Good afternoon, ladies and gentlemen, and welcome to the Atlas Copco Q1 Report Conference Call. At this time, all participants are in a listen only mode until we conduct a question and answer session and instructions will be given at that time. And 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 Olomayer. 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 Q1 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, I mean, 5 to 2 here in Sweden in Swedish time. Without further ado, I'd like to hand over to Roni Lettin, our CEO, and he will start his comments on the quarter results.
Please, Roni. Thank you, Hansola, and good afternoon to all of you. And 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 number 2, where we give our quarter 1 highlights. I'm very pleased to see this record order intake.
It if you would have asked me a couple of months ago, would it be at that level? And 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 25,000,000,000 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 want to forget that CT was also on record level and we kept a reasonable good level on the construction level. So that made it a very strong order intake and not 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 2 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. And also to say some words about China, We are comparing and those who have already looked to the presentation have seen a minus, but we are comparing here with a very strong China.
But 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're increasing constantly because we still believe we can take more out of the market. And also the ones who have seen the press releases, we also opened 2 new customers then during the Q1 and that is the one in Senegal and the other one in Mozambique to really take control of that market. And last but not least on the investments, we have many new products came on the market.
So 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 and really succeed that rapid growth with a positive cash flow. So overall, I can say, I'm very pleased to see this type of outcome. If I then look to the figures, I will not go through them all.
Maybe I'll jump immediately to the operating profit, which has increased by 15% and 4.6% for those who have not looked a bit to history is the 2nd best ever EBIT level on the operating margin, a very solid 20.7%. There's a couple of negative effects and a couple of positive effects. You can read them there and maybe also Hans Ulle will elaborate a bit more when we go to the flow through bridges. On the profit before tax, maybe want to highlight that, yes, policy shares, we sold them all last year. So this is over.
And we have an earnings per share of 2 point 18 kroner. And an operating cash flow of 1,000,000,000,000,000, which is a very good solid run rate. And I think also Hans Ole will elaborate a bit when we talk about the cash flow also to see that we paid this quarter EUR 1,500,000,000 in tax. Then I would like to go to slide number 4. Orders received level in local currency, group total plus 13% year to date.
Only one figure compared to last year, if you compare year to 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. So let's go to the Americans, which is Slide number 5. 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. Then 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, could what make the comparison difficult for Mexico this year. But a very, very solid development program. And primarily also coming from the manufacturing industry what it means from Compress Technique and IT, so Industrial Technique, which were both very solid.
Sales in Construction Equipment improves. So we see that also when we look to the rental companies. We see a good development and good demand from them. South America, yes, very strong Chile, very strong Peru and 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.
Then 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. So I'm very pleased to see that development coming from a good development in industrial tools for the motor vehicle, but also when we look to our compression side, a good development.
If we look to this plus 11%, one should of course take into account that this is a bit inflated by the acquisition. If we only want to look into organic with a couple of percentages. So Europe would be a little bit less than 11%, but still at a better clip level. Africa, Middle East. Middle East is back.
We got very, 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 good very good level because otherwise you cannot make the price spend $0.61 If I then go to slide number 7 and talking about Asia. We got sequential improvement positive on the order critique side, although year on year as you can see here on the slide minus 10. But still a good robust demand for industrial equipment as well as also for mining equipment. So I'm very pleased to see that we keep at a very strong high level. If I then talk more specific about the largest economy in that region and then we talk about China, I see still a good development demand in China.
Of course, if we compare with the same quarter last year, it is less, but sequential it is at a positive level. If I give a bit of an insight on the couple of segments and I'm talking then about our yellow canaries, they do still solid in China. On the other hand, when we think about road construction demand, it remain still at the soft level. Australia, what can I say more besides what is written here, continued to be strong demand and that may be still an understatement? It goes really very well and we expect really that to continue.
Then slide number 8, where you see the difference of our price pricing organic growth increases. Again, a quarter with double solid double digit growth. So it's 9 quarters in a row that has given growth above 10%, So that is solid. Then we go to the bridge, slide number 9. I also mentioned already about price.
