Good afternoon, ladies and gentlemen, and welcome to the Atlas Copco Q1 report conference call. At this time, all participants are in listen only mode until we conduct a question and answer session, and instructions will be given at that time. If anyone should require assistance during the conference, press star 0 on your telephone. Just to remind you, this conference call is being recorded. I would now like to hand over to the chairperson, the CFO of Atlas Copco, Hans Ola Meyer. Please begin your meeting and I will be standing by.
Thank you very much, and welcome to everybody participating on this conference call regarding our first quarter 2012 results. Today, we have also our Annual General Meeting, so we will have to be rather efficient, and we have to break this call just before the next full hour, in 1:55 here in Sweden, in Swedish time. Without further ado, I'd like to hand over to Ronnie Leten, our CEO, and he will start his comments on the quarter results. Please, Ronnie.
Thank you, Hans Ola, and good afternoon to all of you. When I'm going through the presentation, I will try to refer to the slides so that we know where we are. Let's go immediately to slide 2, where we give our Q1 highlight. I'm very pleased to see this record order intake. If you would have asked me a couple of months ago, would it be at that level? Most of you know the outlook we put forward at that time. I did not expect that level of demand, but I'm very pleased to see almost SEK 25 billion for this received level. What are the really takeaways when you dig a bit deeper? As it also said here on the slide, we had a very strong development in the Mining segment, and on top of that, we had very good automotive business order intake.
We ought to forget that CT was also on record level, and we kept a reasonably good level on the Construction level. That made it a very strong order intake. Of course, not to forget, as we tend to forget that our continuous good development of our service strategy, so that also led to a strong growth in the aftermarket. When we take it a bit geographically and we take the two large economies in the world, and this time I would like to start with the U.S. We had very good growth in U.S. It keeps going, and you all remember that already we had seen this for more than 12 months, that there is still a good investment going on almost overall in the United States for our products. Also to say some words about China.
Those who have already looked to the presentation have seen mining, we are comparing here with a very strong China. If we look sequentially, we see still a very solid sequential improvement in China. I will elaborate a bit more when we take the regional figures. We continue to invest in market presence, dig deeper into the market, densifying the network. Feet on the street, we are increasing constantly because we still believe we can take more out of the market. Also the ones who have seen the press releases, we also opened two new customer centers during the second quarter, and that is the one in Senegal and the other one in Mozambique to really take control of that market. Last but not least, on the investments.
We have many new products came on the market, further development on innovation, which also you see when you look later on to the bridge, you see also that it has a positive effect on our pricing strategy. The last line, strong value creation and a continuous, I should say, value creation. I think I would like to really highlight that. With our strong profit level we have and with our asset-light model, growth is really creating value in growth mode. To really succeed that rapid growth with a positive cash flow. All in all, I can say I am very pleased to see this type of outcome. I will not go through them all. Maybe I jump immediately to the operating profit, which has increased by 15% and SEK 4.6 for those who have not looked a bit to history.
The second best ever EBIT level from the operating margin, a very solid 20.7% with a couple of negative effects and a couple of positive effects. You can read them there and maybe also Hans Ola will elaborate a bit more when we go to the flow through bridges. On the profit before tax, maybe want to highlight that, you probably see Shares, we sold them all last year, so this is over. We have an earnings per share of SEK 2.18. An operating cash flow of SEK 1.4, which is a very good solid run rate. I think also Hans Ola will elaborate a bit when we talk about the cash flows to see that we paid this quarter SEK 1.5 billion in tax. I would like to go to slide number four. Orders received, level in local currency, group total plus 13% year-to-date.
Only one failure compared to last year. You compare year-over-year, minus the other ones are very solid development all over, and on the minus I will elaborate when we talk about the different regions. Let us go to the Americans, which is slide number five. I already elaborate a bit on U.S. and, of course, when you talk North America, the biggest part, a very strong order intake with strong growth in United States and Canada. You can maybe wonder why only plus 9% as we talk so strong about United States and Canada. One should not forget that last year, same quarter, we had one of the largest orders booked in Mexico, for instance. Of course, that make the comparison difficult for Mexico this year. A very solid development going on.
