Business Breakdowns
Episode 71 Atlas Copco: Sweden’s Best Kept Secret
Business Breakdowns

Episode 71: Atlas Copco: Sweden’s Best Kept Secret

Business Breakdowns

Episode 71

Atlas Copco: Sweden’s Best Kept Secret

Stephen Paice is the Head of European equities at Baillie Gifford. We cover the rich corporate history of Atlas Copco, what makes its culture so noteworthy, and provide an overview of its products that are used in industries all around the world.

This episode is presented by:

Visible Alpha. The team at Visible Alpha built a platform to analyze consensus data and financial metrics on over 6,000 public traded companies. Rather than having to dig through models one by one, Visible Alpha extracts data from every line item across sell-side models so you can better understand expectations on metrics beyond just revenue and earnings. Listeners are invited to try Visible Alpha for free by visiting visiblealpha.com/breakdowns.

[00:02:12] - [First question] - What makes Atlas Copco such an interesting business 

[00:03:52] - What they’re selling and who they’re typically selling to 

[00:06:02] - Whether or not there are alternatives to air compressors

[00:07:03] - What a vacuum pump is and how their industrial vacuum business works

[00:08:55] - Metrics used to measure how Atlas Copco is a market leader 

[00:10:25] - Some of the key milestones of their corporate history leading up to today

[00:17:51] - How much the Wallenberg family owns of Atlas Copco today

[00:18:48] - Walking through the income statement

[00:21:47] - Service regularity and overview of revenue generated through service 

[00:25:35] - Cost profile of the business and how their supply chain works

[00:30:19] - Anything unique that contributes to their 6-7% revenue growth

[00:31:55] - What the consolidated business margin works out to

[00:33:23] - Being able to allocate 30-40% of free cash flow towards acquisitions in a fragmented market

[00:35:16] - What the bull case for Atlas Copco is

[00:39:46] - A metric he typically uses when thinking about these types of businesses 

[00:40:47] - The most interesting and surprising takeaways from Atlas Copco

Atlas Copco: Sweden’s Best Kept Secret

Introduction

Matt
This is Matt Reustle, and today we are breaking down the Swedish industrial giant Atlas Copco. With a market cap hovering around 50 billion US dollars, Atlas Copco is a dominant player in the air compressor and vacuum pump markets. It's returned a 40X over the past 20 years for its shareholders. And to break down the business I'm joined by Stephen Paice, Head of European Equities at Baillie Gifford. Baillie has owned this business for four decades, and Stephen still has the handwritten research notes from the mid '80s so we thought it was a proper fit. We cover the rich corporate history, including how one family, the Wallenbergs, also referred to as the Swedish Rockefellers, have played such a major role in the history. We get an overview of pneumatic energy and the importance of the air compressor market. And we explore what makes this corporate culture so noteworthy to both insiders and outsiders. Please enjoy this breakdown of Atlas Copco.

Matt
Stephen, thanks for joining us on Business Breakdowns.

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