Morning, good afternoon and good evening to everybody to this conference call and presentation on Atlas Copco's 2nd quarter results 2015. We are here in the Atlas Copco mine in Naka, Sweden, but I know also that we have a lot of participants on the conference call over the line. We will follow a very traditional continuous improvement we're trying to do. But in this case, we do quite a lot the same. I realize that we will have a presentation first by my boss, our CEO, Roni Lettin.
He gives his comments on the results and then we will take a questions and answer session right after that. We'll be back on that one. But right away, I'll leave it to you Roni.
Should I start? Okay. Go ahead. Okay. Thank you, Angela.
And good afternoon all here and the ones on the call wherever you are. Good morning, good evening. As usually, I will flip through the presentations. I will not make it too long, so you have plenty of time to ask questions. In brief, a very solid good service business.
And the reason why I'm saying it like is because we see in all the different business areas as also in all geographical areas, a good solid development of our service business. So again, our strategy, our drive to create value for our customers is well received by them. An increased order intake in Europe, and that's maybe the takeaway from this presentation. It's definitely a very good solid development in Europe, almost in all countries. Unfortunately, we see a decrease in Asia.
And what is, of course, Asia, the biggest country, especially for us, is China and that has gone down in the quarter. Sequential, the equipment is a little bit better than Q1 this year. So that's maybe also a takeaway. And then I think it's always nice to have records. We don't have only records in the Tour de France, but also here.
I think a very good record, especially on the operating profit, because I think it's very important that what you sell is also yielding bottom line. So of course, we know if we are a little bit modest, I think it's also from a strong impact of currency. And last but not least, and that's always, I think, where the proof is, the cash flow. And I think we can say also that this quarter we had a very solid cash flow. So all the all, a reasonable solid quarter.
Now if we now go to sell a little bit more, then it will be even a good one. But unfortunately, that is not yet. But this is maybe what can help on that. And you know that since many, many years, Aposco has focused on innovation. And we said, okay, let's also talk about that and let's see what does it mean.
Here is one example a that it is friendly to use, it also has been well perceived by the customers. And that is, I think, is really what made me saying it's the best one because also we see, since we launched in 2014, a good sales increase. Of course, unfortunately, it does not mean 10% or 20% of our business, but anyhow, we have many of these initiatives what made us doing a little bit better every time. In figures, yes, you can read it. Maybe I'll go a little bit on the operating profit, where we came out of 19 point 4%.
If we then see 2 things, the restructuring cost, but on the other hand, the provision of long term incentives, because the share dropped during the quarter, which is then the positive side. If we take all these plus and minus together, we are close to almost to a 20% EBIT margin, so which I think is also a very solid one. I think the rest of the figures, I think you can really read by yourself. Let's now go to the different regions. Europe, I have already commented that.
I think we see in almost all countries, we have seen a good development. Even France, which maybe remember last quarter or 2 quarters ago, said, yes, Europe, okay, but and then I had a couple countries. In this day, I can say almost all countries are doing a very solid development. And also Germany, which of course is the biggest economy, is doing well. Otherwise, you cannot make this plus 10%.
Also, U. S. Is doing plus. Of course, we have in couple segments a couple of headwinds, okay? It's not a surprise when I say oil and gas.
I think you see it and you feel it also when you are in Texas. You see that. I think is also when we come to North America. We also have Mexico, which is a bit softer compared to the year before. So also that made the figure not so big as we have in Europe.
South America, tough place to be now, especially the biggest economy, Brazil. I think also that's not a surprise for most of you. So that's also where we feel the headwind. So it's an area where we need to adapt. Maybe one country which is still at the reasonable positive side is the copper country, and that's meaning in Chile that they're okay, but all the rest is a minus.
Then Africa, Middle East. Middle East, okay, Saudi, and we all know it's you read also the press and you see also the oil and gas investments they keep doing. Of course, that also gives tailwind for us. But on the other hand, when it comes to the mining side, it's still tough. We may give them a bit of a negative figure.
Asia, minus 2% China, down India, up. But take it very in summary. So that is an area again since a couple quarters that we see the big tickets in China is not really coming. If we take the normal business, the day by day business, it's still okay. But it's the big ticket is what makes it negative.
And then we have the Pacific, so Australia, New Zealand, where, of course, again, Australia, synonym for mining, it's a minus there, where New Zealand is a plus because of K due to our acquisition. So all by all, you see a bit of a mixed picture. If we would have that 5 years ago, I think the black will be maybe red and the red will be black. So it's turning. Luckily, we are everywhere in the world.
