Epiroc Ab Class A · OMXSTO:EPI_A
Epiroc Ab Class A — Investor Day (2019)
132 slides from Epiroc Ab Class A's investor day presentation, 2019
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Slide 2: Epiroc Capital Markets Day 2019
Wifi code: EpirocCMD Epiroc Capital Markets Day 2019 Mattias Olsson, Senior Vice President Corporate Communications
Slide 3: Safety first!
Safety first!
Slide 4: Practicalities
———— acticalities
Slide 5: Purpose
Purpose
Slide 6: Today's presenters
Today’s presenters Mattias Per Helena Martin Sami Jose Breakout Anders Olsson Lindberg Hedblom Hjerpe Niiranen Sanchez sessions: Lindén SVP Corporate President and SVP Mining and SVP M&A and President President Intelligent mining SVP Controlling Communications CEO Infrastructure Strategy Underground
Slide 7: Video
Video 7
Slide 8: Epiroc Group
Epiroc Group Per Lindberg, President and CEO
Slide 9: Epiroc's key strengths
Epiroc’s key strengths Leading Strong and High and resilient Driving the future History of value productivity proven operating aftermarket in intelligent creation for all partner in model exposure mining and stakeholders attractive niches infrastructure 9
Slide 10: Leading global productivity partner
Leading global productivity partner Epiroc in brief • We provide customers in selected niches of the global mining and infrastructure with – innovative, safe and sustainable drill rigs, rock excavation and construction equipment, and tools – world class service to enhance productivity – solutions fo
Slide 11: …in attractive niches
…in attractive niches Exposure to hard rock applications Mining Infrastructure 76% of order intake* 24% of order intake* Surface civil Underground civil Deconstruction and Underground mining Surface mining Exploration engineering and engineering recycling urban development Customer characteristics C
Slide 12: Strong and proven operating model
Strong and proven operating model Focus and agility Focused and High degree of Strong services Flexible Sharp focus on decentralized direct sales and business manufacturing innovation business services philosophy Quick and ~85% direct sales Aftermarket 75% of product cost Leadership in efficient 65%
Slide 13: Focused and decentralized businesses
Focused and decentralized businesses 2 segments and 7 divisions Equipment & Service Tools & Attachments Surface and Underground Rock Mining and Rock Hydraulic Drilling Solutions Rocktec Rock Drilling Tools Exploration Drilling Excavation Excavation Service Attachment Tools Product companies, custome
Slide 14: Always close to our customers
Always close to our customers Global presence with high degree of direct sales and service Sales in +150 countries Revenues by region* North Asia / America Australia 22% 26% Top 10 customers represented 18% of revenues in 2018 South Africa / America Top 10 markets Middle 16% % of revenues 2018 East
Slide 15: High proportion of recurring business
High proportion of recurring business Revenues Harsh environments leads to significant maintenance requirements Equipment Service Tools & Attachments 26% 35% 65% Aftermarket 39% Our service offering optimize our customer’s productivity and lowers the total cost of operations 12 months until Septembe
Slide 16: Attractive mix of revenues
Attractive mix of revenues Growing aftermarket making us more resilient 60.000 71 75 70 55.000 67 70 65 63 65 50.000 60 45.000 55 41 127 40.000 38 285 50 35.000 45 31 364 14 645 14 463 40 30.000 28 663 27 102 35 10 016 25.000 8 768 30 7 989 20.000 25 15.000 20 26 482 15 23 822 10.000 19 895 19 113 2
Slide 17: Driving the future in intelligent mining and infrastructure
Driving the future in intelligent mining and infrastructure Leadership in automation, digitalization and battery • Market leading offering in automation and information Increasing levels of machine automation management solutions • Strong market attention for 6th Sense • 60% of equipment delivered w
Slide 18: Value creation
Value creation Solid revenue growth Improving profitability 50 000 12 000 30 45 000 11 000 41 127 10 000 +12% 25 40 000 +9% 38 285 9 000 8 282 35 000 20.1 8 000 18.9 19.3 20 31 364 18.1 7 385 30 000 28 663 16.8 27 102 7 000 5 930 25 000 6 000 15 5 175 20 000 5 000 4 548 4 000 10 15 000 3 000 10 000
Slide 19: Sustainability is integrated
Sustainability is integrated In our own and customer’s operations Code of Automation Conduct Responsible ”Walk the and efficient talk” value chain Zero Diversity emission 19
Slide 20: Financial goals
Financial goals Goals Description 2015 - 2018 Sept. 2019* Compound Growth Annual revenue growth of 8% over a business cycle annual growth 10% 14% rate Average Industry-best operating margin, with strong resilience over Profitability operating 18.3% 20.1% the cycle margin Improve capital efficiency a
Slide 21: This is Epiroc today
This is Epiroc today. Together, we have built it, together we will grow it. United in performance. Inspired by innovation.
