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Atlas Copco AB
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Ladies and gentlemen, welcome to Atlas Copco's Q2 Report for 2021. Today, I am pleased to present CEO, Mats Rahmström; and CFO, Hans Ola Meyer. [Operator Instructions] I will now hand over to Hans Ola, please begin your meeting.
Thank you very much, and hello, everybody. I am very happy for many reasons to welcome you to this call today of the -- on the second quarter report from Atlas Copco. The report has been out for a while so I'm sure you've had the time to read it already. We will go straight into the comments from our CEO, Mats Rahmström. And then after that, we will go into the Q&A session, and I will come back to that after Mats' starting comments. So over to you, Mats.
Thank you so much. We will start with Slide 2, Q2 in brief, trying to summarize the quarter for you. As you can see record order intake and it was SEK 32.5 billion for the quarter. And the year-on-year is up 54%. It might not be too relevant, but sequentially also an improvement on 6%. And then we also benchmarked with 2019, which was the best year in the past event, we were up 28%. So it's an all-time high on orders for not only in Vacuum, but also in Compressor Technique and Industrial Technique, and it's spread out to all our regions. So a very positive turn back. And you can also see sequentially that was order growth for all our business areas. Record revenues. We, like many others, have huge challenges when it comes to sourcing of components, there's a scarcity of components. But I think and do believe that we handled the situation quite well. And I confirm that we also had the record on SEK 27.5 billion there as well. So quite proud of the team that is helping us in manufacturing, logistics and purchase. The margin reported margin 21.5% and adjusted for the revaluation of the long-term incentive of 21.9%. Go to Slide #3, and this just confirms the numbers and it's a quite an impressive graph. And we came in above our own expectations. And this time, the driver was not only in semi, very strong semi, but we could see many of the general industry segments being very strong. That helped us sequentially to improve from Q1 to Q2. On the bottom, the return on capital employed stayed at 26%, supported by volume. And of course, it's diluted by the intangibles from ISRA, Perceptron and some of the city's distributors, but pleased about that as well. If we go to the geographical picture on Slide #4. In the third box, you have the growth rate the last 3 months comparing them with the COVID year. But instead, I looked at the sequential improvement, and then we have double-digit growth and strongest growth in North America. It was also double digit in Latin America and now seeing a bigger growth in Europe. So spread throughout, and I'm pleased to see the 41% in Asia, which means that we are competitive in one of the most important regions. Here, this confirms the 54% on Slide 5. And as I said, sequentially up 6% versus 2019, 28%. So it's clearly a strong performance from the group. If you look at the sales page the structural changes plus three its related to the ISRA, Perceptron and CT distributors, but you can still see that we have headwind in constant currency. This is mainly related to the U.S. dollar. Slide 7, well, impressive growth numbers. And of course, gaining in the group is the most profitable part with the Vacuum Technique. So pleased to see such a strong Compressor Technique and Vacuum Technique, but now we also see strong growth rates on Power and Industrial. And then we are at Slide 8, Compressor Technique. They did record order levels, SEK 14 billion. Strong development, both for the Industrial Compressors, small and large. We could see also strong service and also sequential increases in most of the areas. Revenues at 14% organically, SEK 12 billion was a strong from them and a very, very strong margin at 23.9% supported by volume, slightly negative on the currency. And of course, very strong return on capital employed at 91%. Then I also wanted to highlight this product, another product with the extremely good energy efficiency. And this is really in line with the sustainability target that we have to help our customers to continuously improve the performance and help with the CO2 level. So bit interesting to follow this new product as well. Vacuum they have actually three records. They have both orders received, orders invoice and operating profit. So record orders and maybe this is why I said that we didn't expect from the fantastically strong Q1 to have another quarter this strong. But they really went for it and took a lot of orders for the customer. Here, we would expect orders to be placed early. It was making sure that the part of the capacity in lineup or deliveries. Record revenues and a very healthy operating profit level at 24.8%. Go to Industrial Technique. Record orders, I think automotive spelled out very strong in North America but you can also see strong development in general segment, which was very good and also continuous strong growth for service.Industrial Technique with an operating margin back above than 20%. And this, of course, includes then the intangibles for the ISRA acquisition and I think they were at 23%, if we took that away, if I recall it correctly. And another new product from this time back to promote a little bit ISRA products, very interesting segment to be in. And then Power Technique, also strong as you can see from the graph, SEK 3.9 billion. Happy to see that the utilization in especially the rental lease is going up, but it was a good performance from all the different product segments and happy to see the margin at 16%, supported by volume and slightly negative on currency. Here we have another product that is supporting the sustainability journey, energy storage normally goes hand-in-hand in generators to help our customers to reduce cost and improve sustainability. And on Slide #12, you can see the profit and loss. And I just wanted to highlight that we now help you out with EBITA, which is the operating profit, excluding amortization of [indiscernible] related to acquisitions, so you get both these numbers. Hans Ola?
