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Atlas Copco posts Q2 profit beat, but sees slowing demand
Global Banking & Finance Review®
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(Reuters) -Swedish industrials group Atlas Copco on Wednesday reported second-quarter operating profit that beat market forecasts, but said demand was expected to weaken in the near term, sending its shares lower.
(Reuters) -Swedish industrials group Atlas Copco on Wednesday reported second-quarter operating profit that beat market forecasts, but said demand was expected to weaken in the near term, sending its shares lower.
Operating profit adjusted for items affecting comparability rose to 9.49 billion Swedish crowns ($925 million) from 7.04 billion a year earlier, beating the 8.94 billion expected by analysts polled by Refinitiv.
Shares in the company were down 2.5% at 1105 GMT after trading flat ahead of the release of the report.
J.P.Morgan said Wednesday’s beat was “more than offset” by more cautious guidance, whilst Jefferies said it was surprised by the increased inventory build up.
Persistent supply chain challenges and higher costs have weighed on Atlas in recent quarters, while its customers are scaling back investments. The global group makes industrial products ranging from air treatment systems to construction equipment and power tools.
“The demand for the Atlas Copco Group’s products and services remained strong, even though the order intake did not reach the very high level of the previous quarter,” the company said in a statement.
In particular, its key vacuum division has struggled, with the company saying it had seen weaker equipment demand, especially from the semiconductor companies it counts as its main clients.
Inventories at the Swedish company as of June 30 were 32.39 billion crowns, compared to 23.60 billion crowns a year ago.
Order intake for the group came to 43.47 billion crowns, narrowly topping analysts’ expectations of 43.20 billion, whilst for the vacuum unit it came to 9.19 billion versus 11.40 billion a year ago.
($1 = 10.2560 Swedish crowns)
(Reporting by Marie Mannes and Greta Rosen Fondahn; editing by Niklas Pollard; Editing by Sharon Singleton)
Operating profit is the income a company generates from its normal business operations, excluding any income derived from non-operational activities such as investments or sales of assets.
Demand refers to the quantity of a product or service that consumers are willing and able to purchase at various prices during a given time period.
Inventory levels indicate the amount of goods a company has on hand at any given time, which can affect its ability to meet customer demand.
Order intake is the total value of new orders received by a company during a specific period, reflecting demand for its products or services.
Items affecting comparability are non-recurring or unusual items that can distort a company's financial performance, often excluded to provide a clearer view of operational results.
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