You see a solid plus 2%. So our 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. So I'm very pleased to see that. And you see here also the book to bill when you compare orders received and revenues. But also on the revenue level, EUR 22 point 2,000,000,000 is at a good level at a very good level, I should say, especially when we take the Q1 of the year, which is normally a bit on the lower side.
The group then, yes, not much to say, but let's go immediately to Slide number 11 when we talk about the business areas. And then 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. Very good order income, how can I say, strong order income from gas and process, compressors, but also the demand for our industrial compressors around very solid level? Otherwise, you cannot make the plus 5% organic growth.
And I didn't mention here anything about the service, but that continues to have a solid development too. Then 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 of course less
aftermarket.
We also 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. And last but the least, it's also affected by the acquisitions we have done lately, which are now in the start up where some costs have been taken and we will work further on the efficiency in these acquisitions. But I'm sure also Hans Ole will elaborate a bit more when he is mentioning the flow through bridges that one. But one thing is also here on the compressor, Nick, we still coming here at the Rose, which is coming close to 70%.
I think in the quarter, if I take it right, I think it's around 68%. So it's still very healthy value creation for the Alconoscope Group. And when you look to the picture, maybe to highlight, we keep investing in new machines. Their room is definitely efficient more efficient than the previous one. The lifecycle cost for our customers will go down and this will keep us really competitive in this market.
Then I would like to go to Industrial Technique, slide number 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. And 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 who see more or less the same pattern as we also see in compressed technique for the industrial smaller industrial compressor. So we see more or less the same pattern in that demand. And yes, 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. Yes, it I maybe get a bit boring when I say record again. Every slide starts with a record. So maybe we should be more inventive to find another word for record.
But anyhow, strong activities in mining keeps continue 22% organic growth, really right on the nice contributors. We are there strong growth in aftermarket. As you also know, that is a focus area for us. And maybe I have to apologize here that when we compare with last year and then you were looking maybe listening to me last time that I was a bit more careful in comparison with the expectancy here. Yes, I made maybe I didn't expect that it would have been 22% organic growth.
So 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. Then 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 of ships full of equipment on the ocean.
So if you get invoice, which also you see inventory, which maybe some of you could think about. But on the other hand, when you look to this business area, you see still that it's that it's not still that it has a rose of almost what is it 66%. So a very nice contributor to the value creation of this group as it is in CP. Yes, we closed a couple of acquisitions, which was Perfora, GEA and our distributors in Colombia. Construction technique, here it may be the only one which has not a record.
So maybe we'll have to do
next time.
Lower still lower than last year, mainly coming from the weak demand in China from the road construction equipment, they're not very strong in Brazil. But if we look to the other products, the portable energy when it comes to compressed generators, we have a very stable demand. So that results very well and we see a very strong market in North America and the Middle East. And I'm very pleased to see also the operating margin coming again in double digit, although it is still negative affected by some lower production volume and yes, more heat in the street because we feel also that besides investing in our lead, we also need to invest in new customers and the feet in the street of course. But yes, this today may be a bit lower profit than investing in the future, investing in the structure because we believe really that is a business area which will be a nice contribute for the future.
Then I'm going immediately to Slide number 15, summarize before I give the word to Hans Zola. Operating profit compared to last year, 15% up. And when you look to return on capital employed, although we look to our balance sheet, but look here, we went from 32 percent return on capital employed to 37%, which is I think I'm very pleased to see this trend to yes, India Group. So maybe, Angela, you can take over.
Yes. Thank you, Roni. I will just add a few short things because you have touched upon many of the important comments also on profitability, etcetera. 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 long capitalization.
By that, I mean, we had a very successful borrowing of €500,000,000 7 year money. And that is, of course, in anticipation of 2 things: the dividend will come in the next month and then, of course, also that we have an amortization of another loan. But nevertheless, we are borrowing more for that reason. So we expect that on the run rate, perhaps it's more likely that our interest net per quarter going forward will be approaching EUR 200,000,000 rather than the EUR 150,000,000 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 Ronny mentioned. I think we leave it at that and go on to Page number 16. Ronny 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 has been commented already. But I would rather turn to the next page on number 17 and just reiterate a few things that again, Ronny has touched upon. There are 2 business areas that look a little bit different from what you can say over a period of 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 aftermarket sales compared to last year. Equipment sales was about 60% this quarter and it was 57% of total revenues a year ago. So that is, of course, a revenue mix. There are also revenue mixes between type of products. Ronny mentioned that we had good success.