Thank you. If we continue below the operating profit, you can see not much to comment on the financial items, but perhaps more on the tax expense, which looks to improve -- decrease quite a lot compared to last year, but it's actually last year that included a couple of positive onetimes of releasing a few provisions, which you can also find in the report also commented last year. I think the 22% level is fairly representative of where we are and should be at this point in time. And then you can see the increase on net profit and consequently also basic earnings per share and the return on capital employed has started to improve a little bit after the drop down to 23%, which was caused by the, let's say, immediate effect of the relatively large acquisitions last year. I think if we move on to the next, we have the profit bridge. As you can see, moving from, of course, a low 16% last year, we got a little bit of help. Of course, from the -- not having the restructuring costs of last year, and also slightly less negative LTI program effect of the valuations. The acquisitions contribute, but of course, it dilutes somewhat the margin. And so does, of course, currency as well, as you can appreciate there. Whereas, the residual, which is really the organic development, if I call it like that, volume, price, mix and other is contributing with the flow-through of 44%, which for those of you that have followed us for a long time know is a very high number. It's not the one that we expect to be repeated over a sequence of quarters, but it can certainly happen when we have a tailwind of demand like we have had right now. On the negative impact on currency, we had SEK 715 million in absolute value compared with the situation in Q2 2020. For next quarter, we believe still that it will be a negative comparison but clearly less than this quarter. So that's what we expect for Q3. If we move on to the business areas, you just get a little bit more details here of the same things basically on -- that I commented on the group total. All of the business areas, which is very rewarding, have a nice strong profit impact from the volume, price and mix. And by the way, I think the price increase is bordering between 0.5% positive to 1% positive in that bracket somewhat, which we think is a reasonable level given the type of business model that we have. If we then just to repeat a little bit what Mats touched upon, if you look at the Industrial Technique, we would take away the -- all the impact of the acquired -- recently acquired, we would be back at around 23% operating profit level, which I think just shows that it has gone pretty quick for the business to recover after the heavy drop of the COVID, and that was related to Industrial Technique, just to point that out. Rest of the comments, I think Mats already gave. So we move on to the balance sheet, where not a lot to specifically focus on. What we have in the equity, this period is that a reduction of the full dividend, which equates to about SEK 8.8 billion, but only half of that has been paid in May. And the other half, about SEK 4.4 billion will be paid late October. And so that is now booked as part of the liabilities in the group, just to see how you can reconcile the movement of the equity a little bit better there. All of that we have talked about and then sums up in the next slide in terms of cash generation. You can see that it improved in the quarter compared to the same quarter last year, in spite of the volume growth that normally ties up more working capital. On the other hand, and that which it didn't, thanks to a lot of invoicing, of course, but also perhaps to the point that we have both equipment standing in the inventory that could have been delivered if we had all the components, but partly also perhaps a little bit lower than expected due to the same factor really that we haven't been able to bring in as much components that we would have liked to keep the production even higher or to increase the production even more and related to the comments of Mats on the supply chain. Taxes paid in the quarter stands out a bit and it is pretty high for a single quarter. But there is nothing very specific in it. It's a combination of what happened last year to a certain extent that some taxes were allowed to be delayed in terms of payment in many countries due to the COVID situation and the uncertainty. And that, of course, is not repeated this year. So that's why it's higher. And then the rest is normal variations on when preliminary taxes are paid in certain countries, vis-a-vis others. But all in all, a good solid cash flow again with that at SEK 3.7 billion. And with that, I give the word back to you, Mats.
