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October 25, 2018
A solid quarter with strong revenue and profit growth
Revenues and profits grew significantly and order volumes were somewhat higher than last year. Revenues increased with 19% organically to SEK 9,651 million, and orders received reached SEK 9,413 million, up 3% organically. Our operating profit reached SEK 1,898, including costs of SEK 126 million related to the split from Atlas Copco and a change in provision for personnel option programs. The operating margin was 21.0%, excluding the costs related to the split and incentive programs.
Demand development and trend
We saw a continued good sentiment and customer demand in the market. Mining production remained high in all major markets and activities in infrastructure continued to be good. The order intake was higher than the previous year, and I am pleased with the strong order development for our service business and also for our surface equipment. We had, however, lower order intake than in the past two record quarters. This was partly due to fewer large orders received. Such large orders are not evenly distributed over time, and will consequently impact quarterly order intake. Orders received are also typically lower in quarter three compared to quarters one and two. For mining equipment a majority of the orders continued to be for expansion in existing mines. In the quarter we have seen a decrease in metal prices, but in the near-term future we do not expect the overall market sentiment to change significantly. We expect the demand to remain at current level.
Improved factory output supported the strong revenue growth
The equipment deliveries were largely in line with the second quarter. Our factory capacity has improved and our efforts to bring it on par with the demand are yielding results. The operating margin was strengthened by currency and also by the growth, primarily in the Equipment & Service segment. For Tools & Attachments, the margin improved somewhat compared to the most recent quarters, reinforced by our efficiency actions. Working capital increased in the quarter. This is not satisfactory and we continue to address the issue both short-term and long-term.
Our innovation initiatives in new technologies generate strong interest from our customers and a high share of our equipment delivered is ready for automation. Our newly inaugurated Control Tower in Örebro, Sweden, is designed to be an innovation arena for exploring and developing automation solutions. We will introduce the second generation of battery-operated equipment in the fourth quarter. All-in-all, our customers will benefit from increased productivity, safety and energy efficiency.
The journey of value creation continues
Our goal is to deliver profitable growth. It is essential that we focus on what will create value going forward. We have comprehensive strategies for sales growth and several programs for excellence: in supply-chain, manufacturing, sourcing and service, as well as initiatives to improve our agility. Our journey continues.
President and CEO
A presentation and teleconference will be held today at 10.00 CEST. Information is available at epirocgroup.com/en/investors.