Epiroc (EPI) Q3 2024 earnings summary

Executive summary

• Orders received rose 8% year-over-year to SEK 15.5 billion, driven by strong mining demand and record large equipment orders of SEK 1.4 billion, with organic equipment order growth at 11% and service order growth at 6%; construction demand remained weak, especially in the US, impacting attachments.

• Revenues increased 5% year-over-year to SEK 15.7 billion, with organic growth at 3%; acquisitions contributed positively, while currency effects were negative.

• Several innovations were showcased at MINExpo, including advancements in automation, electrification, and hybrid equipment.

• Workforce reductions and efficiency measures led to sequential cost improvements and inventory reduction.

• Major acquisitions of ASI Mining, STANLEY Infrastructure, and ACB+ were completed, strengthening automation and attachments offerings.

Financial highlights

• Adjusted EBIT margin was 19.7%, down from 21.8% year-over-year due to mix and acquisition effects; operating profit was SEK 3.3 billion, flat year-over-year.

• Operating cash flow was SEK 1.8 billion, with a cash conversion rate at 96% on a 12-month rolling basis.

• Net working capital increased 6% year-over-year to SEK 24.4 billion, but decreased sequentially due to inventory and receivables reductions.

• Gross margin was 37.1% (down from 38.5%); EBITDA margin improved to 28.3% (from 26.4%).

• Return on capital employed was 21.5% (down from 27.8%); net debt/EBITDA at 0.97, mainly due to acquisitions.

Outlook and guidance

• Mining demand for equipment and aftermarket is expected to remain high in the near term, while construction demand is anticipated to stay weak.

• Further cost-saving measures, workforce reductions, and organizational adjustments are planned to support profitability.