Slide 1: Q1 2024
Q1 2024 April 23, 2024 Helena Hedblom, President and CEO Håkan Folin, CFO
Slide 2: Highlights Q1 2024
Highlights Q1 2024 • Mixed demand, with solid mining activity – High mining activity and strong service – Large orders MSEK 400 (900) – Construction weak (hydraulic attachments) • Increasing the focus on profitability – Higher costs year-on-year – Sequential structural savings achieved in SG&A • Imp
Slide 3: Group orders received: Mixed demand, solid mining activity
Group orders received: Mixed demand, solid mining activity • Orders received -4% • Strong mining (service & tools) • -3% organic growth • MSEK 14 162 (14 715) • High demand for larger rebuilds • +2% acquisition growth and mixed-fleet automation • Weak construction (attachments) Orders received Organ
Slide 4: Innovation
Innovation • Purpose-built training facility in Australia • Batteries with Service • Safety leader – Order for Collision Avoidance System 9 (CAS9) of MSEK 36 – CAS 9 + Real-time positioning = Safer and more productive operations 3.2% R&D expenses of Leveraging innovation revenues Focused R&D Collabo
Slide 5: CG Epiroc
CG Epiroc Titan Collision Avoidance System
Slide 6: Aftermarket
Aftermarket • Solid customer activity in mining • Strong demand for service (larger rebuilds, automation) and tools • Construction weak (attachments) Revenue split Recurring aftermarket revenues 11 000 10 439 9 738 10 054 10 000 9 612 9 453 8 965 9 000 8 304 8 626 21% (22) 8 000 7 374 T&A 33% (30) 7
Slide 7: Operational excellence
Operational excellence • Increasing the focus on profitability – Focus on costs and efficiency – Lower number of employees sequentially – Lower cost in SG&A sequentially • Increased production capacity in Örebro, Sweden • Split of “Tools & Attachments division” from May 1, 2024 to increase customer
Slide 8: Sustainability: People
Sustainability: People • Improved safety – Total recordable injury frequency rate decreased to 4.6 (6.2) – Focusing on a safety culture is yielding results • 18 157 (17 586) employees – +377 for comparable units year-on-year – Down ~100 sequentially (incl. additional workforce) • Increased number of
Slide 9: Sustainability: Planet
Sustainability: Planet • CO2e emissions from operations -28% to 17 266 (23 957) tonnes – Solar panels and a higher share of renewable electricity • CO2e emissions from transport +5% to 96 987 (91 948) tonnes – Higher volumes delivered • Decarbonization progress (Scope 3) – Batteries with Service – F
Slide 10: Q1 2024
Q1 2024 10
Slide 11: Group revenues and EBIT
Group revenues and EBIT • Revenues MSEK 14 143 (13 868), +3 organic • Operating profit, EBIT, MSEK 2 760 (3 161) – IAC MSEK -127 (-26), whereof M&A transaction and integration costs: MSEK -125 • Adjusted operating profit, EBIT, MSEK 2 887 (3 187) – Negative mix effects (Service and T&A), higher cost
Slide 12: Group EBIT profit bridge
Group EBIT profit bridge Adj. Margin: Margin: margin: 22.8% 19.5% 20.4% -13% 3 200 3 161 3 000 -362 -3.3 ppt 2 887 +49 -88 2 800 2 760 +127 +1.0 ppt -1.0 ppt 2 600 +26 Adj. opening balance +13 Structure incl. acq. -127 IAC 200 0 Q123 Organic Currency Structure/other Q124 IAC Adjusted operating profi
Slide 13: Equipment & Service orders received: Strong demand
Equipment & Service orders received: Strong demand • Orders received -4% • High mining activity • -2% organic growth • MSEK 11 025 (11 539) • Large orders MSEK 400 (900) • +1% acquisition growth • Strong demand for mixed-fleet automation and midlife upgrades Orders received Organic growth Orders rec
Slide 14: E&S revenues and EBIT
E&S revenues and EBIT • Revenues MSEK 11 212 (10 733) – Strong invoicing for equipment – 42% (38) equipment revenues • Operating profit, EBIT, MSEK 2 503 (2 718) – Higher share of equipment, a negative mix effect within Service, and higher costs – EBIT margin 22.3% (25.3) Revenues, EBIT and EBIT mar
Slide 15: E&S profit bridge
E&S profit bridge Adj. Margin: Margin: margin: 25.3% 22.3% 22.3% 2 800 -8% 2 718 2 700 2 600 -273 -4.1ppt 2 503 2 503 -1 2 500 +59 -0.2ppt +1.3ppt 2 400 2 300 +/-0 Adj. opening balance 2 200 -1 Structure incl. acq. -/-0 IAC 200 100 0 Q123 Organic Currency Structure/other Q124 IAC Adjusted operating
Slide 16: Tools & Attachments orders received: Mixed demand
Tools & Attachments orders received: Mixed demand • Orders received +/-0% • Mining demand strong for rock • -1% organic growth drilling tools • +3% acquisition growth • MSEK 3 122 (3 133) • Construction weak, impacting hydraulic attachments Orders received Organic growth Orders received bridge 4 000
Slide 17: T&A revenues and EBIT
T&A revenues and EBIT • Revenues MSEK 2 949 (3 125) • Operating profit, EBIT, MSEK 335 (532) – Items affecting comparability MSEK -125 (0) • Adjusted operating profit, EBIT, MSEK 460 (532) – Adj. EBIT margin 15.6% (17.0) – Higher share of rock drilling tools and weak hydraulic attachments (underabso
Slide 18: T&A profit bridge
