximum of 2 900 000 may be transferred to personnel stock option holders under the performancebased stock option plan 2017.

• Acquisition of not more than 70 000 series A shares to hedge the obligation of the company to pay remuneration to Board members who have chosen to receive 50% of the remuneration in synthetic shares.

• The sale of not more than 30 000 series A shares to cover costs related to previously issued synthetic shares to Board members.

• The sale of a maximum 5 100 000 series A and B shares currently held by the company, for the purpose of covering costs of fulfilling obligations related to the option plans 2012, 2013 and 2014.
• The shares may only be acquired or sold on NASDAQ Stockholm at a price within the registered price interval at any given time.

During the first six months of 2017, 477 683 series A shares, net, were acquired. These transactions are in accordance with mandates granted. The company's holding of own shares at the end of the period appears in the table to the left.

Risks and factors of uncertainty

Financial risks

Atlas Copco is subject to currency risks, interest rate risks, tax 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 2016 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 2016.

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 about 180 countries. In 2016, Atlas Copco had revenues of BSEK 101 (BEUR 11) and more than 42 000 employees.

Business areas

Atlas Copco has five 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 growth.

The Compressor Technique business area provides compressed air solutions; industrial compressors, 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, the United States, China, India, Germany and Italy.

The Vacuum Technique business area provides vacuum products, exhaust management systems, valves and related products mainly under the Edwards, Leybold and Atlas Copco brands. The main markets served are semiconductor and scientific as well as a wide range of industrial segments including chemical process industries, food packaging and paper handling. The business area has a global service network and innovates for sustainable productivity in order to further improve its customers' performance. Principal product development and manufacturing units are located in the United Kingdom, Czech Republic, Germany, South Korea, China and Japan.

The Industrial Technique business area provides industrial power tools and systems, industrial assembly solutions, quality assurance products, software and service through a global network. The business area innovates for sustainable productivity for customers in the automotive and general industries, maintenance and vehicle service. Principal product development and manufacturing units are located in Sweden, Germany, the United States, United Kingdom, 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 Power Technique business area provides air, power and flow solutions through products such as mobile compressors, pumps, light towers and generators, along with a number of complementary products. It also offers specialty rental and provides services through a dedicated, global network. Power Technique innovates for sustainable productivity across multiple industries, including construction, manufacturing, oil and gas and exploration drilling. The business area is headquartered in Belgium. Principal product development and manufacturing units are located in Europe, Asia, South America and North America.

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 growth. 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.

For further information

• Analysts and investors Daniel Althoff, Vice President Investor Relations Phone: +46 8 743 95 97 or +46 768 99 95 97 ir@se.atlascopco.com

• Media Ola Kinnander, Media Relations Manager Phone: +46 8 743 80 60 or +46 70 347 24 55 media@se.atlascopco.com

Conference call

A presentation for investors, analysts and media will be held on July 17, at 2.00 PM CEST.

The dial-in numbers are:

• Sweden: +46 8 566 426 95
• United Kingdom: +44 20 300 898 02
• United States: +1 855 753 2237

The conference call will be broadcasted. Please see our website for link and presentation material:

http://www.atlascopcogroup.com/investor-relations.

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

Third-quarter report 2017

The Q3 2017 report will be published on October 18, 2017 (Silent period starts September 19, 2017)

Capital Markets Day 2017

Atlas Copco will host its annual Capital Markets Day on November 14, 2017, in Stockholm, Sweden. More detailed information and instructions on how to register will be distributed prior to the event.

This information is information that Atlas Copco AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 11.00 CEST on July 17, 2017.

The Board of Directors and President declare that the interim report gives a fair view of the business development, financial position and result of operation of the Parent Company and the consolidated Group, and describes significant risks and uncertainties that the parent company and its subsidiaries are facing.

Nacka, July 17, 2017

Atlas Copco AB

Hans Stråberg Chairman

Mats Rahmström Director President and CEO Anders Ullberg Director

Staffan Bohman Director

Tina Donikowski Director

Johan Forssell Director

Peter Wallenberg Jr Director

Sabine Neuß Director

Gunilla Berg Director

Bengt Lindgren Director Union representative

Mikael Bergstedt Director Union representative

Auditors' Review Report

Introduction

We have reviewed the interim report for Atlas Copco AB for the period January 1 - June 30, 2017. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other

review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Nacka, July 17, 2017

Deloitte AB

Thomas Strömberg Authorized Public Accountant