So I think it helps us to compensate our business. Organic, you may be thinking that we have not updated the graph, yes, but it was almost 0. So that means, yes, you don't see it. But you see, it's all the last 4, 5 quarters is always going plus minus, plus minus. So that is the big challenge for many businesses like ours when you are in CapEx.
We then look to sales bridge. I don't think I need to say much more structural changes. Yes, that is the acquisitions we did primarily in Industrial Technique with the handrop, which is going fine, the investment currency significant and then price volume, yes,
more or
less 0. Where we see price, again, is our innovation, which help us to create value for customers. And of course, we also get a share of that part. Then let me go to the different business areas. Compressor Technique, for me, pretty the same picture than before.
Although last time, we got a bit more tougher comparison because we had that in Q1 that big order in the vacuum year before. But if we look now, we still see good solid development in service. I think it's a real solid development there. The yellow canaries, the small to medium sized businesses, the day by day business. So the smaller tickets, they do okay.
And then of course, what made us really suffering when it comes to organic growth is the large tickets. And that, I think, is, of course, a lot of synonym with China.
But on the other hand,
the good news is also that our vacuum business is still doing well. So we have now 6 quarters over Edwards company and they're still doing great. So it's nothing to worry about. And then operating profit, yes, rock solid 22.7 percent. So the traditional business and then traditional business, I mean, everything without the vacuum is doing, yes, as it should be, is on the level where I believe we should be now after 1.5 years.
So that's good to see. So that is working fine. Then Industrial Technique, yes, motor vehicle business. So the model changes and the aerospace is there the place to be today. And that is also where we have our offer, our innovative offer.
So also that we see in good development and good demand. And then we know the off road part is tough. And that is where we get the headwind of yes, for this business and growth in service, like I said, I repeat myself. And operating margin, rock solid, doing great, I think, in all the different areas. Then we come to Mining and Rock Excavation.
Like I said, equipment a little bit higher, but unfortunately, equipment is not much anymore. So we're really talking here about a couple of orders, which makes it sometimes higher and sometimes lower. I think you should not forget, because I think in this business area, when we take the service and the consumables altogether, we are between 70% 80% of the business. So equipment is rather thin these days unfortunately. But luckily, we have a very solid service business, which does well and is also getting more and more efficient.
So that is good to see. Unfortunately, we have to take some further measures, which we do in consolidation some operations. And also in our field operations, we felt we can do better. And that's also part of the costs you see on this slide. Adjusted margin in this business area as we had the SEK 65,000,000 in the month or in the quarter, bringing it to SEK 19.3 billion.
I think step by step we are coming there where we would like to be in this business area. So I'm very confident that even with this level of business that we will improve on the operating margin. Construction technique. When Australia, when Brazil, when China, when Russia has headwinds, these are really construction markets, especially for our portfolio. Yes, you get a bit of headwind.
And that makes us also saying that, yes, portable compressors and gold construction compared to the previous year, yes, it's tough. So that is some work to do. But on the other hand, we see some growth in Europe. I repeat myself here. And yes, in other regions, it was softer.
Also here, we have done restructuring, mainly also consolidation of manufacturing, some in U. S. And some in Germany. So also that lead to extra restructuring costs. But on the operating margin, again, if we exclude this restructuring, we are 13% round.
Still more to come there. And then the organization knows that we're expecting a higher contribution there. For the group, total and then I hand over to Hamzola. You can see here, it is what it is. Yes, I think a good revenue 12% up compared to last year, but also operating profit.
You see also that regaining, okay, we should not forget currency is bringing something. But also I think when it comes to certain efficiency improvements, especially on the CT side, where we have done a slightly improvement compared to last year, bring us to 19.4 percent, everything included and €19,800,000 if we exclude these onetime items. So, Hamzula, I suggest you take it from here. Yes.
A few short comments before we go into Q and A. Yes, below operating profit, we had rather uneventful quarter, I would say, with the financial net, specifically the interest net perfectly in line with last year. So no change basically. We have a little bit better amount situation, but and we even borrow a little bit more this year, but you know where the interest rates are, so it doesn't make much change. Very low in other words.
So the negative change this year compared to last year on financial net was purely financial exchange differences and valuation changes of derivatives, etcetera. And that is, of course, difficult to predict this quarter. There is an extra devaluation in Venezuela, for example, and a few things. This is very difficult to predict again. When we come to the interest net in the financial items, it's somewhat more calculable, and we expect it to be more or less in line with what we have seen also for the coming quarters, somewhat lower than EUR 200,000,000 I would say is a fair guess.