Thank you, Hans Ola. And on the near-term outlook, then we are trying to guide on the activity level we see among our key customers from Q2 to Q3. And we say that we see then a remain hike at the current level, and it is rather high for us. What we have seen in Q2 is a strong semi, improved general industry for many of our segments of improved service. So I think the trends are positive. Then we still have to have in mind that semis and outlook could be seen as key accounts but positive trends. On the negatives, all the other societies are opened up. We can also see warning signs regarding the coronavirus on the delta, although our operations are up and running today. The other thing is, of course, if we see the shortest initial supply chains, if that could stop our customers of our operating. But overall, we see a positive market with a high activity level when we start the Q3.
Very good. Thanks for that. And...
Before the Q&A, we have a new picture for you, Hans Ola, that you haven't seen in the deck yet. So it's always a legacy coming to an end today with Hans Ola's last quarterly report, retiring after 35 years in the group, 22 years as the CFO and 112 quarterly reports. That must be some sort of a record. So I'd like to thank Hans Ola for your guidance and your support during my time and when we worked together and for being a fantastic and appreciated colleague. And you know that I always challenged you on the golf course whenever you want. And at the same time, you can see this in the room and it's also on the picture, you can see that the [indiscernible] exactly the same. And you will get to know Peter more then we have the Q3 report. So welcome, Peter as well. And now I think we're ready for Q&A.
Okay. Well, let me first thank you so much Mats for those kind words and thank you, everybody on the call for challenging us so well during many, many years. With that, we move over to your Q&A session then. And I'd like the operator, please, if you can repeat the process for the questions, please.
[Operator Instructions] I have a question from the line of Guillermo Peigneux from UBS.
Guillermo Peigneux from UBS. And I wanted to follow up on a few things that I've learnt. It's sad to see you leaving but also very happy to share with you all these years that I shared with you. And I have 2 questions. One and a follow-up.
Well, I think I will disappoint you, Guillermo this time. I have strict orders only to accept 1 question at a time.
Okay. So let's [indiscernible] until the end. But the question is obviously, when it comes to the last -- the second part of the year, I guess, your operating leverage this quarter was good and according to -- or even exceeding your expectations. But I wonder whether the dynamics that you're seeing in component pricing on your assembly process, on your working capital will highlight that maybe actually going into the second half of this year, the operating leverage that we could assume might be somewhat more modest? And then that is my question.
I'm very sorry, yes, Guillermo. There was some confusion here. Could you repeat, please, the question?
Yes. Towards the second half of this year, the operating leverage that you got, obviously, during the first half was very good in the second quarter and the first half was very good and it was exceeding your expectations, but I wonder whether dynamics on raw materials, component pricing, working capital terms. We could assume that the second half could be a bit more modest from an operating leverage perspective.
Yes. Sorry, for not catching that the first time, sorry, Guillermo. But, no, I think as I indicated already before, this is an extremely high level. And with the type of business model that we have, we are not expecting to see that when, let's say, the revenue growth is more moderate, so to speak. Now of course, with this order intake, we expect indeed to have a good trajectory for revenues for some time, of course, because certainly, we want to deliver the goods that we have orders for. But I think one should be careful to project the same type of flow through's. So your statement, if I understood you right, is that we probably should not expect the same. I would agree with that. I mean, we're in the beginning of a recovery phase still. And we know from investments that are granted, investments that are coming on stream as we speak. We know from recruitments. We know from a number of these things that we are adding some cost. It's not the problem, of course, because we have the strong growth in the business. But indeed, it can have a certain moderating effect on the flow-through, yes.
