Epiroc Ab Class A · OMXSTO:EPI_A
Epiroc Ab Class A — Investor Day (2021)
113 slides from Epiroc Ab Class A's investor day presentation, 2021
Slide 1: Epiroc Capital Markets Day 2021
Epiroc Capital Markets Day 2021
Slide 2: Movie: Mining from a new perspective
Movie: Mining from a new perspective All rights reserved by Epiroc. 2
Slide 3: Epiroc is a vital part of a sustainable society
Karin Larsson 2019: VP Investor Relations / Head of IR 2017: Head of External Communications, Ahlsell AB, Head of IR Sweden 2016: Senior Consultant, COIN, Sweden 2011: IRO, Atlas Copco, Sweden 2010: Pan European Equity Sales, Barclays Capital, Germany 2006: Nordic Equity Sales, SEB Enskilda, Germany
Slide 4: Safety first
Safety first 4
Slide 5: Epiroc is a vital part of a sustainable society
Epiroc is a vital part of a sustainable society Infrastructure Mining 23% 77% 5 Of orders, Q321, 12 months
Slide 6: Strategy and foundations for success
Strategy and foundations for success . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Sustainability and a strong company 30 min Q&A culture being our foundation at the end
Slide 7: Sustainability and a strong company culture being our foundation
Helena Hedblom 2020: President and CEO 2017: Senior Executive Vice President Mining and Infrastructure, Epiroc, Sweden President & CEO 2013: President, Rock Drilling Tools Division, Atlas Copco, Sweden 2011: General Manager Rock Drilling Tools Division, Atlas Copco, Sweden 2008: Vice President R&D,
Slide 8: Strategy and foundations for success
Strategy and foundations for success . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Sustainability and a strong company 30 min Q&A culture being our foundation at the end
Slide 9: Sustainability and a strong company culture are our foundation
Sustainability and a strong company culture are our foundation ” • Strong company culture – Employer of choice We are a vital part of a – High-performing organization sustainable society. – Decentralized governance model that leverages functional excellence 9
Slide 10: Strong company culture and global presence
Strong company culture and global presence At your service! • Epiroc is a 148-year old start-up 15 198 employees around the world • Decentralized organization • Customers in 150+ countries Europe – 10 largest = 20% of revenues North America 31% • ~85% direct sales 15% • Aftermarket: 2/3 of revenues
Slide 11: Drive the productivity and sustainability transformation
Drive the productivity and sustainability transformation • We can make a positive impact by enabling It’s about knowing. automation and digitalization Not guessing. – Improve working conditions and increase safety – Increase utilization of equipment – Less unscheduled maintenance – Increase efficien
Slide 12: Drive the productivity and sustainability transformation
Drive the productivity and sustainability transformation Sources of carbon emissions in mining, % • We can make a positive impact by Example: Copper, underground, Australia; 13 Mt p.a. ore production enabling zero-emissions 100 – The mining and infrastructure industries represents a meaningful 33% 3
Slide 13: Drive the productivity and sustainability transformation
Drive the productivity and sustainability transformation • How do we do it? – Innovation, automation, digitalization, and electrification – Collaboration and knowledge sharing – Strong local presence – Innovation culture 13
Slide 14: How to foster a strong innovation culture
How to foster a strong innovation culture • Dare to think new: Creative, bold and open-minded employees • Willingness to take on responsibility and grow to the next level • Culture included in acquisition integration • Take advantage of the full workforce for better results Innovation Commitment Col
Slide 15: Collaborate with the best to make a real difference
Collaborate with the best to make a real difference A few examples • The first mechanized • Battery-electric in African • Converting diesel equipment development charging greenfield mine to battery-electric system in the world – Most sustainable and – Speed up the shift to an – “Avatel” is a game ch
Slide 16: Vital part of a sustainable society
Vital part of a sustainable society • Focus areas in sustainability – We live by the highest ethical standards – We invest in safety and health – We grow together with passionate people and courageous leaders – We use resources responsibly and efficiently • Sustainability included in remuneration •