If we go to the bottom, the profit for the period, we have also deducted taxes, of course, and the taxes represented 24.7% in the quarter, a percentage point, of 1.5% higher than last year for various reasons, but I think it's a good representation of the run rate. So somewhere 24% to 25% is what one should expect also going forward there, I would say. If we move over and talk about the bridge and we always measure bridges, whatever we talk about internally in Atlas Copco, but here also for you. You recognize the format, but I repeat for those that haven't seen it so many times that the second column from the left is called volume, price, mix and other. That's really the organic development of the result from Q2 last year to Q2 this year, I.
E, we have tried to isolate the organic from currency changes, from one time items, effects of acquisitions and effects of valuation of our long term incentive program. When we do that, we come to a result effect of 38% compared to how much we have lost in volume on revenue. So that's the famous flow through in the quarter. It doesn't look very dramatic. I think it's somewhere what we expect when we have that type of development on revenue.
We look at next slide, which is the business areas. Very, very quick comments in the same column. Compressive technique, I would say very good. They have lost revenue when it comes to volume a little bit, but the loss of operating profit is very, very marginal. So that's good.
Industrial Technique is perfectly in line with what one should expect, I would say. And mining and rock excavation is the one where we still fight with a little bit too high cost level in certain parts of the business. So we cannot really adjust the cost quick enough to compensate for the top line of the EUR216,000,000 And then Construction Technique, again, something that I would have expected if you lose €272,000,000 on revenue, it's a fairly normal reaction of the operating profit. So not so dramatic there. On the balance sheet, I would only highlight that on equity, you can see that from December, we have dividended out some EUR 7,000,000,000 that we have also sorry, SEK 3,500,000,000 roughly.
And then we have also given some extra capital distribution to shareholders. But compensating that is, of course, the profit that we have generated in the meantime. So you can see the development there that we book the dividend that we are going to pay also in October. It's already deducted in the equity and it's booked 3 point €7,000,000,000 is booked in non interest bearing liabilities. That's why that item is actually somewhat high in the second quarter or at the end of June.
Cash flow, Ronny talked about it in his first slide. I would only say that, again, it's not a very difficult quarter to analyze. You can see 2 lines, one called net financial items and the other one further down called adjustment currency hedges of loans. And if you take the adjustment there, the reason why we adjust the operating cash flow is because in the financial items sometimes we have non income statement related transactions that do affect our cash flow, in this case, hedges of loans. So that's why you have a plus on net financial items and you have an adjustment negative, totally the opposite from last year as you can see.
All in all, EUR 3,500,000,000 in operating cash flow in line with Q1 and also somewhat better, but by and large in line with last year. So nice strong stable solid cash flow generation from the business. So I leave it back to you Roni. Yes.
You give me the future. Yes. You see the outlook, it's not changed. Why have we not changed it? We still see a good solid development from service, which is almost 45% of our business.
Small to medium sized tickets, I think we'll say, okay, that is positive flat. But of course, when you have the big tickets and you have me hearing talking many times about that, because there is where we suffer. But if you take them all together, we believe that the demand for our products, I think, for the next coming quarter is, yes, to increase somewhat. So that's a very short and I'm sure there will be more questions about that. So then I think, Hansula with that move to the questions.
Thank you, Roni. Can I ask the operator please to repeat the procedures for the telephone conference questions please?
As a reminder, it's 1 on your telephone keypad if you have a question. 1.
Excellent. So in order to get that prepared, we start here in Stockholm. One question. We have two hands here. We start with Guillermo.
Good afternoon, everyone. Guillermo Peigne from UBS. I was trying to maybe gather your sentiment around the yellow canaries? You said just okay. And I think that was a bit more, let's say, cautious than how it's good compared to last quarter.
So I was wondering whether you could give some clarity around that. And then I have a follow-up.
No. Of course, just okay. In my position, you want to see this thing moving really to get really strong growth. And that's not I think when it comes to this yellow kind of you get a little bit of a mixed view on that. I think Europe, okay.
North America, okay. Of course, you can see a little bit on oil and gas is affected. So that is one segment, which there is a reason for that. And then I think you see it's tougher in China. So if you take that all together, it is flat positive.
But okay, if you then read a bit my body language, yes, I'd say you want to get it more. That is the point.
Thank you. And then regarding pricing, which obviously reached on your reported line 0 last quarter now seems to be improving. I wonder whether it's just the underlying pricing improving or actually I know that it's not mix, but just the division's mix improving. So I just wanted to gather what's going on. Yes.
