Epiroc Ab Class A · OMXSTO:EPI_A
Epiroc Ab Class A — Q3 2024 Earnings Presentation
34 slides from Epiroc Ab Class A's earnings presentation, Oct 25, 2024
Slide 1: Q3 2024
Q3 2024 October 25, 2024 Helena Hedblom, President and CEO Håkan Folin, CFO
Slide 2: Highlights Q3 2024
Highlights Q3 2024 • Strong mining demand – MSEK 1 400 (1 000) in large equipment orders – Organic equipment order growth 11% – Organic service order growth 6% • Weak construction demand, impacting mainly attachments – Demand softened in the US • CMD: Strategy for resilient, recurring and profitable
Slide 3: Group orders received: Strong mining, weak construction
Group orders received: Strong mining, weak construction • Orders received +8% • Strong mining • +6% organic growth • MSEK 15 520 (14 360) – Large equipment orders • +6% acquisition growth – High demand for mixed-fleet automation and larger rebuilds • Weak construction Orders received Organic growth
Slide 4: Innovation
Innovation • Innovation highlights at MINExpo – Minetruck MT66 S eDrive – Hybrid – Pit Viper 271 E – 100% lower emissions – Automatic Bit Changer – Safer and more efficient – Powerbit X – The world´s most durable drill bit 3.0*% R&D expenses of Leveraging innovation revenues Focused R&D Collaboratio
Slide 5: Aftermarket
Aftermarket • High mining activity level and a good demand for digital solutions, including mixed-fleet automation solutions, as well as high demand for mid-life upgrades and ground engaging tools (GET) • Weak construction impacting mainly Attachments, but also Tools Revenue split Recurring aftermar
Slide 6: Operational excellence
Operational excellence • Ongoing actions to improve profitability – Efficiency measures carried out as planned – and more ongoing – Sequential reduction of workforce by around -450* – YTD reduction of workforce by around -1 000* – Lower cost level in Marketing and Administration sequentially • Reduc
Slide 7: Sustainability: People
Sustainability: People • Improved safety – Focus on a strong safety culture – also for customers – Total recordable injury frequency rate decreased to 4.4 (5.1) • Employees up 4% to 18 908 (18 146) – Acquisitions • Increased number and proportion of women – Employees 19.6% (18.8) – Managers 24.0% (2
Slide 8: Film: India's 1st All Women Underground Mine Rescue Team
Film: India's 1st All Women Underground Mine Rescue Team 1min 14s Q3 2024 8
Slide 9: Sustainability: Planet
Sustainability: Planet • CO2e emissions from operations -24% to 16 295 (21 531) tonnes – Higher share of renewable energy purchased and installation of solar panels • CO2e emissions from transport +18% to 106 070 (89 881) tonnes • Silver medal in EcoVadis sustainability rating Q3 2024 9
Slide 10: Group revenues and EBIT
Group revenues and EBIT • Revenues increased 5% to MSEK 15 699, +3% organic • Operating profit MSEK 3 277 (3 260), incl. IAC of MSEK 191 (-12) – Positive revaluation effect of the shares held prior to the acquisition of ASI Mining and impairment of acquisition-related intangible assets in E&S (net e
Slide 11: Group EBIT profit bridge
Group EBIT profit bridge Adj. Margin: Margin: margin: 21.7% 20.9% 19.7% 3 400 +1% 3 260 3 277 3 200 -130 +200 -1.3 ppt -191 +-0 ppt -53 3 086 +0.5 ppt 3 000 +21 Adj. opening balance -12 Structure incl. acq. +191 IAC 200 0 Q323 Organic Currency Structure/other Q324 IAC Adjusted operating profit Q3 20
Slide 12: Equipment & Service orders received: Strong mining
Equipment & Service orders received: Strong mining • Orders received +5% • High mining activity • +9% organic growth • MSEK 11 830 (11 311) • Large orders MSEK 1 400 (1 000) • Strong demand for mixed-fleet automation and midlife upgrades Orders received Organic growth Orders received bridge -2% orga
Slide 13: E&S revenues and EBIT
E&S revenues and EBIT • Revenues +5% organic to MSEK 11 875 (11 729) • Operating profit MSEK 2 923, incl. IAC of MSEK 208 (7) – Revaluation effect of the shares held prior to the acquisition of ASI Mining of MSEK +554 and impairment of acquisition-related intangibles assets of MSEK -346 • Adj. EBIT
Slide 14: E&S profit bridge
E&S profit bridge Adj. Margin: Margin: margin: 24.5% 24.6% 22.9% +2% 2 950 2 923 2 900 2 868 2 850 +210 -137 -208 2 800 +1.7ppt -2.4ppt 2 750 -18 2 715 2 700 +0.8ppt 2 650 2 600 -1 Adj. opening balance 2 550 +3 Structure incl. acq. +208 IAC 150 100 50 0 Q323 Organic Currency Structure/other Q324 IAC
