Hello, and welcome to the Atlas Copco Q1 Report 2018. For the first part of this call, all participants will be in a listen only mode and afterwards, there will be a question and answer session. I will now hand you over to Hans Ulamajer. Please begin.
Thank you very much, and a very warm welcome to this Q1 2018 conference call for Atlas Copco. My name is Antoine Mayer. As you heard, I'm the CFO of the company. And this time, it's a little bit of a special call because yesterday at the Annual General Meeting, the decision by our shareholders to split the company in 2, Atlas Copco and Epiroc was taken and that as you have seen from another press release. As an effect of that, we are now and I'm sure you have noticed already, we are reporting the continuing operations for Atlas Kokko and Epiroc is then reported as a discontinued operation.
This has some implications on some historic numbers where the exact quarterly data between Atlas and Epiroc is not exactly 100% reconciled. And somewhere in the material, you will see that there may be some gaps in some numbers or numbers left out and so on. And this is for the reason that the Epiroc prospectus with all the details is not ready as you know and will be ready at the end of May. Also as a consequence of the decision, we thought it's a good idea to not only have Maestro Armstrong, our CEO, as usual in the call, but also Per Linde, the CEO Epiroc and Anders Lindgren, the CFO of Epiroc, participating in this call. And we will come back to that later, of course.
Today, we have an hour, as usual, and I would already now ask the for the Q and A session that we stick to one question each because it allows more people to have their possibility to ask questions. But I'll come back to that. First, I hand it over to Mads.
Thank you, Hans Ulla, and I will start on Slide number 2. We call this slide strategy in action, and we wanted to share a little bit a story with you. And this is really what drives our organic growth. This vacuum pump, the whiteboard might not look much to you, but it's a very important part of making semiconductors. This is a success working together with the cooperation with 1 of our big clients.
They developed this product over 18 months on-site. And it's a pump now that is recognized being more quiet as a smaller footprint and lower energy higher energy efficiency and it's also easier to service. So when we have the AGM last night, we recognized this for the John Munk award, which is the award for best innovation in Apafrokwo. 3, and then we'll start to comment. Francois will have already comment on the Epiroc and Atlas Copco decision.
So I'll start with the record order intake. SEK 25,000,000,000 for us almost, it's a fantastic result, recognizing down 9% organic growth versus last year Q1, which was the record for us. And so we're very pleased with that. You can also see that it's still a big drive for equipment, but also service is hanging along in a very good way. You can also see that we are growing all our main markets.
I would especially like to highlight the penetration over the last 1.5 years in Asia. In this quarterly report, you see that it's 37% of our sales. It is very important to be number 1 in the world. It's the number 1 semi market. It's the number 1 auto market.
It's the number one compressor market and of course also the construction market. So we really drive our presence and competence in these regions. Profit margin, the adjusted one was 21.8%, and the reported one then was 22.1%. And on the positive side, you had the divestment on Light and Concrete for 109 You had the split cost on that plus coco side being negative on NOK 39,000,000. But then you need also to look if you want to complete split cost on EBITA, I think it's minus €95,000,000 And you also have revaluation of options of minus €16,000,000 And that is then the gap between the adjusted and the reported numbers.
Hansoula guided you a little bit on last call on the currency, and it came in then as minus €4,000,000 €450,000,000 And Hans Ola will share a little bit looking forward into Q2 later on in the presentation. On Epiroc, fantastic orders received, very proud of the organization. And Per will then cover Epiroc's presentation later on. Slide number 4. It repeats a little bit what I just mentioned.
But if I go to revenues, you can see it's almost SEK 22,000,000,000 there and organic group of 9%. It's quite a good achievement, and we are proud of the team that's been pushing on deliveries. But as you can see, there's still a gap, of course, between the orders received and the revenues. But if you go to the graph, I think I mentioned in the previous call that we are trying then to be on the level on the run rate now that could match up with Q2 and Q3 in terms of deliveries. And you can see that intrinsically, we're almost there now.
I think they have done a great job. But of course, with the fantastic orders received now. There are new challenges in the supply chain for us and cover that a little bit later. Operating cash flow, the bottom line there. We are building up inventories, orders on hand to be able to deliver for the future orders in Trinseufe.