Our next question comes from the line Daniela Costa from Goldman Sachs.
And standing the wishes of happy retirement to Hans Ola as well. My question is regarding understanding a bit better the profile of orders delivery in the Vacuum technology business going forward. So how shall we think about like the orders that you have at hand now? Are they mainly for delivery this year, sort of like will they impact organic sales growth next year as well? Can you just give us a little bit about like how you're seeing the orders to sales development?
So as I said briefly on the VT part, I think customers are aware that there is a shortage of capacity industry, considering the huge demand for semiconductors in many different segments of the market. And we -- I'm sure that we have some preorders. So some of the orders are booked with the delivery time. But I would say the majority is expected to push out as much as we can this year. So it's not like it's scheduled for mid-next year or anything like that. But a normal delivery time or that they place the orders for delivery as soon as possible.
Yes. Maybe can I clarify just if I understood. Because when we look at like 40% growth rate year-to-date on the order side, we shouldn't sort of like extrapolating towards next year revenue growth?
I think you should take Mats question as well, there is some preordering meaning that we don't know whether that will actually be deliveries exactly by the end of the year or even spill over something. But we are talking about the majority being something that we see projects and where we definitely do everything, we can in order to respond in terms of deliveries. But to your point, it's an extraordinary increase that we have seen. So to expect that everything can be from a capacity point of view even be coped with inside the next 2 quarters is perhaps too optimistic, yes.
Our next question comes from the line of Max Yates from Credit Suisse.
I just wanted to ask about geographic trends in Compressor Technique. And I know you don't sort of talk about trends through the through the quarter, but I just wanted to understand if you could give us a little bit of color around what you're seeing in Europe, North America and China, and maybe not necessarily how that developed through the quarter, but are you seeing very different trends through those 3 regions? A bit of color there would be helpful.
The comments that are in the report is basically as much as we can say, to your point, it's not about whether April was super strong or June was strong or anything like that. But the strong take on the quarter in general is the impressive growth in both North America and Asia of the Industrial and pretty diverse -- diversely exposed divisions, if we call it like that. And then I'm referring to all 3 business areas, at least Compressor Technique and Vacuum Technique, but also Industrial Technique that address, let's say, manufacturing segments primarily. And so it's really not, as Mats has already pointed out, it's not only about semiconductor making the big numbers this time. It's much more spread than that.
So is it fair to assume that all regions and compressors are above the sort of pre-pandemic levels? Because obviously, we can see compressors as a whole, but is it fair to assume that's true of all the regions or is it mainly driven by one if we compare to 2019?
It's pretty well spread, I would say. But by -- as I alluded to, that perhaps North America and Asia stands out a little bit more than the others. I don't have exactly in my head, whether it's a record level on all regions, unfortunately, but it's high levels in those 2 at least and record levels.
Our next question comes from the line of Andy Wilson from JPMorgan.
I wanted to ask on Compressor. There's sort of an interesting phrase you used in the report this time, which I don't recall seeing at least recently in terms of the increased market penetration, which obviously has contributed to some of the growth. I just wondered if that was -- or if you could kind of elaborate a little bit on exactly, I mean, clearly, that would point to further market share gains. But just given you've specifically highlighted that, I'd be interested if there's anything that's particularly either changing in the market or that you'd like to emphasize in, I guess, how you're winning those market share gains?
Yes. But that's correct. And I think there is a couple of segments where we have invested over the last few years, slightly more. And one of them being in fresh -- scarcity of fresh water, so it's low-pressure machines, where we do believe that we gain market shares and you could see that we introduce even more products in this segment. So that's something that we are proud of and that increased the penetration of that market. Same thing for high pressure, where we also invest a little bit more in the product portfolio. And I can also see that medical has been performing very well, not only linked to the COVID situation. So there's a couple of segments in the market and on-site gases, oxygen and nitrogen generation on-site and other segments. So there we have 4 areas where we think that we are gaining penetration in the market and upgrading equipment to something that is much more efficient than the present equipment.
