Good morning, good afternoon, good evening. Welcome to all of you attending this call, the Atlas Copco Group Q1 earnings call. Before we start, and I hand over the word to Mats Rahmström, I would like to already now ask you to when the question session starts, that you would only ask one question at a time, so that everybody has an opportunity to bring a question to our attention. Considering the fact that we also will have the annual general meeting for shareholders today, we are on a tight schedule, so we will keep strictly to the time for this call. With that, we can conclude the introduction, and I hand over to Mats.
Thank you, Peter. I think it's appropriate that I say a few words about Ukraine and Russia before we start. We have, during the quarter, focused on the safety for our 41 employees. We stay in daily contact with them, and we had also offered employment outside Ukraine, and that is of course, mainly then, valid for females since men are between 18- 60 are not allowed to leave. We have also arranged with direct donations and financial support to ease the situation for them. In Russia, as previously reported, Atlas Copco in Russia has between 2014 and January 2022 sold equipment and service to four companies where we can't guarantee purely civil applications. To give a summary of what we know this far, the majority of the sales was related to service.
The equipment sold are standard products and have not been modified or specifically tailored. However, the group's guidelines and policies have not been followed since we cannot guarantee purely civil applications. We have been in contact with ISP in Sweden, the Inspectorate for Strategic Products, and informed authorities in Belgium. We have reminded all our employees about the importance of following internal guidelines and policies. We have also changed the screening process away from Russia and strengthened the process, so we try to make sure this is not repeated. We have also initiated a thorough investigation together with external partners, looking into all our sales in Russia between 2014 and 2022. As you can understand, this is fairly complicated, and we have not finalized the investigation yet.
This far, we have found very few cases where it's not sufficient documentation to completely determine the customer's application. Trade compliance is prioritized in the group. We will continue to assess the results of the investigation and cooperate with relevant authorities. We take this very seriously, and we are determined to make sure we follow the rules and regulations going forward. I will start with the report. That's slide two, which is called Q1 in brief. We had fantastic orders received, SEK 40 billion and 23% organic growth. Compressor Technique had 20% growth, and that was a record. Vacuum Technique had 20% growth, and that was also record. Industrial Technique, 11% growth, and that was also a record. Power Technique was fantastic with 55%, and of course, that's also a record for us.
This, of course, is a quite strong quarter last year as well. Looking at the regions, we can see double-digit growth in all the regions. Service, some challenges in service in auto, we can see that there are shortages of chips, and there have been a lot of closures during the quarter, but we are also suffering from the shortage of components and also COVID. Revenues, it came at SEK 30 billion. Of course, we would like to do more, but considering the situation with 7% growth, we are quite pleased with the revenue as well. It is very unpredictable and challenging. In the beginning of the quarter, we could see COVID spreading through Europe, and of course, then in Asia, especially in China.
We are also challenged to handle the balance between components availability and the headcount. We are buying components on the spot market, and we are buying more air transport than we normally do. We are taking these costs because our main focus is to focus on our customers to make sure that we can supply as best we can. Of course, I think you can see evidence of that in the orders received. We say healthy profitability, SEK 6.7 billion, 22.4% margin, and an adjusted margin when we take the long-term incentive through at 21.7%. That's also a record for us. Go to the next slide, number three, Q1 financials, and maybe can give some attention then to the graph. It came in, orders received better than expected.
We had high expectations, as you could see in the forward-looking statement. CT, Compressor Technique, came in better than we expected, and of course, with Power Technique coming in significantly better than we expected as well. The only thing I think adds from the previous slides on this one is the cash flow. You can see a rather low cash flow, and that is mainly because we are building up inventory to handle the orders on hand and the high orders received that we have. If you then go to slide number four, that should be the map. It's all green, double-digit growth in all regions. I think it's quite an achievement to see that our product portfolio services is well- accepted in all these regions.