I think the last time, I think, when we looked on the pricing, I think it was I think on the mining side, we had a couple negative influences. Okay, you can say big orders, a bit of struggle of a couple quotes what's going on. I think if I see in the different business areas, it's still a slight positive. One should know, and I think I've explained that several times, if you take on the service side, of course, when you don't have strong inflation, it's a little bit more difficult. And then you need to work you through to efficiency, because you need to have good arguments to a customer to go and renegotiate the contract.
So that is an area where it's not so easy as before. If you're living in a society where, say, 2%, 3%, even more percent inflation makes that part easier. But I think we still are even if it's tough and customers are negotiating because they feel also and that the CapEx is thin and competition is tougher. But I feel that adding on our equipment side due to our new products, the innovation side that we are getting paid for our value.
And then last I promise. And I have to ask on the currency. Obviously, you faced tougher comps and a bit weaker corona, so a bit stronger corona compared to last quarter. So I wonder whether you could give any guidance on contribution to EBIT?
Well, like we normally report, we compare the impact of currencies in Q2 versus how it was in the Q2 last year. And it was short of €1,000,000,000 and a little bit more than €1,000,000,000 in Q1. We look at today for Q3, Q4, it will go down. That impact will not be as big. And then it will continue to be less than that.
So it will shift between the first and the second half of the year quite noticeably due to what happened last year basically.
Quite noticeably 40%?
Well, I don't know. But somewhere in €500,000,000 it will probably be at least in the Q3.
Thank you.
Good. We had another question here before we go to the telephone. Yes?
Thank you. Andreas Bok from Koerle Asset Management. So Europe is turning. I think that your order book is consistent with the PMIs and the consumer comp, I mean, all the factors of that. But where are we in the level of compressor sales?
I mean, on cars and trucks, I can say, we're here, but we should be there in a normal cycle. But where are we on compressors? And are there any anecdotes that you can get? Like, the customers haven't invested in Spain for last 3 years, etcetera. So that's like the first question.
So we're turning, but where are we on the level? What's the upside to a more normalized environment? Then on China, China is tough, but you also wrote in your report that service is doing very well in China. Also there, can that can you actually grow that much in service that you can offset the equipment weakness in China for the next 6 to 12 months?
On the compressors, is that you talked about Europe? Yes. I'm I'm working now in compresses since 2025, trying to find the predictability and tell Hamzula next month it will be that. So I don't have that. But I will try to talk you a little bit through the different segments.
If you take the very small ones, the medium, small, you see that volume is going fine. I think the resets up to 22 kilowatt, which, okay, tickets of less than €10,000 that volume is doing fine. Or you can say, is that coming because we take share, because with our GA, VSD plus and all that? Yes, partly maybe, but also partly that there is a good demand. People are not holding back.
You see that in Spain. You see that in Italy. You see that in France. You see that in Benelux. I see it more or less everywhere.
And let's forget Greece now. When it comes to the bigger tickets, and I'm talking the very big ones, but the bigger tickets, yes, I think also there I saw activity. I see quote levels fine. Are we already there where I think we could be people are confident to buy and taking really EUR 2000000, EUR 30000 or EUR 40,000 investment? Yes, that cycle is a bit longer and that is a little bit more tougher.
But and then when it comes to the very big ones, yes, that's still tough, that one. And if we
look at the level of small or midsized compressors, where are we today compared to what we could be in a good If
you take of course, I don't have a little bit of a take like Spain, it's half of the size it was between 2,009, half, half the level. Same in Italy. It's very low if you compare to this peak levels 2,000 whatever 2,008. But we see on in the Benelux in U. K, it's already coming close to where it was before.
But the southern part is still a while to go there. Then yes, Service China, I still believe that and I'm still confident that there will be some growth. And why I'm so confident? First, we definitely don't service everything what we should service. How come?
Okay. It's selling. It's convincing customer to do it. This is our famous one to 1 ratio. Still a lot to do in China.
And second also, our value creation, our offer, we get better and better in creating value to you. And also better and better mean competitive and competitive more better in that area. So and that just makes me I think and that how do we get more competitive? I think our logistics get better. Our service engineers get better.
So we can do the work much better than you owning it. But it's a matter of convincing you. But the more industries are under pressure, the more they're open to listen to your offer. And then it's a matter of course how competitive we are. And that is what we have learned also in Europe and during, let's say, call it the crisis we had.
