January 31, 2020
Record revenues and profit in a strong 2019
Epiroc’s revenues, profit and cash flow increased in 2019, supported by strong growth of our service business and efficiency initiatives. Revenues increased 7% to almost BSEK 41, our operating profit increased 10% compared to 2018 and we improved our operating margin and cash flow. Our customers continue to show interest in our innovative productivity solutions, even if the overall demand for equipment softened.
Continued growth in service in Q4
Order intake in Q4 remained at a similar level as in Q3, which was expected. Compared to the previous year, we saw a continued solid development in service with an organic order growth of 6%, while the demand for equipment softened with a decline in orders.
It is clear that our customers remain cautious in making investment decisions. In the near-term we expect that demand will remain largely at the level seen in the fourth quarter.
Improved underlying margin and cash flow
In spite of record revenues for the full year, we had a year-on-year decline in revenues in Q4 as orders for equipment have gradually softened throughout 2019. Revenues decreased by 3% to MSEK 10 280 with an organic decline of 7%. The operating profit was MSEK 2 016, including items affecting comparability of MSEK -115. The adjusted operating margin improved to 20.7%. Operating cash flow improved both compared to the previous quarter and year-on-year and amounted to MSEK 2 827.
Continued actions for resilience
Epiroc’s business model is agile and designed to be resilient. We continuously adapt the organization to prevailing business activity, and in Q4 we reduced our headcount by 521, or 3%, and also identified further areas for efficiency improvements. These are expected to give visible effects in the first half of 2020.
We continue to adapt our product portfolio and production footprint. We completed the restructuring of the handheld rock drilling tools business in Tools & Attachments in the quarter. Going forward, we will continue to optimize our product portfolio and related footprint.
Innovation and commitment to value creation
We continue to focus on innovations, such as automation, digitalization and electrification. In Q4 we signed a collaboration agreement with Pucobre in Chile to further digitalize their mining operations, boosting productivity and safety. We assist our customers in connecting existing machine fleets regardless of make or model, and to optimize processes through automation, system integration and information management. In other words, we deliver smart, safe and seamless operations. During the quarter we also announced our partnership with world-leading commercial explosives provider Orica to jointly develop a semi-automated explosives delivery system, enabling safer and more productive blasting operations in underground mines.
Through passion, commitment and collaboration, we support our customers in achieving higher productivity, and a cost effective, safe and sustainable business. This enables us to create long-term value and further strengthen Epiroc for the future.
Handing over to Helena Hedblom
In November we announced that I will be stepping down and that Helena Hedblom will take over as President and CEO starting March 1, 2020. My mission from the beginning was to establish the new company, list it on the stock exchange, and ensure it stands strong for the future. The mission is accomplished and I am happy to be handing over to Helena. She has deep knowledge and experience of the business, a strong drive, and a strong focus on innovation and customers’ needs. She is a highly appreciated leader and perfect to lead the company into the future.
President and CEO
For further information:
Analysts and investors:
Mattias Olsson, Senior Vice President Corporate Communications
Tel: +46 72 729 8295
Ola Kinnander, Media Relations Manager
Tel: +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 CET on January 31, 2020.
Epiroc is a leading productivity partner for the mining and infrastructure industries. With ground-breaking 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 solutions for automation and interoperability. The company is based in Stockholm, Sweden, and had revenues of BSEK 41 in 2019 and has more than 14 000 passionate employees supporting and collaborating with customers in more than 150 countries.