Thank you, and very welcome, everybody, to this Q1 conference call from Atlas Copco. We will spend the first 20, 25 minutes, something like that, with some comments from Mats Ramstrom, our CEO and then we will take Q and A. And we'll try to be ready within an hour approximately. Without anything more than for me to say, please, Mats, take it from here.
Okay. Thank you, Hans Uda. We will start on Slide number 2, which is called Q1 in brief. Order intake, we are very happy with the SEK 30,000,000,000 and 18 percent organic growth. It came in better than we expected and this is also versus a strong quarter last year.
A number of things in the strategy that we that's working for us right now. We can see new products Very well. Let's see some of the segments that we are focusing on doing well as well. Our local strategy in Asia, China is also benefiting, but we should not forget that has been pent up demand, of course, on product. Invoicing, SEK 26,000,000,000 up 13% organically.
Of course, we see challenges in logistics, COVID and some components. We adjust that as a good result for the quarter. Operating margin at 20.7 It's what we have reported. And if we adjust for the long term incentive plan, it's SEK 21.7 We'll be Slide number 3, which summarize Exactly what I just said. But if you look at the graph, you can see first time then that we are on the SEK 30,000,000,000 level, which is very good and it's a confirmation from our I think that we have good products presented by good people and good service solutions.
So we're very, very happy about that. Return on capital employed from last year and 29% to 23% this quarter. And if you had a bridge on that, it would be minus 4% on dilution from acquisitions and approximately 2% mainly in currency and a positive result for the volume. Slide number 4, And this is a geographic map. We have the growth throughout the world, both for equipment and service.
Very positive to see that. Maybe the highlight is still that we have almost 40% I would say in Asia, we've got a good traction there for all our business areas. We have double digit growth for all business areas in the region and then 34% for the group. Slide 5 confirms seeking to start organic growth. And if you take Slide 6, you have the bridge on orders and revenue.
The structural changes on orders is impacted by the Itza acquisition and the perception and some of the ECB distributors. And then you can see that we still have quite a lot of headwind in terms of currency, And Hans Guler will elaborate a little bit on that later on and then 18% 13%. If you take Slide number 11, this is the pie chart with a different business area. And of course, Extremely good vacuum technique with strong order intake from the semi industry, but also industrial, vacuum and scientific vacuum is doing quite a bit. And you can see Compressor Technique up 13% organically, considering that being 46% for the group, I'm very pleased with that.
Industrial Technique also set the more orders, more activity in the auto sector, especially electric vehicle and battery manufacturing. And Power Technique. After a number of quarters, now we can see Some of the rental companies started to invest again and we see positive on that as well. And comment by business area, which is part of Slide number 8, which is compressor technique. As I mentioned 13% organic growth In all areas, principally, gas and process, although we see more activity, We cannot beat last year on that one.
Considering the strong position for service, they continue to develop The service offered to our customers and you can see strong growth as well. And then outstanding Profit margins, SEK 23.7 billion considering the headwind from currency. And if you look at the bar, Very much looks like a record on orders we see there as well. Vacuum technique on Slide number 9. And we are Positively to say then record orders, record revenues and record operating margins.
Of course, I think everyone should expect strong semi, but really confirms our strong product portfolio This industry and the readiness we have to access these orders. So very Well done by the organization and really picking up on this big volumes. And of course, if you look at the graph, it almost looks like we have done something wrong, but very strong there. And then to follow-up with strong operating margin, 24.9 Thank you, of course, with the currency working against us. Industrial Technique on Slide 10 then.
We can see that the drop off A significant event in Q2 2020. And then step by step, each quarter has been better and better. Now you have in this still strong organic growth on 13%. And also we now can see that we can get more business out of the general industry market as well. And they also continue their increased group for service.
Operating margin, 19.5 And as you see later on, we have helped you here with the EBITA taking away the intangibles from acquisitions and that will lead to EUR 22.5 billion, which is in par with the pre calling, pre IFRS level, and that is something that we are proud of. Our technique on Slide 11. And as I said before, more activities here. We do very well with the portable combustors and service. Specialty rental flattish, and I would say Europe and Middle East, but it's not helping us to improve that number just yet.
And revenues up 5% and operating margins between 3% Considering that invoicing was up 5%, they've done a good job with the cost management there. And then on Slide 12, I think this is a good time to handle with you, Harjolva.
