Atlas Copco AB

Thank you, and very welcome everybody to this first quarter conference call from Atlas Copco. We will spend the first 20 minutes, 25 minutes, something like that with some comments from Mats Rahmström, our CEO, and then we will take Q&A.

And we'll try to be ready within an hour approximately. Without anything more than to say, please, Mats, take it from here.

Okay. Thank you, Hans Ola.

We will start on Slide number 2, which is of course Q1 in brief. Order intake, we are very happy with SEK30 billion, an 18% organic growth.

It came in better than we expected. And this was also versus a strong quarter last year.

The number of things in the strategy actually is working for us right now. We can see new products selling very well.

And these are some of the segments that we are focusing on doing well as well. Our local strategy in Asia, China is also benefiting, but we should not forget that there has been a pent-up demand of course on products.

And invoicing SEK26 billion, up 13% organically. And of course, the challenges in logistics, COVID and some components.

So we expect a good result for the quarter. Operating margin at 20.7% is what we have reported.

And if we adjust for the long-term incentive fund it's 21.7%. Moving to Slide number 3, we summarized exactly what I just said.

First, if you look at the graph, and you can see first time then that we are on the SEK30 billion level, which is very good and it's a confirmation from our customers that we have good product presented by good people and good service solutions. So I'm very, very happy about that.

Return on capital employed from last year 29% to 23% this quarter. If you had a bridge on that, it would be minus 4% on dilution from acquisition, and approximately 2% mainly in currency and positive for some volume.

Slide Number 4, which is a geographic map. We have the growth throughout the world, both for equipment and service.

I'm very positive to see that, maybe the highlight is still that we have almost 40% of our sales in Asia. We have a good traction there for all our business areas.

We have doubled the business -- all business areas in the region and done 34% for the group. Slide 5 confirms the 18% organic growth.

And if you take Slide 6, we have the bridge on orders and revenue. The structural changes on orders, is impacted by the ISRA acquisition and Perceptron and some of its key distributors.

And then, you can see that we still have quite a lot of headwinds in terms of currency and Hans will elaborate a little bit on that later on, and then 18% and 13%. If you take Slide number 7, this is the pie chart with different business areas, and of course, extremely good vacuum technique with strong order intake from the thermal industry, but also industrial vacuum and scientific vacuum [ph].

And you can see, compressor technique up 13% organically, considering that's 46% for the group, I'm very pleased with that. Industrial technique also up 13%, and more orders, more activity in the auto sectors, especially electric vehicle and battery manufacturing.

And Power Technique, after a number of quarters now we can see that some of the rental company has started to invest again and we see positive on that as well. I'll comment now by business area.

We can start on Slide number 8, which is Compressor Technique. As I mentioned, a 13% organic growth in all areas including gas and process, all orders see more activity with some of the last year on that one.

Considering the strong position for service, they continue to develop the service offered for our customers and you can see strong growth as well. And an outstanding profit margin of 23.7% considering the headwind from currency.

And if you look at the bar it very much looks like a record on orders received as well. Vacuum Technique on Slide number 9, and here also it is a record orders, record revenues and record operating margins.

And also, I think everyone should expect strong semi, but really confirms our strong product portfolio for the industry and the readiness we have to accept these orders. So very well done by the organization and really picking up on the big volume.

And, of course, if you look at the graph, it almost looks like you've done something wrong, but very strong there. And then to follow up with strong operating margin at 24.9% that is more, of course, with the currency working against us.

Industrial Technique on Slide 10 then, you can see that it dropped off quite significantly in Q2 2020, and then step by step each quarter that's embedded. Now you have it in this field, strong organic growth of 13%.

And also, we now can see that we can get more business out of the general industry market as well, and they also continue their increased use for service. Operating margin, 19.5%, and that we see later on we are helped here with the EBITA as you know intangibles from acquisition, and that will lead to [indiscernible] which is in par with the pre-COVID EBITA level.

And that is something that we are proud of. Power Technique on Slide 11.

As I said before, more activities here. We do really well with portable compressors and service.

Specialty rental flattish, and I would say, Europe and Middle East, that is not helping us to improve that number yet here. And revenues up 5%.