Slide 22: Uncertainty weighs on near-term robust market
Uncertainty weighs on near-term robust market Robust production level among Mineral prices at good levels Strong customer focus for customers supporting strong improved productivity – leading to growth in aftermarket strong growth in connectivity and 150 150 automation 140 140 130 130 120 120 Global
Slide 23: Softer equipment demand, strong aftermarket
Softer equipment demand, strong aftermarket Orders received, Equipment Orders received, Service Orders received, T&A 5 000 5 000 5 000 4 500 4 500 4 500 4 234 4 054 4 097 4 147 4 000 4 000 3 761 3 806 4 000 3 713 3 601 3 580 3 589 3 500 3 147 3 281 3 355 3 442 3 500 3 388 3 500 3 142 3 181 3 053 3 1
Slide 24: Near-term demand expectations
Near-term demand expectations Epiroc Q3 Outlook “In the near-term, we expect that the demand will remain largely at the level seen in the third quarter. That said, the economic environment continues to be uncertain.”
Slide 25: Medium term - replacement demand
Medium term - replacement demand Equipment fleet, by year of commissioning • 24% of the equipment is older than 10 years • The average age is about 7 years • Utilization/running hours, maintenance, midlife services, etc. impact the condition of the machines – Average age and running hours vs. expect
Slide 26: Long term market dynamics attractive!
Long term market dynamics attractive! A growing world… Increases the underlying need for infrastructure and minerals We have a strong position and the right solutions to … with increasing challenges to meet customers’ challenges meet the demand… Driving cost of hard rock excavation Safe and sustaina
Slide 27: A growing world… (1/4)
A growing world… (1/4) Increases the underlying need for infrastructure and minerals Economic growth Population growth Strong urbanization trend 300 000 12 000 12 000 11 000 11 000 250 000 10 000 +0.8% 9 735 10 000 220 318 9 000 9 000 8 548 200 000 +3.0% 8 000 7 631 8 000 7 000 7 000 +1.4% 6 620 150
Slide 28: A growing world… (2/4)
A growing world… (2/4) Increases the underlying need for infrastructure and minerals Global construction market Total mining capital expenditure drill-to-mill 15 000 60 14 000 55 13 000 +4% 51 -4% +6% 12 000 12 400 50 12 000 11 500 46 47 11 100 44 44 45 11 000 +4% 10 300 10 600 42 10 000 9 500 9 800
Slide 29: A growing world… (3/4)
A growing world… (3/4) Favorable hard rock exposure Gold Infrastructure 21% 27% 17% Copper 12% Other 2% Zink 3% 9% 4% 5% Coal Nickel, Lead Platinum Iron Favorable trends Mixed trends Estimated exposure of revenues in 2018 29
Slide 30: A growing world… (4/4)
A growing world… (3/4) Example: Electrification driving metal demand Electric cars sold annually, millions Metal used per car, kg +2 050% 83 Assuming that 30% of all cars sold in Copper 60 2030 are electric: 43 23 • The demand for copper would increase by an additional 10% +1 050% 32 • The demand fo
Slide 31: … with increasing challenges to meet the demand… (1/2)
… with increasing challenges to meet the demand… (1/2) Customers meeting productivity and complexity challenges Average overall equipment effectiveness in different industries, % Strong focus on productivity 150 Underground mining 29 140 130 120 38 Open pit mining 110 -27% 100 Crushing & grinding 90
Slide 32: … with increasing challenges to meet the demand… (2/2)
