Epiroc Ab Class A · OMXSTO:EPI_A
Epiroc Ab Class A — Investor Day (2023)
130 slides from Epiroc Ab Class A's investor day presentation, 2023
Slide 1: Welcome to the Epiroc Capital Markets Day 2023
Welcome to the Epiroc Capital Markets Day 2023 Wifi EpirocWorldExpo2023 1 Epiroc!2023
Slide 2: Karin Larsson, VP Investor Relations & Media
Karin VP Investor Relations Larsson & Media 2006 2006 2010 2011 2016 2017 2019 2023 VP Investor Nordic Equity Pan European Investor Relations Senior Head of External VP Investor M. Sc Finance Relations & Sales Equity Sales Officer Consultant Communications Relations Media Linköping University, SEB E
Slide 3: Safety first!
) Safety first! »» > —
Slide 4: Agenda today: Strategy for profitable growth
Agenda today: Strategy for profitable growth Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Strong corporate culture Sustainability mindset 4
Slide 5: Agenda tonight: Throwback Thursday
Agenda tonight: Throwback Thursday After all, we are a 150-year-old startup… • Famous quotes, ground-breaking innovations, curiosa and more! On stage • Ola Kinnander, Media Relations Manager • Alexander Apell , IR Controller • Jimmy Kristoffersson, Corporate Finance Manager • Karin Larsson, Head of
Slide 6: Agenda tomorrow: Epiroc World Expo
Agenda tomorrow: Epiroc World Expo • Before 7:30 AM: Eat proper breakfast and • Stations check out from hotel • 7:30 Bus pick up at hotel • 8:00 World Expo Tour – Four groups • 11:15 Buses towards Arlanda and Stockholm • 14:00 Arrival Arlanda and/or Stockholm 6
Slide 7: A leading productivity and sustainability partner
A leading productivity and sustainability partner Orders received Orders received Revenues in ~150 countries 54 552 53 222 Europe ~18 000 North America +10% 45 648 12% employees 26% 39 400 39 492 36 579 33 831 EBIT margin 22.3% Africa/ Asia / Australia 27 551 27 634 Middle East 32% South America 16%
Slide 8: Helena Hedblom, President and CEO
Helena President and CEO Hedblom 1997 1997 2000 2008 2011 2013 2017 2020 Manager Material Senior Executive Vice President General Manager President, Rock M.Sc. in Material Development, Vice President President Product Manager R&D, Rock Rock Drilling Drilling Tools Technology Rock Drilling Mining and
Slide 9: Strategy for profitable growth
Strategy for profitable growth Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Strong corporate culture Sustainability mindset 9
Slide 10: Attractive niches with structural underlying growth
Attractive niches with structural underlying growth Orders received Orders received Orders received 54 552 Structural underlying growth… 53 222 Increased need for mining and construction 45 648 39 400 39 492 36 579 … with increasing challenges for customers 77% 79% to meet demand… 77% 73% 76% Increa
Slide 11: Epiroc has a favorable hard-rock exposure
Short term Epiroc has a favorable hard-rock exposure Hard rock exposure (of orders) Mineral prices at good levels Q1 2023 Epiroc exposure Nickel Coal • Record orders received 240 Zinc 3% 3% Platinum 4% Infrastructure 220 • High customer activity 4% 23% Other 200 • Customer investment willingness 6%
Slide 12: Global population trends favorable
Long term Global population trends favorable Growing population… … with an even faster growing middle class 13% 44% 8 600 5 200 7 600 3 600 2022 2030 2022 2030 # million population (total) # million middle class Fidelity - The case for demographics – 2023 https://www.fidelity.com.au/insights/investm
Slide 13: Urbanization drives construction demand
Long term Urbanization drives construction demand Strong urbanization trend Epiroc’s exposure 12 000 80 towards the 11 000 68% 10 000 64% 70 construction 60% 9 000 56% 60 market is 8 000 +52% expected to grow 50 7 000 6 606 6 000 5 131 5 887 40 4-5% 5 000 4 352 30 p.a. until 2030 4 000 3 000 20 2 00
Slide 14: Green energy creation drives mineral demand
Long term Green energy creation drives mineral demand New renewable power Total mineral demand for clean generation energy technologies +371% 4.5x +383% 1 361 3.3 2.9 +333% 1.3 304 0.7 0.6 0.3 2020 2040 Solar Wind Other renewables GW from expansion of renwables 2020 2040 McKinsey - Global Energy Per
Slide 15: … as does the electric vehicles and battery storage trend
Long term … as does the electric vehicles and battery storage trend Use of copper and Adoption of electric vehicles (EVs) nickel in cars +139% +5x 73.0 53.2 39.9 22.3 2.0 0.0 EV millions Copper Nickel 2020 2040 Conventional car, kg/vehicle Electric car, kg/vehicle Goldman Sachs – Electric vehicles a
Slide 16: Expected demand for important minerals