We have learned to do that and see that we get, yes, better and better in that part. And that's also in China. And it brings and it's still profitable. So if we don't grow, we grow with profit.
But you said that if we just add to that, you talked about can it compensate really for the of course, if you have Asia and China particularly so strong for us on large compressors, this gives a lot of value. And there is a limit, so to speak, how fast you can grow service year by year. So it's not done in a fortnight to compensate for the low level that we see today on the large compressors at least.
Maybe on the profit level, yes.
Yes, yes, yes. On the top line, yes. On the
top line, yes. On the top line, yes. On the top
line, yes. On the top line, yes. On the top line, yes.
I should qualify that.
You're right. Because
you should now start to look on the bottom line, not on the top line.
True. Okay. Thank you. So we turn to the telephone conference. Two questions, please.
The first question comes from Mr. Claus Beierlein at Citi. Please go ahead.
Yes. Hi, guys. It's Claus from Citi. I have a few questions, please. Firstly on the aftermarket in mining Ronny, consumables still relatively weak.
Could we try and break out the exploration part here versus the core business? The reason why I'm asking is that we've seen some quite big production cuts coming out from the miners recently, particularly in iron ore. So my question is really, is your relatively big gold and copper exposure still protecting you? Or have you started to see any weakness outside of exploration?
Yes. You see the consumer growth. Of course, exploration is soft. And I think there is not much happening what makes it really, really happening. When it comes to the volumes, yes, beside maybe iron ore, but the rest I think same copper, these volumes are still okay.
When you look to our consumables, what made it tough for us, it's primarily China and I think also Australia. There is a couple of others here and there, but I think now 2 bigger ones, which made us tougher to compete with last year. If you take sequentially, it's more or less the same level. But I think like I said, iron ore is now a little bit under pressure. And of course, there is not much I think when we talk about the consumables, it's also if there is not much exploration done, not much more even underground exploration drilling taking place, yes, then it's not so easy to expand that business.
Then my second question or follow-up is on OE in Mining. I appreciate that we can see this quarter on quarter volatility at these low levels. But I'm curious about the outlook here in the next couple of quarters. When we speak to the miners, they say that they will now increase spend in gold, surprise, surprise, that there is replacement need. Is that something you have seen yet looking at tender activity?
I'm praying every day for that, that I will see it. I think if we can keep this level, I will already be happy, not satisfied, but happy. Let's see if it really comes because, of course, although the quarter was a bit better than Q1, but okay, we're talking very small figures here. And of course, if you have 1 or 2 orders more, you say it's a great quarter because it's up. If that order falls in the other quarter, yes, you say it's a weak quarter.
So don't read too much in this. I'm still careful in really believing that the mining equipment demand is coming back. I think I'm still careful at that.
So we're very happy that we have other businesses that keep delivering.
Although, of course, we still don't have 100% market share. So we can still take more. I think we believe we have the best equipment. So it's just a matter to convince our customers to buy it.
Thank you. I promise, my final question is on GAAP, Gas and Process. A shift here from seeing declines in all major markets in the last quarter, now it's only Asia declining. Was this just a tough comp last quarter? Or have we seen these indirect effects from oil and gas going away?
Yes. I think it's a bit the same remark what I made on equipment because if we would have done April in the Gas and Process, which was if April would then be March, then okay, you would have not asked the question, because you sometimes get tickets of €5,000,000 €6,000,000 now I'm talking. Yes, what made then the quarter in GAAP, so the gas and process look a little better. I think what we see and that is something I think I have to share with you where in Q4 last year, think when we all oil and gas, I think it was difficult to get the people talking about their orders. There is activities, people talking.
There are definitely also orders even with fuel gas boosters, which came and then they're coming the length in U. S. I think there is still good activity in Saudi Arabia, which makes it okay. But of course, Asia, which is, I think for us was a lot to do with air separation and that is not really strong now. And that made us saying that still Asia is weak.
Thank you.
Thank you. We take the other question from Telkonet. But I have to say that please try to restrict yourself to possibly one follow-up because there are many people wanting to put questions on the telephone But next one please.
Next question is from Mr. Andreas Willi at JPMorgan. Please go ahead.
Good afternoon, everybody. My first question is on your service business overall, which you called out as being a positive highlight for the quarter. Maybe you could give us some indication what the organic service and aftermarket growth was at the group level? And my follow-up question then would be on the mining and margin where you had the more negative drop through. Is this just purely an issue in the equipment business in terms of the drop through being weak?
Or are you seeing underlying pressure on the mining service business as well in terms of having no pricing power or flat pricing, but still having some inflation on your salaries?