And operating margin at 15.3% considering that invoicing was up 5%. They've done a good job with the cost management there.

And then on Slide 12, I think this is a good time to hand over to you Hans Ola.

Yeah, okay. Thank you, Mats.

We have, as you have seen in the report and as Mats have already said, we have included also an extra line in the income statement this time and we will continue to do that just to give a little bit comparison of the EBITA and the operating profit before amortization of intangibles from acquisition. So it's not that perfectly clean EBITA.

That's why we can see the definition on this slide. We talked about most of the things, the net financials is starting to become, I almost used insignificant amounts in relation to the total turnover and profitability of the group, and that of course reflects the continuous development of the interest rate that has helped us.

But it's also fair to say that last year had much more of financial exchange differences. So that did not repeat itself.

On income tax, we normally comment 22.9% is slightly better than last year, slightly lower than last year. And I would say that the estimate going forward would probably be in the range of 22% to 23%, something of that nature.

And on the return on capital employed, yes, Mats have already commented on that. So I don't need to repeat that.

If we turn to the next slide, the profit bridge. Here, of course, you can summarize it by looking from the right, of course, which is last year to the left versus this year.

Quite big numbers in the various columns, and primarily in currency first of all. You can see that there is a very negative number, but also the impact on the margin is quite significant.

From this, SEK1,065 million negative compared to the same quarter last year. Already there we should say that of course it's very negative partly, first of all, because we have currency ratios between the dollar and the euro, and the dollar and other currencies that have worked against us.

But we also have the strengthening of the Swedish krona compared to last year, which of course, affects the translation of all profits that we make in other currencies than in Swedish Krona. So that's why the number in itself was even above a SEK1 billion as you can see here.

So that was very negative. And I could like highlight for you that the US dollar, for example, was 13% lower ratio than last year.

The euro 5%. But we also have some other important currencies in Atlas Copco, like the Russian ruble, the Brazilian real, and the Turkish lira, just to pick on the queue, and they were between 20% and 30% depreciated against the Swedish krona.

So that's why the currency impact is very negative in this quarter. If I try to look ahead like we normally do, it would -- it will continue to be negative if we do the same comparison quarter two to quarter two of 2020.

But it's also important to remind everybody that is only because of the comparison with last year. The effective currency rates that we have in the result in Q1 is expected to be the same, I mean, it's not that we have the negative going into Q2.

These numbers are actual Q1 rates. So just to point that out.

The other column is of course the most interesting one where volume price mix and other effects, i.e., the organic effect is very positive on the other side. So volume contribute.

We have -- we have more underlying volume. But it's also fair to say that in all business areas, we still enjoy the cost-containment measures during the COVID quarters if I call them like that is of course to a certain extent still there.

And now as the orders and revenue has to grow back as they did in Q1, we expect also to add more cost, of course. I think then I'll leave it with that.

And then if we take the next one, well, it's a very similar comment actually even if it's business area by business area. Negative currency impact and the positive volume price mix and other impact, if you compare the revenue addition to the operating profit addition, you can see a very significant positive outcome flowing through in this quarter.

Not surprisingly when you go from a subdued market environment where much better growth environment and that's what we have seen in Q1, of course. I will move on to the balance sheet.

Yeah, I don't have so much to comment. Perhaps, if you look at December 31 as the previous quarter, there is a quite significant addition of SEK10 billion, but above half of that is coming from pure translation effects of the Swedish krona.

So while the rest is primarily made up of new cash generated in the quarter. I'll stop there and go to the next page, which is number 16 and deals with cash flow.

We increased the cash -- the operating cash flow from SEK3.8 billion to SEK4.3 billion. And in very rough summary, you can say that the effect is better profit somewhat and slightly lower investment.

If we put that all together, we're in also to a certain examples and more working capital build after this year compared to last year, and that sums up to this SEK0.5 billion better operating cash flow largely. So with that, I think I hand it back to you Mats for the final slide before the Q&A.

Yes, to the near-term outlook, and here we're trying to give you a comparison between Q1 versus Q2 with sequential. And normally, Q1 is a strong orders received month for us.

And we're trying to judge the customer activity and give you a little bit of guidance there. And so, it remains uncertain, and I pick up that and it's mainly the situation with COVID.