Long term Expected demand for important minerals Copper demand to Gold demand expected to double by 2035 be strong as well 27% 96% 49 19% 58% 6 300 of Epiroc of Epiroc exposure exposure 4 000 25 2021 2035 2022 2030 Global refined copper demand. MMt Global market for gold, tonnes S&P Global - The Fut
Slide 17: Epiroc has a favorable hard-rock exposure
Long term Epiroc has a favorable hard-rock exposure Hard rock exposure (of orders) 100 100 100 100 100 Supply deficits Infrastructure 27 24 24 23 23 anticipated in key minerals by 2030 16 Copper 17 21 24 27 Deficit expected 19 Gold 21 23 21 Iron 19 7 Platinum 5 Balanced demand/supply 6 Zinc 4 2 11 2
Slide 18: Potential levers to resolve the mineral supply gap
Potential levers to resolve the mineral supply gap Decrease demand Increase supply • Decarbonization slowdown • Expand existing mines in a higher pace • Substitution • Increase exploration activities and do more greenfield • Improve yield by using technology • Recycling of materials 18
Slide 19: Global deconstruction is set for growth
Global deconstruction is set for growth Global metal recycling market Strong trends that drive demand for deconstruction and recycling • Environmental concerns 369 • Resource scarcity 5% • Regulatory requirements Most recycled minerals in 217 the world • Aluminum, Copper, Lead, Zinc, and Nickel Howe
Slide 20: Attractive niches with structural underlying growth
Attractive niches with structural underlying growth Orders received Orders received Structural underlying growth… Increased need for mining and construction … with increasing challenges for customers to meet demand… Increased demand for productivity solutions …and strong focus on safety and sustaina
Slide 21: Customers seek to increase productivity
Customers seek to increase productivity Average equipment utilization is low within mining, % 29 Underground mining 38 Open pit mining 70 Crushing & grinding 88 Oil & gas 90 Steel 92 Oil refining MineLens, McKinsey, October 2019
Slide 22: Customers need to excavate more rock
Customers need to excavate more rock Depletion of ore grades expected to remain between 0.5%-2% in the foreseeable future 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Underground average ore grade (Wt by paid Copper) Surface average o
Slide 23: Customers need to go underground
Customers need to go underground Underground mining expected to be strong in the coming years +45% 36 33 33 29 25 2020 2025 2030 2035 2040 % of Underground production, Copper McKinsey and MineLens, estimates 2018
Slide 24: Attractive niches with structural underlying growth
Attractive niches with structural underlying growth Orders received Orders received Structural underlying growth… Increased need for mining and construction … with increasing challenges for customers to meet demand… Increased demand for productivity solutions …and strong focus on safety and sustaina
Slide 25: Safety first. Always.
Safety first. Always. Mining and construction need to address safety • Safety is on the top on 32 everyone’s agenda 29 • Yet, fatality rates have remained flat • More needs to be done! 21 20 19 19 20 18 18 18 18 15 14 14 13 12 12 11 11 11 11 10 10 11 9 9 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 26: Decarbonization commitments increasing
Decarbonization commitments increasing Our customers are committed to make a change. Examples of CO2e goals: BHP Boliden Glencore Rio Tinto Vale 30% reduction 15% reduction 33% reduction 40% reduction 15% reduction in scope 1 & 2 by in scope 1 & 2 by in scope 1 & 2 by in scope 1 & 2 by by 2026 2030
Slide 27: Strategy for profitable growth
Strategy for profitable growth . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Strong corporate culture Sustainability mindset 27
Slide 28: The future mine and construction site
The future mine and construction site Safe workplace • Eliminate safety hazards by innovation and technology • Remove people from dangerous situations Green operations • Use renewable energy and emission-free vehicles Efficient design • Meet customer challenges by conducting smart exploration – and
Slide 29: We invest more than ever to stay ahead
We invest more than ever to stay ahead MSEK 1 571 in R&D expenses Research and development expenses 3.0% • More than 1 730 R&D engineers 1 800 3.0 1 600 1 571 Reduce time to revenue 1 438 2.5 1 400 • Partnerships and ecosystem 1 200 1 172 2.0 • State-of-the-art simulation tools 1 035 1 032 and verif
Slide 30: Safety solutions provider
Safety solutions provider Direct worker safety & wellness • Collision avoidance • Personnel monitoring and situational awareness • Safety information in real time • Smart rock reinforcement • Electrical solutions and infrastructure Autonomous solutions • Autonomous drill, load and haul solutions • T
Slide 31: Leader in Collision Avoidance Systems (CAS)
