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October 25, 2019
Growth in aftermarket, lower equipment demand
The customer activity continued at a high level in the quarter, driving a robust aftermarket development. We saw a strong organic order growth of 11% in service. As expected, the order intake for equipment was lower than in Q2. Equipment orders from infrastructure customers were particularly soft. Our mining customers are cautious and investment decisions are being postponed.
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.
Improved underlying margin and cash flow
Revenues increased year-on-year with 5% to MSEK 10 158 with an organic decline of 3%. The operating profit was MSEK 1 927, including restructuring costs in Tools & Attachments of MSEK 179 and change in provision for long-term incentive programs of MSEK ‑54. Adjusted for these items, the operating margin improved to 21.3%. Operating cash flow improved both compared to the previous quarter and year-on-year and amounted to MSEK 1 883.
Actions to improve our resilience and safety
Epiroc has an agile and resilient business model and we continuously adapt the organization to prevailing business activity. We have already adapted our workforce, mainly in manufacturing, and also identified further areas for efficiency improvements. These will be carried out in the coming quarters and are expected to give visible effects in the first half of 2020.
In Tools & Attachments, we continued to deliver on our strategy for operational excellence and also completed the divestment of the geotechnical consumables product line. In addition, we decided to restructure our manufacturing of handheld rock drilling tools in China and the majority of the restructuring costs in Tools & Attachments are related to this.
The work-related injuries continued to decrease in the quarter and we continue to strengthen our work in this area. The safety awareness initiative launched last quarter is being rolled out globally.
Significant interest for automation and information management, and for battery-electric vehicles
It’s exciting to see that the launch of our 6th Sense automation and information management solutions received significant attention from the market and that we received multiple orders. In Chile, we also won a large mining equipment service contract. The contract includes the opportunity in the near future to implement automation features for the customer’s equipment fleet. The number of connected machines continued to increase at a rapid pace, and we also see strong customer interest for our battery-electric mining equipment. We are proud to support the industry’s drive toward automation, digitalization, and electrification.
Committed to value creation
In the quarter, we gathered our leaders in Stockholm to align on future expectations and how we best face the opportunities and challenges of tomorrow. We are committed to create value for our stakeholders both in the shorter and longer term. We will relentlessly contribute to our customers’ drive for productivity, safety and sustainability with our innovative solutions, while continuously improving our agility and resilience.
President and CEO
A presentation and teleconference will be held today at 10.00 am CEST. Information is available at epirocgroup.com/en/investors.
For more information please contact:
Karin Larsson, Vice President Investor Relations
+46 10 755 0106
Ola Kinnander, Media Relations Manager
+46 70 347 2455
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 set out above, at 07.30 am CEST on October 25, 2019.
Epiroc is a leading global productivity partner for the mining and infrastructure industries. With cutting-edge technology, Epiroc develops and produces innovative, safe and sustainable drill rigs, rock excavation and construction equipment and tools. The company also provides world-class service and solutions for automation and interoperability.
Epiroc is based in Stockholm, Sweden, had revenues of SEK 38 billion in 2018, and has more than 14,000 passionate employees supporting and collaborating with customers in more than 150 countries. Learn more at www.epirocgroup.com.