Atlas Copco - Annual Report 1999

CONSTRUCTION AND MINING TECHNIQUE
CONSTRUCTION AND MINING TECHNIQUE
Continuous Improvements
on Recovering Markets
For Construction and Mining Technique, 1999 was marked by a weak start customers become even more intent on
followed by a stronger end to the year. From a low level early on, metal prices
improving their own critical processes.
They can accomplish their goals with
lifted towards the second half, and the business area won major orders from high-performance equipment and effective
service, maintenance, and operator
infrastructure and mining projects. Projects to boost consumables, rentals, training programs. In the midst of the
and services combined with additional organizational adjustments to counter
construction and mining industry’s
adjustments, Atlas Copco Construction
the effects of a mature market.
and Mining Technique’s divisions have
generally maintained or advanced their
positions relative to their competitors.
Current opportunities to advance the
1999 1998 1997 business include expansion of rental operations for drilling rigs,
Revenues, SEK m. 5,725 6,437 6,453 new methods to further exploit customer productivity, and e-
Operating profit, SEK m. 397 498 387 commerce for consumables such as spare parts and accessories.
Return on capital employed, % 13 15 12
Investments, SEK m. 415 494 460
Number of employees 4,123 4,572 5,058
The Construction and Mining Technique business area develops,
manufactures, and markets rock drilling tools, tunneling
and mining equipment, surface drilling equipment, construction
tools, loading equipment, and geotechnical drilling equipment.
The products are sold, rented, and serviced for building and construction
companies, large infrastructure projects, quarries, and
mining companies around the world. The business area has its
chief manufacturing plants in Sweden and the U.S.
Revenues
Revenues totaled sek 5,725 m. (6,437). Orders received decreased
1 percent, to sek 6,062 m. (6,117). Major orders were received
from infrastructure projects and mining operations in Russia,
India, Hong Kong, and Brazil.
Earnings
Operating profit ended at sek 397 m. (498), giving an operating
profit margin of 6.9 percent (7.7). Return on capital employed
was 13 percent (15).
Business development
Initially, Construction and Mining Technique divisions were
struggling in the aftermath of the economic turmoil in Asia,
Australia and South America as well as depressed metal prices.
During the second half of the year, these negative trends turned
positive. Prices on metals increased with positive effect on the
business.
To some extent, economic uncertainty represents an
opportunity for the business area, because the business area’s
50 ATLAS COPCO 1999
Product development
Product development resulted in the introduction of several rig
types and rock drills from Atlas Copco Rock Drilling Equipment,
including a very large face-drilling rig with a surface reach
of 165 square meters. Customer productivity remained in focus,
and the emphasis on modularization of designs intensified.
Other products introduced by the business area included a
new grouting pump and a small rig for reverse circulation, both
for geotechnical drilling from Atlas Copco Craelius.
Uniroc, Atlas Copco Wagner, and Atlas Copco Construction
Tools focused their development efforts on improving the
performance of their core products – rock tools, bits, loading
and construction equipment.
Investments
During the year, the business area invested a total of sek 116 m.
(202) in property and machinery. The majority of investments
was attributable to improvements in production processes aimed
at enhancing flow and reducing tied-up capital.
Investment in rental equipment totaled sek 299 m. (292).
Training
The increased complexity and computerization of drilling rigs
led to several new training efforts, internally for the sales
organization and with customers. These typically make use of
interactive computer-based training tools, which are aimed at
complementing training in the real work environment.
The divisions in the business area conducted training programs
in project management and 3D-CAD for development
engineers.