Leader in Collision Avoidance Systems (CAS) • 30-40% of industry fatalities are related to failures of vehicle interaction controls Collision Avoidance Level 9 - Intervention • Epiroc has the highest level for safer If the operator does not act, the system mining operations – Level 9 will take inter
Slide 32: Movie: The world's first semi-automated wireless blast with Avatel
Movie: The world's first semi-automated wireless blast with Avatel 1m 06s 32
Slide 33: Three strong technology trends
Three strong technology trends Making (OEM agnostic) automation work at scale – including 1. Automation automation kits for mixed fleets, wireless communication, and Closing product gaps control systems to manage it all Situational awareness and Ensuring real-time knowledge of where all assets are f
Slide 34: How automation enables productivity and sustainability transformation
How automation enables productivity and sustainability transformation For our customers: Example: Pit Viper 271 • Protecting people. Keeping them Manual vs. autonomous away from equipment and dangerous situations • Increasing productivity -40% cost per meter drilled • Reducing energy consumption • L
Slide 35: Movie: Autonomous drilling in Peru
Movie: Autonomous drilling in Peru 0m 46s 35
Slide 36: Adding capability through M&A
Adding capability through M&A Key criteria 23 acquisitions since the creation of Epiroc with total Stand-alone Strategic fit and Potential to become or Stand-alone Strategic fit and Potential to become attractiveness synergies with Epiroc remain number 1 or 2annual revenues of attractiveness synergi
Slide 37: Our acquisitions contribute to the innovation strategy
Our acquisitions contribute to the innovation strategy OEM agnostic automation Connectivity 1. Automation Closing product gaps Situational awareness and fleet management Ore body 2. Digitalization knowledge Mine process optimization Infrastructure Conversions 3. Electrification ASI: Epiroc is minori
Slide 38: Acquisitions contribution to strategy
Acquisitions contribution to strategy OEM agnostic automation Connectivity Automation Closing product gaps Situational awareness Ore body Digitalization knowledge Mine process optimization Infrastructure Conversions Electrification ASI: Epiroc is minority owner of 34% 38 Radlink: Epiroc is a majorit
Slide 39: RCT: Proven agnostic machine control technology
RCT: Proven agnostic machine control technology Number of countries RCT solutions have been implemented: 70+ Amount of machine types RCT solutions have been applied to: 150+ Quantity of RCT systems implemented over past 20 years: 700+ Total machine agnostic solutions delivered: 1 500+ 39 Numbers inc
Slide 40: Epiroc's mixed fleet automation in numbers
Epiroc’s mixed fleet automation in numbers Autonomous load/haul Epiroc equipment (used mainly underground) that is fully autonomous in +2 400 operation and other OEM equipment that have ASI Mining and/or RCT's Mixed fleet driverless Guidance/Automation technology with fully autonomous autonomous loa
Slide 41: How automation and digitalization contribute to profitable growth
How automation and digitalization contribute to profitable growth for Epiroc Higher portion of recurring revenue streams • Hardware, software and licenses fees • Higher service penetration (higher attachment rate) • Higher equipment utilization, which drives demand for consumables and parts • Projec
Slide 42: Creating the world's largest single autonomous mine
Creating the world’s largest single autonomous mine • Largest-ever automation order, MSEK 500 • Converting Roy Hill’s mixed fleet to driverless operation in Australia • Remote Operations Centre in Perth, 1 100 km from mine • 96 autonomous haul trucks and 200 utility vehicles to run 24/7 42
Slide 43: Movie: The world's largest fully autonomous mine with Roy Hill
Movie: The world’s largest fully autonomous mine with Roy Hill 1m 19s 43
Slide 44: How digitalization enables productivity and sustainability transformation
How digitalization enables productivity and sustainability transformation For our customers: • Increasing safety and productivity • Providing insights and full control of fleet, equipment and people • Improving mine planning, reducing traffic congestion • Optimizing mine production plans / drill-to-
Slide 45: Sami Niiranen, President Underground
Sami President Underground Niiranen 1997 1997 2004 2007 2010 2012 2014 2018 Regional Mining Engineer, Global Business Marketing President Key Account Business M.Sc. in Mining Project Engineer, Manager, Manager, General Manager Underground Manager Manager, Site Manager Underground Underground Divisio
Slide 46: How electrification enables productivity and sustainability transformation