We are quite pleased with having 40% of our sales in Asia. This is where growth is happening, but also the balance between the regions. During the last two years, we have started step by step to structure ourselves to protect ourselves better from protectionist and COVID, to shortening the lead times of our product and the value chains. We call it local for local. That's why we have invested quite heavily in our structure in the three power hubs, Asia, with focus in China, Europe, and North America, with focus on the U.S. That is building in an insurance for us and building in agility in process. On slide number 5, you have the growth per quarter, and we have six consecutive quarters now with the growth.
Of course, we will see tougher comparisons in the coming quarters. Slide six is the sales bridge, and you can also confirm just the currency there, 9% positive on orders received and 8% on revenues. Peter will later guide you on the next quarter on the currencies. Seven, where you have the pie chart. Compressor Technique, very interesting with 20%. We can see that industrial compressors, big and small, selling really well. What came out more as a surprise was a lot of decisions in Gas and Process that seem to be linked to compressing and liquefying gases and expanding gases, more so linked to sustainability. Very positive for them.
In Power Technique then, you can see the main part of was the U.S. rental companies buying in capacity earlier than price increases, and of course, it's also decent for rental companies. Very positive for us that they trust us to be their supplier. Slide number eight, Compressor Technique, as I said, SEK 17 billion in orders received and a strong growth industry, big and small. GAP was very positive, continued to be very solid, which is good for our mix in service. Revenues is substantially up, 7% organically and SEK 13 billion, and a very solid margin at 23.8%, supported by currency, but negatively affected by the supply chain constraints which I could repeat on all the business areas. Very solid return on capital employed in 90%.
Now, Vacuum Technique, the last five quarters, looking at the graph, it's a quite fantastic development. Another record done with SEK 11.5 billion, 20% up on orders received. Revenues 10% up, and they managed to build on the revenues quarter by quarter. Here you can see, of course, that the operating margin is challenged. It's the supply chains, as we discussed, but also some of the more long-term customers, where pricing is not as easy to get through. Return on capital employed, 25%. Slide number 10, Industrial Technique. They also came in with a record orders received. We can see the order is linked to electrification, but here was also positive general industry development. It's also many applications linked to sustainability.
It's inverters, it's electronics, it's batteries, it's motors. So many applications there. Service is challenging in Industrial Technique due to that. They are lacking chips for the manufacturing. We see a lot of shutdowns, and then we don't have access to the plants, and there's no rundowns on the tool side or so. They also have a challenge on the supply side, and it's mainly linked to electronics. Operating profit at 21%, EBIT at 23.5%, also here supported by the currency. Power Technique, as we said, was surprisingly strong, a lot of orders, SEK 6 billion, U.S. rental companies, a main part of that, buying capacity. They're buying before price increases. You can say that they placed order early.
They should have in mind also that they had quite a strong Q4 in 2021, and we were not sure how much was left there to offer the customers. Continuous strong development of Specialty Rental and record revenues there. Here you can see that it's also electronics, but also engines that is the most difficult part for the operations. Operating profit at SEK 664, which is a record for them, and strong margins at 17.9%. Innovation here, maybe I should highlight, this is a typical application where in the past they used a diesel engine, and now then we introduced electrical engines here as well. In line with what we do for sustainability for ourselves and also for our customers.
Also interesting with the two, I believe spot on, acquisitions, Wangen and LEWA that has been announced as well. We come to slide number 12 that summarize the group. You can see that as a service then they give the EBIT are 23.7% and operating profit margin at 22.4%. By that, I hand over to Peter.
Thank you, Mats. Following the operating profit, we have, let's say, stable net financial items. The small increase that we see there is mainly due to the one-time cost related to the fact that we bought back a bond and issued a new bond at a much better rate. We move to the tax, which was effective tax rate at 21.9%, which is also the level that we expect going forward throughout the rest of the year, aiming at about 22%, for the full year. As a result of all of the above, we have a profit for the period of SEK 5.2 billion compared to SEK 4.1 billion last year, an increase by 27%, impacting the basic earnings per share positively going up to SEK 4.28.
Return on capital employed of 27%, which is largely increase driven by volume, and return on equity of 30%. Going on to the next slide, adding a little bit more color on the profit bridge on slide 13, where you can see a number of impacts on how the margin has developed. First of all, quite positive impact from the share-based LTI programs. Acquisitions being slightly dilutive, but quite a positive currency impact of 4.6%. All other things remaining the same or currency rates remaining more or less the same, we would expect a similar currency impact going forward, basically the status quo.