Our next question comes from the line of Maddy Singh from Bank of America.
Before I ask my question. again, all the best, and all the best to Hans Ola for his retirement. So in terms of question of, the order growth, which you have reported across the board looks very strong. So just wondering whether there have been areas where you actually have seen any growth rate peaking or any slowdown per se or any regional slowdown as well, if you have noticed, especially coming from, let's say, China where the second quarter had already seen recovery from last year. So if you could talk about some of those things.
For me, if you look at our key markets, the power hubs of the world throughout the quarter, being Asia, North America and Europe, we see strong sequential growth. And the only region where we had a slight negative was Africa, which is a very small region for us. But otherwise, we have seen a very strong demand throughout many geographical areas.
And then to conclude, as you alluded to China and the already good comparison levels last year of -- compared to the other regions due to recovery from COVID. No, we didn't see any different relative growth rates or anything there. It's exactly what Mats pointed out.
And this is very -- I would say, it's probably a surprise because when kind of -- some logistical challenges plus shortage of chips, semiconductors, those concerns. So despite of these issues, you have been able to see strong sequential growth. So is that a fair conclusion that these issues like chip shortage and logistical issues didn't really have any impact on your performance?
No. It do have an impact on our performance as well. But as long as we are better than competition, then probably it's likely that they place the order with us. And remember then, going into the COVID situation almost 2 years ago, we kept investing in R&D and our portfolio, we kept investing in competence and we kept investing in digitalization. So and this was the reason to see if we can gain market share when the market is coming back. And we saw -- started to talk about supply chain mid last year that we see that, okay, what can we do? How can we be ahead of the game? And it's not scientific, but hopefully, those are the initiatives that put us in a better position right now. And hopefully, we are gaining some market shares in many different markets.
In one way that Mats already commented upon, it, of course, has already -- have impacted also us in the sense that without them, we could possibly have had a little bit even higher deliveries already.
Yes.
But when it comes to orders, it's exactly what Mats commented on.
Our next question comes from the line Klas Bergelind from Citi.
It's Klas from Citi. So my one question is on semis and a flat panel. It's flat quarter-on-quarter and still a very good level, of course, but the reason for the very strong growth quarter-on-quarter in VT was obviously growth outside of semis. Have you seen any difference between semis and flat panel towards the end of the quarter, I'm interested to hear if flat panel weakened at all? There is probably some give away -- or give back of the preordering in the first quarter, but interested if there has been any underlying slowdown in parts of the semi flat panel spectrum?
I must [indiscernible] to say I haven't followed the differentiation there at the time. I don't have any numbers for you that would be accurate.
We -- I think we touched upon it lightly before that we haven't seen a major change in the underlying customer activity. So it's really, as we have always said, the key account market and extremely difficult to judge months, of course, but even quarters to what will be the actual demand level? And how can you interpret with a little bit of a softer week or month or something. It's extremely difficult. So that's why we revert back to the more general statement that we haven't seen anything that we interpret that as a slowdown nor an even stronger pickup for that reason in that segment.
Our next question comes from the line of James Moore from Redburn.
Hans Ola, can I join the long list of congratulation and wish you a happy retirement.
Thank you.
I have a question about flow through. So could you help us understand what's happening in your Vacuum business a bit more. I -- The numbers are very big. And I know you don't break it out. But could you give us a rough labor about how the service -- the 2 service businesses, do they kind of just carry on growing it, I don't know, a 10% type growth rate and everything else is just on the equipment side. Really, my question is about speed and service in Vacuum and whether that also has extraordinary growth rates?
Well, it does not reach the extraordinary growth rates of the equipment, that would be physically impossible. But it's interesting to see the type of growth that they have had compared to 2019, for example, which was the previous best year we had. And it's very, very strong and it's very comforting levels we see when we make that comparison. But probably come to a sort of the yearly growth rate in that region that you mentioned yourself, roughly. But not anywhere near -- not on the 50%, 60%, 70% levels that we see for the rest the month.