How electrification enables productivity and sustainability transformation For our customers: • Protecting people from dangerous fumes, noise and heat • Eliminating or reducing CO2e emissions • Adhering to new legislation, rules and standards • Reducing energy consumption (ventilation is a large par
Slide 47: We make a positive difference
We make a positive difference Sources of carbon emissions in mining, % Example: Copper, underground, Australia; 13 Mt p.a. ore production 100 33% 35% 83% of Epiroc emissions derive from 15% 48% “use of products” in Scope 3. 14% 19% 1% Drilling Blasting Loading Hauling Dewatering Ventilation Other Eq
Slide 48: We make a positive difference that goes beyond our scope
We make a positive difference that goes beyond our scope Sources of carbon emissions in mining, % Example: Copper, underground, Australia; 13 Mt p.a. ore production • ~40%* 100 of opex cost of running an 33% underground mine derive 35% from ventilation • ~35% 15% 48% of emissions derive from ventila
Slide 49: Sami runs the fan
Sami runs the fan Ventilation underground is a must ~110 m3 per second with diesel (est. 6 m/s) ~7 m3 per second with BEV (est. 1 m/s) 49 * Example: A deep underground mine (5X5m) with several vehicles in same mine area (one drill rig, two loader and four mine trucks)
Slide 50: BEV performance better than diesel
BEV performance better than diesel Customer benefits • ~30% lower ventilation need • 5-10% higher productivity • Up to 80% lower energy consumption • Up to 70% less heat generation • ~30% lower maintenance cost Example: The Epiroc Minetruck MT42 SG (Smart Green) is more efficient than MT42 diesel 50
Slide 51: Electrification is nothing new…
Electrification is nothing new… 1974 2012 2016 2018 2020 2021 2025 Drilling with Development of First generation New generation Customers on Battery Full offer of electric cable first generation battery-electric battery-electric all continents infrastructure battery-electric battery-electric rig, lo
Slide 52: Movie: A complete electrification offering
Movie: A complete electrification offering 3m 08s 52
Slide 53: A complete electrification offering
A complete electrification offering Helping customers to optimize performance • Battery-electric equipment – Automatic battery swapping – 5-10 min • Battery-technology platform to other OEMs • Batteries as a Service (BaaS) • Batteries with a Service (BwS) • Battery retrofit / Conversion • Electric i
Slide 54: Epiroc's battery system
Epiroc’s battery system 28 Proven chemistry: Ni NMC Nickel 3 Li Lithium 25 27 Mn Co Manganese Cobalt Cell 4.2 V Battery pack Number of sub-packs depends on equipment. A ST14 loader has 4 sub-packs = 300 kWh Module 672 cells Batteries Certified: IEC 62619; UL 1642; UN 38.3 Sub-pack 800 V / 75 usable
Slide 55: State of the art battery safety
State of the art battery safety Safety is a must in an underground environment Battery system designed to prevent thermal runaway, yet capable of handling one Incidents to date: Mechanical crash protection 0 Heat Management System Accident to date: Mechanical structure of the battery pack Battery Ma
Slide 56: Movie: Thermal runaway tested in a safe environment
Movie: Thermal runaway tested in a safe environment 0m 16s 56
Slide 57: Standardized modular approach with many advantages for customers
Standardized modular approach with many advantages for customers Design for harsh environments • Safe • Robust • Modular Smart charging solutions that enable equipment to run 24/7 • Quick battery swaps • Charge time shorter than discharge time (two batteries per machine) • Low demand on grid, low ne
Slide 58: Standardized modular approach with many advantages for Epiroc
Standardized modular approach with many advantages for Epiroc Modular and scalable • One technical platform • Quick roll out • Monitoring of each cell, module and subpack • Monitoring of complete fleet • Conversions of existing fleet Other OEMs use same standard • Lower charging infrastructure cost
Slide 59: Our standardized approach bodes well for profitability
Our standardized approach bodes well for profitability Scalable production with increasing efficiencies NMC battery cells expected to … while scale in production …last longer… have higher energy density… lowers input cost 240 400 5 500 220 5 000 200 350 4 500 180 3% -5% 300 7% 4 000 160 250 3 500 14
Slide 60: The widest offering in the market
The widest offering in the market Emission-free versions in By 2025, the offering all underground products will be available in Target 2030 100 emission-free alternative In 2023, roughly half of the potential revenue stream within loaders are available in battery-electric versions 39 35 By 2030, all
Slide 61: Strong demand for low emissions alternatives