We can see that we have operations in India, for example. Now we are -- after running, but of course, we have had incidents there as well.

But on the other side, we are quite positive to rule out that planned program. And logistically, you can see some of the -- especially auto customers lacking supply of chip.

So we can see that they have now some shutdowns. And on the positive side, which we say continue high current level then which is then coming from a record quarter, and you can see positive trend in most of our business areas and divisions.

We can see that, that is spread geographically throughout the world. And a very strong position for us in Asia and China then.

We also said -- as I said before in the inspection that if orders will come, we have a strong position in many of what we call the key segments for us. So we believe, we continue to be, as we said on high current level, but there is still uncertainty of course in what will happen in the coming three months.

Thank you, Mats. So with that, I'd like to hand the word back to the operator of the call to give the instructions for the Q&A session.

Already before that, I might ask that we continue also with a proven concept of sticking to one question at a time, allowing more people to get their question on the call. So with that, please, I hand the call over to the operator.

Thank you. Hi, Mats and Hans Ola.

It's Klas from Citi. So the first one, just want to continue there, Mats, on the guidance.

You're guiding flat quarter-on-quarter, obviously from a very solid level but I'm interested in some of the businesses where you have a pipeline building of larger orders. So I can see that gas and process is now improving quarter-on-quarter and you have pretty good visibility with the key accounts on the semi side.

So I totally get that you want to be cautious in light of what's going on in India, and so forth. But if you look at quotation activity, and would you say that sort of the indication out of the pipeline, maybe signals a little bit better orders than the SEK30 billion.

I wouldn't say it indicate maybe about SEK30 million -- and we don't guide like that. But high activity level, considering what we have presented for Q1 if that is the confirmation that we are positive to the development of our segments.

Yeah. No, I understand.

Okay, fair enough. And just one quick follow-up for you, Hans Ola.

On the margin or 23.7% in CT, and this is the division that had most of the temporary savings for COVID if I understand it correctly. How much of that margin there was linked to those savings that might start to reverse?

Is it percentage point or anything you can say that answer there?

No, I wouldn't there, because it's not an easy calculation even if we had all the numbers and we put these together. So -- but it's noticeable in the spend on admin and marketing, primarily that we got down to a good level and now we have seen the costs are starting to come back, but it's obvious that we still have some benefit, the traveling, couple of participations in shows -- trade shows, and so on, are done in a more economical way if I put it that way right now.

The interesting thing is that, it's not at all certain that only costs returned to exactly what they were before at the same volume level. So that is extremely.

I have no fear and that this is a quarter that will prove to be a sort of a one-off sweet spot. It's not that effect that one.

It's really something that we just want to have in there to complete the picture, and it goes not only the [indiscernible].

Makes sense. Thank you.

Thank you.

Hi, good afternoon everyone. Thanks for taking my question.

I just want to ask on the vacuum side, and clearly the strength in semi has been in the Q1, and it's no great the price given and the move we have seen the backdrop. I just -- also if you kind of fill out a little bit what you're actually hearing from customers on the ground in terms of indications of how long this kind of level of spend can be sustained?

Whether you think you've seen any kind of pre-ordering or customers trying to order ahead just to ensure that they get that product? Just trying to get a sense, I guess, with the sustainability about consuming very good number?

It is, of course, as you say, everyone is trying to catch up with the demand in the market today to our benefit, and it's a position that we do have in the North America, China, Korea, Japan. And when this -- all this come available, not definite, but we just hope for them and get them.

You need to have right product, people there, but also in this case, the capacity to deliver. And as we speak and then we are installing more capacity to handle and be ready.

And coming back to -- it's not a straight line, I mean, you have 20, 25 accounts, and probably at the handful of big orders. So difficult to predict that you can understand if they place the order now or in another quarter.

And they don't need a catalyst if it's for inventory or whatever it might be that we don't measure it up. But I'm sure, if you see the situation globally and the management will -- some of them will actually gets paid before as we were the best supplier and make sure that we get our product in first line.

So I do believe that other orders have been paid prematurely to this quarter. How much, I don't exactly know.

Okay. But it doesn't feel that there is an obvious exceptional spike there.