And Hans Ole will cover that a little bit further as well later on. Slide number 5 shows you the split of our sales. We can read a very strong Europe, 13% up, very solid now also in this meeting Brazil mainly then for the Atlas Copco part, very solid 17. And you can also then continue group in Asia. And as I said earlier then of the complete split diraccent37 percent being in Asia, which is very good for our future opportunities.
The negative part is in Pacific Africa. The biggest BA there is CT. They were principally flat, but we also include Middle East here. And there was one order in semi that we did not repeat, so it's principally from comparison there. Slide number 6, First highlight that we have then tried to exclude the mining and rock excavation in this slide.
Katina 7 strong quarters and we continue to invest. And I encourage them to look at new opportunities both in coverage, but specifically in R and D. So we continue to invest money into that. I think this is a very interesting company today to work for a young engineer that would like to have a big challenge that could be hardware, software or into the new digital area. I think this is very interesting.
We are very focused on this. Slide number 7. There I would highlight on the currency, SEK 450,000,000. And then you can see that now we have combined the volume and price into 1, what we call, organic. It might look to someone that we are trying to hide away from a problem.
That is not our intention, but we have realized that our guidance when we cannot include new products or projects don't give you good guidance. Price for comparable products is what was approximately 0.5%.
Slide 8.
So you can see the new structure compressor being a big part, but you can also see Technica and Power Technique. Slide number 9, then we get into the compressor performance. And considering the number of industries that we are in today, I think the organic growth number on 30%, I would say, it's very, very strong. You can also see that in the graph that it really sticks out as an amazing performance. It's a big demand for the larger compressors that's both oil free and gas compressors with a strong drive in Asia as we highlighted as well.
On the operating margin, we reported 23.1%, and I think they have a negative currency just above 1% and 1.2%, something like that. So it's a very strong operating margin for Brexit, I think. On the innovation side, you can see in the left corner, it is the medical gases, providing them compressor equipment for hospitals mainly. We have a very strong performance in U. S, where we are leading also in the U.
K, but we have more work to do in some other regions, and it continues now to introduce new products. The Wokke Filtration acquisition is something that we wanted to do for a number of years, and it's a key component for performance in compressors, but also in vacuum techniques. You can now say that we are in the filter business for compressors and vacuum techniques. Vacuum Technique, Slide number 10. We didn't highlight it, but it was also record revenues.
They consolidate in dollars. So if you would have looked at this graph in dollars, you would see that they also have the records for this received. It principally then we was a little bit more flat, but we continue down. That was versus a fantastic quarter last year, I should say. And we continue to grow our business both in industrial and high vacuum.
And the numbers I see, I cannot read anything else and that we are gaining market shares in these areas. Operating margin was highly impacted by the currency, mainly than the U. S. Dollar and negative 3.4% currency. If you look at the market then, we still see cheap pricing then.
We said it was increasing. Now I think it's been more flat. Sales is still high, although I think some of you might have followed some of the reports last week. But you can see some foundry companies reported that they had the less demand for the high end phone chips, for example, but it is a smaller piece of the market. So we still believe that the main drivers of this industry is still there more memories in use, more data computing.
You will see more IoT in the auto industry, more AI and VR as well. That doesn't mean that every quarter is strong. It's still a lot of key accounts in this business, but the demand for this type of product is increasing over time. On the new products there, the variable speed, you recognize that from compressor technique, this is how we help our customer to drive down cost in terms of efficient use of the energy. It's also good for the environment.
So now we have the type of technology, both in compressor technique. We have it in power techniques. It's a very interesting product on-site. Industrial Technique, solid organic group on 9%. Continue to develop very interesting products to the market, shifting more and more into battery connected tools as well as you can see in the left corner.
And the trend shift we have seen a little bit this month, I would say, quarter will be that the general industry starts to take off with better and better markets from what we call off road, so I can see a clear shift as well. Continuous strong car market in Asia as well as general industry developing there as well. Overall, I think I talked a little bit about general demand from the auto manufacturers. We say that in the past few years, we had the 4% growth over a number of years, And the projection going forward is that it's still growth on the lower level around 2% that was also confirmed in Q1. Then we should know that our business is not directly correlated to the manufacturing output, more to the number of projects in the market.
