Slide 1: Interim report Q3 2019
Interim report Q3 2019 October 25, 2019 Per Lindberg, President and CEO Anders Lindén, CFO
Slide 2: Growth in aftermarket, lower equipment demand
Growth in aftermarket, lower equipment demand Key highlights Q3 2019 • Strong aftermarket - High customer activity • Solid and improved underlying margin – Revenue mix positive • Good cash flow • High interest for automation and information management, and for battery-electric vehicles • Order intak
Slide 3: Key financials Q3 2019
Key financials Q3 2019 Orders received, MSEK, and change % +2% • Order intake up 2%, -6% organic 9 600 • Revenues up 5%, -3% organic 9 600 9 413 +3% 9 400 • Operating profit up 2% 9 200 – Currency and acquisitions contributed positively -6% +5% 9 000 – Restructuring costs of MSEK 179 in Tools & Atta
Slide 4: Leading the way in innovation
Leading the way in innovation Q3 2019 • Strong market attention for the 6th Sense automation and information management solutions • A large mining equipment service contract won in Chile with possible implementation of automation features • No. of connected machines increasing rapidly • Strong inter
Slide 5: Continuous strive to improve operational excellence
Continuous strive to improve operational excellence Q3 2019 • Workforce reduced by 500 organically in 2019 • Further efficiency improvements will be carried out in the coming quarters and expected to give visible effects in the first half of 2020 • Divestment of geotechnical consumables product line
Slide 6: Sustainability as a competitive advantage
Sustainability as a competitive advantage Q3 2019 • Safety and well-being – Positive trend in reducing work-related injuries • Highest ethical standards – “Speak Up” launched • Passionate people and courageous leaders – Epiroc Days – Leaders committed to value creation for all stakeholders • Respons
Slide 7: High proportion of recurring business
High proportion of recurring business Per segment Q3 2019 Order intake, MSEK and growth, % Revenues in the quarter (Total growth / Organic growth) Equipment Service Tools & Attachments +2% / -6% 9 413 9 600 2 727 Equipment 27% 3 601 32% -24 / -27 68% Aftermarket 4 147 (63) Service 3 589 +16 / +11 41
Slide 8: Segment: Equipment & Service
Segment: Equipment & Service Orders received, MSEK and change, % -4% • Orders received down 4%, -8% organic 7 190 7 200 • Service orders up 11% organic 7 000 – High customer activity -8% -1% 6 874 6 800 +5% • Equipment orders down 27% organic 6 600 – Investment decisions postponed 0 – Cancellation o
Slide 9: Segment: Tools & Attachments
Segment: Tools & Attachments Orders received, MSEK and growth, % +17% • Orders received up 17%, -3% organic 2 700 2 665 – Rock drilling tools orders negatively impacted by 2 600 optimization of product offering 2 500 +15% – Hydraulic attachment tools decreased organically 2 400 2 285 2 300 • Revenue
Slide 10: Financials
Financials CEpiroc
Slide 11: Profit impacted by restructuring costs
Profit impacted by restructuring costs Q3 2019 Operating profit and margin 4 000 24 22 3 500 21.3 20 20.0 20.5 19.7 19.7 3 000 19.1 19.0 18 18.6 18.1 18.4 18.4 16 2 500 2 302 14 2 154 39 2 160 1 991 2 024 1 989 2 000 233 12 181 126 59 1 521 1 535 1 578 1 610 10 1 459 1 500 53 15 50 95 45 8 2 162 2 2
Slide 12: Profit impacted by restructuring costs
Profit impacted by restructuring costs Looking into the numbers Operating profit and margin Underlying Margin: 19.7% Margin: 19.0% Adj. margin: 21.3% margin: 21.7% +2% +14% +16% 2 250 2 201 2 200 2 160 +41 2 150 54 2 100 2 050 +179 2 000 -63 1 950 +89 -1.3pp 1 927 -0.1pp 1 898 +3 1 900 +0.7pp 1 850
Slide 13: Equipment & Service: Profit bridge
Equipment & Service: Profit bridge Looking into the numbers Margin: 24.6% Margin: 26.3% +10% 1 940 +5 1 932 1 920 +0.3pp 1 900 +61 -0.3pp 1 880 1 860 1 840 1 820 +102 +1.7pp 1 800 1 780 1 764 1 760 1 740 20 0 Q3 2018 Organic Currency Structure Q3 2019 and other 13
Slide 14: Tools & Attachments: Profit bridge