… with increasing challenges to meet the demand… (2/2) Increasing cost of hard rock excavation Depletion of ore grades Trend towards underground expected to be strong 2.6 2.4 2.2 2.0 1.8 64 71 67 67 1.6 77 1.4 1.2 1.0 0.8 0.6 33 33 36 0.4 29 23 0.2 0.0 1990 1995 2000 2005 2010 2015 2020 2025 2030 20
Slide 33: …and strong focus on safety and sustainability
…and strong focus on safety and sustainability Customer’s taking on the sustainability challenge* Category Key subcategories Why do we always put safety first? Reduce number of casualties Because our equipment and solutions make a difference! Health and safety Reduce number of injuries Reduce illnes
Slide 34: The right solutions to meet customers' challenges
The right solutions to meet customers’ challenges Service and maintenance We have a strong position and the right solutions to meet customers’ challenges Productivity enhancing solutions Safe and sustainable solutions, increased productivity and lower total cost of ownership Automation, electrificat
Slide 35: Video
Video Smart, safe, seamless 35
Slide 36: Strategy and foundations for success
Strategy and foundations for success Value creation for all stakeholders Operational Focus on Innovation and Safety and Presence and People and and service Outperformance attractive niches expertise sustainability penetration leadership excellence All rights reserved by Epiroc. 36
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Slide 38: Strong and resilient aftermarket business
Strong and resilient aftermarket business Helena Hedblom, Senior Executive Vice President, Mining & Infrastructure
Slide 39: High proportion of recurring business
High proportion of recurring business Revenues Harsh environments leads to significant maintenance requirements Equipment Service Tools & Attachments 26% 35% 65% Aftermarket 39% Our service offering optimize our customer’s productivity and lowers the total cost of operations 12 months until Septembe
Slide 40: Solid growth in the aftermarket business
Solid growth in the aftermarket business Strong aftermarket business provides resilience 28 000 Epiroc, incl. hydraulic attachments as from 26 482 26 000 2015 +7% 23 822 24 000 22 000 21 348 19 895 20 000 +8% 19 113 18 000 18 000 17 400 17 200 15 900 16 000 14 000 14 000 11 900 12 000 10 000 8 000 6
Slide 41: Keys to aftermarket success
Keys to aftermarket success Presence Efficient Technical Focus People and supply chain know-how leadership 41
Slide 42: Trends and customer values in aftermarket
Trends and customer values in aftermarket • Safety and sustainability • Productivity and efficiency • Total Cost of Ownership (TCO) • Connectivity – digitalization 42
Slide 43: Broad aftermarket offering
Broad aftermarket offering • Service • Supply of • Midlife • Rock drilling • Hydraulic agreements spare parts services, tools attachments and audits and training, and components other service products Service 39% Tools & Attachments 26% 43
Slide 44: A strong service business
A strong service business Revenues Service revenues Service 16 000 15 746 +7% 15 000 14 302 14 000 13 000 11 807 12 107 12 000 11 188 11 000 10 000 9 000 8 000 65% 7 000 Aftermarket 6 000 5 000 4 000 3 000 2 000 39% 1 000 0 2015 2016 2017 2018 2019 12M Sept Service revenues, MSEK 12 months until Sep
Slide 45: Presence is vital and a competitive advantage!