Strong demand for low emissions alternatives BEV revenues of equipment revenues ~3% Not including electrical infrastructure, BaaS, conversions and other BEV-related services Revenues (of equipment revenues) from drilling equipment with cable and/or with significantly lower fuel consumption than othe
Slide 62: Recurring battery electric revenues
Recurring battery electric revenues Batteries as a Service Battery electric contract equipment at 25 80% of units sites globally Number of recurring orders Strong demand for diesel-to-battery 9 conversions 62 As of end May 2023
Slide 63: Leveraging innovation
Leveraging innovation LEVERAGING INNOVATION R&D 3% of revenues ..but mainly allocated Supplier innovation to equipment Partnerships and 75% of product cost is collaboration (30% of the revenue stream) purchased material… 63
Slide 64: Innovation: Continuous improvement
Innovation: Continuous improvement MT42 -100% -100%+ CO2e CO2e Minetruck MT42 with fossil-free dump box Minetruck MT42 Minetruck 42 Battery Fuel use: 0 liters per hour. Fuel use: 52 liters per hour Fuel use: 0 liters per hour Direct* CO2e emissions**: 0 kg/hour Direct* CO2e emissions: Direct* CO2e e
Slide 65: Partnership is the new leadership
Partnership is the new leadership Collaboration for success Collaboration to set a new world standard for sustainable mining at great depth. With Northvolt and ABB, we are collaborating on battery- With Orica, we are developing solutions for powered vehicles, batteries and electric powertrains. semi
Slide 66: Short break – Movie: A magnetic culture
Short break – Movie: A magnetic culture 66
Slide 67: Strategy for profitable growth
Strategy for profitable growth Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Strong corporate culture Sustainability mindset 67
Slide 68: Broad aftermarket offering
Broad aftermarket offering Aftermarket 68% Service 47% Tools & Attachments 21% Spare parts and Service Midlife services, Rock drilling Hydraulic components agreements training, and tools attachments and audits more Revenues Q123 RTM 68
Slide 69: The aftermarket business provides resilience
The aftermarket business provides resilience Aftermarket revenues Creation of dedicated Epiroc, incl. hydraulic Covid-19 Three division for parts & attachments as from service services 2011 2015 divisions 40 000 35 872 35 000 33 268 30 000 +8% -8% 26 829 27 328 23 821 24 569 25 000 -2% -4% 20 845 19
Slide 70: Luis Araneda, President Parts & Services
Luis President Parts & Services Araneda EMEA 2000 2000 2001 2003 2011 2011 2014 2022 2023 President Technical Mechanical Service Construction Mining Regional Parts & MBA Mining Manager Manager / Engineer Technician Sales Manager President Services VP Operations EMEA UBB University, Industrial Techni
Slide 71: A growing service business
A growing service business Revenues Service revenues 25 000 24 529 22 462 Tools & 20 000 Equipment +10% Attachments 21% 32% 17 123 16 030 15 545 15 000 14 302 11 807 12 107 11 188 68% 10 000 Aftermarket 5 000 Service 47% 0 2015 2016 2017 2018 2019 2020 2021 2022 Q123 12m Service revenues, MSEK Q123
Slide 72: Regionalization supporting the strategy
Regionalization supporting the strategy NASA EMEA NASA APAC Goal: EMEA Drive profitable growth by being the best productivity and sustainability partner 72
Slide 73: What do customers want?
What do customers want? • Safe operations and higher productivity • Best-in-class technical support • Customer centricity • Availability and responsiveness • Collaboration partner to improve performance and production • Stock availability and short lead times • Added value such as parts planning, tr
Slide 74: Presence is vital and a competitive advantage!
Presence is vital and a competitive advantage! 100+ VALE CANADA service workshops ~7 400 KAZAKHMYS Nanjing 5 employees remanufacturing in service* centers 300+ 8 sites with service Global/regional contracts with distribution people on site Major Epiroc workshop centers Major service contract 74 *Emp
Slide 75: The right feet on the ground
The right feet on the ground Build competence • Focus on training and Certified technicians (Level 1), per year competence 1 062 • Efficiency, standardization, Covid-19 impact 954 sales, quality, customer satisfaction and loyalty • ~300 apprentices in academies 596 553 565 around the globe 433 86% 2
Slide 76: The right feet on the ground
The right feet on the ground Keep competence • Keep focusing on training and Certified technicians (Level 2), per year competence Covid-19 impact 871 • Clear career path • Strong culture and mentoring 731 program • Brothers and sisters in 482 454 performance 302 242 55% 104 of technicians have deep
Slide 77: What services do we offer?