Primarily also coming from the manufacturing industry, which means from Compressor Technique and IT. Industrial Technique team, which were both very solid. Sales in construction equipment improves. We see that also when we look to the rental companies, we see a good development and good demand from them. South America. Very strong Chile, very strong Peru, a very solid Brazil. Maybe one side remark, when we talk about Brazil, that construction is improving sequentially, but still a bit on the soft side. I would like to go to Europe. Next slide. The orders in Europe really increased this year also, 11%, coming from a very solid Russia, but also the good Germany. The German demand was, for us in the quarter, very favorable.
I'm very pleased to see that development coming from a good development in industrial tools for the motor vehicle, also when we look to our compressor side, a good development. We look to this +11%, one should, of course, take into account that this is a bit inflated by the acquisition. We only want to look into organic, with a couple of percentages, Europe would be a little bit less than 11%, but still at a very good level. Africa, Middle East. Middle East is back. We got very good development there, especially when it comes to Saudi Arabia and also the mining part in West Africa as well as in South Africa keeps developing at a very good level, because otherwise you cannot make a +51%. I go to slide number seven, I'm talking about Asia.
We got sequential improvement, positive on the orders received side, although year-over-year, as you can see here on the slide, -10%. Still a good robust demand for industrial equipment as well as also for mining equipment. I'm very pleased to see that we keep at a very strong high level. I talk more specific about the largest economy in that region, we talk about China, I see still a good development demand in China. Of course, we compare with the same quarter last year, it is less, sequential, it is at a positive level. I give a bit of an insight on a couple of segments, I'm talking then about our yellow canopies, they do still solid in China. On the other hand, when we talk about road construction demand, it remains still at a soft level.
Australia, what can I say more besides what is written here? Continue to be strong demand, and that's maybe still an understatement. It goes really very well, and we expect really that to continue. Slide number eight, where you see the difference of our pricing. Organic growth increases. Again, a quarter with solid double-digit growth. It's nine quarters in a row that has given growth above 10%, very solid. We go to the bridge, slide number nine. I mentioned already about price. You see a solid +2%, a continuous focus on innovation, new products, and presence gives us really price leadership and allows us also to get the right value for our products and services. I'm very pleased to see that. You see here also the book-to-bill when you compare orders received and revenues.
Also on the revenue level, SEK 22.2 billion is at a good level. At a very good level, I should say, especially when we take the first quarter of the year, which is normally a bit on the lower side. The group, not much to say, but let's go immediately to slide 11 when we talk about the business areas. The first one is Compressor Technique. As already mentioned, record order intake, 5% organic growth, especially when we go to compare with last year, which was a very strong quarter already. I can say strong ordering come from gas and process compressors, but also the demand for our industrial compressors are at a very solid level. Otherwise, you cannot make the +5% organic growth.
I didn't mention here anything about the service, but that continues to have a solid development, too. When we look to the operating margin, 22.1%, a very solid margin. Of course, when you compare with last year, one can say only 22.1%. It's primarily impacted by revenue mix from larger equipment sales, which then has an effect of course, less aftermarket. We have done several investments in market penetration, as already also mentioned, that feet on the street. We keep investing in all the different areas as we believe it still creates value to put more feet in the street. Last but not least, it's also affected by the acquisitions we have done lately, which are now in the startup where some costs have been taken, and we will work further on the efficiency in these acquisitions.
I'm sure also Hans Ola will elaborate a bit more when he is mentioning the flow-through. One thing is also here on the Compressor Technique, we still coming here at the ROCE, which is coming close to 70%. I think in the quarter here, if I take it right, I think it's around 68%. It's still very healthy value creation for the Atlas Copco Group. When you look to the picture, maybe to highlight, we keep investing in new machines. They're definitely more efficient than the previous one. The life cycle cost for our customers will go down, and this will keep us really competitive in this market. I would like to go to Industrial Technique, slide 12. Record intake. I'm very pleased to see this level when we see 10% organic growth coming from this business area.
It's great to see that. Also, when you look then to the profitability, 24%, it's great to see. Coming from a good motor vehicle in all regions, and that means China, India, U.S., and Europe, and a good aftermarket business. Maybe one remark. We see in the general industry for those, we see more or less the same pattern as we also see in Compressor Technique for the smaller industrial compressors. We see more or less the same pattern in that demand. We keep launching new products into the market. The picture what is shown here is one of our new high torque tools, which is again bringing efficiency for our customers. Mining and Rock Excavation, next slide, 13. I maybe get a bit boring when I say records again.