Slide 17: 2030 sustainability goals for people and planet
2030 sustainability goals for people and planet • Health and safety • Operations – No work-related injuries – Halve CO2 emissions in operations • Balanced workforce – 90% renewable energy in own operations – Double the number of women in operational roles • Transport • Walk the talk – Halve CO2 emis
Slide 18: Examples of initiatives and achievements
Examples of initiatives and achievements • Health and safety • Balanced workforce • Walk the talk – Lost-time injury frequency – Improved gender diversity – Code of Conduct updated rate down 16% y-o-y – Diversity & Inclusion Board o Mandatory E-learning – Increased safety awareness o Compliance targ
Slide 19: Examples of initiatives and achievements
Examples of initiatives and achievements • Science based targets • Operations • Products validated – Halve CO2 emissions in operations – Offer a full range of emission- – Industry leading o Energy mapping free products – Above SBTi’s minimum o Renewable energy – Halve CO2 emissions from requirements
Slide 20: Strategy and foundations for success
Strategy and foundations for success . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Sustainability and a strong company 30 min Q&A culture being our foundation at the end
Slide 21: Focus on attractive niches
Focus on attractive niches • Niches where customers appreciate and seek best-in-class solutions – Global applicable solutions in hard-rock mining and/or infrastructure – Mission critical applications with high need of aftermarket – Solutions with technical height – Strong drive for increased safety,
Slide 22: Strong offering and exposure
Strong offering and exposure Equipment 36% of orders received Aftermarket 64% of orders received Mining Service Tools Attachments 77% • Service agreements and audits • Rock drilling tools • Demolition and rock- excavation attachments of orders Underground Surface Exploration • Exploration drilling •
Slide 23: Favorable hard-rock exposure
Favorable hard-rock exposure Hard rock exposure (of orders) Mineral prices at good levels Epiroc exposure 220 Infrastructure Gold 200 24% 23% 180 160 Other 9% 140 2% 21% 120 Platinum 3% Copper Coal 3% 4% 100 Zinc 11% Nickel 80 Iron 60 Dec. 15 Mar. 16 Jun. 16 Sep. 16 Dec. 16 Mar. 17 Jun. 17 Sep. 17 D
Slide 24: Q3 2021 and near-term outlook
Q3 2021 and near-term outlook • Record orders received • Increased revenues and operating profit • Supply-chain challenges • Acquisitions “We expect that demand, both for equipment and aftermarket, will remain at a high level in the near term.“ 24
Slide 25: Focus on attractive niches
Martin Hjerpe 2019: SVP M&A and Strategy, Epiroc, Sweden 2002: Partner, McKinsey & Company, Sweden and Chicago, USA SVP M&A and Strategy 2000: Business development analyst, ABGS, Sweden 2000: M.Sc. in Engineering Physics, Chalmers, Sweden Focus on attractive niches
Slide 26: Long term: Attractive market dynamics
Long term: Attractive market dynamics 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 sustainability Increased demand for new types of solut
Slide 27: Structural underlying growth
Structural underlying growth • Today: 56% of population World economic growth Strong urbanization trend lives in urban areas 300 12 000 80 +52% 11 000 68% • 2050: The world's urban 250 238 10 000 64% 70 60% population will increase to +2% 9 000 56% 60 205 more than 2/3 200 8 000 50 175 7 000 6 606 •
Slide 28: Customer challenges in mining
Customer challenges in mining Need to increase productivity Need to go underground Need to excavate more rock Average equipment utilization is Underground mining expected to be Depletion of ore grades expected to strong in the coming years low within mining, % remain between 0.5%-2% in the +45% fore
Slide 29: Supply deficit expected for key minerals
Supply deficit expected for key minerals • Copper supply deficit in 2030 – Decarbonization drives strong demand growth – Recycling increasing, but not enough to eliminate growth – High exploration activity • Strong outlook for gold – Meaningful ore grade decline – Small recycling impact – High explo
Slide 30: Strong focus on safety and sustainability
Strong focus on safety and sustainability • Need to improve safety • Need to reduce GHG Need to reduce environmental • Despite improvements more emissions impact further Water scarcity is increasingly needs to be done • Mining and construction are important as 30-50% of copper, iron -59% large GHG e
Slide 31: Financial goal: Revenue growth of 8% p.a.