Talking about the drop-through a little bit, as Mats already indicated, I think there's a tremendous amount of headwinds, whether it is material cost increases, labor efficiency due to absences as a consequence of COVID, inefficiency due to lack of components in the factories, freight that is becoming more and more complicated. I think we have also noted that within our organizations, quite a lot of efficiencies have been achieved, but unfortunately, they are basically compensated by all these negative headwind that we see. As a result, we have this drop-through as it is. I think in spite of all these headwinds, I think we are quite, actually quite proud of the achievement.
I think as Mats explained, we want to focus particularly on the customer, and see this rather as an investment in the future, that we will be able to harvest from, later on. Of course, meanwhile, we continue to work very hard with our entire organization, across the different business areas to continue to work on price. We do see positive impacts from price activities, across different business areas. Overall, as I said, quite happy with the overall outcome. If we then go to the next slide, we see a little bit more details, for the different business areas. For Compressor Technique, we could say that the profitability level to drop-through is on par with the current level.
I think Vacuum Technique is probably the business area that maybe sticks out a little bit more than the others. Of course, given the tremendous growth that we have seen across the last quarters and again in the first quarter of 2022, I think it's not really surprising that it is even more challenging from a supply chain perspective. On top of that, when we look at Semi particularly, we see these long-term contracts where it is of course even more complicated with the key accounts to increase prices proactively as we do in the other business areas. I think also there overall, Happy but not satisfied, you could say. But I think proud on the achievement from our employees across Vacuum Technique and the other business areas.
In Power Technique, I would probably highlight a very strong flow drop-through that we have witnessed over the quarters. Not only a very solid order intake that was a complete blowout, but also solid performance from a profitability point of view. Moving on to the next slide, which is then the balance sheet on slide number 15. Just highlighting a couple of main changes. First of all, on the balance sheet, the inventories, of course, sticking out with quite a substantial increase, and that is obviously related to the buildup of component stock that we want to have in order to make sure that we have components available when we are able to produce the products.
We also see an impact on our sales stock, and that might be initially surprising at first, but customers are also sometimes pushing back deliveries because other products that they need before our products are also delayed, for example. We also, of course, are confronted with products that are basically finished, missing one or two components, and that are standing idle to be reworked, afterwards, and that adds also to the inventory situation. Receivables are also going up quite substantially, but if you look at it from a relative point of view compared to revenues, very much stable. Actually, we feel that our overdues are well under control and the risk profile is actually going slightly down. Then, of course, on the asset side, the cash is also increasing quite substantially.
Here, of course, we need to note that in the coming quarter we will see the dividend, or half of the dividend payment, taking place as well as the redemption, if that is finally blessed by the annual general meeting, obviously. Of course, also the acquisitions, Wangen, LEWA and Geveke, that will come through in the second quarter. On the liability side, the increase of the equity is of course related to the retained earnings increase. On the net interest-bearing liabilities, the main reason for the increase is related to the issue of a EUR 500 million bond, which we bought back and then reissued at a much lower interest rate, and that is the main reason for the increase there.
On the non-interest-bearing liabilities, the main reasons for the increase are the payables, which of course go very much hand in hand with the inventories going up. Also an increase in advance payments, which is related to the orders received in particular project business, where of course, we are typically having multiple installments and where we get advance payments from the customers. Finally, accrued expenses related to the execution of the projects that we are able to invoice. That is explaining the development there. Then we move on to the cash flow. I think the first thing to highlight there definitely is the enormous operating cash surplus that we were able to generate over the first quarter of SEK 8.1 billion.
As we already indicated, the cash flow ends up being, of course, quite a bit softer, mostly due to the change in working capital, which is, of course, contributing a lot. This is basically by and large the inventories. The last point to highlight maybe on the cash flow for the first quarter is the investment in property, plant and equipment, where you see more than double impact on the cash flow than the same quarter last year. That is due to the investment that we are doing currently. We have already indicated at earlier occasions that we have, quarter after quarter, even during COVID and 2021, decided on quite a number of substantial investments in capacity. That is now, of course, starting to affect the cash flow as well.