Yes. Okay. Thank you, Mats. We have, as you have seen in the report and as Mats has already said, We have included also an extra line in the income statement this time, and we will continue to do that just to give A little bit of comparison of the EBITA, I mean, the operating profit before amortization of intangibles from acquisitions. So it's not a perfectly clean EBITA, so that's why you can see the definition on the Hi.
We've talked about most of the things. The net financials is starting to become I would almost use insignificant amounts in relation to the total turnover and profitability of the group. And that, of course, reflects The continued development of the interest rates that have helped us, but it's also fair to say that last year had much more of financial exchange differences. So that's since that did not repeat itself. On income tax, we normally comment SEK 22,900,000 is slightly better than last year, slightly lower than last year.
And I would say that the estimate going forward We'll probably be in the range of 22% to 23%, something of that nature. And on the return on capital employed. Yes, Mats have already commented on that. So I don't need to repeat that. If we turn to the next slide, the topic which, here, of course, you can summarize it by looking from the right, of course, which is last year to the left, which is this year, Quite big numbers in the various columns and primarily in currency, first of all, you can see that there is a very negative Number but also the impact on the margin is quite significant from this SEK 1,000,000,000,000 negative compared to the same quarter last year.
Already there, we should say that, of course, it's very negative, partly, 1st of all, because we have currency ratios between the dollar and the euro and the dollar and other currencies that have worked against us. But we also have the strengthening of the Swedish krona compared to last year, which, of course, affects the translation of all profits that we make in other currencies than in Swedish krona. So that's why the number in itself was even above SEK 1,000,000,000 as you can see here. So that was a very negative. And I could highlight for you that the U.
S. Dollar, for example, was 13% lower ratio than last year, the euro of 5%. But we also have some other Important currencies in Atlas Copco like the Russian ruble, the Brazilian real and the Turkish lira just to pick on a few, and they were between 20% 30% depreciated against the Swedish krona. So that's why the currency impact is very negative in this quarter. If I try to look ahead like we normally do, it would it will continue to be negative if we do the same comparison quarter 2 to quarter 2, 2020.
But it's also important to remind everybody that, That is only because of the comparison with last year. The effective currency rates that we have in the result in Q1 is expected to be the same. I mean, it's not that we add the negative going into Q2. These numbers are at actual Q1 rates. So just to point that out.
The other column is, of course, the most interesting one where volume, price, mix and other effects, I. E, the organic effect is very positive on the other side. So volume contributes. We have more underlying volume. But it's also fair to say that in all business areas, we still enjoy The cost containment measures during the COVID quarters, if I call them like that, is, of course, to a certain extent still there.
And now as the orders and revenues are starting to grow back as they did in Q1, we expect also to add more cost, of course. I think that I'll leave it with that. And then if we take the next one, Well, it's very similar comments actually even if you look business area by business area. Negative currency impact and the positive volume price mix and other impact. If you compare the revenue addition to the operating profit addition, you can see a very significant positive flow through in this quarter.
Not surprisingly, when you go from a subdued market environment to a much better a growth environment, and that's what we have seen in Q1, of course. I'll move on to the balance sheet. Yes, I don't have so much to comment. Perhaps if you look at December 31 As the previous quarter, there is a quite a significant addition of SEK 10,000,000,000, but About half of that is coming from pure translation effects of the Swedish krona. So where the rest is primarily made up of new cash generated in the quarter.
I'll stop there and go to the next page, which is number 16 and deals with cash flow. We increased the cash the operating cash flow from SEK 3,800,000,000 to SEK 4,300,000,000. And in very rough Summary, you can say that the effect is better profit, somewhat and slightly lower investments. If you put that all together, we're in also to a certain extent also more Working capital build up to this year compared to last year. And that sums up to this SEK 500,000,000 of debt to operating cash flow roughly.
So with that, I think I hand it back to you, Mats, for the final slide before the Q and A.
Yes. So the near term outlook then and here we are trying to give you a comparison between Q1 versus Q2, the sequential. And normally, Q1 is a strong order we received month for us. And we're trying to judge the customer clearly and give you a little bit of guidance there. And they remain uncertain And I picked up that and it's mainly the situation with COVID.
We can see that we have operations in India, for example. Now we are up and running, but of course, we have had incident as well. But on the other side, we are quite positive to the rule out of that in program. Logistically, we can see some of the especially auto customers lacking supply of chips. So we can see that we have a nice shutdown.