And we still see, even in the car industry, a big demand for different projects and a lot in material in body shops, but also in transmission and powertrain, driven of course by some of the electrification as well. Completed a very interesting small one, but an interesting acquisition for Klingel. It completes principally one more assembly technologies. So if a customer trust, we can handle the nuts and the bolts and the screws, of course, also then for mixed materials on the adhesive solutions, also the self-service rebating. And this fluid is a one-sided operation, and you can use it for steel or aluminum.
It's a very good and complementary technology to the SDRs. And if you look at the graph, it was an outstanding orders received on industrial technique as well. Power Technique, I think, yes, to look at the graph, I think you have a proud team there. It's strong for this receipt, up 16%. This is portable capacitors, also rental is doing okay.
The adjusted margin was 15.1%. We also had a negative currency impact of minus 1.3%. Then you can see on the capital gain and that is from the divestment of Light and Concrete, so the reported was SEK 18.9 If you look at the coronary dairy, the container, it's actually quite an interesting product where we have then combined 2 engines into 1 big generator, which makes it significantly more efficient, and we can utilize the engines in a very smart way. I really believe this will be a winning product moving forward. Also another interesting for the rental business that we then have oil free air that we rent.
And in the same depots now, we will also put in steam. And steam is one of the best ways, of course, to transport heat in different processes in the industry. So one more sector in the specialty organelle business. And by that, I will hand over to Per and give you an update on the EPROC quarter.
Thank you, Mats. And you have another proud team in Eperok. We had a very strong quarter, I think, organic growth of 21%, landing above SEK 10,000,000,000 which clearly is a benchmark for the group. Double digit growth in all regions with Americas and Africa, Middle East being the strongest. Equipment and service growing 22% with equipment being the stronger of the 2.
And we still see the majority of orders coming from expand brownfield expansion projects, which is quite interesting to see. Tools and Attachment at 13%, also very healthy. Revenues up 14%, which is in comparison a very good number. But of course, given the orders received, we're still under pressure when it comes to supply chain. But we're managing and I expect our ramp up to continue or to accelerate during quarter 2.
Margin is at 18.4%, but of course, we do have one time lifting cost of €95,000,000 which is corresponds to 1.2%. And we also have corporate costs now building up the Epiroc Group corporate functions of roughly €45,000,000 And that as an indication, it's roughly 3 quarters of the run rate that we expect during 2019. And also at the end of this slide, as you can see, there's a reminder of our Capital Markets Day on May 30, and there's obviously a link to a website where you can register, and I encourage you to do that. Thank you.
Thank you, Per. So this is Hans Ola here again. I think we then move over to the income statement on Slide 14. But and that taken you well in this case it's back to continuing operations, I should say. So but I've taken you through some of the numbers in the income statement.
If we look down, you recognize the 22.1% on operating profit and adjusted 21,800,000 as Anat said, you remember as well. If both the profit before taxes then means that we have about €320,000,000 in negative financial net. It's above what we feel is the run rate. And the reason the main reason, I would say, is because we decided to prepay one of the euro loans that matures next year. We will have sort of a payback of that onetime cost before this loan matures next year.
So that was a good idea. But it's a onetime cost included in that. That's why it's big. Going forward, I would say you should expect perhaps a little bit more than €200,000,000 in that range. Of course, depending on what the krona does to the euro and the dollar translation differences, but somewhere in that region, I would expect for the next quarter or 2.
Further down, you have the income tax expense. And you can see with your own immediately that we have about the same tax expense as last year, but higher profit. So the rate tax rate was 26%, and it was quite much higher, 28.6% in 2017. Now of course, as I said in the beginning, now we have a combination of new numbers for Epiroc and new numbers for continuing Atlas Copco. So we should perhaps be a little bit careful in over analyzing the ratios and the numbers for last year.
It will take a couple of understanding what is the run rate for Aperok and what is the run rate for Atlas Copel. But in this particular moment, when we are still splitting, it's a little bit difficult to be exact. But 26% for continuing operations is also a pretty good indication of what one could expect for the next couple of quarters. What we have seen that helps from last year is, of course, the reduction of corporate income tax in the U. S.