And when we talk about the equipment side on the orders, how much of this strong business is a function of the near-term shortages of a semiconductor supply chain versus the ongoing structurally at a good, growing more and more semiconductor market?
But we don't really -- we're not in the market per quarter. We just looked at the number of construction sites around the world for semi plants coming up in the coming years. And we have to look at that map, I must say that it feels like we are truly in the right segment. And then, of course, how much is the demand when the auto industry picked up again in terms of -- it's very difficult for us to judge, and I'm not sure the customer would tell us either. But to be in this segment, considering 5G is coming along, I can see more and more of our factories being connected. So I'm not really so concerned about the demand level for a number of years to come, but it's been fluctuated between quarters as we have said. And then on the Industrial and scientific, of course, we are gaining by us bringing embedded products to the market. So we are quite pleased with the position that we have going forward.
Next question comes from the line of Sebastian Kuenne from RBC.
My question would relate to the IT division. I would like to know roughly what the portion of businesses there that you do with electric car manufacturers. So battery, electric car assembly and so on. What part of that business is currently related to electric?
If you look at the Industrial Technique as a whole, I believe, 50% to 60% of the business is related to auto in one way or the other. And when I asked the same questions because I do ask the same question, they say that the majority today is related to cell manufacturing batteries or hybrids or full electric. And of course, the full electric is the one that's taking off more with different programs. So very little CapEx goes in from our side that leads into fossil fuel combustion and the type and most of what you see in the report linked in one way or the other to electrification.
I would have one other question, if I may?
Do we have other questions still to take? Well, if you don't mind, if we continue with the next person in line and then we'll be happy to come back. I think we will have time.
Our next question comes from the line of Alasdair Leslie from [indiscernible].
I was wondering if you could share some additional thoughts on your new machine vision solutions department. What kind of future growth you anticipate here, and do you plan to do any more acquisitions here?
We have entered into this because we believe it's growing faster than GDP. You can see that they have ISRA, if I start with that, and had a very interesting surface vision, which was 75% of the business. And on the industrial application, of course, we have access to all accounts within auto, for example. And we can see that the metrology park and industrial vision is growing. So we do expect higher growth rates from this and that you can see on the multiple that we paid for the company. It's developing quite well, not only for us, but also for competition. So it's a very good segment for us to be in. And that's the reason why we have entered it. And also, a good combination with a lot of our own equipment because we see automation entering into many of our tightening applications, and then we can combine tools, software and vision systems. So I think I see both synergies when it comes to the industrial applications, together with our tools. And then in terms of acquisition, you can take it segment-by-segment. But is there a possibility for a rollout? Absolutely. Is that the number 1 priority right now? Probably not because now we need to integrate this, we need to fix Perceptron from a profit point of view. And then we are probably ready then to look at other candidates if we do it successfully. And so far, we are very pleased with the acquisitions that we have done in this period.
[Operator Instructions] I have a question from the line of Gael de-Bray from Deutsche Bank.
Congratulations, Hans Ola. Obviously, also congratulations to the entire group for a very strong commercial performance this quarter. So I had a question in this respect. At the letters to CMD, you highlighted that a large part of CT's commercial success was related to a strong increase in R&D or in particular, over the past few years. And I think this effort led to, I think, the number you provided at the time was 55 new products released in 2020, which compared to only 35 or so in the previous years. So would be possible to have an update on this for 2020 on the number of new products, which is in the pipe for this year. And since you have a clear innovation focus on energy efficiency products CO2 emission reduction, energy recovery and so on. I wondered if you would also have any comments on the new EU climate policy architecture, which was released just a couple of days ago?