And on the positive side, which is a high current level then, which is then coming from a record quarter. We can see positive trends in most of our business areas and divisions. We can see that, that is spread geographically throughout the world and a very strong position for us in Asia and China then. I would also say that, as I said before in the introduction that if orders will come, we have a strong position in many of what we call the key segment for us. So we believe it's continued to be, as we said, and high high current level.
But there is still uncertainty, of course, in what will happen in the coming Q1.
Thank you much. So with that, I'd like to hand the word back the operator of the call, to give the instructions for the Q and A session. Already before that, I might add that we continue also with the proven concept of sticking to one question at a time, allowing more people to get their question asked on the call. So with that, please, I hand it over to you, operator.
Thank you. Our first question comes from the line of Claus Bergelijn from Citi. Please go ahead. Your line is open.
Thank you. Hi, Mats. And Hans Holger, it's Klas at Citi. So the first one, just want to continue there, Mats, on the guidance. You're guiding flat Quarter on quarter, obviously, from a very solid level.
But I'm interested in some of the businesses where you have a pipeline building of large orders. So I can see that gas in process is now improving quarter on quarter, and you have pretty good visibility with the key accounts on the semi side. So I totally get that you want to be cautious in light of what's going on in India and so forth. But if you look at quotation activity, would you say that sort of The indication out of our pipeline maybe signals a little bit better orders than the SEK 30,000,000,000. I'll start here.
I wouldn't say it indicates maybe about SEK 30,000,000 and we don't guide like that. But at high activity level, Considering what we have presented for Q1 is the confirmation that we are positive to the development of our segment.
Yes. No, I understand. Okay, fair enough. And just one quick follow-up for you, Hans Ole. On the margin of 23.7% in CT.
This is the division that had most of the temporary savings through COVID, if I understand it correctly. How much of that margin there was linked to those savings that might start to reverse? Is it a percentage point or anything you can say there, Hans Ole?
No, I wouldn't bear because it's not an easy calculation even if we had all the numbers and we're sitting together, So but it's noticeable in the spend on admin and marketing, primarily that we got down to a good level and now we have seen the costs are starting to come back. But It's obvious that we still have some benefits. The traveling, couple of participations in shows, Trade shows and so on are done in a more economic way, if I put it that way right now. The interesting thing is that It's not at all certain that all costs will return to exactly what they were before at the same volume level. So but it's extremely I have no fear in that this is a quarter that will prove to be a sort of a one off sweet spot.
It's not that effect at all. It's Really something that we just want to have in there to complete the picture. And it goes not only to compressor technique, but also to the Yes,
makes sense. Thank you.
Thank you.
Thank you. Our next question comes from the line of Andrew Wilson from JPMorgan. Please go ahead. Your line is open.
Hi, good afternoon everyone. Thanks for taking my question. I just wanted to ask on the vacuum side. And Clearly, the strength in semi has been very pronounced in the Q1, and it's no great surprise given what we've seen in the backdrop. I just was hoping you could kind of fill out a little bit what you're actually hearing from customers on the ground in terms of indications of How long this kind of level of spend can be sustained?
Whether you think you've seen any kind of pre ordering or customers trying to order ahead just to ensure that they get that product? Just trying to get a sense, I guess, of the sustainability of what's obviously been a very good number.
But it is, of course, as you say, everyone is trying to catch up with demand in the marketplace To our benefit, I would say the positioning that we do have in the North America, China, Korea and Japan. When these orders come available, not that easy that we just Hopefully then, yes, you need to have the right product, people there, but also in this case, the capacity to deliver. And as we speak, I mean, we are installing more capacity to handle this to be ready. And coming back to It's not this straight line, this. I mean, you have 20, 25 accounts and probably just a handful of net big, big orders.
So Difficult to predict as you can understand if they take the order now or in another quarter. And they don't really tell us And if it's for inventory or whatever it might be, we don't measure that. I'm sure if you see the situation globally and you're in the management room that some of them will have Let's place these orders with the best supplier and make sure that we get our products in first line. So I do believe that there are orders that have been placed
It doesn't feel that there's an obvious Exceptional spike there. I mean, it's clearly there's a lot of underlying help from the market and I guess some share gains as well by the sound of it.