What services do we offer? 1. Replacement parts and kits 2. Service agreements and audits 3. Midlife services, including diesel-to-battery conversion 4. Remanufacturing solutions for components 5. Electrification solutions – Electrical infrastructure solutions, such as chargers and battery- swapping
Slide 78: 1. Replacement parts and kits
1. Replacement parts and kits Engineered for peace of mind What? Replacement parts and kits revenues • High-quality genuine parts 180 • Repair kits and preventive 167 maintenance kits 160 155 +12% 140 • Blasthole undercarriage 119 systems, feed parts, rock drills, 120 112 107 booms, Rig Control Syst
Slide 79: 2. Service agreements and audits
2. Service agreements and audits From parts provider to productivity partner What? Service agreements revenues • Care agreements 159 160 155 • RigLife and OnSite 150 +12% agreements 140 134 130 119 • RigScan 120 115 110 100 Epiroc strengths 100 90 • Strong local presence with 80 right feet on the gr
Slide 80: Increase customer share
Focus on the service agreement ratio From parts provider to productivity partner - Increase customer satisfaction and loyalty by close collaboration Increase customer share - Increase Epiroc resilience - Customer share acceleration There is a 1.5x positive correlation between the growth in the servi
Slide 81: 3. Midlife services
3. Midlife services Extend equipment life What? Midlife services • Replacing and upgrading old parts with new or remanufactured components 160 +10% 151 147 143 • Returning equipment to maximum 140 128 124 productivity and extended cycle life 120 • Cost significantly lower than buying 100 100 a new m
Slide 82: Movie: Midlife Services in Mongolia
Movie: Midlife Services in Mongolia 40 sec 82
Slide 83: 4. Remanufacturing solutions
4. Remanufacturing solutions Give used original components a new lease on life What? Reman revenues • Old parts become new again 600 • Reliable parts with minimal 552 550 523 downtime (incl. warranty) 500 • Sustainable option 450 411 400 • Approx. 2 200 components +51% 350 remanufactured in 2022 296
Slide 84: Larger and aging fleet requires maintenance
Larger and aging fleet requires maintenance Size of known fleet growing Equipment fleet (year of commissioning) +33% 133 7% 17% 100 17% 8.4 years average fleet age 31% 28% 2018 Q123 RTM Fleet size, indexed 2021 or later 2006-2010 2016-2020 2005 or earlier 2011-2015
Slide 85: Equipment life cycle and service offerings
Equipment life cycle and service offerings 100% Midlife services, including battery conversion Remanufacturing solutions for components Productivity Replacement parts and kits Electrification solutions: Electrical infrastructure, chargers, battery swapping stations and Batteries as a Service Service
Slide 86: Technological height increases parts demand
Technological height increases parts demand Automation vs. not automation +33% +14% (10 years) (7 years) Automation leads to higher cumulative parts revenues. Higher utilization contributes positively. Reduced parts damage contributes negatively. Service agreements and hours not included in calculat
Slide 87: Maintenance needs on BEVs
Maintenance needs on BEVs Battery vs. combustion engine • Customers save 15-20% in parts consumption (including engine maintenance). Other savings, such as diesel and ventilation, come on top. • Epiroc has >12% over 5 years cumulative aftermarket revenues – Electric infrastructure and Batteries as a
Slide 88: Democratization of innovation to drive growth further
Democratization of innovation to drive growth further How? • Cross-divisional collaboration • Partnerships • R&D contribution from everyone Success stories 80% of new innovation ideas • Replacement parts and kits from service technicians – Hydraulics and hose solutions for mixed fleet • Midlife serv
Slide 89: Service growth potential at a glance
Service growth potential at a glance Some important revenue streams indexed 155 159 +10% 180 160 160 151 600 167 +12% 147 552 143 550 523 160 155 134 +12% 140 140 128 124 500 140 115 119 120 120 450 411 119 +51% 120 112 100 100 400 107 100 100 100 350 100 296 80 80 300 80 250 60 60 199 60 200 40 40
Slide 90: Goran Popovski, President Tools & Attachments
Goran President Tools & Attachments Popovski 1998 2002 2005 2005 2010 2012 2017 2020 M.Sc. of Logistics, Regional President B. Sc M.Sc of Regional Materials and Business Vice President Hydraulic President Tools & International International Business Line Supply Chain Manager SDE - Marketing Attachme
Slide 91: Tools and attachments for hard rock excavation, demolition and recycling
Tools and attachments for hard rock excavation, demolition and recycling Revenues T&A revenues +4% 12 000 11 343 11 000 10 799 10 806 10 205 Tools & 10 000 9 519 Attachments Equipment 8 738 9 024 32% 9 000 21% 8 088 7 925 8 000 7 000 6 000 68% 5 000 Aftermarket 4 000 3 000 2 000 Service 1 000 47% 0
Slide 92: The perfect match for performance
The perfect match for performance The best The best The best rock The best equipment service drilling tools performance The best The best The best The best equipment service attachment performance
Slide 93: Movie: Powerbit X vs. Standard bit
Movie: Powerbit X vs. Standard bit 0m 48s 93
Slide 94: Profitable growth journey