It means clearly there's a lot of underlying help from the market, and I guess, some share gains as well by the time?

No, but I think my job and my team's job is to make sure that you are in a position to create the best and accept the orders. And then if, call it, in Q2 or Q3 or Q4, maybe it's too much stuff, it will brings in the system, which is linked to the key account structure.

So there is no reason for me to panic, this quarter or next quarter. I'm just going to make sure we offer the best product and already when the orders are coming.

Very clear. Thank you.

Hi, good morning. I wanted to ask two things.

One on regarding EUV, and I believe you were sole supplier, and we've heard a lot about sort of prospects for your EUV being particularly strong compared to other lithography technologies. Are you still sole supplier there?

That's my first question.

I don't think we have confirmed that ever, but we have a strong -- very strong position.

Okay. Thank you.

And then just more general in terms of the demand trends, obviously, extremely strong that you talked through and you believe they are sustainable. But have you seen how our inventories at across the various segment lines on your customers, I know some others within short cycle have talked about potentially some restocking having happened over the last few months?

What's your view on that.

Well, we don't have a huge amount of pipeline from us through a third-party distribution network in different parts of the world. So it's not that type of the business model so much.

So in our case, it's more -- if it's an order, it is going straight to the end user in absolute majority of the cases. So they then build stock on -- on investment goods.

Well, they might be anxious to put in the orders to secure their -- the sequence in our ability to deliver like Mats touched upon. But the building pipeline of restocking is not needed so much of a phenomenon in our market.

But again, as we -- as Mats already said, we cannot quantify it, but we are pretty sure that there is a part of the overall very strong order intake and certainly be an approach to secure, let's say, deliveries in the coming couple of months. Since they see also what we see a certain strength on supply chain [ph].

Thank you.

Good afternoon. Guillermo Peigneux from UBS.

Thank you for taking my question, Mats and Hans Ola. I wanted to ask maybe a similar question to -- on this, regarding maybe from a deeper side, the shortages in semiconductors, when do you think the bottlenecks will be solved with the amount of demand that you've seen now in place in the market and the amount of, I guess, catch-up from the supply side?

And that will be my first question.

I don't have specific on end-user there, but I can follow what's going on. And of course, in Q2 last year, there is many adaptive suppliers to found their projection.

And at the same time, we have COVID situation that accelerate the digital efficient. And the shortage we have seen now in the auto sector has been very transparent with that in many quarterly reports.

But of course, we now ultimately see that all electronic businesses that it was coming in for short of supply. And -- but just -- we have a good position, but I cannot really predict when, where and how much they will need going forward as the end user.

But I think going through that will be on top of every possible project that is available a longer and we have the benefit of having a global presence in -- main manufacturers also. I think people count on us.

We will be there and take a good share of -- from this.

Thank you. And then my follow up is on electric vehicle demand that you highlight, because one of the key elements of -- basically strengthen IT.

I wanted to ask about Europe. How do you see demand from the electric vehicle platforms and models in Europe?

And do you see quoting activity increasing there even more than what you saw relative in Q1?

Well, electric vehicles as we would rank them, it seems like China has the highest activity, Europe, number 2, and US number 3 and that do not come as a surprise. But over lately, we can see that the number of projects in EV and battery manufacturing is increasing, and we hope to becoming a more and more of a significant part of our sales.

And I think we could view the battery pack going forward as a new engine for many of these vehicles. And if I look at the rule [indiscernible] that there is significantly more cars being bought that is being fully electric.

And I think you have to go back almost six years to -- where we would like to be in the position where we kind of saying, it's not only going to be a foundry, we're going to do the discount, we're going to do this activity. And now with the vision coming into that applications as well through automate, I think we have four strong technology that support us for the electric vehicle development.

Personally, I believe, if continue this way, I can see the commitment from many of the OEMs in this industry. How fast we as a consumer will accept these new vehicles, I guess, is linked to logistics around charging, which have to be an important part for continued success for many.

Thank you very much.

Thank you.

Hello. Yes, hi.

Thank you for -- thank you for allowing me to ask a question here. So my question is on Vacuum Technique business and again, given the announcements from TSMC and also you know intends plan to set up a new plant, continued CapEx update on these guys, I'm just wondering how much of that is reflecting in the Q1 orders or those announcements are likely to, you know if you book only later this year -- early next year?