If I start the last question then. We have not really digged deep into the new regulations. But in general, we are positive to support the transition of the society to be more CO2 neutral. And that we do from a personal reason, of course, on the planet. But also, from a business reason, we see that we provide our customers with the most energy-efficient product, and we tend to continue to do that. And we think that might leave a gap between us and some other competitors. So for us, this type of regulations where industries like to see less CO2 footprint is beneficial for a company like ours. And we do invest like you saw in today's presentation as well, even more resources into providing financially, something that is better for the customer, but also from an environmental perspective. In terms of what we will release and when the market we will keep that to ourselves and not share that with competition so much. But I think [indiscernible] was generous at least to show the tons of new products coming, and we would not release anything that's worse than we have or not better than competition. So the release will be the best product.
Our next question comes from the line of Rizk Maidi from Jefferies.
I just have a question on the order intake, which was quite impressive. It was quite a strong quarter for Hans Ola's last quarter. As always 30% above 2019 levels. And if I look at the bat chart, [indiscernible] on page 5, this last quarter seems a bit odd when comparing to the trend of order intake since 2012. Mats, what would you attribute the strong demand to a -- is there an element of double ordering in the availability of liquidity out there? Or is this emerging trends on the back of COVID such as shortening of supply chain and restoring capacity?
Well, I think we have to take turns on that one, which is basically a very, very broad -- well, the economy-almost-related question, it's difficult for us to pinpoint those factors, of course. But the combination, of course, I mean, I think the COVID recovery cannot explain all this, i.e., that people were scared to do investments for a while, then we possibly seeing some growth. But to your point, it's way above those levels. Of course, our exposure to very interesting end markets like the semiconductor market with the tailwinds that, that segment has is a contributing factor definitely. And then what also Mats eluded to, we really focus on the product development and innovation and try to dig out so many -- as many segments as possible where we feel that we have a product offer that we haven't really penetrated that specific segment with I don't think that it's an effect of a big change from globalization to regional or localization yet. But I don't know if I forget something there, Mats or...
No, but we were debating ourselves a little bit a gap between 2019 and where we are today. And okay, you can say that it builds back up quicker than expected to the 2019 level, but now we are significantly above that. And we do see these investments in semi where we do believe that the customers are preordering equipment, making sure that they are first in line for deliveries. How much that is, is very difficult to speculate in. But then we also went through the other business and say, preordering tools in industry technique. We don't think so industrial compressors, now we don't think so and power, we don't think so. So that is in that scope, I think, but we can also see the close link to some other things in the segments that we presented on the Capital Markets Day where we are gaining speed in some segments, which we also talked about in terms of penetration. So I think many of these strategies are paying off. And right now, when we speak, we are working on the next segment that we like to penetrate in the coming months and years.
So we welcome Guillermo back then.
Guillermo, please.
[Foreign Language]
Guillermo from UBS.
Okay. Perhaps, we can wait for Guillermo a little bit. we can go on to the -- hello, is this Guillermo?
Yes. I have an additional question. Sorry for that. I wanted to ask about the size of the business. You mentioned vision in a number of occasions in your report. And I wanted to ask whether you could share with us the size of the vision, the mission, vision business as we speak.
Well, I think that you can calculate more or less from yourself. We have reported a nice, steady growth a couple of quarters so and that, I would say, continues and the size of the 2 acquired companies. So there's nothing magic in that. It's not the agent part of Industrial Technique as of yet, of course. But yes, it has grown repeatedly in the quarters that we have owned them.
We have a question from the line of Lars Brorson from Barclays.
Good luck, Hans Ola. Mats, if I can just try to peel the onion a little bit on your comments around China and the industrial businesses in China. I noticed that your gas and process business is moving sideways. Sequentially, it was up in the first quarter and now talking about sequentially [indiscernible]. Is that driven by China and whether you're seeing in that part of the business? I mean, obviously, you see a notable correction in Asian gas and petrochem prices this year. I wonder whether you're starting to see an impact on your business. And then on sort of other industrial short-cycle businesses in China, again, we have [indiscernible] earlier talked about a notable slowdown in part driven by automotive. I wonder whether you can recognize that in your, say, legacy cyclical businesses or your power tool business, your consumables, which perhaps are more production-driven, but maybe that's being offset by strong growth in new emergency by the thesis. So I'm just trying to understand or maybe got a bit of flavor for the DNA of the growth profile of the Chinese business for the Industrial asset space?