Profitable growth journey Tools & Attachments Adjusted operating profit and margin Customer centric mindset 1. Strategic growth 3 000 20 18.4 18.0 2. Innovation to stay ahead 17.5 3. Improve value proposition 2 500 4. Expand scope by acquisitions 15 13.1 13.0 13.4 13.3 1 985 2 043 2 000 11.8 11.8 1
Slide 95: Urbanization drives demand
Urbanization drives demand 1. Strategic growth • Urbanization trends strong Strong urbanization trend across the globe 12 000 80 – 1.2 million km² of new urban 11 000 75 68% 70 built-up area needed by 2030 10 000 64% 65 60% 9 000 60 • Excavation needed to create 56% 55 8 000 +52% stable foundations
Slide 96: Urban mining: Strong recycling and deconstruction trend
Urban mining: Strong recycling and deconstruction trend 1. Strategic growth Moving from linear to circular economy Extraction Production Distribution Consumption Waste Steel • 36% of global crude steel produced from secondary raw materials • Using steel scrap in the production process reduces CO2 em
Slide 97: 2. Innovation to stay ahead
2. Innovation to stay ahead Data harvesting • Across all products to improve the safety and improve the productivity for customers Powerbit X • Improved safety with fewer drill bit changes enabling automation AutoVC Cutter 2000 • Revolution within trenching with up to 40% energy savings Digitalizati
Slide 98: 3. Improve value proposition
3. Improve value proposition Broadening channel range to take advantage of strategic growth • Mining and quarrying • Construction • Recycling and deconstruction Different value propositions • Essential Line Working tools • Extension of breaker range • Different agreements, e.g. Cost per meter contra
Slide 99: 4. Expand scope by selective acquisitions: DandA
4. Expand scope by selective acquisitions 2021: DandA Heavy Industries DandA Heavy Industries manufactures hydraulic breakers • Strengthening leading position in hydraulic attachment tools • MSEK 210 in annual revenues and 60 employees* 99 * At the time of announcement of the acquisition
Slide 100: 4. Expand scope by selective acquisitions: Wain-Roy
4. Expand scope by selective acquisitions 2022: Wain-Roy Wain-Roy manufactures excavator attachments for the construction industry • Strengthening presence in the North American construction market • MSEK 200 in annual revenues and 100 employees* 100 * At the time of announcement of the acquisition
Slide 101: 4. Expand scope by selective acquisitions: CR
4. Expand scope by selective acquisitions 2023: CR CR provides advanced ground engaging tools and related digital solutions mainly for the mining industry Expanding offering in first-rate offering of essential consumables and digital solutions MSEK 1 700 in annual revenues and 400 employees* 101 * A
Slide 102: Acquired innovation: CR GET Trakka
Acquired innovation: CR GET TrakkaTM Keep workers safe and quickly return to production • Advanced IoT sensors for high reliability and immediate Ground Engaging Tools (GET) recovery with scanner • Safety: prevent major risks caused by crusher events • Productivity: quickly locate lost component and
Slide 103: Customer centric mindset
Customer centric mindset • Proactive and solution minded culture • Highly competent, motivated and committed team • Highly specialized decentralized organization delivering customer solution with speed and agility • Better availability – Turning global production presence into a clear competitive ed
Slide 104: Movie: Epiroc DTH drill bits (down the hole)
Movie: Epiroc DTH drill bits (down the hole) 38 s 104
Slide 105: Håkan Folin, CFO
Håkan CFO Folin SVP Controlling, Finance & Sustainability 2002 2002 2005 2006 2008 2010 2013 2021 M. Sc. SVP Controlling, Engineering/ Business Group Business CFO Business Finance & Senior Associate CFO CFO Industrial Development Controller area APAC Sustainability Management (CFO) KTH Royal Institu
Slide 106: Strategy for profitable growth
Strategy for profitable growth Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Strong corporate culture Sustainability mindset 106
Slide 107: Financial goal: Revenue growth of 8% p.a.
Financial goal: Revenue growth of 8% p.a. Solid revenue growth Epiroc’s goal is to achieve annual revenue growth of 8% over a 55 000 52 474 business cycle and to grow faster 49 694 50 000 than the market +8% 45 000 Growth will be organic and 40 849 39 645 40 000 38 285 supported by selective acquisi
Slide 108: Two reporting segments but three revenue streams
Two reporting segments but three revenue streams Revenue split Tools & Equipment & Tools & Attachments Attachments 21% Equipment Service 32% 68% 21% of revenues After- market 79% of revenues 17.3% EBIT margin 24.4% EBIT margin Service 47% Tools & Attachments revenues, MSEK Service revenues, MSEK Equ
Slide 109: Financial goal: Industry-best operating margin, EBIT
Financial goal: Industry-best operating margin, EBIT Operating profit and margin Operating margin (EBIT) 2022 vs. Epiroc’s goal is to have an peers and industrial companies industry-best operating margin 16 000 23.7 23.5 25 22.9 with strong resilience over the 22.4 14 000 21.0 21.2 20.3 22.7 22.4 cy
Slide 110: Resilient margin and low adjustments