Every slide starts with a record, maybe we should be more inventive to find some other word for record. Anyhow, strong activities in mining keep continuing, 22% organic growth. Really riding on the nice contributors. We are there. Strong growth in aftermarket. It shows you how that is a focus area for us. Maybe I have to apologize here that when we compare with last year, and then you were looking maybe or listening to me last time, that I was a bit more careful in comparison with the expectancy. Here, I didn't expect that it would have been 22% organic growth. I have to apologize for that part of outlook, but I'm happy to do that also next time if I'm wrong with that level or in that direction. On the revenue, almost 25% operating margin. Very solid. We keep going there.
The guys are really under steam when it comes to the output of the factories. There are a couple ships full of equipment on the ocean, to get invoiced, which also you see on the inventory, which maybe some of you could think about. On the other hand, when you look to this business area, you see still that it has a growth of almost, what is it, 66%. A very nice contributor to the value creation of this group as it is in CP. We closed a couple of acquisitions, which was Perfora, GEA, and our distributor in Colombia. Construction Technique. Here it may be the only one which has not a record, maybe we'll have to do next time. Still lower than last year, mainly coming from the weak demand in China from the road construction equipment and not very strong in Brazil.
If we look to the other products, the Portable Energy, when it comes to compressor generators, we have a very favorable demand. That develops very well, and we see a very strong market in North America and the Middle East. I'm very pleased to see also the operating margin coming again in double-digit, although it is still negatively affected by some lower production volume. More feet in the street, because we feel also that besides also investing in R&D, we also need to invest in new customer centers, feet in the street, of course. Yes, today, maybe a bit lower profit, but that's investing in the future, investing in the structure, because we believe really that is a business area which will be a nice contributor for the future. I'm going immediately to slide number 15.
Summarize before I give the word to Hans Olav. Operating profit compared to last year, 15% up. When you look to return on capital employed, although we look to our balance sheet, look here, we went from 32% return on capital employed to 37%, which is, I think I'm very pleased to see this trend to see the improvement. Maybe Hans Olav, you can take over.
Yep. Yep. Thank you, Ronnie. I will just add a few short things, because you have touched upon many of the important comments also on profitability, et cetera. When we look at the total profit for the period, we normally comment also on the financial items, and you can read it in the report, but obviously to think about going forward is that we have now stepped up, in March, our loan capitalization. By that I mean we had a very successful borrowing of EUR 500 million, seven-year money. That is, of course, in anticipation of two things, the dividend that will come in the next month, then, of course, also that we have an amortization of another loan. Nevertheless, we are borrowing more for that reason.
We expect that on a run rate, perhaps it's more likely that our interest net per quarter going forward will be approaching SEK 200 million rather than the SEK 150 level that we have seen in this quarter, or close to that at least. Tax came in about where expected, and I think still that around 25% or slightly lower is in that region we expect in the near-term future. Return on capital employed, very strong at 37%, as Ronnie mentioned. I think we leave it at that and go on to page number 16.
Ronnie has also there alluded to that if we call the organic profit flow-through or incremental profit, it's lower as a percentage Affected by a few things that have been commented already, I would rather turn to the next page on number 17 and just reiterate a few things that, again, Ronnie has touched upon. There are two business areas that look a little bit different from what you can say over a longer period averages in terms of flow-through. CT, this quarter compared to last year, we have more equipment sales than in relation to after market sales compared to last year. Equipment sales was about 60% this quarter, and it was 57% of total revenues a year ago. That is, of course, a revenue mix. There are also revenue mixes between type of products.
Ronnie mentioned that we have good success, that we have good, strong invoicing from engineered compressor, gas and process specifically. Then, of course, we also have a lot of investing in the growth right now. We have market penetration going up in many new countries and also in countries like China, India, et cetera, on an ongoing basis. That is eating out of the margin flow-through in this period of strong growth. We also have the effect of the acquisition contribution, as you can see in that slide. The other business area to say a few words is, of course, Construction, and they're here. It's a good sign that we are back compared to the low levels of profitability in Q4, we do have a negative comparison with last year, primarily lower production volumes, so we still have factories that are not fully absorbed.
We are also investing, as Ronnie said briefly, in more R&D and also in our market presence. It's opening up new customer centers for this business area to serve the growth of the future. With that, I think we leave that page and go to the balance sheet. A few points is worthwhile to note. The growth of total assets is primarily due to the new EUR 500 million loan that will then be compensated for by in the second quarter with the dividend payout and the amortization of another loan of about SEK 2.6 billion. The continued growth is, of course, also increasing the working capital.