Financial goal: Revenue growth of 8% p.a. ” Solid revenue growth Epiroc’s goal is to 50 000 achieve annual 45 000 +5% revenue growth 40 849 40 000 38 285 38 278 36 122 of 8% 35 000 31 364 over a business cycle and 30 000 28 663 27 102 to grow faster than the market 25 000 20 000 15 000 Growth will b
Slide 32: Financial goal: Industry-best operating margin
Financial goal: Industry-best operating margin ” Operating profit and margin Epiroc’s goal is to 16 000 25 have an 23.0 14 000 21.0 21.2 industry-best 19.4 20.3 22.5 20 12 000 18.1 20.4 17.1 19.9 operating 16.8 18.9 19.3 10 000 15 margin 8 000 7 385 8 136 7 382 8 613 with strong resilience 5 930 10
Slide 33: Strategy and foundations for success
Strategy and foundations for success . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Sustainability and a strong company 30 min Q&A culture being our foundation at the end
Slide 34: Leading productivity and sustainability partner in the digitalized mine
Leading productivity and sustainability partner in the digitalized mine Digital solutions Increasingly improve and digitalized and optimize the connected mines end-to-end process and worksites for our customers 34 www.epiroc.com/en-be/world-of-epiroc
Slide 35: Innovation, digitalization, automation and electrification
2020: President Technology & Digital Division, Jonas Managing Director Epiroc Rock Drills AB Albertson 2018: President Rocktec division, Epiroc, Sweden Managing Director Epiroc Rock Drills AB 2016: President Rocktec division, Atlas Copco, Sweden President Managing Director Atlas Copco Rock Drills AB
Slide 36: Investing more than ever to stay ahead
Investing more than ever to stay ahead • MSEK 1 000+ in R&D Research and development expenses 1 800 3.0 • R&D engineers - always 2.8% 1 600 close to customers 2.5 1 400 – Approx. 1 400 engineers (29% software) 1 200 2.0 1 035 1 032 1 055 977 • Reduce time to revenue 1 000 1.5 795 – Partnerships and
Slide 37: Collaborate with the best to make a real difference
Collaborate with the best to make a real difference • Next Generation Carbon Neutral Pilots for • Sustainable Underground Mining (SUM) Smart Intelligent Mining Systems (NEXGEN – Collaboration to set a new world standard for SIMS) sustainable mining at great depth – Collaboration for carbon-neutral –
Slide 38: Help customers to embrace innovation
Help customers to embrace innovation • Local digital competence • Regional Application Luleå Centers (RAC) Moscow – Supporting customers Sudbury Asia, to innovate and Denver M. East, implement automation India Nanjing and digitalization • Control towers • Virtual reality test mine Santiago Johannesb
Slide 39: Movie: Digital transformation of mining
Movie: Digital transformation of mining All rights reserved by Epiroc. 39
Slide 40: Why digitalization enables the productivity and sustainability transformation
Why digitalization enables the productivity and sustainability transformation • For our customers: – To increase safety o Full control of fleet, equipment and people – To increase productivity o Better mine planning, reduced traffic congestion and ore-grade optimization o Reliable operations with le
Slide 41: Why automation enables the productivity and sustainability transformation
Why automation enables the productivity and sustainability transformation • For our customers: Market-leading position with a wide range of automation solutions – To protect people. Keeping them away Incl. proven and commercially viable mixed-fleet automation from equipment and dangerous situations