In this case, particularly, Vacuum Technique with large investments in the Korean factory as well as in Qingdao in our Chinese factory. Then finally, as well, some additional machinery investments that we decided for Compressor Technique over the last quarters. That then gives us an overall result of SEK 2.4 billion cash flow versus SEK 4.3 billion for the same quarter last year. With that, we come to the end of the balance sheets and financial items. I would like to hand over back to Mats to talk a little bit more about the near-term outlook.
Thank you, Peter. That's slide 17. It's a near-term outlook, where we're trying to judge the activity level among our customers down from Q1 to Q2. It reads all the words current economic development makes the outlook uncertain. What we refer to here is, of course, the COVID situation. I guess it will be a question anyway. In China, we have 10 manufacturing units of all size. If I take the average yesterday, it might not be valid for today, as you understand. We are running at 75% capacity approximately. Our distribution centers are in the Shanghai region. We are running closed loop in those issues, and it's only a capacity of 25%, so it will have an impact on...
As long as it is shut down in Shanghai, it will be difficult for us. Then, of course, we don't fully know how the Russian and Ukrainian part. They've indicated that it's the Russian part is 1.5% of our revenues. So that might not be so significant, but of course, it can have an impact on the European economies moving forward. We don't see the light in the tunnel when it comes to components. I think I asked the questions to four of the business areas, and I think they all were saying that, "No, we don't see that happening in this coming quarters." That will be a continued challenge, and we just need to be better than the competition. Underlying demand, as you could see from orders received, we'll do some pre-ordering.
You can see that it was spread throughout equipment and service, also geographically. We see that activity levels in terms of product is high. That's why we also said that we believe that activity level will continue, but maybe not then on the same level as we have seen in the first quarter of the year.
Thank you, Mats. I'd like to hand over back to the operator to guide us in the question session. Thank you.
Thank you. Our first question is from Andrew Wilson of JP Morgan. Please go ahead.
Hi, good afternoon. Thanks for taking my question. I just wanted to ask. I think you made a comment on Power Technique specifically with regards to some pre-buying ahead of price increases and some, I guess, early ordering. Try and get a broader comment on the group as a whole and thinking about the other business areas with regards to if you think you've seen significant pre-buying in those businesses as well, and if that plays any, I guess, any role in the comment around not necessarily repeating the Q1 orders in the near term, despite obviously market demand still being very strong.
In terms of pre-ordering, it's also difficult for us to judge, of course, what is pre-ordering and what is not. As the situation is with inflation right now, there is, of course, quite frequent announcement of price increases in all our business areas. In Power Technique specifically then, there was a very strong Q4 already. We can see that, and that we don't normally see. Of course, the high demand that we have seen now, so we believe it will be a softer Q2 for Power Technique.
Sorry, Mats. Yeah, sorry, just in the other businesses. Thank you.
When we look at how solid the orders are in the other business areas, I would say that project business is in Compressor Technique seems to be very solid, and I think some of them have, as I indicated in Gas and Process, have actually taken decision earlier than we expected. In the bigger oil-free machines, that's project business, the Gas and Process, we think it's we know the projects, we know what it's for, and we haven't seen any cancellations, and we have not seen any delay in those orders. They're still pushing us for. The delays we see sometimes, as Peter mentioned, that someone else has not delivered.
Where we see a risk, of course, if we see a softer market in Compressor Technique, could be in industrial with the smaller compressor, which is also distributed through distributors around the world. Of course, they place bigger orders than normally. That would be maybe the first step that we'll see that. We have not seen that either. In Vacuum semi, same thing there. They're trying to buy into capacity because you can see we don't have enough capacity, reloaders, as well. In industrial, I don't see any pre-ordering. We don't have so much distribution there either. In Industrial Technique, automotive division, that it's linked to project business in Auto, and I don't see a big risk there either. I think that's the best we can give at this point.