And the first steps of reduction in Belgium and so on and so forth. So there will continue to be some changes further down the road. But for the near term future, this is a pretty good indication of what you should expect. And the basic earnings per share, you have there. And then we can turn to the next page on Page number 15.
This is where we turn the revenue bridge and the orders bridge into profit bridge. You can see that the currency impact on profit is pretty big compared to the impact on revenues and hence, of course, the negative margin effect that it gives for the group, about 1.3% negative. The other ones are, as we have commented, the one time items on the share base. I don't go through them in detail. Instead, I go to Page 16.
We can look at the different parts of the group. With the flow through for the group of more than 40%, of course, we have a couple of business areas that stand out. Compressor Technique has, as Mats alluded to, just like the group, a negative impact from currency on the profit margin. And hence, if you allow for that, so to speak, the 23.1% is a very good number. The flow through is, of course, a combination of what was costs that have disappeared from last year and a very good leverage on the increased revenues and volume increases.
So as I've said many times before, it's not so easy to say now we are exactly what we believe you would see going forward. Just conclude that in over a period of time, I think for Atlas Copco with the profile we have, a 30% to 35% drop through to EBIT from a revenue increase is probably more long term achievable than these numbers. You can see another example of a very high leverage effect on profit in vacuum technique. And you can also, if you make the numbers, Mats already did it for you, about 3.5% negative from currency, which is, of course, a burden. And repeating last year's good profit margin with that burden, so to speak, from currency is quite an amazing achievement.
Industrial Technique is more Swedish related than euro dollar perhaps than the other 2. So the impact on currency was mildly positive actually from a margin perspective. And Power Technique, again, negative from the currency impact. So the 28.6% on flow through with volume, price, mix and other is more or less a normal indication, I would say. I'll move on to the balance sheet here.
Of course, it's a very messy picture. If you look at December 31 to the right and compare it with March 31st, you can immediately see that in all lines, there has been an exclusion of the Epiroc business and that has basically then moved from each of the lines to the right to assets classified as held for sale in March. The increase in total is, of course, both an increase in Epiroc and in Atlas Copco from working capital needs and also, of course, the profit generation is in the assets it's accumulating in cash. So there is the short summary, I would say, on the liability side. The equity is increasing for Atlas Copco, of course, and the whereas the interest bearing liability again is a combination of Epiroc, well, of Atlas Copco continuing and then in liabilities classified as held for sale, you will find the similar effects as on assets.
It's grouped in one line for Epiroc. I'll move over to cash flow. Here, I'll start by saying, as we done now, this is including discontinued operations so that we make no mistake in that. The next comment I would like to say is that you have followed us those of you that have followed us for a long time, you know that we talk about operating cash flow. The reason we do that is because we want to guide to what we think is an underlying operational cash generation capability.
And that's why the numbers on certain things like currency hedges of loans, we eliminate for that in one of the lines. You can immediately see that the big shift from last year is the working capital that is now accumulating because of the orders on hand development that you saw from orders received. So if we would then try to see through this number from what is Epiroc and what is Atlas Copco, we you can roughly say that about €600,000,000 positive would be a round number for Epiroc and the rest would then be for Atlas Copco. And in a similar way, you would find about SEK 1,000,000,000 in cash flow for Epiroc last year and about SEK 2,500,000,000 for Atlas Copco continuing operations. Just to get the feel for that both of us are accumulating working capital right now, of course.
So we move on then to next slide. Just to repeat the summary of what was decided yesterday, an ordinary dividend of SEK7, a mandatory share redemption of SEK8 per share. So in total, we're talking about SEK18 plus 1,000,000,000 to be distributed in cash to shareholders in the next couple of weeks. And then, of course, the big decision to the dividend out of the shares in Epiroc maybe. Here is then the update on the split.
There is no exact date on the listing, 1st day of listing. We still talk about mid June. That part is roughly indicating. But we have to, of course, wait for the final NASDAQ Listing Committee meeting at the end of May. And the decision yesterday was, of course, from the shareholders that they decide to go there, but we still have to wait to know exactly the timing of the listing per se.