With this type of growth, we will, of course, invest in the business. As some of you will remember from last year's Capital Markets Day, that's exactly the pattern we are used to see in these type of strong growth phases. It's not the cash generation that is the primary focus in these type of situations. Over time, we are more than confident that we can certainly maintain efficiency in this, and we can even improve in some of the business areas that lots of projects internally is witnessing that ambition. If we turn to the page number 19, you can see what I meant about the very soon-to-be amortization in 2012 of a loan. We have, as you can also appreciate, we have much more loans now maturing in 2019 than we had before.
That is a sound, long-term oriented capital base, and that's what we're looking for. When I then turn to page 20, the cash flow, we just wanted to highlight basically that the operating cash flow, which includes everything but acquisitions. As you know, we have, of course, a positive contribution compared to last year from the profitability, from the profit generation, but we are paying, and I underline paying substantially more taxes this quarter compared to the first quarter last year. That is primarily here in Sweden that has been a big effect. The other comparison that is worthwhile mentioning with last year is that last year included almost SEK 300 million of positive cash flow from selling Rental Service shares, which is, of course, not there this time.
All in all, a rather expected cash flow, if you ask me, and this is also in line with what we have seen in previous years in those periods. With that, I think we just leave for final words on the outlook to Ronnie.
If we go to the last slide where we see the near-term outlook with what we believe is that the products and services of our company, we expect that to remain at a very solid, current high level. With that, I think we can better go to the question.
I think mindful of time, I think that's a good idea, Ronnie. With that, I just ask the operator to repeat the maneuvers to pose a question on the call, please.
Thank you, sir. If you do have a question at this time, please press star one on your telephone keypad. To cancel your question, please press the hash or the pound key. Once again, that's star one to register a question and the hash or the pound key to cancel. The first question comes from the line of Nico Dil from JP Morgan. Please go ahead.
Good afternoon, gentlemen. I'd like to ask three questions, please. First of all, you've upgraded your outlook here with the results to sort of a stable level of demand. We see the working capital investments filtering through for potentially what I see as a little bit of growth coming through. How do I look at this outlook statement going forward? Is this sort of the usual first step up, where we're starting to get a bit more positive and perhaps we can move even into positive territory from here? Could it perhaps sort of start to tinker down a little bit further out in the year? Just sort of wondering what your longer-term perspective rather is, rather than one quarter out. Secondly, I think you gave us the figure for Compressor Technique on the aftermarket sales, 60% last year, 57% this year. What is it for Industrial Technique, please?
It's the other way around. It's 60% new equipment this year, then 57% last year.
Sure.
Okay.
For Industrial Technique, what are the figures there? The last question is around China. Ronnie, you highlighted that you still see good demand there outside road construction. We see the figures for Asia, for China, down 10%. Wondering where the weakness is really on a year-on-year basis.
Mm-hmm. Yeah. Okay. Maybe I can start from the outlook and why it changed. I think if we look to when I really take the different segments and geographical outlook, and I take U.S., I take South America, I look to, say, they believe in the mining demand. I look to Russia. The other hand, maybe there are a couple of areas like Europe that is a bit, maybe in some areas in Europe is a bit more prudent than I believe, given that we are already on a high level, that one side. The other hand, I see a lot of positive things that made us changing this level, bringing in this type of outlook.
I think when you take it and more specific for us as Atlas Copco, I believe really with our drive for innovation, new products, and I'm digging on it and I'm repeating myself maybe already a thousand times. I believe with the new products, with further feet on the street, with our focus on aftermarket, I believe also that will help to support our outlook in that part. When it comes to-- I will take the question on China, I think, Hans Ola can take on Industrial Technique and other part. On China, it's difficult, too, because there's a lot of things that goes out and written and you see here and there, everybody gets a bit wondering what in the hell is going on there. That's also the same for me when you try to demystify what's all gone.
If I do it a bit systematic, what I see in China is that on the road construction side, because that concerns us, and I'm not going to elaborate the products which we do not have in our portfolio. I still see a soft business development. That is not really taking positive. You can maybe a bit more positive compared to quarter four, but I think that I'll let that for everyone to judge. On that part, I see it negative, but when I go to the positive side, I see still a good development and demand on the mining side.