No. On the service growth on the group, I think it is a solid single digit figure that we do. And that also was my starting sentence when I opened this conversation that I said it's solid And it can only be that figure when it's solid in all business areas and in all continents. Because if you have one continent is minus and the other pluses, then I think you don't have that. I think it's very solid, if I can say my buzzwords.
And also on the mining side, I think that is good. That we have seen, what was it now, 3 quarters mid last year, I think we saw a bit of a turning. That, I think, is really also giving good results. And I think it's
a lot to do with
our own internal hard work, all logistics ready, getting the people also focused on it, trying to convince the customer with the right value offer. That is where we are working. When it comes to the mining and the margin, yes, there is a lot of under absorption on the equipment side. And Hansula alluded a little bit when we were talking about the flow through bridge. It's not definitely not on the service side.
The service side is it can always be better of course, but I think it's well under control. It's under absorption. Yes, you have the installations. You have your engineering work, which you don't activate, but you take it over the P and L and yes, that's in. And of course, you can say, yes, but Roni, stop all engineering work.
Stop it and take a short term. But that we have chosen not to do And to really keep investing in new equipment, in innovative equipment, of course, you would like to see the orders, because that's where the proof is. But that's the main, main reason. Under absorption, volume, factories also in the sales. And so yes, keeping investing in hopefully in the right products.
Thank you very much.
Thank you. I'm looking around here in Stockholm, if we have anything. Otherwise, we continue on the telephone conference with the next couple of questions. Yes, please.
The next question comes from Mr. Andre Kuytinen at Credit Suisse. Please go ahead.
Good afternoon. Yes, thanks for taking my question. I just want to double check on the dynamics between the quarters on orders, it looks like there was an element of catch up in Q2 from Q1 from what you said on Compressor Technique and on mining. So is that the case? And if it is, are you guiding for sequential improvement of that sort of caught up level?
Or should we think about sequential improvement of a more underlying run rate level?
Yes. I think you alluded to it in your
initial comment
about lumpiness and so on and the
Yes, of course, if you compare Q1 with Q1 and Q2 with that, I don't think it's a catch up. I would not say that. I think, again, it's the small tickets. I think it's okay. And I will not look now negative.
So it's not to allude to another body language. But I think the bigger tickets and that's also difficult for us to estimate. There are definitely quotes going on for orders for €10,000,000 €15,000,000 Yes, and they are hanging on already quarter 1, quarter 2, quarter 3. And of course, they can fall. And that makes it very difficult also for us to read that.
You see, if you if there is no real trust in the market, people holding back these investments, that thing you do in your own private life, you also do in business, that's also what I do. If I am confident about the future, I invest. If I'm not, I hold back. And that's the big difference between small tickets and big tickets.
But you could also say that if you now that we have Q2, you put them 2 together. I don't think anyone would see that it was a very dramatic first half compared to the first half previously or the second half of 2014. So this is again just to underline what Roni says that sometimes you get a few orders on the bigger equipment and sometimes you don't. So but put them both together, I think the drama of stock market reactions might have been a little bit more modest both up and down to be honest.
Yes. And that was also, I think, when we talked about Q1, because we are now commenting Q2 here, but I think if you look to Q1, because if you compare that with last year Q1, because that was the difficulties. But again, this was primarily on the vacuum side.
Yes.
Yes, absolutely. And if I could just ask a follow-up to a previous question where you commented on where some segments of the market are versus previous peak. Could you tell us where China large ticket items are versus the peak level
right now? A peak level, which was already this is many years ago. 2012 mid-twenty 12. I've not have it just in front of me now. But if you take the peak level on mining, peak level on big tickets compressors.
I was thinking about compressors. Maybe yes, it's maybe now I'm going to maybe July. But I think if it's minus 20%, minus 25%, I don't think I'm overdoing it.
On large compressors in China?
Yes. Yes. And also the market, if you look to the statistics, which you also have access to, you can see that, that market has really in total has green thumb.
Got it. Thank you. Appreciate
it. Thank you. Next question please. Yes. Can take one more.
I said one more on the card, then I come to Anders here. Telephone conference please.
Next question comes from Mr. Bastien Giunta at Exane. Please go ahead.
Hi, good morning. Just to follow-up on the yellow canaries in China. You mentioned a tough China tougher China in Q2. Could you help us understand if demand has weakened through the quarter or it was weak, I mean in April, May, June? And second question is on Industrial Technique.