That's very helpful. Thank you.
Thank you. Our next question is from Daniela Costa of Goldman Sachs. Please go ahead.
Hi, good afternoon. Thanks for taking my question. I'll stick to one. Wanted to get some color on like when you're thinking about your guidance basically for the Q2, which is sequentially slower than 1Q. Are you basing that sort of on some data points that you're seeing already, and can you talk us like through that? Or is this still largely based on just your macro expectations? And I guess related to that, sorry to add this, but you talked a lot about customers delaying because they don't have components. Is there a risk of demand destruction that you might perhaps start to see with some of the projects that your customers are getting sort of their IRRs not making sense given all the cost inflation going on?
Any thoughts on those would be extremely helpful. Thank you.
Yeah. I mean, if you start with the quarter as such, just looking at the graph, of course, you can see the deviation. We also said a couple of times on the call that it was quite a bit empowering a n expectation, and we don't think that will be repeated, but we might be wrong again, of course. Then I lost out on your. You wanted color on? Sorry.
No, on your customers. When you said earlier that basically some customers, they were delaying, I guess, the deliveries because they didn't have something in the system. But I guess the other question we're getting frequently is demand destruction because of high prices everywhere else, not just on your equipment obviously, but if you're seeing any signs that your clients are maybe rethinking the underlying projects that they're using your equipment on because their return on those investments ceases to make sense?
No, we haven't seen that. It's been the other way around in Q1, of course. We haven't seen that early on in April either, even though we don't guide on that. So far it's been very solid in the industries that we operate in. That said, we don't know how some of these global things that I just mentioned feel.
Got it. Thank you very much.
Thank you. Our next question is from James Moore of Redburn. Please go ahead.
Yes, good afternoon, everyone. My question surrounds the vacuum margin and the 220 basis point drop and the low drop-through. Peter, thank you for mentioning the supply chain and the large customer pricing dynamics. I just wondered if you could break down the organic drop-through a bit qualitatively. Firstly, on price realization, any way you could help us quantify what percentage price realization you got in the quarter, but what you would have had to get to be net price cost neutral?
Secondly, within this, can you say what's impacting on the cost side? Is there a particular suite of components, semis or EUV masks? Finally, on mix, could you say across the divisions, which really saw the biggest drop, the most drop in margin? I'm assuming. Am I correct to assume it's the Semi OE unit that's really the principal driver of this?
Thank you, James, for your question. No, I think for price, of course, it's as always very, very difficult to give a very exact number because what we try to measure is like for like products, but then you have, of course, a lot of project business. You have a lot of products that are not really have a comparable alternative to do the calculation against. It is more of an indication that we try to get across the BA. What we do see is that in Vacuum Technique it continues to be much more difficult in general to push up the price levels given the long-term contracts, particularly with the key accounts. That has not fundamentally changed.
We do see overall across Vacuum Technique as well, a better price increase throughout the quarters than in earlier quarters. On the contrary, that is then again met by even further price increases. We see the inflationary tendencies, whether it is labor cost in a number of markets, whether it is component cost that is going up quite substantially. Spot market buying, of course, is adding to it. Of course, when it comes to spot market buying or buying in general, particularly if it's about the microchips, for example. If at a certain point we can get hold of a batch of microchips that might cover a two-year demand, we will at this point, the question from the supplier is, do you take it or don't you take it?
I think we just decide to take it, well, almost whatever the cost may be, because we just need it to produce the products and deliver to our customers and live up to our commitments. That for us is the main focus still. Of course, COVID adds even more complexity within our own operations. I mean, we have the manpower to produce significantly more, but as we have not all components available, that becomes rather inefficient. You see the same effect happening in our supply chain, where also our suppliers are affected by COVID outbreaks. As a result of that, of course, they can't supply or they can supply even less than what we had hoped for.
To top it all off, you could say maybe we have Ukraine, Russia, where of course a number of commodities, not necessarily commodities that we buy directly because we have very little impact from supply chain directly. But of course, indirectly, there is an impact from raw materials, whether it is pig iron used in foundries, for example, or other type of materials that are used somewhere throughout the value chain, ultimately further affecting the supply chain complexity and of course, driving cost also further up. I think that's a little bit the picture we see.