But I think my job and my team's job is to make sure that we're in a position to quote And accept the orders. And then if this comes in Q2 or Q3 or Q4, doesn't matter too much, it There will be swings in this business, which is linked to the key account structure. So there's no reason for me to stand and say, well, this quarter, next quarter. I'm just going to make sure that we offer the best product and are ready when the orders are coming. Very
clear. Thank you.
Thank you. Our next question comes from the line of Daniella Costa from Goldman Sachs. Please go ahead. Your line is open.
Hi, good morning. I wanted to ask 2 things. 1 on regarding EUV, and I believe you were sole supplier and we've heard a lot about Sort of prospects for EUV being particularly strong compared to other lithography technologies. Are you still sole supplier there? That's my first question.
I don't think we have confirmed that ever, but we have a strong very strong position with that.
Okay. Thank you. And then just more general in terms of the demand trends, obviously, extremely strong that you talked through and you believe they are Sustainable, but have you seen how are inventories across the various segment lines on your Customers. I know some others within short cycle have talked about potentially some restocking having happened over the last few months. What's your view on that?
Well, we don't have a huge amount of pipeline from us to a 3rd party distribution network in different parts of the world. So it's not that type of of the business model to so much. So in our case, it's more if it's an order, It is going straight to the end user in absolute majority of the cases. Do they then build Stockholm on Investment Goods. Well, they might be anxious to put in the orders to secure There, the sequence in our ability to deliver, like Mats touched upon, but We did building a pipeline of restocking is not really so much of a phenomenon in our case.
But again, as we as Mats already said, we cannot quantify it, but we are Pretty sure that there is a part of the overall very strong order intake and certainly be an approach to secure, let's say, deliveries in the coming couple of months since they see also what we see as certain strains on supply chain.
Thank you.
Thank you. Our next question comes from the line of Guillermo Peignen from UBS. Please go ahead. Your line is open.
Good afternoon. Guillermo Penea from UBS. Thank you for taking my question, Mats And Hansola, I wanted to ask maybe a similar question to Andres regarding maybe from a different side, the shortages in semiconductors. When do you think the bottlenecks will be solved with the amount of demand that you see now in place in the market and the amount of, I guess, catch up from the supply side? And that will be the first question.
I don't have specific statistics on end user there, but I can follow what's going on. And of course, in Q2 last year, I think many of the other suppliers to found their projections. And at the same time, we have COVID situation that accelerated digitalization. And the shortage we have seen now in the Alta sector being Very transparent with that in many quarterly reports. But of course, you now can also see that there are electronic businesses that is also coming into a short Hi.
But just to leave with the Elmo that we have a good position, but we cannot really predict When and where and how much they will need moving forward as the end user. But I can guarantee that we'll be on top of Every possible project that is available among the and we have the benefit of having the We'll be present in where their main manufacturers are. So I think you can count on that we will Be there and take a good share of the coming business.
Thank you. And then my follow-up is on electric vehicle demand that you highlighted That's one of the key elements of basically strength in IT. I wanted to ask about Europe. How do you see demand from the electric Vehicle platforms and models in Europe and DC quoting activity increasing there even more than what you saw already in Q1.
Electric vehicles, if you would rank them, it seems like China It's the highest activity, Europe number 2 and U. S. Number 3. And maybe not so much as a surprise. But we were lately, we can see that the number of projects in EV and battery manufacturing is increasing.
And it's also becoming a more and more significant part of our sales. And I think we could view that impact going forward as the new engine for many of these vehicles. And at least if I look at the route here around Stockholm, I can see that there is significantly more car steamboat that we've been fully electric. And I think we have to go back almost 6 year to put I2B in the position where we said, okay, it's not only going to be assembly, we're going to do the defense, we're going to do the sales through the team. And now with the vision coming into that, those applications as well to automate.
I think we have 4 strong technologies that support us for the electric vehicle development. Personally, I believe it will continue this way. I can see the commitment from many of the OEMs in this industry. How fast we as consumer will accept these new vehicles, I guess, is linked to logistics around charging, which I believe may be an important part for continued success for many.
Thank you very much.
Thank you.
Thank you. Our next question This comes from the line of Mehdi Sink from Bank of America. Please go ahead. Your line is open.
Hello. Yes, hi. Thank you for Thank you for allowing us the question here. So my question is on vacuum technique This is again. Given the announcements from TSMC and Also Intel's plan to set up a new plant, continued CapEx update from these guys.