Presence is vital and a competitive advantage! >100 service workshops >6 100 3 employees remanufacturing in Service centers >280 3 sites with service regional contracts with people Service centers distribution on site Remanufacturing centers centers *Employees in Service, excluding additional workfo
Slide 46: Service – value proposition
Equipment life cycle and service offerings Service – value proposition Value Midlife services Connectivity Reman solutions Training Custom engineered solutions Spare parts / service agreements Equipment life cycle 46
Slide 47: Examples from our broad service offering
Examples from our broad service offering Replacement Service Reman Midlife services Custom Training Telematics parts and kits agreements solutions engineered products (connectivity) and audits solutions All rights reserved by Epiroc. 47
Slide 48: Service agreements
Service agreements From parts provider to partner Service agreements revenues • Clear service value proposition +27% 140 • Service agreements for 127 120 113 different demands 100 100 • Lifecycle management 80 60 40 20 0 2017 2018 Sept. 2019 Service agreements revenues, index 48
Slide 49: Reman solutions
Reman solutions New lease on life Reman solutions revenues +80% • Sustainable remanufactured 178 180 components 180 160 • Original Equipment 140 Manufacturer (OEM) certified 120 100 100 quality 80 60 40 20 0 2017 2018 Sept. 2019 Reman solutions revenues, index 49
Slide 50: Midlife services
Midlife services Extend equipment life Midlife services revenues • Replacing old with new +56% 156 components, returning 160 140 equipment to maximum 129 120 productivity and operating 100 100 efficiency at a fraction of the 80 cost of a new machine. 60 40 20 0 2017 2018 Sept. 2019 Midlife services
Slide 51: Custom engineered solutions
Custom engineered solutions Engineered to meet Custom engineered solutions revenues individual needs • More than spare parts, less 250 +106% than a machine 206 200 180 • The solution is designed to 150 match the machine 100 configuration, and to 100 incorporate the latest version 50 of components to
Slide 52: Training products
Training products A safe way to generate value Training products revenues • Training tools that raise +64% operators’ skills, increase 180 164 Full cabin 160 their ability to master the Desktop 140 129 machine and drilling 120 100 expertise, right from the start. 100 80 60 40 20 0 Classroom trainer
Slide 53: Connectivity – an enabler for service transformation
Connectivity – an enabler for service transformation Connectivity Data analysis Data driven service 53
Slide 54: Seamless interaction
© 2019 PwC - Confidential & For Discussion Only Seamless interaction Proactively understand needs for service, spare parts and consumables Epiroc proactively Customers are empowered with Whether you are supported automatically, understands the needs easy and context-aware ability to remotely or on-s
Slide 55: Tools & Attachments
Tools & Attachments Revenues Tools & Attachments revenues 11 000 10 736 Tools & Attachments +7% 10 000 9 519 9 000 8 738 8 088 7 925 8 000 26% 7 000 6 000 65% 5 000 Aftermarket 4 000 3 000 2 000 1 000 0 2015 2016 2017 2018 2019 12M Sept Tools & Attachments revenues, MSEK 12 months until September 20
Slide 56: About Rock Drilling Tools
About Rock Drilling Tools Summary • Key contribution to customer productivity total cost of operation – Invisible products that do the job – Presence and supply-chain key • Complementing Epiroc equipment innovation • Resilient business • 70% of sales through some level of customer agreements • Raw m
Slide 57: Redefining the offering in Rock Drilling Tools
Redefining the offering in Rock Drilling Tools Grow and acquire in core businesses Tophammer Rotary & raiseboring Down-the-hole Exploration Ground support Divest / exit non-core businesses Oil & Gas Geotechnical Handheld 57
Slide 58: Innovation driving the business forward