Slide 42: Why electrification enables the productivity and sustainability transformation
Why electrification enables the productivity and sustainability transformation • For our customers: – To protect people from dangerous fumes, noise and heat – To eliminate or reduce CO2 emissions – To reduce energy consumption (ventilation is a large part of opex) – To avoid costly capex investments
Slide 43: Underground
2020: President Underground division and member Sami Niiranen of Group Management 2018: President, Underground Rock Excavation Division, Sweden President Underground Division 2016: General Manager, Atlas Copco, Finland 2014: General Manager, Atlas Copco, Ghana 2012: Marketing Manager, Atlas Copco, S
Slide 44: Innovation – Underground
Innovation – Underground • Boomer M20 - the world´s • Avatel - the world's first • COP MD20 – a robust rock first face drill rig with internal mechanized development drill that saves time and cost hydraulics charging system (incl. longer service intervals) 44
Slide 45: Automation highlights – Underground
Automation highlights – Underground • Market leadership • High customer demand • Several large automation orders • Growing number of automation units and projects – Automated rigs in infrastructure – Automated production drill rigs +36% y-o-y • Proven autonomous mixed-fleet solutions – Newcrest in A
Slide 46: Movie: Automation underground - Newcrest
Movie: Automation underground - Newcrest All rights reserved by Epiroc. 46
Slide 47: Digitalization highlights – Underground
Digitalization highlights – Underground 6th Sense • Connected machines +26% y-o-y (Certiq) • Rapid Mine Development – Boosting productivity and lowering costs for Chilean copper miner Pucobre • Collision Avoidance System Interface – Groundbreaking safety improvement • Dynamic Tunneling Package – The
Slide 48: Market leader in electrification
Market leader in electrification • Goal: • Today: • In the future: – Be a full-range partner and – Largest battery-driven product – Full range of emission-free true enabler within portfolio in the market underground equipment by electrification – Batteries as a Service 2025 o Focus: Battery and cabl
Slide 49: Electrification highlights – Underground
Electrification highlights – Underground • Large greenfield order from Ivanplats in South Africa • Battery conversions • Electric trolley solution – Collaboration with Boliden and ABB • NEXGEN SIMS for carbon-neutral sustainable mining • Acquisition of specialist in mining vehicle battery conversion
Slide 50: Movie: Electrification underground – Glencore
Movie: Electrification underground – Glencore All rights reserved by Epiroc. 50
Slide 51: Surface
2020: President Surface division and member of José Manuel Sánchez Group Management 2015: President Drilling Solutions division, Atlas Copco, USA President Surface division 2007: General Manager, Atlas Copco, Chile 2002: General Manager, Atlas Copco, Mexico 1998: Short-term assignment, Atlas Copco,
Slide 52: Innovation – Surface
Innovation – Surface • Automatic Bit Changer – Next step in autonomous drilling – Changes rotary bits faster than people – No human interaction 52
Slide 53: Movie: Innovation – Automatic Bit Changer
Movie: Innovation – Automatic Bit Changer All rights reserved by Epiroc. 53
Slide 54: Innovation – Surface
Innovation – Surface • Pit Viper 291 – powerful large diameter, single- • SmartROC D65 XLF - automated drilling and rod pass drill rig with full automation features handling and 20% less fuel consumption 54
Slide 55: Movie: Innovation – SmartROC D65
Movie: Innovation – SmartROC D65 All rights reserved by Epiroc. 55
