Slide 1: Interim report Q2 2018
Interim report Q2 2018 July 19, 2018 Per Lindberg, President and CEO Anders Lindén, CFO
Slide 2: Key highlights
Key highlights Q2 2018 • Another quarter with orders received above SEK 10 billion • Ramp up of manufacturing and record high revenues • Good operating profit performance • Cash flow impacted by the strong growth • Listed on Nasdaq Stockholm on June 18 © 2018 by Epiroc. All rights reserved. 2
Slide 3: Orders received
Orders received Q2 2018 – change in local currency 24% 20% Europe +14% 18% North America 14% -2% 24% North America South America Europe Africa/Middle East Africa/Middle East Asia/Australia +51% Asia/Australia +15% 30% South America +53% 70% Mining Infrastructure and other © 2018 by Epiroc. All right
Slide 4: Business development / Innovations
Business development / Innovations Q2 2018 • Continued interest in automation from mining customers – Sustainable Underground Mining • Innovations – Minetruck 2010 Battery – Automatic ventilation system – V-LOK clamp the drill string instead of welding © 2018 by Epiroc. All rights reserved.
Slide 5: Key financials
Key financials Q2 2018 • Organic order growth of 18% 12,000 30% 10,483 • Organic revenue growth of 22% 10,000 9,843 25% • Book to bill 107% 8,662 7,879 8,000 20% • Reported operating profit SEK 1,810 million (1,468) – margin 18.4% (18.6) 6,000 15% – Costs for split and change in provision for incent
Slide 6: Segments
Segments Orders received, SEK million Orders received Organic order growth, % Q2 2018 - aftermarket 59% 12,000 10,000 +6% 2,470 8,000 2,270 6,000 +14% 3,713 3,181 4,000 +31% 2,000 4,234 3,142 0 Q2 2017 Q2 2018 Equipment Service Tools & Attachments Equipment Service Tools & Attachments © 2018 by Epir
Slide 7: Equipment & Service
Equipment & Service • Continued strong demand for equipment, 9,000 27% 7,947 supported by mining customers’ expansion 8,000 7,325 24% investments 7,000 21% 6,323 • Positive market development and additional 6,000 5,495 18% marketing and sales activity support service 5,000 15% business 4,000 12% • O
Slide 8: 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 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Orders received, SEK million Revenues, SEK million Orders
Slide 9: Tools & Attachments
Tools & Attachments • Good demand for both rock drilling tools 3,000 18% and hydraulic attachments 2,470 2,452 2,500 15% 2,270 2,297 • Organic order growth of 6% • Organic revenue growth of 5% 2,000 12% • Book to bill at 101% 1,500 9% • Operating margin was 12.4% (14.3) 1,000 6% – Negative impact fr
Slide 10: Financials
Financials C Epiroc
Slide 11: Orders received and revenues
Orders received and revenues Q2 2018 Trend Sales bridge 12,000 140% Orders received Revenues SEK million SEK million 120% Δ, % Δ, % 10,000 Q2 2017 8 662 7 879 100% 8,000 Organic +18 +22 80% 6,000 Currency +1 +1 60% Structure and other +2 +2 4,000 40% Total +21 +25 2,000 20% Q2 2018 10 483 9 843 0 0%
Slide 12: Operating profit and margin
Operating profit and margin Q2 2018 Trend Profit bridge 2,000 25% Operating profit Margin, % 1,800 SEK million Δ, pp 1,600 20% Q2 2017 1,468 18.6 1,400 Organic 539 +2.2 1,200 15% 1,000 Currency -70 -0.8 800 10% Structure and other -127* -1.6 600 Total 342 -0.2 400 5% Q2 2018 1,810 18.4 200 *Includes
Slide 13: Profit bridges – segments
Profit bridges – segments Q2 2018 Equipment & Service Tools & Attachments Operating profit Margin, % Operating profit Margin, % SEK million Δ, pp SEK million Δ, pp Q2 2017 1,242 22.6 Q2 2017 328 14.3 Organic 564 +2.7 Organic -21 -1.5 Currency -60 -0.9 Currency -3 -0.3 Structure and other 1* -0.5 Str
Slide 14: Income statement
Income statement SEK million Q2 2018 Q2 2017* • Gross profit margin Revenues 9,843 7,879 – Impacted by mix with more equipment Cost of sales -6,275 -4,990 Gross profit 3,568 2,889 • R&D expenses increasing as planned Gross profit margin 36.2% 36.7% Marketing and administration expenses -1,389 -1,146
Slide 15: Balance sheet
Balance sheet SEK million June 30, 2018 June 30, 2017* Dec. 31, 2017* • Increase in working capital Intangible assets 3,637 3,136 3,121 Rental equipment 1,300 1,271 1,215 • Funding in place, reflected in current Other non-current assets 4,448 4,136 3,891 balance sheet Inventories 10,664 7,945 8,440
Slide 16: Epiroc Group - Net working capital
Epiroc Group - Net working capital 14,000 42% • Average net working capital/revenues 31.7% 12,000 36% • Strong volume growth increased customer receivables and inventories 10,000 30% • Supply-chain program progressing according 8,000 24% to plan 6,000 18% 4,000 12% 2,000 6% 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 3,027 million 8,000 0.40 • Net debt/EBITDA 0.40 7,000 0.35 • Financing 6,000 0.30 – Bridge and EIB loan in place 5,000 0.25 4,000 0.20 • Share repurchases to start in Q3 2018 3,000 0.15 2,000 0.10 1,000 0.05 0 0.00 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Net
Slide 18: Cash flow
Cash flow SEK million Q2 2018 Q2 2017* • Weak operating cash flow Operating profit 1,810 1,468 Depreciation, amortization and impairment 340 308 • Working capital increased Capital gain/loss and other non-cash items 54 148 • Net financial items paid/received impacted 2,204 1,924 Net financial items
Slide 19: Summary
Summary C Epiroc
Slide 20: Summary
Summary • Strong quarter – Orders received above SEK 10 billion – Ramp up of manufacturing and record high revenues – Good operating profit performance – Negative impact from split costs and provision for incentive programs – Cash flow impacted by working capital • Demand continues to be healthy • Q
Slide 21: C Epiroc
C Epiroc
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