If I look at the order intake and the contribution from acquisition, it looks quite weak compared to the contribution to revenues. I think it's mostly driven by EnroB. I calculate the book to bill of 0.7 times. Is there anything we should worry about? Or is it just exceptionally low for Q2?
Thank you.
On the yellow canaries in China, because China with Chinese New Year and less working days and it's not always following the same month and then you have a bit of shifts, it's so it's a bit difficult to compare. But we can say that I think over the last these 3 months in the quarter, I think June May, June are no were normal months, but they were yes softer compared to last year. That is what I've seen from the yellow granularies part of it.
So You
would say it has improved through the quarter?
Yes, yes, yes. But I think it's June is also a longer month. In May, you have a couple of holiday breaks in China. Yes, Yes, it's not easy to get if you try to be clever in seasonality and then on the yellow canaries, I've never done that actually.
Okay.
When it comes to IT, I'm a bit surprised. I was
a bit surprised you talked about the book to bill of 70%.
Did I hear you right there?
Yes. I mean, if you look at the contribution on order intake, it's 12% from acquisition. And on top on the sales, it's 17%. If you do anything
What about the profit contribution, Mark?
No, no, no, no. I'm talking about the order intake, order intake versus sales contribution.
I don't hear them. Yes, yes. I think it talks here then maybe.
You mean between no, no, I see now. No, there is a it's really related to the fluctuations within the big acquired business. I think you alluded to it, sorry. I didn't really understand the connection. I thought it was the book to bill.
But you're right. So it's a movement, if you like, when you have some big equipment orders compared to the more normal flow of consumables, the rivets in the business. And that can for this particular period, it has given this impact. I don't think that one could take any pattern from that for the future or anything. And it's certainly a little bit lumpy when you if you remember how we described the Hendrog business as they secure business for certain new models.
And then after that, there comes a long period of production. And then of course, the mix between equipment and rivet sales will be quite different from 1 quarter to another.
Okay. So there was no consolidation?
No. There's no fundamental No, no, no. There's no fundamental reason.
No, no, no, no.
You should be happy when the equipment when we order the when the equipment is installed, that's great because then the rivets will come.
Okay. Thank you. Yes. Good. Thank you.
We have a question here in Stockholm. Anders, please.
Yes. Anders Joossel, Swedbank. I'm interested to see the long term pattern in organic growth in Compressor Technique. For 3 years now, it has been around 0% to 2% and maybe 0% this year. While in Industrial Technologies, you had some 6% to 8% organic growth and it's even up 9% now in the second quarter.
What about the long term trends there? It's a deviation between 2 divisions which are both CapEx related. Yes. I think when you take IT and you dig into where they have headwind, let's start with the negative part, is the off road. Where they have really tailwind is the model change in the motor vehicle and also and aerospace, but that's also self help because suddenly suddenly it's also our innovative offer, which made us to gain significant share in the aerospace.
So that helped. It self helped. I think it's good work, really focusing on the part and of course, also helped by mobile changes and then to have the right offer. So that's one part. I think when it comes to CT and equipment and the negative part, one should know China is the single largest compressor market on Earth.
As I said, June 2012 was top. That has gone down. What may be and that is an area also what I have said a couple of times when I was commenting on CT less recently, but before, we can do better in this area. And that and then better meaning gaining a significant share also coming up with extending our offer nitrogen, working harder on air treatment, doing more penetration on the multi brand partner. That's an area where we have to accelerate that again.
And there we maybe lost a little bit, yes, momentum at the so not to hide anything, but that's the comparison. But the big part is, if you compare CT, which you don't have in IT, because in industrial technique, China is one of the fastest growing markets. Why? Model changes. Cars is really booming.
And that we don't have in the same cycle, we don't have that for CT. That's one of the big example. But then you have the self help where IT is doing great and CT could have done better. And that is also where we take measures now that but you are spot on.
So thank you. We go back to the telephone conference. Another question please.
The next question comes from Mr. James Moore at Redburn. Please go ahead.
Yeah. Good afternoon everyone. Ronny, Hansola. On your excellent ten percent growth in Europe, you mentioned mining in the report, but can you help us understand the range of end market growth that you've got across your various end market? What's 20% plus?
What's negative? It's a great number, but it would be helpful to understand what's behind it and what's real and sustainable versus comparative or temporary.
Yes. I think when it comes to mining in Europe, of course, that means I think also main construction because there is not so much mining in Europe, but I think it's on the construction. And also that part is not big, And that made not the figure really boosting. I think when it comes to Europe and the growth, you see that in Industrial Technique. You see that also in Construction, but then our construction business area.
