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Atlas Copco profit misses forecast as vacuum business tumbles By Reuters

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Atlas Copco profit misses forecast as vacuum business tumbles By Reuters

© Reuters. FILE PHOTO: Atlas Copco headquarters are pictured outside Stockholm, Sweden September 4, 2020. REUTERS/Johannes Hellstrom/File Photo

By Marie Mannes

STOCKHOLM (Reuters) – Swedish industrials group Atlas (NYSE:) Copco reported softer-than-expected fourth-quarter profits on Thursday and said demand was expected to remain around the current level, sending its share price down nearly 5%.

Persistent supply chain challenges and higher costs have weighed on the maker of compressors, vacuum pumps and industrial tools in recent quarters. Its customers are also scaling back investments, especially within its key vacuum division which counts the major semiconductor producers as its main clients.

Adjusted operating profit for Sweden’s most valuable listed company rose to 8.03 billion crowns ($782.9 million) from 6.46 billion a year earlier, while analysts polled by Refinitiv on average had expected earnings of 8.56 billion.

In the fourth quarter, order intake at its vacuum business fell 22% to 8.48 billion crowns, once again denting results. On an organic basis, or like-for-like, orders at the vacuum division fell 33%, while for the group as a whole they declined 7%.

Pareto Securities analyst Anders Roslund said the weaker result was entirely due to the drastic fall in orders and supply chain distortions in its vacuum division.

The company’s vacuum gear business, which competes with the likes of Pfeiffer Vacuum, is an important indicator for Atlas as it typically offers a forward-looking gauge of demand for the broader group.

Atlas stock was down 3% at 1236 GMT, off earlier lows.

JPMorgan (NYSE:) said the poor order intake for the vacuum division was expected.

“The negative surprise for us is on the margin, a very un-Atlas like miss,” the broker said.

Atlas as a group delivered an operating margin of 19.5% compared with 18% at its vacuum division.

The company plans to pay an ordinary dividend of 2.30 crowns per share, sharply down from 7.60 crowns paid last year, but roughly matching analysts’ average expectation for 2.28 crowns.

($1 = 10.2568 Swedish crowns)

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