I'm not sure what announcement you refer to, but I see an announcement that they -- some of them will establish businesses in the US, but that's a number of years ahead announced, but not in our books at this point. But if there was some other announcements that you read and I might have mixed up.

No, I mean, I was talking about the --

[Indiscernible] in the U.S.

I was talking about the increase in CapEx to SEK100 billion for next three years. So how much of that is reflecting in your numbers?

In this quarter you mean?

Yes.

I cannot really qualify how much of that spend has come into that and even if they have made announcement recently, I think it's unlikely that they have placed orders already on that. I think they are taking the decision that they decided last few years.

And now they say, well, let's execute on these decisions and order the equipment so we can start with the batch on. So I don't see that linked yet.

So probably that is ahead of us.

And just very quick follow-up on the ForEx hit on the earnings. I think, for this quarter, the margin, if you were to say is about 35% for revenue, you're getting around 35% hit on EBIT.

So is that a usual level we should be expecting going forward as well?

I'm not sure exactly what formula you're referring to there that --

Revenue divided by -- you know, revenue gets divided by FX basically.

Yeah. But if you talk about the sales bridge, of course, we don't know.

I mean, it depends on what the currencies do or the FX stuff. But are you referring to the revenue to operating profit?

Yeah

Relationship.

Yes, yes.

Yeah, well, I mean that is absolutely depending on what happens on the individual FX ratios. Is it primarily other currencies, then the dollar-euro ratio that moves, and it has a certain impact if it's only a pure Swedish krona strengthening or weakening, then it has another impact.

So it's a very difficult question to say this is normal or not. This depends entirely on how the FX pairs are moving in the same period last year and in this period.

The -- so that's one. We don't have a sort of a rule of thumb or anything.

If you -- on the other hand look at the profit that is, so to speak, excluding currency impact on revenues and operating profit, and excluding items affecting comparability and excluding the acquisition effect, the volume price column, so to speak, we have always stated that if you look over a period of time that relationship that we grow by 100, we expect to see some 30 to 35 falling through to the operating profit line. So that 30%, 35% is something that we still feel is reasonably where we expected.

But only over a period of time, it can be several years, but if you go for a long period of time, it normally is in that level. In -- in one quarter -- over a specific single quarter, it can vary a lot from that as you have seen in previous quarters as well, including this quarter which was almost 50%.

So I mean, there is a sort of a rule on that. But on the currency relation, it's impossible to be speaking.

Okay. Great.

Thank you very much.

Okay. Thank you.

Thank you. Just my first question is around what you're seeing in China.

And I mean, you mentioned, this is kind of an area of strength, potentially that there was some -- some pent-up demand here, but I just wonder, kind of, if you look at some of your daily order rates, how that business has evolved sort of so far in April and have you seen kind of any softening there or do you see this sort of strength from Q1 carrying on?

And when we looked at China internally, you would see then, last year down, that was end of Q1, Q2, but then we have only seen strength, continued activities among many of our segments. And as I confirmed in the report, 34% across all our business area was lot of digital or all of them.

And I think March was one day more, but the quarter was one day less. So caused a little bit impact in the service as well.

But it was very strong and we have not seen weaknesses in China. The other way around for a number of quarters was it being strong difference in many of our key segment.

All right. Okay.

And just my follow-up question was on acquisitions in sort of machine visions, software, and some of these sort of more technology-based areas. So, I mean, are you happy with the sort of pace of acquisitions that you're doing in these areas or if there was a larger acquisition, I think, you've seen in some UK listed company which is now up for sale?

Do you see interest in sort of accelerating your push into some of these areas by a M&A or are you pretty comfortable with the rate of kind of more bolt-on acquisitions as you push into these areas?

I think the key for us -- we have a quite defined process. We have -- thank you to all our divisions.

I think it on a level where the top line growth is a priority, and then we list targets, strategy and approve when we go along. But the number one question for us, is it value creating for our shareholders, and then we can move on a bigger target or a smaller target.

