Atlas Copco Q3 tops forecast, but warns of slow semiconductor recovery

By Marie Mannes

STOCKHOLM (Reuters) -Swedish industrials group Atlas Copco beat third-quarter adjusted profit forecasts on Wednesday, but warned demand would weaken in the near term amid a slower than expected recovery in the semiconductor industry.

Operating profit adjusted for items affecting comparability rose 19% to 10.1 billion crowns ($904.8 million), against a mean forecast of 9.7 billion in an LSEG poll of analysts.

Customers scaling back investments have hurt Atlas' order intake. In particular, its key vacuum division, which counts semiconductor producers as its main clients, has seen weak demand lately.

Order intake at this unit, which has dented Atlas' results for the past year, fell 10% to 8.8 billion from 9.8 billion crowns a year earlier.

JPMorgan said that decline was also in line with a delay in an expected recovery of the semiconductor industry.

In a call with analysts, CEO Mats Rahmstrom said the company had hoped for a pickup in the semiconductor industry at the end of the year, but saw that now would be unrealistic.

"(But) when the business is back it might be back with quite significant investments, we don't think it's in Q1 but probably in Q3 or Q4 (Of 2024)" the CEO said.

The vacuum business, which competes with the likes of Pfeiffer Vacuum, typically offers a forward-looking gauge of demand for the broader group.

Atlas said overall order volumes were roughly unchanged at high levels in the third quarter from a year earlier, but were somewhat lower than in the second quarter.

Order intake came to 42.6 billion crowns, down 1% year-on-year excluding acquisitions but beating analysts' expectations of 41.7 billion.

Ahead of the report, some analysts had expected to see lower orders sequentially in most of Atlas' units. JPMorgan said the results were a beat on all lines, and that the weakening demand was as expected.

Atlas makes industrial products ranging from air treatment systems to construction equipment and power tools.

(Reporting by Marie Mannes; Editing by Anna Ringstrom, Jan Harvey and Mark Potter)