I see a good development on the Industrial Technique side where Chinese customers really invest in efficiency tools, where I see some civil works going on tunneling, hydropower, all this part, which is an area which is, of course, coming closer, of course, to us, and also what we see as a positive development. I take a bit deeper on CT. I still see a good development on air separation, which is also, I think, a good sign that one keeps investing and the small to medium size compressors my yellow canopies. They stay at a good level. Of course, it is geographically a bit different spread, so you have a less export-oriented investment. I think in the other areas of China, there is still going good development. One should not forget, Nico, last year, quarter one was really a record China.
If you would read again the transcript and all that, I think I mentioned it also that was a really exceptional high level. If you would take a linear line over the last three years, you still see a good development going on in China.
On the Industrial Technique has a lower level of aftermarket than MR and CT, as you know, and it's not fluctuating very much. For the time being, it's about the same level as
As a year ago. The after-market and accessory level is about 25% of the business.
Thank you.
Next question, please.
Thanks. The question comes from the line of Guillermo Peigneux from Morgan Stanley. Please go ahead.
Hi. Good afternoon. Guillermo Peigneux from Morgan Stanley. I'm more asking a question regarding your investment intention in Compressor Technique, and whether you can sort of guide us as to how far are you with the right sales organization, or in a way, the timing of those investments, when do you plan to finish them? Secondly, regarding incrementals for mining and for Industrial Technique, are you planning to also invest on those divisions to capture more growth or you're happy with the current state of affairs first? Thank you.
Yeah. Maybe I will start to answer your last question first. I'm happy but not satisfied. I think we can then, you know my statement on that. In all the business areas we have, and now we have four, which is also transparent for all of you, we keep investing. What do I mean when I say keep investing? We keep investing in the organization. That means in people, in feet on the street, in engineers. We keep investing in product development. We keep investing in acquisitions when we believe that an acquisition is a better solution than organic. We do that. Otherwise, if we would not do that anymore, I think then there is only one way, and that is divest that business. That is not in the plan, at least I have not heard that in any board meetings. That's one thing.
When it comes to investment in compressors, where are we? I think there is still a lot of opportunities in compressors and related businesses. We start at beginning of January this year, a dedicated organization for quality air business, which is the air treatment and gas treatment business, where we believe there is a lot of upside. It will take a bit of time to really speed up that part, but you will see us more giving more focus on it. You have seen also we have done acquisitions in low pressure, which we did a couple months ago in Houston. We keep going because also there we see some potential. We also are now building two new factories for compressors, one in North India and one in Wuxi, which hopefully they both can be ready by the end of the year.
We do that because we believe that we have to invest in growth markets. Besides that, we keep investing in efficiency in all these different areas.
Thank you, maybe a follow-up regarding Caterpillar comments on construction equipment in China, suggesting that they were ready to export 20% of their production in local China into external markets, thinking that inventory is way too high. One presumably thinks that the Chinese companies are also having their inventories being built up. I'm wondering whether you are concerned that you're going to see increased competition levels for some product categories of yours, Dynapac especially, in emerging markets other than China. Thank you.
I think one mistake one should avoid to make is underestimate any competition, any event. Of course, when one big home market is dropping, of course, these people are looking to move their chains and looking for opportunities. It could end up that they end up in other areas. One thing, when it talks about the Chinese competitors in construction, we have already seen them in Africa, last year and the year before. I think that is for sure. They're already there. We see them also in South America. That I think is for me, not a big change. I think on one end, lucky or unlucky, we are not the biggest player in China when it comes to road construction equipment and related equipment.
It affects us when we talked about Dynapac, but I think we have that well under control for the time being, I believe.
Thank you very much. Very helpful.
Thank you, Guillermo.
The next question comes from the line of Ben Maslen from Merrill Lynch. Please go ahead.
Yeah, good afternoon, Ronnie. Hi, Hans Ola. Couple of questions on the mix effects in Compressor Technique, if I can. Firstly, on the aftermarket versus OEM split, given the very big orders you've had over the last few quarters, do you expect that percentage of aftermarket sales to drift lower as you step up deliveries? Do you think you can keep that fairly stable? That's the first one. Looking at your comments, it seems like the order growth in gas and process is still much faster within equipment than, say, standard industrial compressors. Does that mean we should expect a kind of weaker mix within equipment going forward, from this point forward as well? Is that stable? Thank you.