I'm just wondering how much of that is reflecting in the Q1 orders or those announcements are likely to You know, if you book only later this year or early next year.
I'm not sure what announcements you referred to, but I've seen announcement that some of them will establish businesses in the U. S. But that's a number of years ahead of now, so that's not in our books at this point. But if there was another announcement that you read, then I might have missed that.
No, I mean, I was talking
about The other day was in the U. S,
right? So talking about the increase in CapEx to SEK 100,000,000,000 for next 3 years. So how much of that Is it reflecting in your numbers?
In this quarter, you mean? Yes. I cannot really qualify how much of that has come in for that. And even if they have made announcement recently, I It's unlikely that we have placed orders already on that. I think they have taken the decision that they decided The last few years and now they say, well, let's execute on these decisions and order the equipment first we can start this production.
So I don't see that link yet. So probably that is ahead of us.
And just very quick follow-up on the ForEx So hit on the earnings. I think for this quarter, the margin, if you were to say, is about 35% for a revenue growth, you're getting around 35% hit on EBIT. So is that a usual level we should be expecting going forward as well?
I'm not sure exactly what formula you're referring to there.
Revenue divided by revenue divided by FX it, basically.
Yes. But If you talk about the sales bridge, of course, we don't know. I mean, it depends on what the currency do or the FX does. But where you're referring to the revenue to operating profit relationship. Yes.
Yes. Well, I mean, that is It's absolutely depending on what happens on the individual FX ratios. Is it primarily other currencies than the dollar euro ratio That moves, then it has a certain impact. If it's only a pure Swedish Krona strengthening or weakening, then it has another impact. So it's a very difficult question to say, is this normal or not?
It depends entirely on how the FX Pairs are moving in the same period last year and in this period. So that one, we don't have a sort of a rule of thumb or anything. If you, on the other hand, look at the profit that If you, on the other hand, look at the profit that is, so to speak, excluding currency impacts on revenue operating profit. And excluding items affecting comparability and excluding the acquisition effect, the volume price column, so to speak. We have always stated that if you look over a period of time, That relationship, if we grow by 100, we expect to see some 30 to 35 falling through to the operating profit line.
So that 30%, 35% is something that we still feel is reasonably to be expected, but only over a period of time. It can be several years. But if you go for a long period of time, It normally is in that level. In 1 quarter over a specific single quarter, It can vary a lot from that, as you have seen in previous quarters as well, including this quarter, which was almost at 50%. So I mean, there is a sort of a rule on that, but on the currency relation, it's impossible to be, so to speak.
Okay, great. Thank you very much. Okay. Thank
you. Thank
you. Our next question comes from the line of Maxios from Credit Suisse. Please go ahead. Your line is open.
Thank you. Just my first question is around what you're seeing in China. And I mean, you mentioned this is kind of an area of strength potentially that there was some pent up demand here. But I just wonder kind of If you look at some of your sort of daily order rates, how that business has evolved sort of so far in April? And have you seen kind of any softening there?
Or do you see this sort of strength from Q1 carrying on?
And then when we look at China internally, you would see then last year then that was In end of Q1, Q2, but then we have only seen strength, Continued activities among many of our segments. And as I confirmed in the report, 24% spread across all our business areas with double digit growth for all of them. And I think March was one day more, but the quarter was one day less. So Of course, that gives a little bit of impact in the service and so on. But it was very strong, and we have not seen weaknesses in China.
The other way around for a number of quarters, but it's been strong business in many of our pre
Okay. And just my follow-up question was on acquisitions in sort of machine vision software and some of these sort of more technology based areas. So I mean, are you happy with the sort of pace of acquisitions that you're doing in these areas? Or if there was a larger acquisition, I think you've seen a sort of U. K.
Listed company, which is now up for sale. Do you see interest in sort of accelerating your push into some of these areas via M and A? Or are you pretty comfortable with the rate of Kind of more bolt on acquisitions as you push into these areas.
I think the key for us We have a quite a defined process. We have 22 of our divisions that I think is on a level where we say top line growth is a priority. And then we list targets and strategy and approve them when we go along. But the number one question for us is if it's value creating for our shareholders, and then we can move on a bigger target or a Smaller target when it comes to Vision Technologies right now, the Industrial Technique team has taken on So again, through its perception in less than 1.5 year time. So right now, it's a consolidation, get the max out of this for Synergy.