So with that, I think I just leave it the 2 short words for Mats. Yes. That's on
the near term outlook, Phil, we said that we're going to say that overall demand for the group is expected to remain on the current high level. And the reasoning we have had in the management team is that we see record orders and it's a global picture in both all business areas in all regions. Specifically happy as you know with Asian development. Is there any clouds on the sky? The automotive is that the production rate is going to come down a little bit, but we still see a lot of very active customers in the marketplace.
And that is also valid for North America. In semi, there is a capital organization looking at the CapEx going forward. I think both these organizations that I looked at, they took investments back a little bit for CapEx for the year, but still positive like 9% and 11%, something like that. So the overall demand of the industry is still there even though you might have seen some smaller correction. We continue to launch more and more new products, and I think that will help us.
But the demand that we see will not change much for the coming quarter.
Excellent. Thank you, Mads. Thank you, Per. We then continue with the Q and A. So operator, please, can you give some instructions?
Thank you. And our first question comes from the line of Peter Friedland from Handelsbanken Capital
Markets.
You mentioned much the delivery capacity. You almost reached the Q2, Q3 level. Given the book to bill now, if you also include Epiroc of 1.16, how should we look upon this lever capacity? And what will that affect the actual leverage in the short term? So will you be able to increase deliveries from this Q1 level significantly?
And so if so, in what area? And what would that indicate in terms of the leverage? I know it's a big question, and I think hopefully you could answer in sort of both Epiroc and Atatkopko manners.
I think it's an excellent question, and it's, of course, one of the questions that we debate a lot in our own management team. And I think we talked in the beginning of this cycle that it was foundry goods. That was one of the bottlenecks. I think that has been addressed from those supplies in a very good way, which is healthy because it's very difficult to change that type of suppliers. We go more and more to use dual suppliers to handle the demand as we see it.
We have ramped up in a highly good way, I would say. And I think that industrial technique, I don't have a concern. Vacuum technique, we continue that to invest actually on a quarterly basis, yes, to upgrade the capacity in machining. They handle it in a good way, and I can see they're doing a fantastic job as well. I think the biggest challenge is still in compressor taking in EPI Rock.
And now it's still so that intrinsically our own capacity and competence is in place to assemble more machines and deliver. So that's not really the issue. And I think each of the 27 divisions and they have a short list of suppliers that they are working with on a daily basis. So it's a little bit difficult to predict exactly what will pop up in the coming week. And now we put, of course, a little bit extra demand on this value chain towards them.
But yes, it will be step by step better. There are very detailed plans from each business area. This is what we need to do. So I'm quite confident that it will be better and better, but it is a challenge on a daily basis. And what I would like to say to you is that if you look at our lead times, working competition, you can see that on the orders you see that I think that we are very competitive even with the situation as we have it today.
And that's very clear. And that doesn't sound like you need to increase your staffing or cost that much. So at least in the short term, we could expect maybe abnormally high leverage or is that correctly interpreted?
I think it's going a little bit ahead of oneself to draw that conclusion. We believe that we will be able to eat into the orders on hand situation. That's basically what is the conclusion. The exact leverage, we talked about that before, is very difficult. There are so many factors that affect the year, the similar year last year and this one.
So I would not sort of confirm anything of unusually high leverage. That's not what I would expect to see to be honest, Kjell.
Okay.
I'll get back in line. Thank you.
Thank you.
Thank you. Our next question comes from the line of Graham Phillips from Jefferies. Please go ahead. Your line is open.
Yes. Good morning. My question
is around the operational gearing, the drop through margin, which obviously has been very good in the past. There's been a lot of focus on that. And you said it could normalize to 30% to 35%. Does that could you just contrast vacuum, compressor and because, obviously, industrial is below that at the moment and where there may be an impact from TPA creeping into here from previous periods and also the impact to service and OE as that mix changes within the businesses.
If I start and then see if Mads would like to add something. But I think the
one of
the reasons with if you compare industrial technique to vacuum technique, for example, is that there has been a good steady increase of business volume in Industrial Technically, whereas sorry, if someone is open, perhaps muting temporarily could be good. There is some noise in the background. But anyway, so I think it's more that effect that is visible in Packaging Techniques that it's been an extraordinary ramp up in a short period of time. And then it's almost like the costs are not having time to catch up. We are investing and we're investing and we're investing, but the needs through the big order book is just increasing all the time.
