Atlas Copco Group

Atlas Copco Group Q2 Results July 18, 2002

Contents • Q2 Highlights • Market Development • Business Areas • Financials • Outlook www.atlascopco-group.com

Q2 Highlights • Order volumes stabilized • North America still weak • Europe better than anticipated • China continued strong • Order volumes down 1% overall (-7% in Q1) • Profit after financial items MSEK 1,074 (1,310) • Operating margin 10.8% (13.1) • Low volume and lower rental rates in Rental Service primary reason for margin drop • Negative currency effect www.atlascopco-group.com

Q2 Highlights (cont.) • Strong operating cash flow of MSEK 1,029 • Relocation of assembly operations in Atlas Copco Electric Tools • Launch of Milwaukee brand in Europe • Building presence in China and Russia • Liutech acquisition finalized • Organic growth in Russia www.atlascopco-group.com

Portion of Group Sales, % Change in %, Q2 2002 vs. Q2 2001 Orders received, Q2 2002 vs. Q2 2001 Change in Local Currency June 2002 30 +2 50 -4 9 +19 5 +21 4 -30 2 +3 www.atlascopco-group.com

50 -4 4 -30 Q2 - The Americas June 2002 • Demand below previous year • Low activity in non-residential building and manufacturing industry affecting the rental business • Low capacity utilization affected demand for investment related goods • Slightly improved demand for production-related equipment and tools • Negative development continued in most South American markets Portion of Group Sales, % Change in %, Q2 2002 vs. Q2 2001 www.atlascopco-group.com

30 +2 5 +21 Q2 - Europe and Africa/Middle East June 2002 • Stable Europe • Low capacity utilization affected demand • Demand from construction industry unchanged • Nordic and Eastern Europe positive, France and U.K. negative, Germany mixed • Africa/Middle East • Large projects enhance continued growth in region Portion of Group Sales, % Change in %, Q2 2002 vs. Q2 2001 www.atlascopco-group.com

9 +19 2 +3 Q2 - Asia and Australia June 2002 • Overall good demand in Asia • Strong demand in China continued • Most industry segments improved, while electronics industry remained weak • Weak development in Japan • Good development in Australia Portion of Group Sales, % Change in %, Q2 2002 vs. Q2 2001 www.atlascopco-group.com

Volume Growth per Quarter • Change in orders received in % vs. same Quarter previous year www.atlascopco-group.com

Group Total www.atlascopco-group.com

Volume Growth Compressor Technique • Change in orders received vs. same quarter previous year, % www.atlascopco-group.com

Compressor Technique • Orders received up 1% • Standard industrial compressors enjoy good demand. • Mixed demand for large industrial and portable compressors • China still strong and European market better than expected • Liutech acquisition finalized • Operating margin 19.1% www.atlascopco-group.com

Volume Growth Rental Service • Change in orders received vs. same quarter previous year, % www.atlascopco-group.com

Rental Service • Weak market • Non-residential building and maintenance activities in industrial segment remain weak • Rental rates below previous year • Rental revenues decline 5% in volume • Actions • Capital efficiency measures - reduced rental fleet but more fleet available • Rationalization of support functions • Strong cash generation www.atlascopco-group.com

Volume Growth Industrial Technique • Change in orders received vs. same quarter previous year, % www.atlascopco-group.com

Industrial Technique • Demand for fastening tools from motor vehicle industry continued to be weak • Improved demand for professional electric tools in North America • Plan to relocate some assembly operations from Germany to Czech Republic • Change in mix and lower volume affected profit margin www.atlascopco-group.com

Volume Growth Construction & Mining Technique • Change in orders received vs. same quarter previous year, % www.atlascopco-group.com

Construction & Mining Technique • Orders up 3% • Drilling equipment for surface and underground construction saw increased demand • Orders from mining industry flat • After-market business improved further • Krupp and MAI acquisitions finalized • Annual sales approx. MSEK 670 • Operating profit 10.4% www.atlascopco-group.com

Income Statement www.atlascopco-group.com

Balance Sheet June 30, 2002 www.atlascopco-group.com

Cash Flow www.atlascopco-group.com

Capital Expenditures in Tangible Fixed Assets Net rental fleet investment = MSEK 819 MSEK 12 months Quarterly 1998 1999 2000 2001 2002 www.atlascopco-group.com

Near-term Outlook Overall, thedemand for Atlas Copco’s products and services is expected to remain at the present level. Investment in the two main regions, North America and Europe, is not expected to increase, while recent increases in manufacturing output in the United States are likely to support ongoing modest growth in demand for production-related equipment and tools in that market. Demand for rental equipment in the United States is expected to remain unchanged in the next quarter. Demand in Asia is expected to continue to develop favorably. www.atlascopco-group.com

The face of interaction www.atlascopco-group.com

Cautionary Statement • “Some statements herein are forward-looking and the actual outcome could be materially different. In addition to the factors explicitly commented upon, the actual outcome could be materially effected by other factors like for example, the effect of economic conditions, exchange-rate and interest-rate movements, political risks, impact of competing products and their pricing, product development, commercialization and technological difficulties, supply disturbances, and the major customer credit losses.” www.atlascopco-group.com

Contents • Q2 Highlights • Market Development • Business Areas • Financials • Outlook • Additional Information www.atlascopco-group.com

Orders received, Jan. - June. 2002Group Total MSEK 24,699 -4 30 -1 50 -7 9 +8 5 +5 4 -22 2 +11 12 months, Portion of Group Sales, % Change 2002 / 2001, % www.atlascopco-group.com

Long Term Trend www.atlascopco-group.com

Compressor Technique www.atlascopco-group.com

Rental Service www.atlascopco-group.com

Industrial Technique www.atlascopco-group.com

Construction & Mining Technique www.atlascopco-group.com

Group Total www.atlascopco-group.com

Items Affecting Comparability www.atlascopco-group.com

Group Totalexcl. items affecting comparability www.atlascopco-group.com

Earnings Before Interest and Taxes 12 month values % MSEK 1988 1994 1996 1998 1990 1992 2000 2002 June EBIT margin excluding items affecting comparability 1999 = 12.1%, 2000 = 13.8%, 2001 = 12.5%, 2002 June = 10.9% www.atlascopco-group.com

Return on Capital Employed 12 month values 1998 1999 2000 2001 2002 www.atlascopco-group.com

Earnings per Share and Dividend 1997 1998 1999 2000 2002 2001 www.atlascopco-group.com

Taxes % MSEK 1998 1999 2000 2001 2002 June www.atlascopco-group.com

Inventories, Customer Receivables and Net Rental Equipment Percent of Sales 12 Month Values 1997 1998 1999 2000 2001 www.atlascopco-group.com

Cash and Interest-Bearing Debt MSEK Net borrowings 10,052 Dec. 1998 19,325 Dec. 1999 22,270 Dec. 2000 20,078 Dec. 2001 17,184 Jun. 2002 www.atlascopco-group.com

Capital Structure Net Debt/Equity www.atlascopco-group.com

Atlas Copco Group