Slide 56: Automation highlights – Surface
Automation highlights – Surface • Market leadership Fully autonomous and remote control fleet • High customer demand – Several large 434 automation orders 381 – Fully autonomous Pit Vipers to greenfield +56% 285 – Autonomous fleet commissioned in Peru 164 • Largest autonomous mixed 100 fleet deploym
Slide 57: Movie: Surface automation – Roy Hill
Movie: Surface automation – Roy Hill All rights reserved by Epiroc. 57
Slide 58: Automation making a real positive impact
Automation making a real positive impact • Automation reducing cost Automation impact, per drill 130 and emissions 120 • Different levels of automation 110 100 100 – AutoLevel: From average to 90 expert operator 80 71 – AutoDrill 2: Optimal drilling, 70 with operator monitoring 60 60 50 – Autonomous
Slide 59: Digitalization highlights – Surface
Digitalization highlights – Surface • Connected machines +20% y-o-y (Certiq) • Acquisition of 3D-P – Wireless connectivity for surface mining – Enables digitalization and automation • Acquisition of Kinetic Logging Services – Solutions that provides near real-time borehole assay data and grade infor
Slide 60: Electrification highlights – Surface
Electrification highlights – Surface • Reduce emissions is key • Surface drilling by electric cable since 1990 – Challenges: electrical infrastructure and logistics – Solutions: Motivator for tramming • Full range of emission-free surface equipment by 2030 60
Slide 61: Short break & Movie: Apprenticeships at Epiroc
Short break & Movie: Apprenticeships at Epiroc All rights reserved by Epiroc. 61
Slide 62: Strategy and foundations for success
Strategy and foundations for success . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Sustainability and a strong company 30 min Q&A at the end culture being our foundation
Slide 63: Broad aftermarket offering
Broad aftermarket offering Aftermarket 69% Service 43% Tools & Attachments 26% • Service • Spare parts • Midlife • Rock drilling • Hydraulic agreements and services, tools attachments and audits components training, and more Share of Epiroc revenues 12 months until September 2021 63
Slide 64: The aftermarket business provides resilience
The aftermarket business provides resilience Aftermarket revenues Covid-19 Creation of dedicated Epiroc, incl. hydraulic 30 000 division for parts & attachments as from services 2011 2015 -8% 26 829 26 311 +8% 25 000 24 569 23 822 20 845 +8% 19 895 20 000 19 113 18 000 17 400 17 200 15 900 15 000 14
Slide 65: Parts & Services
2020: President Parts, Service and Supply Chain Jess Kindler and member of Group Management 2016: President Mining and Rock Excavation Service division, Atlas Copco, Sweden President 2013: Director, PT Atlas Copco Nusantara, Parts & Services Division Indonesia 2012: Master of Business Administration
Slide 66: Broad service offering
Let’s Broadstart withoffering service the why Our offering For our customers • Improved safety, e.g. Live Work Elimination • Higher productivity • Reliability and peace of mind Replacement Service Reman Batteries as a • Lower TCO parts and kits agreements solutions service and audits • Circular appr
Slide 67: Equipment life cycle and service offerings
Equipment life cycle and service offerings Service – value proposition Equipment fleet (year of commissioning) Replacement parts and kits / Service agreements and audits 8% Midlife services 20% 41% 7.8 years Battery conversions Value average fleet age Reman solutions Connectivity Training products 3
Slide 68: Presence is vital and a competitive advantage!