But we continue to scout, of course, for possible other segments that would be Yes, well, but it's not the top of the agenda for that team right now. It's more to execute on what we have already committed to do.
Okay. That's helpful. Thank you. Have any more questions from the audience? Hello.
Hello? Yes, hello. Can you hear me?
Apologies for that, a slight technical problem. The next question comes from the line of Sebastian Kuehn from RBC. Please go ahead. Your line is open.
Hi, gentlemen. We hear a lot about pre ordering, double ordering, clients securing delivery slots and so on. My question is a bit the turnaround. Does Atlas Copco at the moment try to secure supplies of certain components? And if so, which type of raw materials would be most effective or would make you most nervous at the moment?
Thank you.
You're right. It's also a challenge for us for certain areas. Of course, since many years have a lot of supply, I think 70% to 80% of the facility is sourced. And we work with a number of TC players and on critical components, we try to have Minimum, 2,000,000,000 if possible. And then we run the scenario planning always with each division for Scenario is up and a scenario down to have some sort of readiness.
And since And Q3, when you could see that there were some positive signals. We have been working in a transparent way with our suppliers. I think we handled Q1, okay. But it means that the teams in purchasing and operations are really working to Thank you. And the area where we do electronics is one area where we are Really trying to find components for us.
I think that's absolutely
Yes. Very consistent with what we read in the paper space.
Sometimes we have to requalify a new supplier for electronics and then we work with R and D to do things like that. We have been part of this upswing announcing quite a number of times. Doesn't make it easy, but I think
So basically what you're saying is you don't see the need at the moment to Pre order or to order earlier than you would normally do or to even double order. That's not the case at the moment.
Is that correct? We don't double order, but if you have physical components for sure, I'm sure they order as many as they need, We will be first in line with the suppliers and make sure that we support them as well to give them a transparent view on the future.
Okay. Understood. Thank you very much.
Thank you. Our next question comes from the line of Gareth de Baix from Deutsche Bank. Please go ahead. Your line is
Hi, guys. Good afternoon. Thanks very much for taking my question. Look, I was Looking at the details you provided around the EBITA performance, So I do appreciate the greater transparency on the underlying performance now. But I was also wondering if there was another It's a message behind, signaling maybe an intention to make more acquisitions going forward.
I think it was mainly to give the things to get the questions over and over again. And then we have a lot of intangibles that we have had in vacuum for a number of years and also now in industrial techniques across and help to guide you, yourself. On the other side, then we are, I think last year, it's SEK 100,000,000,000 in revenues. And our commitment is to see if we can find 8% organic growth over the business Thank you. Which means that we need to accelerate growth, the organic growth, which we do.
You can see that we have increased The stand on R and D and we maintain that stand in the crude wheat year. And at the same time, we have hired more resources available We'll do 3 more candidates on the acquisition side as well. And I don't remember exactly how many. I think we 'eighteen, 2019 and 'twelve and 'thirteen last year. And so we are scouting all the time, and we have more resources That is to complement, of course, the ambition to reach the 8%.
But the underlying is that it's going to make the ones that are
Thank you. Our next question comes from the line of Lars Brossam from Barclays. Please go ahead. Your line is open.
Hi. Hey. Thanks, Matt. Just a quick one really.
I was just Curious for
a little more color around your divisional outlook for the Q2. And maybe if you can, a little further into 2021. I think I heard you say you're a bit cautious around the automotive end markets. What do you see there in terms of the impact on Your business from lower production levels among the automotive OEMs. And do you think that stretches beyond the Q2?
And across other parts of the businesses, I wonder what you can say around your process end markets. Do you think for CT and I guess PT on the pump side, Are we sort of past the low here? And do you think we see a sustained recovery across your key sort of, as I said, process end markets?
I guess to take them step by step. I picked up on the outlook. We don't do a forecast specifically, but I can listen to the management team And they can follow, of course, the media where there are shutdowns. And I think Many of them have been announced, but I don't think they have consolidated that new. But at least we know that there are more shutdowns in Q2 and in Q1.
I have no view when this will pass And of course, how the suppliers of chips distributed orders between electronics and outdoor Myself. I just need to make sure that my team is ready to help our customers in the best possible way. And then maybe Arthur will pick up the TT what was the TT large? You said
the I'm just Yes. I mean, I appreciate Q1 is a seasonally bigger quarter for you on order intake in PT. I guess my question was more generally where you see your Key process end markets, whether it's gas and process in CT or indeed some of the process end markets in PT, how you see them evolve from here? And I guess I was also trying to tie you down into sort of a divisional outlook into the Q2, if I could, across your divisions or business areas.