I would say in Vacuum Technique, again, it is the most complex because of the fact that the growth level that we have seen over the last four or five quarters is of course, not mentioning Vacuum Technique in this particular quarter, of course, but otherwise it has been outperforming all the other business areas quarter- after- quarter in terms of organic growth. I think that makes the challenge for them even more complicated than for the others, I would say.
Thank you, Peter. Thank you very much.
You're welcome, James.
Thank you. Our next question is from Lars Brorson of Barclays. Please go ahead.
Thanks. Hi, Mats, Peter. Can I follow up please on VT and then ask a question on PT? Sorry for the two, but just on the longer-term picture for VT, Peter, notwithstanding the recent investments in Korea and in Qingdao, how are you thinking about longer term need for capacity investments? I mean, the semi VT business, I guess, has historically targeted sort of 70%-75% utilization levels to maintain some flexibility on key accounts. I guess had it not been for the supply chain constraints and the extended lead times, you'll probably be running close to 100%. How to think about the possibility of further capacity investments coming during the course of this year within VT? I'll start there. Thank you.
Yeah, well, I think definitely correct analysis. If today we had all the components available, the capacity would simply not be there to fully deliver on all of these orders. I think we were satisfied to see that during 2020 when COVID started, then 2021, we continued to invest in capacity with repetitive approvals by our board of additional capacity investments in Vacuum Technique. That's what you see coming through now in the cash flow as well, and in the balance sheet, of course, with very significant investments kicking in in Korea particularly and in China, in Qingdao, but also in the U.S. as well as in Europe. All of these investments are gradually coming online across Q2, Q3 2022 and further into 2023, even 2024.
From that perspective, as over time, hopefully the supply chain will get somehow more availability will be there for the components. We should be able to deliver gradually on the demand that we have seen from our customers. Will we do even further investments? Well, that remains to be seen in the coming quarters. Currently, we are very happy that we have taken those decisions in the past and that we see the capacity coming online step by step.
Maybe we can say at least, Lars, that what you see right now is the investment in Asia, and also that we have decided that we want to be the number one supplier in Americas as well. I don't have any numbers or exactly how it will look like, but that we have ahead of us. I think it's four or five semi plants being built in the U.S., and we're quite determined to be the number one supplier there as well.
Understood, Mats. Thank you. Can I squeeze one in quickly on PT? Dare I say the problem child historically, albeit with some very bright kids in the Atlas family, the organic drop-through in the 50%s is really quite impressive. Is that sustainable? It's still a bit unclear to me how much mix impacts margins in any one quarter in PT. Then of course, quite a step up in M&A activity this quarter. You flagged that I think four or five years ago, but it's been fairly quiet until now. Are we on the cusp or are we now starting to see a bigger M&A push in PT? Thank you.
If I start with the M&A question. We've been looking for this type of product at Wangen, the industrialized pump application. I believe it's very close to home for us. But the pump itself is an important part of the process. As you know, depending on what kind of fluid you actually have, the dirtier, the more nasty it is, the more service it is. We prefer these types. We are not getting into water or anything, it's the industrial applications. Now we have to deliver on some of the synergies. But I foresee that over time in the coming years, we will continue to scan the market for the companies that has leading technology that we can take advantage of and sell throughout the world.
It's the start of a new growth platform for PT.
Then maybe I can add onto the question with regard to the drop-through a bit. I think it's fair to say that rental service, Specialty Rental has seen a very solid development across the quarter. Of course, that contributes from a mix point of view positively to this drop-through. Whether that will be sustainable will need to be seen a bit. We have, of course, taken very substantial orders from an equipment point of view over the last two quarters in the rental business.
Even though we feel that we have been able to do a very good job from a pricing perspective there, the equipment business is of course typically a bit softer when it comes to the margins, and that would then probably impact the mix again. Whether this is sustainable, I think we will need to see in the coming quarters as the orders for the equipment will be delivered to our customers and will turn into revenues.