Tools & Attachments: Profit bridge Looking into the numbers Underlying Margin: 13.6% Margin: 5.7% Adj. margin: 12.2% margin: 13.6% 377 380 360 +41 340 336 324 320 300 -88 280 -2.0pp +50 260 +1.4pp +179 240 -129 220 -7.3pp 200 180 157 160 140 20 0 Q3 2018 Organic Currency Structure Q3 2019 Restructur
Slide 15: Costs, net financials and tax
Costs, net financials and tax Q3 2019 • Marketing and administration expenses higher Administration, marketing and R&D expenses – Growth, but also some inefficiencies 2 000 30 – Acquisitions and currency 1 745 1 637 1 663 1 671 – Expenses adjusted for change in provision for 1 569 25 1 482 LTI MSEK
Slide 16: Capital structure
Capital structure Q3 2019 Net debt and Net debt/EBITDA • Net debt was MSEK 2 416 (3 146) 0.50 6 000 – Post-employment benefits MSEK 640 (212) 0.45 0.43 5 500 0.40 5 000 • IFRS 16 increased net debt by MSEK 2 012 0.39 0.39 0.40 0.35 4 217 4 500 • Net debt/EBITDA ratio at 0.24 (0.39) 0.35 3 641 4 000
Slide 17: Capital efficiency
Capital efficiency Q3 2019 Net working capital • Net working capital up 12% 50 30 000 40 25 000 – Increase of 11% due to currency and acquisitions 34.3 34.3 31.9 31.8 31.9 30 20 000 – Both trade receivables and inventories decreased, while this 14 124 15 120 12 158 13 465 15 000 improvement was more
Slide 18: Operating cash flow
Operating cash flow Q3 2019 MSEK Q3 2019 Q3 2018 Operating cash flow and Net profit Operating profit +1 927 +1 898 2 400 100 2 242 Depreciation, amortization and impairment +556 +362 2 200 90 Capital gain/loss and other non-cash items -104 +199 2 000 1 883 80 2 379 2 459 1 800 1 680 1 623 70 1 600 1
Slide 19: Summary and outlook
Summary and outlook C Epiroc
Slide 20: Growth in aftermarket, lower equipment demand
Growth in aftermarket, lower equipment demand Key highlights Q3 2019 • Strong aftermarket - High customer activity • Solid and improved underlying margin – Revenue mix positive • Good cash flow • High interest for automation and information management, and for battery-electric vehicles • Order intak
Slide 21: Demand expectations
Demand expectations “In the near-term, we expect that the demand will remain largely at the level seen in the third quarter. That said, the economic environment continues to be uncertain.”
Slide 22: Capital Markets Day
Capital Markets Day November 14, 2019 Stockholm Registration open!
Slide 23: C Epiroc
C Epiroc
Slide 24: 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
Slide 25: Appendix
Appendix C Epiroc
Slide 26: Geographical overview
Geographical overview Orders received, MSEK and % of Group orders Equipment & Service Tools & Attachments North Europe Top 10 areas America % of Group orders 23% % of revenues in 2018 23% 8 814 9 028 9 298 8 822 8 337 7 481 Australia 11% 69% 66% 70% 69% USA 10% 66% 68% Canada 8% 34% Russia 7% 34% 31
Slide 27: Income statement
Income statement Q3 2019 2017 2018 2019 Q3 2019 2018 2019 2018 MSEK Full year Full year 12M Sep Q3 Q3 YTD YTD Revenues 31 364 38 285 41 127 10 158 9 651 30 569 27 727 Cost of sales -20 101 -24 317 -25 891 -6 431 -6 095 -19 170 -17 596 Gross profit 11 263 13 968 15 236 3 727 3 556 11 399 10 131 Gross
Slide 28: Balance sheet
Balance sheet Q3 2019 2017 2018 2018 2019 2017 2018 2018 2019 MSEK Dec. 31 Dec. 31 Sep. 30 Sep. 30 % of BS MSEK Dec. 31 Dec. 31 Sep. 30 Sep. 30 % of BS Intangible assets 3 121 3 620 3 532 4 242 10% Share capital 21 500 500 500 1% Rental equipment 1 215 1 233 1 277 1 309 3% Retained earnings 12 020 1
Slide 29: Cash flow
Cash flow Q3 2019 2017 2018 2019 2018 2019 2017 2018 2019 2018 2019 MSEK Full year Full year 12M Sep Q3 Q3 MSEK Full year Full year 12M Q3 Q3 Cash flow from operating activities Operating profit 5 930 7 385 8 282 1 898 1 927 Operating cash flow Depreciation, amortization and impairment 1 254 1 369 1
Slide 30: Key ratios
Key ratios Q3 2019 2017 2018 2019 MSEK Full year Full year Q3 Basic earnings per share, SEK 3.55 4.50 1.11 Diluted earnings per share, SEK - 4.49 1.11 Basic number of shares outstanding, millions 1 212 1 206 1 202 Diluted number of shares outstanding, millions - 1 206 1 202 Equity per share, period
Slide 31: 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