Innovation driving the business forward Digitalization • 6th Sense • Seamless view of rock drilling tools performance • Co-operation with capital equipment divisions to enable real-time performance monitoring • Smart Inventory Management • Cost per measure contracts – Daily tracking and reporting on
Slide 59: Innovation driving the business forward
Innovation driving the business forward Product development • Power Bit Underground – Faster penetration rate – 37% longer service life • New M-series DTH hammers – The fastest DTH hammer ever with a unique piston design allows much higher impact frequency. This means also lower fuel consumption and
Slide 60: About Hydraulic Attachments
About Hydraulic Attachments Key summary • Premium hydraulic attachment tools for demolition, recycling, mining and quarrying • Key contribution to customer productivity • Mainly towards infrastructure • Distributor sales – Synergies with Epiroc - market presence and expertise 60
Slide 61: We make a multi-tool out of our customers' carriers
We make a multi-tool out of our customers’ carriers Hydraulic Attachment Tools Handheld Tools Concrete equipment Breakers Drum Cutters Shears: Steel Cutters, Concrete Busters, Combi Cutters Bulk Pulverizer Demolition Pulverizer Bucket Crushers / Grapples Screeners Magnets Compactors Related service
Slide 62: Silent demolition tools
Silent demolition tools • The silent demolition product Silent demolition tools revenues range has been developed +31% and the offering is broader 140 131 120 114 100 100 80 60 40 20 0 2017 2018 Sept. 2019 Silent demolition tools, revenues, index 62
Slide 63: Hydraulic attachment aftermarket
Hydraulic attachment aftermarket • Strong focus on the hydraulic Hydraulic attachment aftermarket revenues attachments service and consumables business 140 +21% 121 120 109 100 100 80 60 40 20 0 2017 2018 Sept. 2019 Hydraulic attachment aftermarket, revenues, index 63
Slide 64: Keys to aftermarket success
Keys to aftermarket success 64
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Slide 66: Mergers and Acquisitions
Mergers and Acquisitions Martin Hjerpe, Senior Vice President M&A and Strategy
Slide 67: Continuous focus on acquisitions
Continuous focus on acquisitions 67
Slide 68: Foundations for success
Foundations for success Focus on Outperformance attractive niches 68
Slide 69: Adding capability through M&A: Key criteria
Adding capability through M&A: Key criteria Stand-alone Strategic fit and Potential to become or attractiveness synergies with Epiroc remain number 1 or 2 “Is this target attractive and “Does it support a core “Does it provide a path to be well-performing in itself?” business strategy of Epiroc?” un
Slide 70: Expansion logic with different strategic rationale
Expansion logic with different strategic rationale Outside core “New products to new customers” Adjacent to core “Broaden our offering to existing customers” Core markets “Consolidate and gain scale” 70
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Slide 72: Automation, digitalization and electrification for underground applications
Automation, digitalization and electrification for underground applications Sami Niiranen, President, Underground Rock Excavation Division
Slide 73: Sami Niiranen – President Underground Rock Excavation
Sami Niiranen – President Underground Rock Excavation Mining Engineer, Helsinki, Finland 1997 2002 2004 2007 2012 2014 2016 2018 Finland and Finland Finland Sweden Sweden Ghana Finland Sweden Australia Nuclear Waste Key Account Global Business Marketing Manager General Manager General Manager Presid
Slide 74: A leader in automation, digitalization and electrification
A leader in automation, digitalization and electrification Timeline for underground equipment – 2010 2010 – 2020 2020 – • Rig Control System (RCS) • Increased demand for automation • Interoperability (mixed fleet) • Single-machine automation • Digitalization creates opportunities • Information manag
Slide 75: Increasing levels of machine automation
Increasing levels of machine automation Innovation continuously improve productivity for our customers Mixed fleet automation Fleet automation MINE Multi machine INSIGHTS automation MINE INSIGHTS MINE Single machine INSIGHTS automation Tele-remote MINE INSIGHTS Onboard operator MINE assist functions
