Epiroc (EPI) Q2 2024 earnings summary

Executive summary

• Mining activity remained strong, accounting for 77% of orders, with large equipment orders reaching SEK 950 million, up from SEK 550 million last year, and a solid pipeline for future orders.

• Construction market weakened further, negatively impacting aftermarket and Tools & Attachments, especially in the US and Europe.

• Acquisitions of Stanley Infrastructure, ACB+, ASI Mining, YieldPoint, and Weco Propel completed, strengthening the company's position in high-end attachments and automation.

• Efficiency measures led to a reduction of around 450 employees, mainly in service and manufacturing, with further reductions planned.

• Sustainability efforts recognized by TIME Magazine, ranking the company 95th globally and 7th in manufacturing.

Financial highlights

• Orders increased 6% year-over-year to SEK 16.3 billion, with 1% organic growth and 7% from acquisitions.

• Revenues rose to SEK 16.5 billion, but organic revenues decreased 1% due to weak Tools & Attachments performance.

• Adjusted EBIT was SEK 3.2 billion (margin 19.7%), down from SEK 3.4 billion (21.6%) last year.

• Reported EBIT was SEK 2.9 billion, with items affecting comparability totaling SEK 325 million.

• Operating cash flow increased to SEK 1.6 billion from SEK 1.5 billion, with a cash conversion rate of 90% over the last 12 months.

Outlook and guidance

• Mining demand for equipment and aftermarket expected to remain high in the near term.

• Construction demand anticipated to stay weak, with ongoing destocking and low activity in key markets.

• No further restructuring costs expected in Q3 for current actions.

• Tax rate guidance remains at 22%-24%.

• Further efficiency measures have been initiated to improve profitability.