Atlas Copco Depends on Asia Demand to Keep Orders Goal in Sight

Atlas Copco AB (ATCOA), the world’s largest maker of air compressors, needs sustained demand in Asia to meet its near-term goal of increased demand, Chief Executive Officer Ronnie Leten said in an interview.

“It will be very difficult for me to fulfill my outlook where we said demand would increase somewhat” if Asia falls short of expectations, Leten said.

Demand in North America and Europe from clients in the car, aerospace and construction industries has been growing, though there are risks attached to countries such as Russia and Syria, Leten said. Like many other equipment makers, Atlas Copco has seen declining orders and revenue from mining gear as projects get postponed.

Atlas Copco said mining remains challenging, and it expects orders to remain largely unchanged from the first quarter. Lower demand for excavators and rock-drilling equipment has eliminated a sizable chunk of many equipment makers’ revenue. Caterpillar Inc., the world’s No. 1 maker of mining gear, recently downgraded its forecasts, saying it expects a 20 percent drop in sales to the industry in 2014.

Leten said Atlas Copco’s mining exposure is more favorable, as it is more focused on underground rock excavation as opposed to the more challenged surface-drilling business.

“We see some replacement, but we don’t see any big new investments,” Leten said, adding that demand for Atlas Copco’s mining equipment has been basically unchanged for the last nine months.

Net income in the first quarter declined 0.8 percent to 2.75 billion, the Stockholm-based company said in a statement. Analysts predicted 2.81 billion kronor, according to a Bloomberg survey of analysts.

The shares traded 0.8 percent higher at 191.8 kronor as of 5:26 p.m. local time.

To contact the reporter on this story: Niclas Rolander in Stockholm at nrolander@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Andrew Noel, Robert Valpuesta

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