When it comes to portables, when it comes to portable compressors, generators, even our construction tools that I think is doing fine. I think even I should say our old construction even is getting in Europe, I think. And I think the same is what I already commented on on our compressor side is helping. And then we should not forget in the 10%, although we don't grow 10% on the service side, but it's also helping. Now the question, James, and that's for me also all the time, is this sustainable?
One thing I can say, it's not that is 1 or 2 big orders that make the 10%. It's really many several orders. It's also spread. You also have heard me saying when I was commenting on Europe, it's almost every country that is growing from Sweden up to Portugal. They are growing.
So you see it more or less. And I feel also when I talk to our guys that when it comes to the service and the small tickets that yes, they're more positive. They're more positive.
And if I can use a follow-up as a euphemism for a completely different question. On your vacuum business, you were right last quarter so you didn't see any semi pressure in Edwards coming through, but maybe some growing signs of some CapEx cuts. Are you seeing anything in the forward looking tenders or discussions that make you a little more cautious about vacuum orders
in the second half? No.
And we had an internal meeting, I think it's 2 or 3 weeks ago with the guys because I'm following it up myself, this. And that question I put forward. Of course, the forward looking is not 6 months or 9 months. I think I'm really talking a month, 2 months. And I think they didn't see any negative trend.
They still see quotation levels on. They still see projects going on. You saw also yesterday, you better than I, the Dutch company, which also brought up good results. So we see that I think when it comes to the semicon, what I see today is still okay. But yes, we are all looking for the next drop.
But today, I'm still confident, still confident that I think if I take now and we are a couple of weeks in the quarter, I haven't seen any sign what made me changing my mind on the semicon.
Very good. Thanks.
Thank you, James. We continue with the next question, please. And I have to say just before, we still have a number of questions and we will not be able to take all of them. We have some other commitments to go to afterwards. But I say, as I always say, that we have an excellent Investor Relations department, and I will try to answer the phone as much as I can even if you don't have the chance now on the call.
But we will have time for 2 more questions. So please.
Next question comes from Lars Brochson at Barclays. Please go ahead.
Thanks. I'll keep it short. Just on the consolidation of your manufacturing footprint in Mining and Construction divisions, were actions here more of a one off in the quarter? Or do you see a need further actions here given the current order run rate of these businesses?
Yes. Of course, this quarter is 1. I think we will continue to do some activities on the mining side. But this will, I think, happening in the next coming 1 or 2 years, that these activities we will do. Okay.
Not the huge ticket. There you see these are tickets. Okay, now we made them public because otherwise you don't understand fully the flow through and the result. But you see these are tickets of SEK 30,000,000 SEK 40,000,000. I
think we can repeat again what we have said before that the reason we even mentioned these relatively small restructuring plans and so on is because they do have an impact on the specific business area margin in that quarter. But even if you go for a 12 month period, it's not very big. It's very seldom that it has a big impact over a 12 month period. But that's exactly what
we mean. Yes. And we don't want to make a big one either because No,
that's not our way forward. We want to
keep ourselves honest. Absolutely. Good.
Thanks, Lars. Another question and the last one unfortunately.
The last question comes from Alastair Leslie at Societe Generale. Please go ahead.
Yeah. Hi. Good afternoon. Just on Compressor Technique, looking at your sequential comments on large industrial compressors, it looks like we've had 4 quarters now of improvement. Quoting activity in Europe as you said seems to be getting better.
So is it reasonable to expect a return to growth on a year on year basis, maybe next quarter in large compressor, so that stops being a drag?
Yes. I think in business, normally you don't hope. Okay. You see activities that there is activity. There is quotation level like say geothermal quotation levels are there.
There is a quotation level for expanders. There is even quotation levels for air separation from a couple companies. They are there and yes. But of course, again, if a COO, how I behave myself in taking big investments, I only do it when I trust the future. And I'm not so sure that when it comes to the big tickets that we are already there that we trust the future.
Customers.
Yes, the customers. But of course, we are working on that. It's not dead, dead, dead. I think there is it's a little bit better than on the mining side, but it's still also
softer. Okay. Thank you very much, everybody that participated. I wish those of you that are in the Northern Hemisphere at least a very nice summer and the rest might have a very nice winter, I don't know. We also take the opportunity to remind people that we have pinpointed the 17th November as the date for our next Capital Markets Day here in Stockholm.
And of course, I hope to see as many of you as possible on the 20th October when we release our Q3 report. Thank you for today. Bye bye.