Epiroc interim report Q2 2024

CEO comments

Strong mining, weak construction
Mining activity continued to be strong in the quarter and the orders received increased to MSEK 16 349 (15 436), corresponding to an organic growth of 1%. Large equipment orders amounted to MSEK 950 (550). The organic service growth was 5%, driven by mid-life upgrades and a strong demand for mixed-fleet automation. The construction market weakened further in the quarter, impacting mainly the aftermarket business. The demand for hydraulic attachments in important markets, such as the United States and Europe, was especially weak.

Compared to the previous quarter, we achieved 5% organic growth, driven by higher order intake for mining equipment.  

In the near term, we expect that the underlying mining demand, both for equipment and aftermarket, will remain at a high level, while demand from construction customers is expected to remain weak.

Revenues and profitability
Revenues increased 4% to MSEK 16 511 (15 910), driven by acquisitions. Organically, the revenues decreased -1% as Tools & Attachments had a weak development. The operating profit, EBIT, was MSEK 2 921 (3 413) and included items affecting comparability of MSEK -325 (-16), mainly related to the acquisition of Stanley Infrastructure and restructuring costs. The adjusted operating margin, EBIT, was 19.7% (21.6). The lower margin is mainly explained by overall higher cost levels, negative mix effects and dilution from acquisitions.

Actions to improve profitability  
Efficiency measures were carried out as planned in the quarter. Sequentially, for comparable units, the number of employees decreased by around -450, mainly within service and manufacturing. Further measures for increased efficiency have already been initiated.

Cash flow and working capital
Operating cash flow increased to MSEK 1 609 (1 549). The improvement in cash flow is mainly explained by a more favorable development in working capital, partly compensating for the lower operating profit.

Building position for future growth
In the quarter, we closed the acquisition of Stanley Infrastructure and announced the acquisition of ACB+. Together, we will be a leader within attachments and quick couplers, providing customers with a more complete range of productivity solutions. Long term, the construction market is attractive, with an anticipated annual growth rate of 4-5%, with attachments used for deconstruction and recycling of steel and copper expected to grow even more.

Accelerated leadership within automation
On July 3, we acquired the remaining shares of ASI Mining, one of our collaboration partners in the Roy Hill project in Australia. In this project, we are converting a mixed fleet of around 100 haul trucks to driverless oper­ations. When this project is complete, we will have the created the world's largest autonomous mixed fleet mine. 

I am excited about the uptake for our automation solutions including mixed fleet products for both surface and underground applications. These applications deliver proven benefits for our customers, including increased productivity, improved safety, and lower emissions. We are the one-stop shop for mixed-fleet automation and remote-control solutions, regardless of manu­facturer or type of equipment, mainly thanks to acqui­sitions such as ASI Mining and RCT.

Battery-electric trolley truck system
In the quarter, we successfully deployed a battery-electric trolley truck system for underground mining in close collaboration with ABB and Boliden. This brings the mining industry closer to realizing the all-electric mine of the future, with sustainable, productive operations and improved working conditions.

We are happy that customers continue to choose to collaborate with us to provide them with the right solu­tions for the future. Together we make it happen.
Helena Hedblom
President and CEO

Please find the full report in the attached pdf. Additional financial documents are found on Epiroc's Financial publications (https://www.epirocgroup.com/en/investors/financial-publications) page. The report presentation that will be held starting at 13.00 CEST can be followed via this link: https://ir.financialhearings.com/epiroc-q2-report-2024.
 

[image] Epiroc's battery-electric underground truck trolley system developed together with Boliden and ABB

For more information please contact:
Karin Larsson, Vice President Investor Relations and Media
+46 10 755 0106
ir@epiroc.com
Alexander Apell, IR Controller 
+46 72 083 9519
ir@epiroc.com
Ola Kinnander, Media Relations Manager
+46 70 347 2455
media@epiroc.com

This information is information that Epiroc AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was sub­mitted for publication, through the agency of the contact persons above, at 11.30 CEST on July 19, 2024.

Epiroc is a global productivity partner for mining and infrastructure customers, and accelerates the transformation toward a sustainable society. With ground-breaking technology, Epiroc develops and provides innovative and safe equipment, such as drill rigs, rock excavation and construction equipment and tools for surface and underground applications. The company also offers world-class service and other aftermarket support as well as solutions for automation, digitalization and electrification. Epiroc is based in Stockholm, Sweden, had revenues of more than SEK 60 billion in 2023, and has around 19 000 passionate employees supporting and collaborating with customers in around 150 countries. Learn more at www.epirocgroup.com.