Slide 76: 6th Sense
6th Sense is the Epiroc way to optimize our customers' value chain through automation, system integration and information management – enabling a smart, safe, seamless operation
Slide 77: Epiroc's world leading automation solutions
Epiroc’s world leading automation solutions brings Apatit JSC to new levels
Slide 78: Leading solution for production drilling automation
Leading solution for production drilling automation 6th Sense Production solution – Apatit JSC • Teleremote, ABC Total and Certiq telematics for remote control and monitoring of production drilling – One operator controls six production drill rigs – Remote transmission of drill plans – Automatic dri
Slide 79: Video - Apatit
Video - Apatit 79
Slide 80: Epiroc sets the standard of loader automation
Epiroc sets the standard of loader automation
Slide 81: Highest level of loader automation
Highest level of loader automation 6th Sense Transport solution – Scooptram Automation Total • Automation for multiple loaders, operated/monitored from control room Operator station • Safer work environment by removing people from hazardous areas Multiple loaders • Higher fleet performance through a
Slide 82: Epiroc to digitalize Pucobre's mining operations in Chile
Epiroc to digitalize Pucobre’s mining operations in Chile
Slide 83: Information Management
Information Management 6th Sense Mine Management Solution - Pucobre • Information management and system integration of Pucobre’s existing systems • Planning and dispatching system for Transport, Production and Development • Epiroc Activity Planner and Mobilaris platform with Scheduler and Operator C
Slide 84: Video - Pucobre
Video - Pucobre 84
Slide 85: Epiroc is a leader in battery-electric vehicles
Epiroc is a leader in battery-electric vehicles
Slide 86: Battery-electric vehicles
Battery-electric vehicles • Benefits include improved health and safety, reduced emissions, lower total cost of operation and higher productivity • 100 000 operating hours accumulated to date • >70% reduction on energy consumption, mainly from reduced ventilation • 10% increased productivity for Min
Slide 87: Improved stability with Battery as a Service
Improved stability with Battery as a Service Adding another aftermarket revenue stream • Epiroc will take full responsibility for the batteries, including maintenance, technology upgrades, and recycling • Enables close collaboration with customers and ancillary business • Full access to performance
Slide 88: The future is electric
The future is electric Our ambition is to produce the world’s greenest machines, using the world’s greenest cells, producing the world’s greenest metals, doing our best for our planet Cell Module Sub pack Pack
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Slide 91: Automation and information management for surface applications
Automation and information management for surface applications Jose Manuel Sanchez, President, Drilling Solutions
Slide 92: Jose M Sanchez – President Drilling Solutions
Jose M Sanchez – President Drilling Solutions MSc Mining from Madrid School of Mines, Master’s Degree in Marketing & Sales Management 1988 1994 1996 1998 2002 2007 2015 Spain China Sweden France Mexico Chile USA Reg Underground Rock Product Manager 6 month General Manager Managing Director President
Slide 93: Envision Future mine
Envision Future mine 93
Slide 94: 6th Sense – Information on demand
6th Sense – Information on demand: Instant insight about the equipment performance 94
Slide 95: 6th Sense – Fully autonomous electric drill in arctic conditions at Boliden
6th Sense – Fully autonomous electric drill in arctic conditions at Boliden, Sweden
Slide 96: Video - Aitik
Video - Aitik 96
Slide 97: 6th Sense – Autonomous SmartROC D65 at Newmont Goldcorp in Canada
6th Sense – Autonomous SmartROC D65 at Newmont Goldcorp in Canada
Slide 98: Video - Newmont
Video - Newmont 98
Slide 99: 6th Sense – Autonomous Pit Vipers at Newmont Goldcorp, Mexico
