Slide 1: Interim report Q3 2018
Interim report Q3 2018 October 25, 2018 Per Lindberg, President and CEO Anders Lindén, CFO
Slide 2: Key highlights
Key highlights Q3 2018 • A solid quarter • Continued good customer demand – Organic growth vs. Q3 2017, but lower order intake than the past two record quarters • Strong revenue and profit growth • Improved underlying operating margin • Operating cash flow – Sequential improvement but not satisfying
Slide 3: Key financials
Key financials Q3 2018 • Organic order growth of 3% 12,000 30% • Organic revenue growth of 19% 10,000 9,413 9,651 25% • Book to bill 98% 8,591 7,610 8,000 20% • Reported operating profit SEK 1,898 million (1,520) – margin 19.7% (20.0) 6,000 15% – Costs for split and change in provision for incentive
Slide 4: Orders received
Orders received Q3 2018 – change in local currency 26% 23% Europe +20% 13% North America 13% +8% 25% North America South America Europe Africa/Middle East Africa/Middle East Asia/Australia -16% Asia/Australia +2% 30% South America +6% 70% Mining Infrastructure and other © 2018 by Epiroc. All rights
Slide 5: Segments
Segments Orders received, SEK million Orders received Organic order growth, % Q3 2018 - aftermarket 62% 10,000 9,000 2,285 8,000 -4% 2,239 7,000 6,000 5,000 +13% 3,589 2,982 4,000 3,000 +2% 2,000 3,601 3,281 1,000 0 Q3 2017 Q3 2018 Equipment Service Tools & Attachments Equipment Service Tools & Atta
Slide 6: Equipment & Service
Equipment & Service • Good sentiment in the market 9,000 27% 8,000 24% • Organic order growth of 7% 7,190 7,178 7,000 21% – Equipment +2% 6,263 – Service +13% 6,000 5,406 18% 5,000 15% • Organic revenue growth of 25% 4,000 12% • Book to bill at 100% 3,000 9% • Operating margin increased to 24.6% (23
Slide 7: Equipment & Service
Equipment & Service Equipment Service 4,500 4,500 4,000 4,000 3,500 3,500 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Orders received, SEK million Revenues, SEK
Slide 8: Tools & Attachments
Tools & Attachments • Good business environment 3,000 18% • Organic order decline of 4% 2,500 2,382 15% 2,239 2,285 – Strong 2017 comparisons, impact from 2,141 measures to improve product mix and 2,000 12% efficiency actions 1,500 9% • Organic revenue growth of 5% • Book to bill at 96% 1,000 6% • O
Slide 9: Business development / Innovations
Business development / Innovations Q3 2018 • Continued strong interest in automation – Control Tower in Örebro • Innovations – Minetruck 2200 – New range of reverse circulation drill pipes – Second generation of battery-powered equipment to be presented in Q4 © 2018 by Epiroc. All rights reserved.
Slide 10: Financials
Financials C Epiroc
Slide 11: Orders received and revenues
Orders received and revenues Q3 2018 Trend Sales bridge 12,500 125% Orders received Revenues SEK million SEK million Δ, % Δ, % 10,000 100% Q3 2017 8,591 7,610 Organic +3 +19 7,500 75% Currency +5 +5 5,000 50% Structure and other +2 +3 Total +10 +27 2,500 25% Q3 2018 9,413 9,651 0 0% Q1 2017 Q2 2017
Slide 12: Operating profit and margin
Operating profit and margin Q3 2018 Trend Profit bridge 2,500 25% Operating profit Margin, % SEK million Δ, pp 2,000 20% Q3 2017 1,520 20.0 Organic +309 +0.2 1,500 15% Currency +168 +1.0 1,000 10% Structure and other -99* -1.5 Total +378 -0.3 500 5% Q3 2018 1,898 19.7 *Includes operating profit/loss
Slide 13: Profit bridges – segments
Profit bridges – segments Q3 2018 Equipment & Service Tools & Attachments Operating profit Margin, % Operating profit Margin, % SEK million Δ, pp SEK million Δ, pp Q3 2017 1,261 23.3 Q3 2017 279 13.0 Organic +348 +0.5 Organic +17 +0.1 Currency +145 +1.2 Currency +25 +0.5 Structure and other +10* -0.
Slide 14: Income statement
Income statement SEK million Q3 2018 Q3 2017* • Costs for split and long-term incentive Revenues 9,651 7,610 programs SEK 126 million (15) Cost of sales -6,095 -4,874 Gross profit 3,556 2,736 • Corporate costs SEK 63 million Gross profit margin 36.8% 36.0% Marketing and administration expenses -1,32
Slide 15: Balance sheet
Balance sheet SEK million Sep 30, 2018 Sep 30, 2017* Dec. 31, 2017* • Increase in working capital Intangible assets 3,532 3,076 3,121 Rental equipment 1,277 1,220 1,215 Other non-current assets 4,237 4,093 3,891 Inventories 10,789 7,934 8,440 Receivables 9,674 6,802 7,920 Current financial assets 1,
Slide 16: Epiroc Group - Net working capital
Epiroc Group - Net working capital 14,000 35% • Average net working capital/revenues 31.9% 12,000 30% • Strong volume growth increased customer receivables and inventories 10,000 25% • Supply-chain program progressing according 8,000 20% to plan 6,000 15% 4,000 10% 2,000 5% 0 0% Q1 2017 Q2 2017 Q3 2
Slide 17: Epiroc Group - Net debt
Epiroc Group - Net debt 9,000 0.45 • Net debt SEK 3,146 million 8,000 0.40 • Net debt/EBITDA 0.39 7,000 0.35 • Share repurchases of SEK 1,1 billion, net, in 6,000 0.30 the quarter 5,000 0.25 4,000 0.20 3,000 0.15 2,000 0.10 1,000 0.05 0 0.00 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Net debt (SEK million, end
Slide 18: Cash flow
Cash flow SEK million Q3 2018 Q3 2017* • Increased profit Operating profit 1,898 1,520 Depreciation, amortization and impairment 362 285 • Higher taxes paid Capital gain/loss and other non-cash items 199 3 • Working capital increased 2,459 1,808 Net financial items received/paid -88 27 • Net financi
Slide 19: Summary
Summary C Epiroc
Slide 20: Summary
Summary • A solid quarter • Continued good customer demand – Organic growth vs. Q3 2017, but lower order intake than the past two record quarters • Strong revenue and profit growth • Improved underlying operating margin • Operating cash flow – Sequential improvement but not satisfying • Agreement to
Slide 21: Q&A
Q&A
Slide 22: Slide 22
Slide 23: 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