Resilient margin and low adjustments Margin and items affecting comparability 30 600 25 500 20 400 Positive revaluation 15 Mobilaris Q4 2021 300 10 200 5 167 100 0 0 -5 -150 -100 -179 -10 -200 -495 -15 -300 Restructuring T&A Provisions -20 Q2 2019 Russia -400 Q2-Q3 2022 -25 MSEK 550 -500 -30 -600 Q2
Slide 111: Translating profit into cash
Translating profit into cash Operating cash flow and cash conversion rate, % Operating cash flow varies over the cycle • When the demand is good, we grow and 7 500 300 7 006 6 867 increase working capital 7 000 6 688 6 500 250 • When the demand is poor, we generate 6 000 5 630 5 662 cash and release
Slide 112: Priorities for use of cash (1/3)
Priorities for use of cash (1/3) 1. Continuously invest in organic profitable growth
Slide 113: Priorities for use of cash (2/3)
Priorities for use of cash (2/3) 2. Invest in acquisitions that support our organic efforts Acquired revenues 3 200 10 3 000 2 800 2 600 9 23 8 acquisitions 2 385 2 400 2 400 2 200 7 2 000 1 800 1 600 4.8 4.8 6 5 +7 200 1 400 1 225 MSEK revenues 1 137 4 1 200 3.0 2.9 1 000 3 (Finalized since the 800
Slide 114: Priorities for use of cash (3/3)
Priorities for use of cash (3/3) 3. Cash distribution Epiroc’s goal is to provide long-term stable and Dividend and payout ratio rising dividends to its shareholders Year for payment The dividend should correspond to 6.0 70 5.50 65 5.5 50% of net profit over the cycle 60 5.0 56 51 55 4.5 49 49 47 50
Slide 115: Financial goal: Improve capital efficiency and resilience
Financial goal: Improve capital efficiency and resilience. Investments and acquisitions shall create value. Return on capital employed Net working capital 35 60 000 30 000 45 31.0 55 000 40 30 27.7 27.7 50 000 25 000 35.3 26.2 33.1 32.8 35 45 000 31.8 32.6 25 42 208 35 029 28.9 40 000 20 000 30 20.9
Slide 116: Working capital impacted by growth and supply-chain issues
Working capital impacted by growth and supply-chain issues Strong growth in Services Working capital Ratios since the creation of Epiroc • Good availability Inventory turnover, days Strong demand for equipment +33 days • Machines in transit 18 930 Supply chain 13 245 Accounts receivable turnover, da
Slide 117: Financial goal: Efficient capital structure and investment grade rating
Financial goal: Efficient capital structure and maintain an investment grade rating Epiroc is to have an efficient Net debt and Net debt/EBITDA capital structure and have the 0.7 15 000 flexibility to make selective 0.6 0.5 acquisitions. The goal is to 0.52 10 000 0.4 maintain an investment grade 0.
Slide 118: External funding overview
External funding overview Maturity Profile • Two green bonds 3.5 – BSEK 2 (2027) 2.9 3.0 – BSEK 1.5 (2028) 1.5 • Avg. tenor: 3.3 years 1.1 2.0 2.0 • Avg. interest duration 17 months • Avg. interest rate 3.7% 1.4 2.0 • Unutilized RCF BSEK 4 000 1.0 maturing in 2025 0.4 2023 2024 2025 2026 2027 2028 G
Slide 119: All financial goals at a glance
All financial goals at a glance Goals Description 2015 – 2022 Q123 12M Compound annual Growth Annual revenue growth of 8% over a business cycle. growth rate 8% 25% Industry-best operating margin, with strong Average Profitability resilience over the cycle. operating margin 19.8% 22.3% Improve capita
Slide 120: Strategy for profitable growth
Strategy for profitable growth Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Strong corporate culture Sustainability mindset 120
Slide 121: Our success is based on sustainability and a strong corporate culture
Our success is based on sustainability and a strong corporate culture Sustainability is a business driver! Helping customers providing society with minerals and solutions needed for a low-carbon economy • Copper and nickel • Recycling Sustainable operations • For customers • For Epiroc Innovation le
Slide 122: 2030 goals for planet
2030 goals for planet Base 2019 Halve CO2e emissions in operations* • 84% completion 90% renewable energy in own operations • 65% renewable energy Halve transport CO2e emissions • 60% completion Offer a full range of emission-free products • 39% of fleet available in emission-free option Halve CO2e
Slide 123: 2030 goals for people
2030 goals for people Base 2019 No work-related injuries • TRIFR 5.7, improvement from 6.0 Balanced workforce and double the number of women in operational roles • 23% women managers, up from 19% • Women in operational roles 13%, up from 11% Walk the talk • Have all employees and business partners c
Slide 124: Strategy for profitable growth
Strategy for profitable growth Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Strong corporate culture Sustainability mindset 124
Slide 125: Vision: Dare to think new
Vision: Dare to think new 125
Slide 126: Movie: Epiroc 2032 – From the internal strategy summit
Movie: Epiroc 2032 – From the internal strategy summit 2m 33s 126
Slide 127: Investment case
Investment case Investment case We drive the productivity and We have a high We have a We focus on sustainability proportion well-proven We create value for attractive niches with transformation in of recurring business model our stakeholders structural growth our industry business Our success is ba
Slide 128: CG Epiroc
CG Epiroc 128
Slide 129: 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 130: 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