Slide 15: Tools & Attachments orders received: Mixed demand
Tools & Attachments orders received: Mixed demand • Orders received +25% • Construction weak, impacting • +-0% organic growth – Acquisitions of Stanley Infrastructure mainly attachments but also tools • +28% acquisition growth and ACB+ • Softened demand in the US • MSEK 3 656 (2 924) • Good demand f
Slide 16: T&A revenues and EBIT
T&A revenues and EBIT • Revenues up 19% to MSEK 3 809, -5% organic • Operating profit MSEK 429 (481) – EBIT margin 11.3% (15.1) – Acquisitions impacting negatively (dilution -3.9 ppt) – Comparable units had improvements in profitability Revenues and EBIT 4 500 40 3 991 4 000 3 809 35 3 500 3 418 3 1
Slide 17: T&A profit bridge
T&A profit bridge Adj. Margin: Margin: margin: 15.1% 11.3% 11.3% 600 550 -11% 500 481 -6 +0.6ppt -33 450 -0.6ppt -13 429 429 -3.8ppt +0 400 350 +3 Adj. opening balance 300 -16 Structure incl. acq. +-0 IAC 100 50 0 Q323 Organic Currency Structure/other Q324 IAC Adjusted operating profit Q3 2024 17
Slide 18: Costs, net financials and tax
Costs, net financials and tax • Admin, marketing and R&D Administration, marketing and R&D expenses – Higher costs compared to previous year 3 000 22 – Reported R&D: MSEK 771 (517), of which 346 is 2 746 acquisition-related impairment of intangible 2 564 2 557 2 552 21 2 500 2 367 2 410 2 411 assets
Slide 19: Operating cash flow
Operating cash flow Operating cash flow and cash conversion rate, % 3 500 130 MSEK Q324 Q323 120 Operating profit 3 277 3 260 3 000 110 Depreciation, amortization and impairment 1 168 701 100 2 500 2 435 90 Capital gain/loss and other non-cash items -480 279 81 90 88 80 83 Net financial items receiv
Slide 20: Working capital
Working capital Year-on-year • Net working capital +6% Net working capital Working capital to MSEK 24 395 (22 978) +6% – Acquisitions and lower payables 22 978 24 395 – 38.0% (34.8) of revenues 35 000 38.0 40 17 744 34.8 30 000 35 30.4 20 031 20 202 24 395 25 000 22 978 30 16 634 20 000 17 744 25 15
Slide 21: Working capital: Sequentially
Working capital Sequentially • Sequentially, the working capital has decreased Working capital – Inventory reduced with MSEK 1 171 -3% – Receivables reduced with MSEK 388 22 978 23 520 25 045 24 395 21 736 – Payables reduced with MSEK 909 20 592 21 373 20 202 20 031 18 747 MSEK – 1 171 10 832 10 455
Slide 22: Capital efficiency
Capital efficiency Net debt and Net debt/EBITDA Capital employed and ROCE • Net debt at MSEK 15 152 (7 643) 2.0 25 000 65 000 62 285 60 – Higher net debt due to acquisitions 1.8 60 000 55 1.6 20 000 55 000 50 • Net debt/EBITDA 0.97 (0.49) 1.4 15 152 51 181 1.2 15 000 50 000 45 0.97 • ROCE 21.5% (27.
Slide 23: Summary
Summary • Strong mining (78% of orders) ‒ Large orders MSEK 1 400 (1 000) ‒ Equipment growth 11% organic ‒ Service growth 6% organic • Weak construction (22% of orders) • Strategy for resilient, recurring and profitable growth • Sequential improvements • Innovation highlights at the MINExpo ‒ Leader
Slide 24: 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, while the demand from construction customers is expected to remain weak 24
Slide 25: Q&A
Q&A ir@epiroc.com C Epiroc
Slide 26: Appendix
Appendix C Epiroc
Slide 27: 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 28: 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 60 419 ~150 countries 58 899 Europe 53 222 ~ 19 000 North America 13% employees 27% 45 648 39 400 39 492 36 579 EBIT margin* 19.9% Africa/ Asia / Australia Middle East 31
Slide 29: 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 30: Financial goals at a glance
Financial goals at a glance Goals Description Q3 2024 2023 2015-2023 Growth Annual revenue growth of 8% over a business cycle. 5% 21% 10% Industry-best operating margin, with strong 20.9% 21.8% Profitability (EBIT) 20.4% resilience over the cycle. Adj. 19.7% Adj. 21.7% Improve capital efficiency and
Slide 31: 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 32: Debt information and maturity profile
Debt information and maturity profile Maturity profile 5 600 5 500 500 • Net debt/EBITDA: 0.97 • S&P rating: BBB+ Stable outlook • External financing: BSEK 18.6 3 500 • 84% long term financing 3 000 4 000 1 500 • 38% green or sustainability linked 2 058 2 000 • 4.3 years average tenor (long-term) 1
Slide 33: 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 34: 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