Yes. Maybe I should start, Hans Ola. On Gas and Process business, you say go sideways, yes. But we have had a couple of quarters where it also has been negative not specifically related to China, but with other price I think that we start at least see a more positive trend there, even though it has not shown in this quarter just yet. And China, if I look at the quarter and the last few quarters been very solid. And I don't think we have any evidence that it's beginning for us just yet at least. But I can also follow your comments, and we have to wait and see a little bit, I don't know if Hans Ola can elaborate on that? And was it tight?
No. I think the numbers that are reported from China when it comes to CT, but many of the other business areas as well are really very good. So it's not at all that it's only the semiconductor industry, the famous one with all the spend that is driving the growth. If we look at Compressor Technique, it's at very high levels, and that is irrespective of what type of compressors we're looking at basically. So it's at very high levels. We can only reiterate that the -- there is nothing in the cards that indicate the change of trend in that respect.
Our next question comes from the line of William Mackie from Kepler Cheuvreux.
Congratulations. My question actually relates to how you're thinking about investment across your business. If we look 2 record quarters, rising backlogs, positive global economic outlook and yet really, your investment rates across the business haven't moved much against the 2019 levels in comparison. So can you maybe flesh out how you're thinking about where to prioritize investments across the businesses, but the 4 business areas and perhaps where you see the most critical bottlenecks or areas that need to be expedited to meet this backlog that you face?
In our case, then each business area has a plan to be that. And what we do see as the change strategically with the pandemic with the protections that we have seen that we need to be more local for local. So we need to have a closer presence to customers and their applications. So a lot of the investments lately come to Asia to support the Vacuum divisions. And there, we always would like to have some extra capacity to take these peaks of orders.45 And now we utilize all the capacity that we have. And -- we continue to invest in local manufacturing and local development and local sourcing. And that also goes for South Korea -- So I will say that. And then we have the hubs, of course, with here in Sweden for Compressor Technique and in Belgium for CT. But if I just take what we have done the last year, I would say that a lot of the investments in Asia to support the growth rate we have in Asia. And we have 42% of the group's business in Asia today. This is where we are ramping up capacity and competence.
I think that concludes, right, the line of questions, operator. Is that correct?
We do have a follow-up question from Sebastian Kuenne Kelner from RBC.
So we take the follow-up from Sebastian.
I'd be honored to have the last question for you, Hans Ola.
Go ahead.
In the Compressor business, there's a lot of work on hydrogen economy, of course, which will require a very low gas compression if you transport methane or hydrogen from Chile or from Africa wherever you get it from? And I feel that it doesn't have that type of Compressor because they're usually risk prograding compressors, they can go up to 3000 bar. Where do you see your portfolio in respect to 10 years from now where you have to be in the hydrogen economy. Do you think we're ready for that market? That will be my last question.
No. But I think at your -- when it comes to product range for all applications In hydrogen, we don't have a full range of product there. We are, of course, evaluating ourselves a bit. Will hydrogen be the winner or will we see other winners like battery technology for the truck industry, for example. But we are preparing our case to be ready and having the best product in this segment as well. But we think it's a few years away as well to really be a huge potential for compressor. And as you say, it's more of 500 bars and upwards -- in this segment, and we have a range, but it's not a complete range, but it's for sure 1 of the future segments where we show an interest and we intend to have a strong position in this segment when it takes off and if it takes off in the way we think.
And it could include M&A, of course.
Absolutely. It would include that. It's probably like we do every...
It may to your point, that's what Mats trying to say. They include.Then I would like to say thank you to everybody. I extend it to not just for this call, but as I indicated before, for all the years and all the challenges and support given to me and to Atlas Copco, of course. So with that, thanks, everybody, and have a nice summer for those of you that have the opportunity to do that. Thank you, and goodbye.