I will talk a bit and then Hans Ola maybe you can elaborate more a bit, the mix. When to take the mix effect in CT really. You don't have it as such under control that you said you want to exact sell as much aftermarket as equipment. I try to sell as much as possible because it is fantastic. The more equipment we can put in the field, the higher our market share, the more I think later on the harvest comes afterwards. That is the whole message and mission to all people working in whole Atlas Copco, not only in CT, to do that. We see still a good solid development and growth in the aftermarket in CT. I'm not worried about that at all, that is not coming.
Fortunately or unfortunately, depending on how you see it, if you talk relative terms or money terms, the equipment grows a bit faster, you get a bit shift of mix on that one. When it comes to gas and process, I'm very pleased to see that we get very good ordering come from gas and process as well. It's mainly the fuel gas boosters, LNG, air separation. There is a lot of investments going on, I'm very pleased that we are successful to grab some of these. In relative terms, again, it affects maybe a bit the profitability, I think we should work hard on efficiency. We should make sure that these latest acquisitions contribute, that is what the people in CT need to do.
They need to work harder on efficiency that this investment in feet industry is heavily done, that is the message I give them. Maybe you can-
No, you have said it all. I think it's specifically on the gas and process. It's not the first cycle we have seen when gas and process orders are stronger, perhaps for a certain period of time. We had that a couple of years ago, we've had it before that. It's, of course, giving very nice contribution to value and to volume. Your question was, of course, about the margin. I understand that, nevertheless, I think that it's not just one thing that happens. If the percentage of larger, more engineered equipment is stronger in one of the coming quarters, of course, we expect, as Ronnie said, that there are other things that also improve in the same way. It's not that we are worried about, let's say, the profit margin on a more sustainable basis going forward. No.
As a very quick follow-up on that, Anders, you had a period, I think, where gas and process orders were weaker, and you'd added some new capacity in China, I think. Just could you say where within that segment utilization levels are and margins, if you can?
Yeah, maybe I can take that. I think the utilization as such, it's not affecting so much the profitability event. It's a very asset-light setup. It's a bit depending on what type of orders it makes, because some segments are more profitable than others. It is really, and of course, I will not go to say what the profitability is of the division, but it's a real strong value creator in the business, because it is rather an asset-light business because you get first, like I said, in fixed assets, low investment, because that factory, what we build there, I remember build, I said it once, I think it was EUR 10 million, so it is not big one. Second, in that business, you also get down payments. You get really prepaid.
It is rather, from a balance sheet point of view, it is a very attractive business for us to create value. In EBIT terms, it has a lower profitability than an old V compressor or whatever.
Okay. Thanks a lot. Have a nice weekend.
Yeah, you too.
Thanks.
Next question.
The next question comes from the line of James Moore from Redburn. Please go ahead.
Yes, good afternoon, everyone. It's James at Redburn. I've got a few questions. On the mining business, on the 22% order growth, I wondered if you could give us a percentage excluding the large orders. I'm trying to get back to the base picture there. You talked about maybe being a bit cautious last quarter, Ronnie, and I didn't really get what you were trying to say in terms of the near-term outlook for the percentage picture going forward. Are you cautious again, or are you now a bit more hopeful? Secondly, if I could ask about the Industrial Technique business. You're seeing good volumes around the world. Are you seeing some good volumes in Europe, particularly due to the modularization that's going on in companies like Volkswagen at the moment? Thirdly, on Compressor Technique, thank you for all the help on the lower incremental margin.
I just want to get a sanity check that we are not seeing any supply side dynamic change here with the price versus the cost and some impact from the Chinese or others in the compressor market, or any change in behavior from Kaishan or others. Any comments you can make on that net pricing in CT would be helpful.
Let me first kill that last one. James, definitely not. I think there is always some competition going on, but it is not that we can justify or talk us out that you say the margin a bit lower due to high cost increases and all that. I think it will be incorrect information. We still see a good positive development on pricing, and I mentioned it also when I was looking at the switch. I see that the innovation, the new products coming, and you look when one of the outlines on the compressor at Chicago is a new compressor that has a very good layout, good cost structure, and I think it is a very strong value proposition to sell for a good price. That, no. I have not seen that.