T&A profit bridge Adj. Margin: Margin: margin: 17.0% 11.4% 15.6% 600 -37% 550 532 500 -73 -0.8ppt -14 460 450 -0.1ppt 400 -110 +125 -4.7ppt 350 335 300 +0 Adj. opening balance 250 +15 Structure incl. acq. 200 -125 IAC 150 100 50 0 Q123 Organic Currency Structure/other Q124 IAC Adjusted operating pro
Slide 19: Costs, net financials and tax
Costs, net financials and tax • Administration, marketing and R&D expenses Administration, marketing and R&D expenses 3 000 22 – Year-on-year -6% • Functional costs +4% 2 564 2 557 21 2 500 2 367 2 410 2 411 • 17.0% (16.7) of revenues 2 321 20 • Sequentially 2 049 19 1 978 2 000 • R&D stable – Inves
Slide 20: Operating cash flow
Operating cash flow Operating cash flow and cash conversion rate, % 3 500 120 MSEK Q124 Q123 110 Operating profit 2 760 3 161 3 000 97 100 Depreciation, amortization and impairment 673 635 90 2 500 2 415 82 81 2 435 80 Capital gain/loss and other non-cash items -222 -226 83 80 67 70 Net financial it
Slide 21: Working capital
Working capital Net working capital Working capital • Net working capital +15% MSEK 23 520 23 520 30 000 40 20 442 36.7 – Excl. acquisitions and fx +15% 35 25 000 32.8 23 520 13 793 – 36.7% (32.8) of revenues 28.9 20 592 20 442 30 18 930 20 000 • Higher equipment volumes / 25 13 245 finished goods 1
Slide 22: Capital efficiency
Capital efficiency Net debt and Net debt/EBITDA Capital employed and ROCE • Net debt at MSEK 6 076 (7 281) 1.0 10 000 65 000 60 60 896 • MEUR 500 bond issuance 0.8 9 000 60 000 55 8 000 55 000 50 0.6 0.52 • Net debt/EBITDA 0.39 (0.52) 0.39 7 000 50 000 47 401 45 0.4 6 000 45 000 40 • 41% green or su
Slide 23: Stanley Infrastructure: a perfect fit for Epiroc
Stanley Infrastructure: a perfect fit for Epiroc Supports our Expands our high-end Significant sales Excellent cultural fit growth strategy attachments portfolio synergies • Strong focus on • Construction and • Value creation for • Stronger presence innovation deconstruction market customers in the
Slide 24: Preliminary financial impacts of the acquisition
Preliminary financial impacts of the acquisition Deal closed April 1, 2024 Reporting Segment: Tools & Attachments (Attachments Division) President: Goran Popovski Employees 1 380 Revenues and EBITA 2023 Revenues of MUSD 447 / MSEK 4 725* Adjusted EBITA 16% Market comment The demand weakened througho
Slide 25: Summary
Summary • High mining activity ‒ Strong service ‒ Strong rock drilling tools ‒ Lumpy large orders • Safety leadership • Construction weak • Negative mix effects on margin • Increasing the focus on profitability • Improved cash flow • Positioned for growth in infrastructure attachments Q1 2024 25
Slide 26: Looking ahead
Looking ahead “In the near term, we expect that the underlying mining demand, both for equipment and aftermarket, will remain at a high level. Demand from construction customers is expected to be soft.” 26
Slide 27: Capital Markets Day
Capital Markets Day CAPITAL MARKETS DAY Join us in Las Vegas + MinEXPO Tuesday September 24, 2024 www.epirocgroup.com/en/cmd-2024 Q1 2024 27
Slide 28: Q&A
Q&A
Slide 29: Appendix
Appendix
Slide 30: Investment case
Investment case We accelerate the Our success is We focus on We have a high productivity and We have a well- We create value based on attractive proportion sustainability proven business for our sustainability and niches with of recurring transformation in model stakeholders a strong corporate struc
Slide 31: A 151-year old start-up company and a leading productivity and sustainability partner
A 151-year old start-up company and a leading productivity and sustainability partner Orders received Orders received Revenues in 58 899 58 346 ~150 countries Europe 53 222 +18 000 North America 13% 45 648 employees 25% 39 400 39 492 36 579 EBIT margin 21.1% Africa/ Asia / Australia Middle East 30%
Slide 32: Strategy and foundations for success
Strategy and foundations for success . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Sustainability and a strong company culture 3
Slide 33: Financial goals at a glance
Financial goals at a glance Goals Description Q1 2024 2023 2015-2023 Growth Annual revenue growth of 8% over a business cycle. 2% 21% 10% Industry-best operating margin, with strong Profitability (EBIT) 19.5% 21.8% 20.4% resilience over the cycle. Improve capital efficiency and resilience. Capital e
Slide 34: 2030 goals for people and planet
2030 goals for people and planet • No work-related injuries • Balanced workforce and double the number of women in operational roles • Have all employees and business partners comply with our Code of Conduct and Responsible Sales Assessment Process implemented • Halve CO2e emissions in operations* •
Slide 35: Debt information and maturity profile
Debt information and maturity profile Maturity profile 5 722 • Net debt/EBITDA: 0.39 4 500 • S&P rating: BBB+ Stable outlook 4 000 • External financing: BSEK 17.2 1 500 • 91% long term financing 3 000 • 41% green or sustainability linked 2 000 • 4.8 years average tenor (long-term) 1 729 2 000 198 3
Slide 36: 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 37: 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