Presence is vital and a competitive advantage! 100+ VALE CANADA service OSKEMEN workshops 7 470 KAZAKHMYS Nanjing 5 employees remanufacturing in service* centers 300+ 7 sites with service Global/regional contracts with people distribution on site Major Epiroc workshop centers Major service contract
Slide 69: A growing service business
A growing service business Revenues Service revenues 18 000 +6% 16 462 16 030 16 000 15 545 14 302 Tools & Equipment 14 000 Attachments 31% 26% 11 807 12 107 12 000 11 188 10 000 69% 8 000 Aftermarket 6 000 4 000 2 000 Service 43% 0 2015 2016 2017 2018 2019 2020 Q321 12m Service revenues, MSEK 12 mo
Slide 70: Maximize full potential within service
Maximize full potential within service • Right feet on the ground • Connectivity to enable real-time data of activity levels, emissions, and need for aftermarket • Take advantage of increasing technological height of capital equipment • Tailored service products to different customer segments and ch
Slide 71: The right feet on the ground
The right feet on the ground • 6 146 service technicians • 75% of technicians with 40% of technicians with deep globally knowledge in hydraulics, technical knowledge in models • Focus on training and pneumatics and electrics and systems competence Certified technicians (Level 1), per year Certified
Slide 72: Number of connected machines increasing
Number of connected machines increasing • Certiq – a telematics solution Telematics enabled fleet – Collects, compares and 6 000 5 700 communicates vital real-time 5 500 equipment information +29% 5 000 – Important building block for 4 500 4 300 productivity and automation 4 000 3 400 – User friendl
Slide 73: Number of connected machines increasing
Number of connected machines increasing • My Epiroc – track everything, Customers using MyEpiroc act anywhere – Platform-independent solution 350 for any device 305 300 – Instant access to all +193% machine data 250 – Operational status, 200 performance and location 150 – Identifies replacement need
Slide 74: Technological height increases aftermarket demand
Technological height increases aftermarket demand • Positive correlation between • Automation vs. not automation technical height of equipment – >10% higher 5 year cumulative and share of installed base parts revenues that we cater to o Higher utilization contributing positively o Reduced parts dama
Slide 75: Electrification generates new revenues
Electrification generates new revenues • Batteries as a Service – Customers purchase the battery operation service – Circular approach • Battery conversions – Scooptram ST1030 – Scooptram ST14 – Next up: Minetruck MT436 – Several machines currently under conversion – Battery conversion for mixed fle
Slide 76: Movie: Aftermarket – Battery conversion
Movie: Aftermarket – Battery conversion All rights reserved by Epiroc. 76
Slide 77: Midlife services: Extending equipment life
Midlife services: Extending equipment life • Returning equipment to Midlife services revenues maximum productivity and operating efficiency +12% 137 • Replacing old components 140 127 126 with new 120 100 100 • Only a fraction of the cost of 80 a new machine 60 • Battery conversions 40 • Engine repo
Slide 78: Movie: Reman solutions: Extending life of existing parts
Movie: Reman solutions: Extending life of existing parts All rights reserved by Epiroc. 78
Slide 79: Reman solutions: Extending life of existing parts
Reman solutions: Extending life of existing parts • Reliable parts with minimal Reman revenues downtime (incl. warranty) 400 372 • Sustainable option 350 • Reman programs in USA, 300 294 Canada, Chile and Mexico 250 +72% • Approx. 2 000 components 200 198 remanufactured in 2021 150 100 100 50 0 2018
Slide 80: From parts provider to partner
From parts provider to partner • Strong local presence Service agreements revenues • Improved value propositions • Different agreements for 140 +9% 130 different demands 115 118 120 100 • Lifecycle management 100 80 • Data-driven services and 60 subscriptions 40 20 0 2018 2019 2020 Q321 12m Service
Slide 81: Tools & Attachments
Goran Popovski 2020: President Tools & Attachments and member of Group Management 2017: President Hydraulic Attachment Tools President Division, Sweden Tools & Attachments 2012: Vice President Marketing, Sweden 2010:Regional Business Manager SDE - Region Division EMEA (Europe, Middle East, Turkey an