But I don't think that the quarter and certainly not predicting Q2 is the right way to look at that normalized 30%, 35%. I just don't know where it will come next quarter, to be honest. It's too many factors that when I say normalized, I'm talking perhaps over a 12 to 18 months time and seeing that, that can be a sustainable level perhaps. But it's very difficult, Graeme, to be more precise about that. When it comes to the purchase price amortization effects, of course, if you buy companies and then you get the purchase price amortization on the intangibles.
And then suddenly 2 years later, the business is double the size. Of course, the impact is not so big anymore from a percentage point of view. But I don't think that that is
was price and volume significant in any of those drop through margins in any of the divisions?
Not very different across the board. Mats indicated 0.5% positive for the group. And there is no big, big deviations in that between the business areas, no.
Okay. All right. Thank you very much.
And maybe just a quick follow-up. Thank you.
Thank you.
Our next question comes from the line of Alexander Virgo from Bank of America Merrill
I wondered if you could talk a little bit about compressor order growth and the demand trends that you're seeing there. 13%, clearly very strong. I just wondered if you can break down some of the regions for us, maybe quantify Asia and China in
If I start in general then on the demand curve, even just at the big event at CTE beginning last week and that's in place with the old sales manager around the world. And I think you can see in the industrial compressors, I think it was called the yellow Canaris before, you can see a big demand for the industrial compressors, and it's a global picture. On the bigger compressors, which you have done in oil free and in gas and process, There you can see it's a big drive in Asia, specifically in China. And as you know, we actually manufacture these in that county. So they're very good at meeting up with the demand there.
On the absolutely smallest compressors, the simple technology, the piston tariffing is a little bit more flat. And that's also global. But that, I think, I'm not sure that meets the market. It's a little bit our competitiveness as well. So in general, I think it looks good for many of the divisions.
And I think the biggest change we see in gas and process compressors, even though that it's not really oil and gas that drives everything, it's a bigger interest, more probes, but it's not that many orders in the gas side. So it's a general demand for compressor, both industrial and the bigger ones. You want to add? Yes. No, if
I just follow what exactly you touched upon that for quite some time, we've had a decent development on the small- to medium sized industrial compressors actually, but we have lacked what we had 3, 4 years ago, good strong demand for the bigger compressors. And that is what I see is the main explanation for the last quarter
or 2 ramp up of the order growth, the organic growth. And I would complement that information then by saying that in Power Technique, the portable compressors that we submit more and more request for the 4 wheel machines as well, which are the bigger machines. So in that 16% order system, you see more and more bigger machines as well for us. So it's a clear demand for that as well.
Yes. In Power Technique then, in the latter example.
Our next question comes from the line of Andrew Wilson from JPMorgan.
Just a quick one for me, I guess, following on from the previous question actually. Can you talk a little bit about how the demand developed through the quarter, thinking particularly in compressor, but also, I guess, a general comment on the group as a whole, please?
I'm not really sure what you're after, but you want me to comment on the other BAs then or? Over the quarter.
Yes. Please, just in terms of did you see demand accelerate through the quarter, I. E. Was much stronger than January, February? I'm just trying to understand kind of the run rate there.
No, I understand the question, but I think we refrain from those comments on in for many, many years because we do sell investment machines to a large extent. It's not a very straight line type of growth or decline that we see month by month. So it would be it can be just as misleading as a good leading indicator to look at monthly numbers, to be honest. So I think that even a quarter sometimes can be difficult to judge whether we see a good or a new trend or a remaining trend from before. So no, we don't like to comment on specific months.
It becomes just not very informative, to be honest, and you have to just trust me on that one. Sorry for that.
Okay. Not a problem. Thank you, guys.
Thank you.
Thank you. Our next question comes from the line of Lars Brorson from Barclays. Please go ahead. Your line is open.
Hi, thanks. Good morning, gentlemen. And maybe I could turn to Peer first. Obviously, a the €10,000,000,000 order level you saw in Q1? That's obviously a very strong number.