We had good strong invoicing from engineered compressor and gas metal process specifically. And then of course, we also have a lot of investing in the growth right now. We have market penetration going up in many, many new countries and also in countries like China, India, etcetera on an ongoing basis. And that is eeping out of the margin flow through in this period of strong growth. And 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 there here it's a good sign that we are back compared to the low levels of profitability in Q4. But we do have a negative comparison with last year, primarily lower production volumes. So we still have factories that are not fully absorbed. And then we are also investing, as Roni said briefly, in more R and D and also in our market presence.
So it's opening up new customer centers for this business area to serve the growth of the future. So 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 due to primarily due to the new €500,000,000 loan that will then be compensated for by in the Q2 with the dividend payout and the amortization of another loan of about SEK 2.6 1,000,000,000 The continued growth is, of course, also increasing the working capital. With this type of growth, we will, of course, invest in the business and as some of you will remember from last year's Capital Markets Day that's exactly the pattern we are used to see in this type of strong growth phases.
It's not the cash generation that is the primary focus in these type of situations. But 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. So if we turn to the Page number 19, you can see what I meant about the very soon to be amortization of in 2012 of a loan. And then we have as you can also appreciate, we have much more loans now maturing in 2019 than we had before. So that is a sound long term oriented capital base and that's what we're looking for.
When I then turn to 20, 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 Q1 last year and that is primarily here in Sweden that that has been a big effect. And then the other comparison that is worthwhile mentioning with last year is that last year included almost EUR 300,000,000 of positive cash flow from selling rental service shares, which is of course not there this time. So 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. So with that, I think we just leave for final words on the outlook to Roni.
Yes. So if we go then to the last slide where we see the near term outlook with we believe is that the products and services of our company we expect that to remain at a very solid current high level. So and that I don't can I think we can better go to the question?
I think mindful of time, I think that's a good idea, Ronny. So with that, I just ask the operator to repeat the maneuvers to pose a question on the call please.
Thank you, The first question comes from the line of Nico Deel from JPMorgan. Please go ahead.
Good afternoon, gentlemen. I'd like to ask 3 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 is 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? Or 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 1 quarter out? Secondly, I think you gave us the figure for compressor technique on the aftermarket sales 60% versus sorry, 60% last year, 57% this year. What is it for Industrial Technique, please?
It's the other way around. It's 60% of equipment this year and 57% last year.
Sure. Sure, sure, sir.
Okay.
So for Industrial Technique, what are the figures there? And the last question is around China. Rodi, 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?
Yes. Okay. Maybe I can start on the outlook and why it changed. I think if we look to what when I really take the different segment and geographical outlook. And I think U.
S, I think in South America, I look to say the belief in the mining demand. I look Russia. On the other hand, maybe there are a couple of areas like Europe, which is a bit maybe in some areas in Europe is a bit more prudent. Then I believe given that we are already on a high level that one side, but on the other hand, I see a lot of positive things that made us changing this level, bringing in this type of outlook. So and I think when you take it a more specific for us as Copco, I believe really with our drive for innovation, new products and I'm digging on it and I'm repeating myself maybe already 1,000 times.
I believe with the new products, with further ink on the street, with our focus on aftermarket, I believe also that will help to support our outlook in that part. Then when it comes to I will take the question on China, I think, and Anzurla can take on industrial technique and other parts. On China, what and it's difficult to because there's a lot of things that goes out and written and you see here and there and everybody gets a bit wondering what in the 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. So that is not really taking positive.
You can maybe a bit more positive compared to quarter 4, but I think that I'll let that for everyone to judge. So on that part, I see a 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 as well, where Chinese customers really invest in efficiency tools, where I see some civil works going on, on tunneling, hydropower, all this part, which is an area which is, of course, coming closer to us, which and also what we see as a positive development. When 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 compresses my yellow canaries, they stay at a good level. Of course, it is geographically a bit different spread, but so you have a less export oriented investment. But I think in the other areas of China, there is still going good development. But one should not forget, Nico, last year, quarter 1 was really a record, record, record China. And if you would read again the transcript and all that, I think I mentioned it also and that that was a really exceptional high level.
