The Swedish industrial company Atlas Copco (ATCOa.ST) announced on Wednesday a higher-than-expected increase in adjusted earnings for the third quarter but forecasted short-term declines in demand.
Analysts surveyed by LSEG predicted operating profit to be 9.7 billion crowns ($904.8 million), but operating profit adjusted for comparability-affecting items increased 19% to 10.1 billion crowns. Reduced investments by customers have impacted Atlas’s order intake. In particular, demand has recently been poor for its important vacuum segment, which mostly serves semiconductor manufacturers as clients.
Regarding the short-term prognosis, Atlas Copco stated it “expects that the customers’ activity level will weaken compared to the third quarter.” Atlas Copco also predicted that near-term demand would decline from its high level at its most recent outlook update in July.
According to Atlas, order volumes were somewhat lower in the third quarter than in the second, but they remained at high levels compared to a year earlier. Order intake exceeded experts’ forecasts by 1% to 42.6 billion crowns, with growth excluding acquisitions down 1%. The Swedish group stated that 43.5 billion orders were placed in the second quarter.
Before the release, several analysts anticipated decreased sequential orders in most units. JPMorgan stated that the declining demand was to be expected and that the results outperformed expectations in every way.
The Swedish firm manufactures power tools, construction equipment, air treatment systems, and other industrial goods. Orders at its vacuum division, which has negatively impacted Atlas’s performance over the last 12 months, decreased by 10% to 8.8 billion from 9.8 billion crowns.
According to JPMorgan, the drop in the unit’s orders was also consistent with the semiconductor industry’s anticipated slowdown in recovery.
Competing with companies such as Pfeiffer Vacuum (PV.DE), the vacuum industry is a key indication for Atlas since it usually provides a look-ahead measure of demand for the larger group.
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