You mentioned expansion projects maybe more so than replacement. Can you help us maybe with a bit of color around what particularly keen to learn what some of your copper miners might be doing. That will be my first particularly keen to learn what some of your copper miners might be doing. That will be my first question. Thanks.
Well, in general, we can't see a slowdown in mining nor in construction. So the basic outlook is we expect demand to be more or less in the same level going forward, at least in the short term. When it comes to specific the types of orders that we get, it tends to vary, as Anzola said, by month and there's also a variety of projects. So what ends up in our order books is not exactly indicative of what happens in the industry as such. We did receive a fair amount of good orders across the commodities and copper and gold as well.
So the activity seems to be high there, And but we also saw a high portion of orders coming in on surface equipment, surface drilling primarily quite a lot stronger than underground during the quarter. But I wouldn't say that that's necessarily a trend, but that's what we saw during Q1.
That's helpful. Can I maybe just one follow-up on the outlook for vacuum technique, Mats, and just try grown the underlying market considerably? Can you help me a little bit with what you see particularly in the industrial vacuum side, both into Q2, but also maybe some thoughts further into 2018? Thank you.
I think a bit more in general then, but what we are doing with the EDWADGE and the label brand and also with the Atlas Copco brand and in industrial is that intrinsically about broadening the product portfolio and then doing that in a rapid way by using synergies within our own company. So we're launching quite a number of interesting products to the market, which strengthen each sales rep's portfolio when they go to market. So they have a more complementary product range. And then we also add coverage globally and competence. So the success is based on very traditional strategies, closing gaps in the product portfolio, making sure that they actually go out and meet the customer with the right competence.
And I conclude that, that is what we are doing. That is exactly what we're doing, and we're going to continue to do that. And I agree with you. I think that we are gaining market share here. And actually, if you start adding these brands up now, I think we're getting close to the number 1 and number 2 position in the industrial market.
We can also see a big extension of the product portfolios in high vacuum, also taking market share and being very successful, also driven by product development, I would say, and launching new products. So that's what I see in these two markets. In semi, I mean, it's been such a rapid development over a couple of years now. And it's easy to get used to this level. We see them, and you can see that from some of the reports in the U.
S. Last week as well. There was a little bit of a correction. We tried to follow these 2 organizations that follow CapEx. Doesn't give much guidance for us actually.
It tends to change a little bit from quarter to quarter this quarter. They both adjusted it down a little bit. At the same time, you can see some of the foundry manufacturers saying that they have a little bit weaker demand for the high end chips for the iPhones and Samsungs. At the same time, they also announced that they will increase the CapEx. So I think everyone is ready.
One of the shifts that we have seen in our order book is that this quarter you can see more and more of the Chinese establish themselves in this market. So a number of the accounts on our top list for the quarter is Chinese. And it's very clear that they are moving very quick into the memory business.
And how big sorry, just one final one. How big is EUV for you today?
Lars, I'm sorry. We can definitely take the questions afterwards, but we need to move on there. Still a few questions on target. Thanks, guys.
Thank you. Our next question comes from the line of Ben Uglow from Morgan Stanley. Please go ahead. Your line is open.
Good morning and you for taking the question. It was really following on, Max, from your remarks about the semi foundries CapEx commentary.
Can you just give us a
sense, is there any change in terms of your own conversations with your customers? So in terms of the dialogue that you're having and the kind of sentiment on spending, which frankly changes pretty rapidly in this industry. Can you detect any change in your own conversations? So that's the first question. The second sort of follow-up is just price conditions in vacuum.
Is there any change in what you're seeing on pricing?
On the first one, I mean, not even ourselves can read a clear pattern when it comes to the investments. Quarter by quarter, you can see some of the big American accounts being leading. Then you have some of the South Korean leading. This quarter, as I just commented on, you see a lot of big orders coming in from China. So it's investment cycles.
And luckily enough, we have had a couple of big ones every quarter so far. There could still be quarters where they don't place these major orders for us. So it is a key account business. On pricing, if you're in the semi market, the customer expects you to reduce your pricing every year on your pumps. And the way we work with that is trying to come with innovations all the time to bring more.