When it comes to vision technology right now, that technique team has taken on Isra [ph] and Perceptron in less than 1.5 years' time. So right now, it's a consolidation to get the max out of this synergy, but we continue to scout of course for possibly the largest segment that will be interesting as well, but it's not at the top of the agenda.

So that's being right now, it's more to execute on what they have already committed to do.

Okay, that's helpful. Thank you

Do you have any more questions from the audience? Hello.

Can you hear me?

Hi, gentlemen. We hear a lot about pre-ordering, double ordering, clients securing delivery slots, and so on.

And my question is a bit turnaround, does Atlas Copco at the moment try to secure supplies of certain components? And if so, which type of raw materials would be most effective or what make you most nervous at the moment?

Thank you.

You were right, those were challenge for a start scenario. We, of course, in many years have a lot of supplies, I think [indiscernible] components, and we work with a number of key suppliers, I mean, key supplier components who try to have minimum two, if possible.

And then we run the scenario planning always to each division for scenarios up, and that's in our results to help some sort of revenue. And in Q3, where we could see that there were some positive things.

We have been working in a transparent place with our suppliers. But I think to handle Q1 is okay.

But it means that the teams in purchase and in operations are really working to secure the area [ph]. Electronics is an area where we are needed to find some component for us.

I think that activity area is the one that you refer?

Yeah, yeah. Absolutely.

It's very consistent with what you read in the papers. Yeah, so sometimes we have to pre-qualify a new supplier for electronics, and then we work with R&D and do things like that.

We have been part of this upswing and downswing quite a number of time. It doesn't make it easy.

But I think as it compared to some of the competition, I think we should handle this in a qualified way [ph].

So basically, what you're saying is, you don't see the need at the moment to pre-order or too earlier than you would normally do or to even double order. That's not the case at the moment.

Is that correct?

We don't bubble order. But if you have critical component for sure.

I'm sure they order as many aspects as they could if they need. It will be first in line with the buyers and make sure that we support them ourselves to give them a transparent view on the future.

Okay. Understood.

Thank you very much.

Hi guys. Good afternoon.

Thanks very much for taking my question. Look, I was looking at the details you provided around the EBITA performance.

So I do appreciate the greater transparency on the underlying performance now. But I was also wondering if there was another message behind signaling, maybe any intention to make more acquisitions going forward?

I think, it was mainly to give -- we think we get the questions over and over again. And then we have lot of intangibles that we have had in vacuum for a number of years, and also in our Industrial Technique and help to guide you, yourself.

On the other side then, we've -- I think, last year funded $1 billion [ph] in revenues. And our commitment is to see if we can find 8% organic growth over a business cycle, which means that we need to accelerate both the organic growth, which we do.

You can see that we have increased the spend on R&D and we maintain that spend in the COVID year. And at the same time, we have hired more resources available through -- looking more candidates on the system side of [indiscernible].

I don't remember exact how many. I think it is 18 in 2019 and probably 13 last year.

And so we are scouting all the time and we have more resources in place, but it's a complement, of course, the ambition to reach the 8%. But the underlying is that it's still going to make the ones that are profitable and value generating for our shareholders.

Okay. Thanks very much.

Hi. Hey, thanks, Matt.

Just a quick one really. I was just curious for a little more color around your divisional outlook for the second quarter, and maybe if you can a little further into 2021.

I think, I heard you say, a bit cautious around the automotive end markets. What do you see there in terms of the impact on your business from lower production levels among the automotive OEMs?

And do you think that stretches beyond the second quarter? And across other parts of the businesses, I wonder what you can say around your process end markets?

Do you think for CT, and I guess, PT on the pump side, should we pass the low here and do you think we see a sustained recovery across your key sort of, as I said, process end markets?

I guess, we take them step by step. I think, first on the outlook, we don't do a forecast specifically, but I can listen to the management team and they can follow of course the media, where there are shut down.

And I think many of them have been announced, but I don't think that's consolidated that view, but at least we know that there are more shutdowns in Q2 than in Q1. I have no view when this will pass, and of course, how the suppliers of chips still distribute the orders between electronics and also myself.

I just need to make sure that my team is ready to help our customers in a possible way. And then, they also will pick up the PT.