6th Sense – Autonomous Pit Vipers at Newmont Goldcorp, Mexico
Slide 100: Video – Newmont Goldcorp, Penasquito
Video – Newmont Goldcorp, Penasquito 100
Slide 101: 6th Sense – Control rooms
6th Sense – Control rooms keep operators from hazardous environment
Slide 102: Video – Los Bronces
Video – Los Bronces 102
Slide 103: Building the legacy
Building the legacy Acquisition 100th Pit Viper 2000 2006 2004 2007 First Pit Viper All Pit Vipers robots 103
Slide 104: What's on today
What’s on today First Autonomous BenchREMOTE Electric station in Sweden BenchREMOTE station First Autonomous SmartROC D65 First Teleremote First Remote site in Canada in Ukraine BenchREMOTE station BenchREMOTE First Remote station in Morocco First Autonomous BenchREMOTE in USA station BenchREMOTE st
Slide 105: Continuing to build the legacy
Continuing to build the legacy Forward Looking • AGILE methodology for • FAST, Field Automation • Global competence with faster time to market Service Team, to ensure Surface Automation Center successful customer roll outs 105
Slide 106: Foundation for 6th Sense
Foundation for 6th Sense @Epiroc Insight Control \ Optimize J 106
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Slide 108: Strong and proven operating model – the financials
Strong and proven operating model – the financials Anders Lindén, CFO
Slide 109: Strong and proven operating model
Strong and proven operating model Focus and agility Focused and High degree of Strong services Flexible Sharp focus on decentralized direct sales and business manufacturing innovation business services philosophy Quick and ~85% direct sales Aftermarket 75% of product cost Leadership in efficient 65%
Slide 110: Focused and decentralized businesses
Focused and decentralized businesses 2 segments and 7 divisions Equipment & Service Tools & Attachments Surface and Underground Rock Mining and Rock Hydraulic Drilling Solutions Rocktec Rock Drilling Tools Exploration Drilling Excavation Excavation Service Attachment Tools Product companies, custome
Slide 111: Decentralization in our DNA
Decentralization in our DNA Advantages • Entrepreneurial organization • Quick decision making and adoption to shifting environment • Strong ownership and commitment to create results • Creates strong internal pipeline of good leaders Challenges • Governance model important • Need clear communication
Slide 112: Efficiency potential
Efficiency potential Taking action in in administration and marketing 8 000 20 7 500 7 000 6 500 14.6 14.6 6 000 15 13.5 13.8 5 500 13.3 5 000 4 500 4 000 10 3 500 3 000 5 662 2 500 5 097 2 000 4 178 3 967 4 238 5 1 500 1 000 500 0 0 2015 2016 2017 2018 Sep. 2019 12M Program in place: Annual savings
Slide 113: Flexible manufacturing philosophy
Flexible manufacturing philosophy We only produce on orders (equipment) which enables quick and smooth adjustments in manufacturing levels in ups and downs We only produce core-components to safeguard a flexible manufacturing set-up whilst protecting our innovations Example Boomer: Did you know? 75%
Slide 114: Benefits of a flexible manufacturing philosophy
Benefits of a flexible manufacturing philosophy High returns Limited investment requirements in manufacturing 40 50 000 4.0 2 000 3.6 45 000 35 3.5 32.0 3.2 3.2 40 000 29.5 30 3.0 1 500 27.4 1 384 35 000 1 297 25 2.5 28 050 30 000 374 301 1 014 20 23 086 25 000 2.0 1 000 21 674 20 000 371 15 1.5 459
Slide 115: Core component manufacturing and assembly
Core component manufacturing and assembly ” We can do even better! Main manufacturing sites • Örebro – Sweden • Fagersta – Sweden • Nashik - India • Garland – USA • Nanjing – China Equipment & Service production facility Tools & Attachments production facility 115
Slide 116: Presence is more important than manufacturing footprint
Presence is more important than manufacturing footprint 116
Slide 117: High degree of direct sales and service
High degree of direct sales and service 85% direct sales 117
Slide 118: Direct sales also implies higher working capital