And that is the story I brought for the IXM pump in the beginning of the presentation, where we bring more efficiency easier to service and help out. And this is we work very closely with these customers to develop the next generation of pumps. And that is the opportunity for us also to that they can value our product in a better way. But that is, in general, a new price increases on an older pump to that industry. Thank you.
That's helpful.
Thank you. Our next question comes from the line of Erik Kalkon from Industrial Equity Partners. Please go ahead. Your line is
open. Thanks for taking my question, gents. We'd love to hear what you're doing on pricing across your different BAs this year.
I think that we are doing a lot of activities, of course. Some of the customers that we work with, as I mentioned, in semi, it's more on the innovation side, but actually can bring higher gross margins and bring interesting products to the market. It's up to each and every of the 27 divisions really to work with pricing on each market to say that we are competitive. You can see that we had the price for this quarter then it was 0.5% positive price development. And this is for like for like products from 2017 versus 2018.
And you do not get the projects in there. And of course, in Epirot, there is many of these big projects that they deliver. So it's and then we cannot measure it. You see the same in the car industry, there's big projects. And you see the same in gas and gas compressors, it's big projects.
So we're getting more and more difficult for you to give good guidance. But for like for like product, it was up 0.5% for the quarter.
And I think we mentioned also that it was no big differences between the business areas in that pattern actually. There's more differences there.
Very good. Thank you so much.
Thank you.
Thank you. Our next question comes from the line of Markus Almerud from Kepler Cheuvreux. Please go ahead. Your line is open.
Hi, hi, good morning. First a question for Per. I think you said that equipment was growing faster than services. Is that the case for orders as well or just for sales? And also, if there are any big orders in those numbers?
And then finally, Hansel, if you could help us with the FX expectations for Q2, would be helpful.
Equipment is clearly growing faster right now than service. That's true both in terms of revenue as well as in terms of orders received. When it comes to FX?
I think that was directed to me. Yes, yes, I can I think it was, Markus?
Yes, yes, it was.
So the FX impact
on EBITDA you expect for?
Thanks for reminding me. I actually forgot to mention it when I was on the income statement there was on the profit bridge. So thanks for that. Now we see, as we have said many times, when you look at this impact on operating profit, it's a bridge impact. So it is, of course, a reflection of what happened in the Q2 last year and what happens sequentially this quarter, obviously.
And if we look at the picture today on FX, we would expect that it's mildly negative, much less than what it was in Q1, the comparison. And I'm talking for Atlas Copco continuing operations, but I would be surprised if there would be a big difference also in Epiroc. I mean, the trend would work in the same way. And that's primarily because there was a further weakening of the U. S.
Dollar gradually during Q1 last year that had that impact. Now we see it's the Swedish krona also that is very weak right now. So it's difficult. Mildly negative and if something happens at the end of the quarter, of course, you know since before that that will also affect this number. But if it's almost 0 or if it's 100 negative, well, I really don't have a better projection than that, but much less than in Q1.
Okay. That's helpful. And then large orders in Epiroc, any large orders that impacted those numbers?
Yes. We had some large orders, no doubt. I think we've actually sent out some press releases. But to
be honest, on top of
my head, I cannot remember exactly.
And we have some in Chile,
right, from the copper mine. But that's the one that
I will call in the moment.
Yes, exactly. But if I fill in what we have, let's say, historically commented as big orders, so to speak, I wouldn't say that there was something like that in explaining 5% or 10% growth in itself. So I think not at all. But it was a good variety of weak important orders, but that doesn't mean that it's something that you should sort of take away and show an adjusted growth without 1 or 2 big orders. Now that would not be correct, I think.
That's absolutely right. Yes.
Okay. Thank you very much.
Thank you. Thank you. I think we are at the end of the hour, and I think at least there might be some of you that want to have another go at the question, but I think mindful of time here and now the meeting. Thank you for participating. I know that the next event on the calendar is quite near in time this time and it's about a month from now when there will be a Capital Markets Day specifically for Epioc.
And you have seen that before. And I'm looking at Per and Anders, I think it's the 30th May. Absolutely. Okay. Very good.
You're very welcome. Yes. So with that, I thank you for participating again. And for Atletka for continuing operations, the next opportunity will be the 20th July for the Q2 report. Thank you very much and goodbye.