I think we saw, we wrote in the report as well that the success also came out of flow and portable. In terms of mix, it's the rental is more interesting when it comes to mix. I think we need to have that in the picture as well.
Thank you.
Thank you. Our next question is from Katie Self from Morgan Stanley . Please go ahead.
Hi. Thank you for taking my question. I've just got one again in VT and looking at the semi's order development in particular. It looks like it's being driven mainly from a pickup in sort of Europe and North America, and you know, sort of conflicting with a bit of a slowdown in China. Just interested, is that just base effects that's driving that? Are you seeing more of an underlying pickup in demand in Europe and North America? Thanks.
I think Asia definitely, the main contributor in Asia is China and South Korea. As I recall it, I think China has been quite solid for many quarters. Then of course, we have seen some bigger investments in Europe. We have also heard the European commissioner talking about the Semi importance for Europe, as we have seen in North America as well. We're also going up against very strong quarters in the past. China strong in Asia, and that has continued.
Thank you. Our next question is from Rizk Maidi of Jefferies. Please go ahead.
Yes. Hi. Thanks for taking my question. The question is on VT. So obviously SEK 8 billion Q2 revs, 11.5 roughly in orders. The question is really how do you see the revenue or invoicing over the coming quarters? Do you see this number crossing SEK 9.5 billion-SEK 10 billion level in spite of the capacity constraints that you are seeing? And what is the biggest issue here? Is it the capacity constraints or more what's happening on the supply chain? Thanks.
They don't guide on revenue, as I guess you know. In the vacuum case, to give a little bit of color, we have built up capacity, as you can see, as Peter described a little bit in Asia, and that is coming online step by step. The major challenge for us is to get the supply base up to speed and deliver components as well. I think the number one challenge is with the suppliers. It's a variety of components. It's not just one. It could be as simple as a connector, but if you have the number one thing, it's still electronics.
Okay. Thank you.
You're welcome.
Thank you. Just as a reminder, if you wish to ask a question, please press zero-one on your telephone keypad. Our next question is from Guillermo Peigneux of UBS. Please go ahead.
Good afternoon, and thank you for taking my question. A simple one, and maybe, I would appreciate color on the different divisions. For the new orders that you are putting in in the backlog, what is the average lead time that you expect to be, you know, for you to deliver to your customers, if I may? Thank you.
There is no average from a small piston compressor to big projects, of course. Not everything orders on hand is delayed. There's a lot of projects as well. But there is significantly longer lead times than we have had in the past. I would guess that goes throughout the business areas. I mean, they have it in Industrial Technique for sure. In PT, I'm sure with the engine supply limits that. In VT as the electronics and that of course, with the huge orders. If you compare with on VT, if you compare with 2019, that we said that we had extra capacity at that time, and now we are well above that level. Of course, everything is a struggle about that. Then Compressor Technique. I'm looking at my specialist here on CT.
No, I also think that there the lead times are increasing for the small or medium-sized type of products. The projects again is as Mats mentioned, but there is, say, a limited availability of many different components. Electronics is one, but it can be a fan that is not available for different reasons. So I think their lead times have been increasing substantially compared to normal delivery times under normal circumstances.
Thank you. If I may ask, is it kind of double the time that you normally deliver on average? I think I calculated, roughly speaking, two quarters. Is it more like the moment it seems like you will be delivering four? Obviously, it's all built on assumptions, but is that number something fair?
I mean, I don't follow the lead times on the corporate level for the group. You have more information than we do then, if you have managed to calculate average on lead time for the group. Was that the question, Guillermo?
Thank you. Yeah, yeah, that was the question. Thank you.
Oh, okay. Sorry.
Okay. Thank you, Guillermo.
Thank you. There are no further questions at this time, so I'll hand back over to our speakers.
I think there are no further questions at this moment in the queue. Given the fact that we are preparing ourselves for the annual general meeting taking place as well, we would then hereby want to close the call and thank you all for dialing in and for your questions and attention to this earnings call for Atlas Copco for the first quarter. Thank you very much.
Thank you.