Slide 82: Tools & Attachments – division and reporting segment
Tools & Attachments – division and reporting segment Revenues Tools & Attachments Equipment 26% 31% 69% Aftermarket = = Service 43% 12 months until September 2021 82
Slide 83: Tools and attachments for hard rock excavation, demolition and recycling
Tools and attachments for hard rock excavation, demolition and recycling Rock-drilling tools Hydraulic attachments Connectivity • Extensive range of high-end • High-end hydraulic • Connectivity rock drilling, exploration and attachments ground support drilling tools 83
Slide 84: Our profitable growth journey
Our profitable growth journey • Strong innovation focus to Revenues and adj. operating margin stay ahead of competition 12 000 24 10 799 • Improving value proposition 11 000 9 849 22 10 000 9 519 20 to reach more – and 8 738 9 024 9 000 18 selective - customer 8 088 7 925 8 000 17.1 16 segments 7 00
Slide 85: Strong innovation focus to stay ahead of competition
Strong innovation focus to stay ahead of competition • Drilling tools • Hydraulic attachments • 6th Sense – Improved value proposition – HatCon for higher utilization – Optimal utilization of – Longer service life – Continuous product Epiroc rigs and tools – DTH hammers with new improvements valve s
Slide 86: Improving value proposition to reach more customer segments
Improving value proposition to reach more customer segments • Broadening range of • Smart Inventory channels to reach important Management system customers – Availability in focus – Construction – Recycling • Different value propositions – Mining and quarrying – Essential Line Working tools – Extens
Slide 87: Movie: Kaunis Iron
Movie: Kaunis Iron All rights reserved by Epiroc. 87
Slide 88: Improving internal efficiency
Improving internal efficiency • Motivated and committed team • Focused organization • Reducing complexity • Improving utilization of factories – Consolidated production of exploration drilling tools • Portfolio improvements with niche focus – Closed production of handheld rock In the Tools & Attachm
Slide 89: From tools provider to partner
From tools provider to partner • 240+ rock drilling tools contracts – Double digit growth – Surface, underground, mining and infrastructure – Approx. 150 cost per meter contracts • Benefits for our customers: – Predictability of cost – Stable production – Reliable supply and service • Benefits for E
Slide 90: Movie: Second to none – Roc-Drill
Movie: Second to none – Roc-Drill All rights reserved by Epiroc. 90
Slide 91: Strategy and foundations for success
Strategy and foundations for success . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Sustainability and a strong company 30 min Q&A culture being our foundation at the end
Slide 92: Operational excellence
Operational excellence To do the right things + To do these things even better 92
Slide 93: Supply-chain excellence
Supply-chain excellence CO2 from transport • Supply-chain improvement • Example of goals and program achievements: -28% 120 000 111 924 – Integrate the supply-chain – Customer availability up 14% 110 000 organization in Tools & Attachments* 100 000 90 000 87 672 – Re-design regional – Customer avail
Slide 94: Administration excellence
Administration excellence • Create a stronger and more Admin, marketing and R&D expenses 2 000 35 agile Epiroc – Define best way of working 1 640 30 1 570 1 595 1 511 – Simplify and increase process 1 500 1 360 1 380 1 427 25 effectiveness 18.0 17.9 20 • Example of action and 1 000 15.6 16.3 16.1 16
Slide 95: Welcome Håkan Folin!
Welcome Håkan Folin! • SVP Controlling and Finance • 2013: CFO, SSAB AB – 2013: VP Group Business Control (CFO) – 2010: CFO Business area APAC, SSAB AB • Mission: to drive financial and • 2008: CFO, Tibnor AB operational excellence and • 2006: Group Business Controller actively contribute to Epiroc’
Slide 96: Strategy and foundations for success
Strategy and foundations for success . Operational Outperformance Focus on attractive niches Innovation Aftermarket excellence Sustainability and a strong company 30 min Q&A culture being our foundation at the end
Slide 97: Outperformance
2018: SVP Corporate Communications, Mattias Olsson Epiroc 2016: Head of Investor Relations ASSA ABLOY, Sweden SVP Corporate 2011: Vice President, Investor Relations, Communications Atlas Copco, Sweden 2009: Investor Relations Manager and Senior Project Manager, Atlas Copco, Sweden 2008: Business Con