That can always happen in the years to come, but for the time being, I should say, no, forget it. On mining. I can understand that on one hand, I think you start to know me a bit. I am rather cautious all the time and in this case, on the other hand, also very hopeful and never satisfied on this. We go after all this. There are extremely large orders. I think the ones we announced, this one in South Africa, we did that. I think the big ones we announced, we only have seen one. That is the only big one we really had. The rest are really solid, good orders coming in all over. I talked already about China as the mining. I think I talked to you about Chile. I talked to you about Peru, West Africa, Russia. It is all over.
Sweden, we should not forget, because I think also for us, we see a good development of the mining. When I listen and call a little bit around with people, customers, and other people who have an insight, I believe we should continue to expect a good ordering in the mining business. That was also supporting our outlook in that case. On IT, yeah, you were spot on. The upside is a lot driven from new models. I was myself traveling a couple weeks ago in Germany, visiting a couple of the companies in the automotive, and you see it is really from new models, new challenges in productivity, lighter material. We did this acquisition a couple months ago, which we believe is one of the future strategies for growth. That helps.
We also create a bit our market besides whether there is a good demand from new models.
Thanks, Ronnie. Thanks.
I think that we now have time for one more question, and then we apologize for the other people that have already lined up for questions, but we will do our utmost to answer you after the call, your questions, of course. I leave it to the final question then for this open call.
The final question comes from the line of Colin Gibson from HSBC. Please go ahead.
Hi, good afternoon, everyone. Yes, I'll try and squeeze in two, if I'm lucky, and you can get away with short answers if you like. I wanted to circle back on a couple of things that you've mentioned already. First of all, pricing. If we look at pricing, it stayed very stable in year-on-year terms, up a couple of percentage points for the last few quarters, and that's despite, I suppose, the move out of a very cost inflationary environment into an environment with much more cost stability, I suppose. Maybe you could just explain that a little bit, and just reiterate what you see as the outlook for price increases as we go through the rest of the year. Then secondly, again, just coming back to something that you mentioned already, competition in China, but this time thinking more about off-road equipment.
What we've seen in the wider off-road market is that the brands that have been taking share are the lower price domestic brands, the expensive imported machinery has been losing share. Do you see any similar trends in the kind of products that you're active in? Thanks.
Good. Colin, thanks for the question. I think I will take the last one. I think at first, when it comes to competition, of course, the off-road equipment, I can only talk about Dynapac, then I can maybe elaborate a bit when it comes to construction in the other construction where we are operating. What I see in China is, that's definitely also what we try to do, it's beside our premium product where we say the best product, the lowest life cycle cost, the one we sell under the brand Atlas Copco, the best in the world.
We also have seen that you need a second offer, that is, so to say, the value offer, the value segment, that is where we are really coming head to head, where we have a chance head to head to other players, as you can say, like you call it, the Chinese players. That's also what we do, that is also the reason why we have invested a lot the last two, three years in engineering, in any marketing in China to really make sure we also have a second offer besides our premium offer, the value offer. That is where I believe we need to play with and to make sure that we also get a fair share of this big market called China.
On pricing, we have never been this, say, crazy price increases with plus six, plus seven, because I don't believe in that, because that does not create a good relation with your customers. We continuously do price management. That could also be sometimes that we lower the prices when we see that it has to be done. When you read our pricing bridge, you should, of course, always be thinking that 40% of our business is aftermarket. Aftermarket is a bit of another pricing dynamic than equipment. Because aftermarket partly is also inflation rhythm, because you have a lot of arms and legs, which you really have in your business. You have service contracts with, say, price management related to indexes. Equipment is more driven by innovation, trying to get a better life cycle cost for your customers.
Of course, it's also driven a bit with competition. That, I think, to one end, I've already answered that when I answered the question on China. That is on pricing and on cost. The cost is beside this, if I don't know, copper goes up, of course our products go up. On the other hand, we try with innovation, not only to innovate for efficiency, but also we try to innovate for cost. We need to beat the cost inflation. That is the whole continuous battlefield we have to play. I believe for the time being, we are able to manage that.
Okay. Thanks a lot.
Thanks, Colin.
Thank you very much. Thank you everybody for participating on the call. We are rushing, unfortunately, today because of the AGM that starts in about an hour. Thanks again for participating, and we hope to see you soon again, if not in July, when we report on the next quarter. Thank you very much.
Thank you.
Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may now disconnect your lines, and thank you.