So if you would take it a bit for if you would take a linear line over the last 3 years, you still see a good development going on in China.
So on the Amine industrial technique has a lower level than 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 a year ago. So the aftermarket and accessory level is about 25% of the business.
Thank you. Next question please.
Next question comes from the line of Guillermo Vignaello from Morgan Stanley. Please go ahead.
Hi, good afternoon. Guillermo Vigna 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? And then secondly, regarding incrementals for mining and for industrial technique, are you planning to are you also invest on those divisions to capture more growth?
Or you're happy with your current
well state of current first? Thank you. Yes. 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 4, which is also transparent for all of you, we keep investing. And what do I mean when I say keep investing? We keep investing. People on the street, in engineers.
We keep investing in product development. We keep investing in acquisitions, and we believe that an acquisition is a better solution than organic. So 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. But that is not in the plan.
At least I have not heard that in any Board meetings. So 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 started beginning of January this year a dedicated organization for quality air business, which is 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 of months ago in Houston. We keep going because we're also there. We see some potential. And we also are now building 2 new factories for compressors, 1 in India and one in Wuxi, which hopefully we both can be ready by the end of the year.
We do that because we believe that we have to invest in grow markets. And besides that, we keep investing in efficiency in all these different areas.
Thank you. And maybe a follow-up regarding Castilla comments on construction equipment in China, suggesting that they were ready to export 20% of their production in China, in local China into external markets, thinking that inventory is quite too high. One perceivably thinks that the Chinese companies are also having their inventories being built up. 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. And of course, when one home market, a big home market is dropping, of course, these people are looking to move their Gs and looking for opportunities. So it could end up that they end up in other areas. But one thing when it talks about the Chinese competitors in construction, we have already seen them in Africa last year and the year before. So I think that is for sure they're already there.
We see them also in South America. So that I think is for me not the big change. I think on one hand, lucky or unlucky, we are not the biggest player in China when it comes to road construction equipment and related equipment. So it affects us when we talked about Dynapac, but I think we have that I think well under control for the time being, I believe.
Okay. Thank you very much.
Very helpful. Thank you, Guillermo.
The next question comes from the line of Ben Maslien from Merrill Lynch. Please go ahead. Yes.
Good afternoon, Ronny. Hi, Hans Ola. A 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? Or do you think you can keep that fairly stable?
That's the first one. Then 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 does that mean we should expect a kind of weaker mix within equipment going forward from this point forward as well? Or is that stable? Thank you.
I would talk a bit and then Anand will and maybe you can deliver it more a bit, say, the mix mix. But 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. So 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. And that is the whole message and mission to all people working in whole laparoscopters, not only in CT to do that.
But we see still a good solid development and growth in the aftermarket in CP. So I'm not worried about that at all that, that is not coming. Yes. Fortunately or unfortunately, depending on how you see it, if you talk relative terms or money terms, the equipment grows a bit faster than 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 order income from gas and process well.
It's mainly say fuel gas boosters, LNG, air separation. These there is a lot of investments going on and I'm very pleased that we are relative terms, yes, again, it affects maybe a bit the profitability. But I think we should work hard on efficiency. We should make sure that these latest acquisitions contribute. And that is what the people in City need to do.
So they need to work harder on efficiency that this investment in feet in the street gives return and that is the message I give them. Maybe you can
No, no. As you have said it all, I think it's specifically on the gas and process. I mean, 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 and we've had it before that. And it's of course, it's giving very, very nice contribution to value and to volume.
Your question was, of course, about the margin. I understand that. But nevertheless, I think that it's not just one thing that happens. So if the percentage of larger more engineered equipment is stronger in one of the coming quarters, then of course we expect as Ronny said that there are other things that also improve in the same way. So it's not that we are worried about let's say, the profit margin on a more sustainable basis going forward, no.
And 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 can you say where within that segment utilization levels are and margins, if you can?