Slide 98: Financial goals for value creation
Financial goals for value creation Goals Description 2015 – 2020 2021 12m Sep.* Compound annual Growth Annual revenue growth of 8% over a business cycle. growth rate 5% 5% Industry-best operating margin, with strong Average Profitability resilience over the cycle. operating margin 19.1% 22.5% Improv
Slide 99: Annual revenue growth impacted by pandemic
Annual revenue growth impacted by pandemic ” Solid revenue growth Epiroc’s goal is to 50 000 achieve annual 45 000 +5% revenue growth 40 849 40 000 38 285 38 278 36 122 of 8% 35 000 31 364 over a business cycle and 30 000 28 663 27 102 to grow faster than the market 25 000 20 000 15 000 Growth will
Slide 100: Industry-best operating margin
Industry-best operating margin ” Operating profit and margin Epiroc’s goal is to 16 000 25 have an 23.0 14 000 21.0 21.2 20.3 industry-best 18.1 19.4 20.4 22.5 20 12 000 17.1 19.9 16.8 19.3 operating 10 000 18.9 15 8 613 margin 8 000 7 385 8 136 7 382 with strong resilience 6 000 5 930 10 5 175 over
Slide 101: Two reporting segments
Two reporting segments Equipment & Service Tools & Attachments 40 000 30 18 000 20 25.0 25.0 26.4 18 35 000 16 000 17.1 16.9 24.9 24.7 23.5 25 22.8 29 891 16 14 000 30 000 21.5 28 540 28 275 20.1 26 927 13.1 13.0 13.4 13.3 14 20 12 000 12.2 25 000 11.8 11.8 10 799 11.6 22 383 9 849 12 10 000 9 519 2
Slide 102: Capital efficiency impacted by volume growth
Capital efficiency impacted by volume growth ” Epiroc’s goals are to • Large aftermarket Net working capital 30 000 45 • Improve capital efficiency • Flexible manufacturing 40 25 000 and resilience – We produce on orders 34.4 33.8 35 31.8 • Investments and – We only produce core- 29.8 20 000 30 acqu
Slide 103: Capital efficiency impacted by strong cash generation
Capital efficiency impacted by strong cash generation Return on capital employed ” 40 000 50 Epiroc’s goals are to 35 306 45 35 000 33 881 • Improve capital efficiency 31 838 40 and resilience 30 000 25 927 35 • Investments and 25 000 32.0 30 acquisitions shall create 27.6 20 000 25 value 25.0 21.7
Slide 104: Strong cash generation
Strong cash generation • Operating cash flow varies over the cycle Operating cash flow and cash conversion rate, % – When the demand is good we grow and 7 500 300 7 006 increase working capital 7 000 6 688 6 608 6 500 – When the demand is poor we generate 250 6 000 cash and release working capital 5
Slide 105: Solid financial position
Solid financial position Net debt and Net debt/EBITDA ” 0.7 7 000 Epiroc is to have an efficient capital structure 0.6 6 000 and have the flexibility to make selective 0.5 5 000 acquisitions. The goal is to maintain an 0.4 4 000 0.3 3 000 investment grade rating 0.2 2 000 0.1 1 000 0.0 -322 0 Epiroc
Slide 106: Priorities for use of cash
Priorities for use of cash Dividend and payout ratio ” • Continuously invest in Epiroc’s goal is to provide 6.0 80 organic profitable growth long-term stable and rising 5.5 5.50 70 dividends to its 5.0 shareholders 4.5 56 60 • Invest in acquisitions that 4.0 3.00 49 47 50 support our organic efforts
Slide 107: Creating options for the future
Creating options for the future • Outperformance by: – Foundation for success: Sustainability & culture – Focus on attractive niches – Innovation leadership – Aftermarket growth • Creating options for the future! – M&A and partnerships 107
Slide 108: Investments and acquisitions shall create value
” Investments and acquisitions shall create value • Achievements since 2017 • Acquisitions last 12 months – 19 acquisitions – FVT Research – Focused on technology, – Mobilaris (remaining part) aftermarket – DandA Heavy Industries and consumables – Mining Tag S.A. – Aligned with innovation and – Megl
Slide 109: 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 a well-performing in itself?” business strategy of Epiroc?” mar
Slide 110: Strategy and foundations for success
Strategy and foundations for success . Operational Focus on attractive niches Innovation Aftermarket excellence Outperformance Sustainability and a strong company 30 min Q&A culture being our foundation at the end
Slide 111: Q&A
Q&A 111
Slide 112: 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 113: 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