As Matt said, we rather not try to speculate on each business area Q2 Outlook, it's a group outlook and that is what Matt have offered some extra comments around. On the process, I think I know you're coming from the fact that we saw clearly better order intake in Q1 for gas and process compresses then Q4. But we still we are still below the levels we were for COVID. So it's not that we see a tremendous quarter in terms of absolute values, but it's true that it Is that, so to speak, then a signal that this will continue to go in that direction? It's very difficult to say.
We see some more activity on customer inquiries and so on as Mats alluded to earlier in some of these areas, but it's still the, that's a broader industrial compressor and medical equipment that is really providing the strong growth in in CT. So as you know, the process and customers of gas and process, for example, is a longer project type of demand. So it takes a while until you see what is the trend and what is A good or a bad quarter, so to speak. So it's very difficult to make that call there. Understood.
Thank you both. Okay. Yes, thank you.
Thank you. We have a follow-up question from Mehdi Singh from Bank of America. Please go ahead. Your line is open.
Yes, hi. Thanks again. Just very quick follow-up. For vacuum technique orders, can you please just help understanding what is the typical conversion to sales cycle? Is it 3 to 6 months or is it longer Duration order is going.
So you mean from order to invoicing or from order to revenue? Order to the Sometimes they are very anxious and They come with their orders and expect us to be ready to deliver fairly rapidly when they have come to that stage that they really want to extend the capacity, for example. I mean but in this case, I'm sure you also see the effects of any industry that is going through a strong investment cycle, that they cannot expect to have deliveries in 2, 3 weeks' time or something like that. It will take a quarter or 2 or even 3 perhaps on some of the bigger project in this case. Traditionally, 5 years ago, I think we commented that It is a fairly short period between order and when we booked the orders, specifically in the semiconductor industry and when it was turning into invoicing.
But with this type of ramp ups that we see, I think everybody should expect that it Takes a little bit longer time. Okay, great. Thank you.
Thank you. Our next question comes from the line of Sebastian Kuehne from
RBC. You had an order growth in North America of 17% year on year. So this is fairly strong numbers already. And we heard of companies this morning actually that they face Very severe staff shortages in North America in the assembly of machinery, which prevents these company or that specific company from Growing revenues. Is that an observation that you also make?
Are you getting a bit concerned about increasing capacity in the North American Operations. Thank you.
That is nothing that I heard from our operation at least that does not be plugged in internally yet.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Rhys Mady from Jefferies. Please go ahead. Your line is open.
Yes. Hi, guys. Thanks for taking the questions. So just on the hydrogen opportunity, I mean, there's new CapEx investments going into this field, but also natural gas infrastructure that Can be converted to transport hydrogen. Just wanted to pick up your brain on how Atlas Copco is positioned here, particularly on capacity and how we can benefit from this new opportunity.
I mean, there are a few segments in the market right now that use hydrogen. And of course, Many are exploring the opportunities with fuel cells, and we follow that development. And In the order book for CET this quarter, yes, there are orders for this type of application. But it's just It's rather small, but activity level is high. And for commercial purposes, I think everyone expects it to be between 5 to 10 years before you see significant business, but that means that we need to review the product offers that we have.
And we are in that stage right now where we see cost of can be used and what will happen in the marketplace. But it's A little bit too early to talk about sales successes in this field, but it's an area which we see Could be of great interest and great potential for the competitive fixed organization over time.
Okay. Thank you. And then the other one that I had is more on price increases at times of raw material inflation. I understand that price increase are essentially driven by new product launches. But at times, inflationary times, do you raise list Prices on existing equipment outside of new product launches?
Yes, we do.
Okay. Thank you very much.
Thank you. We have no more questions from the line. I will hand it back to our speakers for their closing comments.
Thank you very much. I think the closing comments have been delivered already. If you sum it up, what has been said, I just want to thank everybody for participating and perhaps as a To extend, I'll remind everybody that there has been an invitation sent out for the Capital Markets Day that we run-in a virtual way on the 27th May this year and with a focus on compressor technique at this time. So with that, again, thanks to everybody, and take care, and see you soon again. Bye bye.