Direct sales also implies ”higher” working capital Net working capital 30 000 45 Making Epiroc’s supply chain 40 25 000 Supply-chain a competitive advantage 34.3 35 improvement program 31.9 31.8 • Initiated in Q1 2018 20 000 30 • Parts and consumables 25 15 000 14 124 • Gradual improvements expected
Slide 119: CO2 emissions decreasing
CO2 emissions decreasing Supply-chain improvement program Transport CO2 emission, spare parts and rock drilling tools, tons An absolute CO2 saving of 19 505* ton 120 translates into: 110 -18% 100 • Greenhouse gas emissions from 4 141 100 passenger vehicles driven for one year 90 82 • CO2 emissions f
Slide 120: Direct sales = Long lasting customer relationships
Direct sales = Long lasting customer relationships We aim to solve our We innovate and We are always close We produce once We can offer customers sell productivity to our customers we get the order financing challenges solutions We are in it for the long run. Our customers know and appreciate it! 12
Slide 121: Strong and profitable aftermarket business
Strong and profitable aftermarket business • A broad global aftermarket … representing a big … with continuous offering… proportion of revenues… improvements for increased • Spare parts profitability • Service agreements, incl. labor • Increase efficiency and knowledge • Consumables • Hydraulic atta
Slide 122: Sharp focus on innovation
Sharp focus on innovation Collaboration enables leverage on R&D Research and development expenses 1 800 3.0 Internal Supplier 2.6% R&D R&D 1 600 2.5 1 400 1 200 2.0 Associates / 1 054 Partnerships 977 JV 1 000 1.5 795 800 600 1.0 400 0.5 200 Innovation leader with the highest ethical standards 0 0.0
Slide 123: Video: Sustainable Underground Mining
Video Sustainable Underground Mining 123 https://sustainableundergroundmining.com/
Slide 124: Resilience!
Resilience! Restructuring with limited restructuring costs Restructuring cost, absolute and in % of revenues 500 1.5 400 300 1.0 200 100 0.5 0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0 -100 -0.2% -0.4 -0.4% -65 -0.4% -200 -81 -120 -179 -0.5 -300 -400 -415 -1.0 -500 -600 -1.6% -1.5 -700 -800 -2.0 -900 -1 000
Slide 125: Let's talk about cash
Let’s talk about cash Operating cash flow and Net profit Operating cash flow varies over the cycle 2 400 100 • Operating profit 2 242 2 200 90 • Working capital depending on cycle 2 000 1 883 80 • Capital expenditures at low levels 1 800 1 680 1 623 70 – Rental equipment, net 1 600 1 506 1 412 1 374
Slide 126: Strong financial position
Strong financial position ” Net debt and Net debt/EBITDA* 0.50 6 000 0.45 0.43 5 500 Epiroc is to have an efficient capital 0.40 0.39 0.39 5 000 structure and have the flexibility to 0.40 0.35 4 217 4 500 make selective acquisitions. The goal is 0.35 4 000 3 641 to maintain an investment grade ratin
Slide 127: Capital allocation strategy
Capital allocation strategy 5.00 ” 4.50 4.50 4.00 Dividend Epiroc’s goal is to 3.50 provide long-term stable 3.00 and rising dividends. Acquired growth 2.50 47% 2.00 payout The dividend should correspond to 50% of net 1.50 Organic growth profit over the cycle. 1.00 2.10 0.50 0.00 2018 EPS, SEK Divid
Slide 128: Epiroc's key strengths
Epiroc’s key strengths Leading Strong and High and resilient Driving the future History of value productivity proven operating aftermarket in intelligent creation for all partner in model exposure mining and stakeholders attractive niches infrastructure 128
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Slide 130: Q&A
Q&A
Slide 131: United. Inspired.
United. Inspired. Performance unites us, innovation inspires us, and commitment drives us to keep moving forward. Count on Epiroc to deliver the solutions you need to succeed today and the technology to lead tomorrow. epiroc.com
Slide 132: Disclaimer
Disclaimer - Some statements in this presentation, or in conclusion to it, are forward-looking and the actual outcome may be different. In addition to the factors explicitly commented upon, the actual outcome may be affected by other factors such as macroeconomic conditions, movements in foreign exc