Atlas Copco Finishes the Year With Continued Exceptional Demand From Semiconductor End Markets

Exceptional semiconductor demand together with supply chain tightness continues to dominate Atlas Copco's earnings. That said, fourth-quarter and full-year revenue and operating profits were in line with our expectations. Looking out into the near term, demand continues to be strong especially for the company's vacuum technique, or VT, division, which caters to semiconductor companies. Customers have been ordering vacuum equipment in advance of starting up new fabs, leading to a higher-than-usual level of advanced payments, which favor the company's working capital for the year. As a result, the reported SEK 23 billion cash flow from operations was slightly higher than our forecasts. We expect advanced orders to continue while supply chains remain tight and continue to favor near-term working capital. We maintain our narrow moat rating and fair value estimate.