When was the PT launched? We said --

I'm just -- yeah, I mean, I appreciate in Q1 is a seasonally bigger quarter for you in order intake in PT. I just -- I guess my question was more generally where you see your key process end markets, whether it's gas and process in CT or indeed some of the process end market in PT?

How you see them evolve from here? And I guess, I was also trying to tie you down into sort of divisional outlook into the second quarter if I could across your divisions or business areas?

As Mats said, we more than not try to speculate on each business area. Q2 outlook is a group outlook and that was not -- I have offered an extra comment around.

On the process, yeah, I think, I know you're coming from the fact that we saw a clearly that order intake in Q1 for gas and process compressors than Q4. But we still see -- we are still below the levels we were before COVID.

So it's not specifically a tremendous quarter in terms of absolute values, but it's true that it -- is that so to speak then a signal that this will continue to go in that direction. It's very difficult to say.

We see some more activity on customer inquiries and so on, as Mats alluded to you earlier in some of these areas. But it's been the, let's say, grew their industrial compressors and medical equipment that is really providing the same growth in CT.

So as you know, the process and the customers of gas and process, for example, is a longer project type of demand. So it takes a while until we see what is the trend and what would a good or a bad quarters.

But it's very difficult to make that call out.

Understood. Thank you both.

Okay. Yeah, thank you.

Yes, hi, and thanks again. Just a very quick follow-up.

For Vacuum Technique orders, can you please just help understanding what is the typical conversion to sales cycle. Is it three to six months or is it longer duration?

How does it run?

So do you mean from order to invoicing or from order to revenue?

Yes. Order to revenue.

Sometimes they are very anxious and then they come with their orders and expect us to be ready to deliver fairly rapidly, when they have come to that stage that they really want to expand the capacity, for example. I mean, but in this case, I'm sure you also see the effects of any industry that is going through a strong investment cycle that they cannot expect to have deliveries in two, three weeks' time or something like that.

It will take a quarter or two or even three perhaps on some of the bigger projects in this case. Traditionally, five years ago, I think we commented that it is a fairly short period between order and when we booked the orders here specifically in the semiconductor industry and when it is turning into invoicing.

But with this type of ramp ups that we see, I think everybody should expect that it takes a little bit longer plan.

Okay, great. Thank you.

Yeah. Hi gentlemen.

Again, a question. You had an order growth in North America [indiscernible] year-on-year.

So this is fairly strong numbers already. And we heard of companies this morning actually that they face very severe staff shortages in North America in the assembly of machinery, which prevents these company or that specific company from growing revenues.

Is that an observation that you also make? Are you getting the concerned about increasing capacity in the North American operations?

Thank you.

That is nothing that I've heard from our operation. That does not been flagged in internally here.

Okay. Thank you very much.

Yes. Hi guys.

Thanks for taking the question. So just on the hydrogen opportunity, I mean, this new CapEx investments going into this field, but also natural gas infrastructure that could be converted to transport hydrogen.

I just wanted to pick up your brain on how Atlas Copco has positioned it here, particularly on complexity technique and how you can benefit from this new -- with the opportunity?

I mean, a few segment in the market right now that use hydrogen and of course many are lowering their opportunity to choose them and we follow that development. And in the order book, specifically this quarter, yes, there are orders for this type of reputation.

But it's -- yeah, it's rather small, but activity level is high. And for commercial resources, I think, everyone expected to be in 5 to 10 years before you see significant business, but that means that we need to review the product offered that we have and we are in that space right now where we see what can we do and what will happen in the market place, but it's a little bit too early to talk about sales processes in this field.

I think it's an area which could be of great interest and great potential for our [ph] organization over time.

Okay. Thank you.

And then another one I had is more on price increases at times of raw material inflation. I understand that price increases are essentially driven by new product launches, but at times -- inflationary times, do you raise list prices on existing equipment outside of new product launches?

Yes, we do.

Okay. Thank you very much.

Thank you very much. I think the closing comments have been delivered already, as you sum it up, what has been said.

I just want to thank everybody for participating. And perhaps as a [indiscernible], remind everybody that there has been an invitation sent out for the Capital Market Day that we run in a virtual way on the 27th May this year, and with a focus on Compressor Technique this time.

So with that, again, thanks to everybody and take care, and see you soon again. Bye, bye.