Yes. Maybe I can take that. When it comes I think the utilization as such it's not affecting so much the profitability then. We should it's not a very it's a very asset light setup. It's a bit depending on what type of oil is it mix because some segments are more profitable than others.
But it is really and of course, I'm not going 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, remember, build asset at one, I think, was 10,000,000 euros So it is not big one. 2nd, in that business, you also get down payments. So you get really prepaid. So it is rather from a balance sheet point of view, it is a very attractive business for us to create value. But it has in EBIT terms, it has a lower profitability than an oil free compressor or whatever.
Okay. Thanks a lot. Have a nice weekend.
Yes. You too.
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 gone and it's up to 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. And you talked about maybe being a bit cautious last quarter, Ronny. 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?
And 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 VW at the moment? And then 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 comment you can make on that net pricing in CT would be helpful.
Let me first deal with that last one. And James, definitely not that I think there is always some competition going on, but it's not that we can justify or talk us out that you say the margin is 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 also when I was looking to switch, I see that the innovation, the new products coming and you look when one of the outlines on the compressor of Cheetahto is a new compressor that has a very good layout, good cost structure and I think it really has it's a very strong value proposition to sell for a good price. So that's no, I have not seen that.
It can always happen in the years to come, but for the time being, I should say forget it. Then on Mining, I can understand rather cautious all the time and in this case, but on the other hand, very hopeful that and never satisfied on this. We go after all this. There are extremely large orders. I think the ones we announced one in yes, this one in South Africa, We did that.
I think the big ones we announced. So we only have seen 1. So that is the only big one we will have. The rest are really solid, yes, good orders coming in all over. I talked already about China and the mining.
I think I talked to you about Chile. I talked to you about Peru, West Africa, Russia. So it's all over Sweden. We should not forget because I think also for us, we see a good development of the mining. And 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.
And that was also supporting our outlook in that space. Then on IT, yes, you were spot on. The upside is a lot driven from new models. I was myself traveling a couple of weeks ago in Germany, visiting a couple of companies in the automotive. And you see it, it's really from new models, new challenges in productivity, lighter material.
We did this acquisition a couple of months ago, which we believe is one of the future strategies for growth. So that helps. So we also create a bit our market besides what there is a good demand from new models.
Thanks, Ronny. 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. So I leave it to the final question then for this open call.
So the final question comes from the line Colleen Gibson from HSBC. Please go ahead.
Hi. Good afternoon, everyone. Yes, I'll try and squeeze in 2 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 but this time thinking more about off road equipment, 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 priced domestic brands and 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 first when it comes to competition and of course the off road equipment, I can only talk about that about Dynapack. And then I can maybe elaborate a bit when it comes to construction in the other construction where we are operating.
But what I see in China is and that's definitely also what we try to do. And it's beside our premium product where we say these 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 and that is so to say the value offer, the value segment and that is where we are really coming head to head where we have a chance head to head to other players and then you can say like you call it the Chinese players. And that's also what we do and that is also the reason why we have invested a lot the last 2, 3 years in engineering, in any marketing in China to really make sure we also have a second offer beside our premium offer, the value offer. And 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. Then on pricing, yes, we have never been this, say, crazy price increases with plus 6 plus 7 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. But when you read our pricing bridge, you should, of course, always predicting that 40% of our business is aftermarket. And aftermarket is a bit of another pricing dynamic than equipment, because aftermarket partly is all sort of inflation driven, 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.
And then equipment is more driven by innovation, trying to get a better life cycle cost for competition. But that I think to one end I've already answered that when I answered the question on China. So that is on pricing. And on cost, the cost is beside if iron ore copper goes up, of course, our products go up. But on the other hand, we try with innovation, not only to innovate for efficiency, but also we try to innovate for cost.
So we need to beat the cost inflation. And that is the whole, yes, the continuous battlefield we have to play. And I believe for the time being, we are able to manage that.
Okay. Thanks a lot.
Thank you, Colin. Thank you very much. And thank you everybody for participating on the call. We are participating and we hope to see you soon again if not in July when we report on the next quarter. Thank you very much.
Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may now disconnect your lines and thank you.