Atlas Copco's First Half Continues to See Good Demand

After a breathless pace of demand growth in the last several quarters, in the second quarter Atlas Copco's vacuum division end markets finally seemed to pause for air. Orders from semiconductor and flat panel display customers are still close to twice the level before the pandemic started but seemed to have peaked. Orders were down sequentially in the second quarter for the first time in several quarters. However, group results still reflected an extraordinary (and unsustainable) demand environment with 13% organic order growth and 8% organic revenue growth. That said, management expects third-quarter demand to be sequentially lower than the second quarter. Overall results were solid, and we are maintaining our narrow moat rating and SEK 109 fair value estimate.