“We are a strong believer that the fastest player will win,” says Epiroc CEO Helena Hedblom, and in its circa-seven years as a “start-up” the company has certainly played hard to that mantra. Speaking in Las Vegas, Hedblom said the Swedish equipment maker had put big bets on the technologies and alliances she believes will further accelerate its progress.
In the race to be among mining’s 21st century machine and technology solutions leaders, Epiroc burst out of the blocks after its 2018 rebadging and Stockholm public listing with 27 acquisitions adding about US$1.25 billion of initial annual sales in areas seen to define the key future battlegrounds for the industry’s old guard of major suppliers. They include the digital, automation and electrification arenas.
The group’s total revenues have grown by about 10% a year since 2018, with acquired businesses contributing 3% per annum of incremental gain.
“We are big believers in speed,” Hedblom told bank analysts and media in Nevada ahead of the MINExpo show held every four years amid the glitz and glamour of Vegas.
Epiroc put on a good show, interspersing presentations from divisional leaders with snappy promotional videos, including for its new 66-tonne-payload underground mine truck – a “game-changer”, according to division boss, Wayne Symes.
The company, of course, has a heritage dating back to 1873 as Atlas and then Atlas Copco. It became a stand-alone listed company in mid-2018. Epiroc’s share price has about doubled in the past five years and the company is worth about US$22.3 billion today.
“Our business is not as transactional as it was maybe 10 years ago,” Hedblom said.
“It’s much more a partnership together with our customers, where we are together bringing the best out when it comes to productivity and sustainability. We continue to add more partners to this system because this is how we gain speed.
“I strongly believe that partnership is the new leadership.
“We also gain speed by doing acquisitions.
“We have a very solid acquisition model.
“That’s very much to create the next horizon of growth.
“What is it actually that customers [will be] prepared to pay for maybe five years from now? That’s the position we’re taking [with] the type of companies we’re investing in … [Then] building the solutions, step by step, that will support the growth.
“Our acquisition agenda has been very much in line with our innovation agenda and that has taken us to the position where we are today with a very strong offering [across] different technologies.
“We see that we are growing our customer share by having these technologies. We also see that we get higher aftermarket penetration when we have more advanced machines out there.”
Hedblom said the company continued to spend about 3% of its revenues on R&D, but the focus had shifted. “We have right now R&D houses on all continents and the acquisitions have helped us to get this position,” she said. “This is a strategic decision to have hubs close to the end markets because the development is happening so fast when it comes to digital, when it comes to automation, and to have engineers close to the largest mining markets and construction markets, that is key.
“We have increased our pace of inventions. We have five-times higher patent inventions … compared to 2018. We also have a very strong position when it comes to new sales ratio, meaning that 61% of the equipment revenue comes from products that are younger than five years.
“We have a young set of products.
“And that is due to [the fact] that we are putting in so much new technology.”
Acquisitions, revenue growth in new areas and expanded aftermarket sales have lifted Epiroc’s compound annual sales growth rate (CAGR) above its 8% ambition level and well above longer-term underlying growth rates for its primary mining (81% of orders) and construction (19%) markets.
Asked about maintaining profitable growth at its targeted levels as it added business layers over the traditional core drilling tools and machines on which it was built, Hedblom said capturing a substantial piece of the potentially massive “smart” mining and construction technology market and also winning market share from competitors were key.
“We continue to push the foundation,” she said.
“Two-thirds of the company’s [revenues are] aftermarket, which means that we need to over-perform. We need to take customer share.
“We’re creating in a way our own aftermarket potential … [with the] new technologies we are adding on the existing fleet. That was not the case before. We are bringing all these technologies into midlife upgrades or different type of upgrades.
“So the service products that were developed over the years have been a key to [aftermarket] success, but we are also adding more and more opportunities.”
The presentation heard Epiroc had more than 1200 customer sites with service agreements, including over 300 with Epiroc technicians on site and many site machine service and overhaul workshops that were like “small factories out in the world”.
“This is a very strategic area because in the end it creates loyalty, recurring business, and also stability over tougher times …where we in a way lock out pirates,” Hedblom said.
“On the equipment side it’s a lot about innovation – having the best machines.
“We are very precise in what we are doing. We look at the potential to differentiate from a technological standpoint [and] we look at the recurring piece of that business. We are very well aware of our strength and our capabilities to scale things.
“But we are confident in this 8% growth because I think we have found the methodology how to do this. Of course you need to know your customers; you need to have the presence out there. You need to have a culture also with very ambitious individuals.”
The presentation featured updates on new technology market penetration, which is building: 600-plus battery electric vehicles at 34 sites; 3100 driverless machines in operations, up 29% year-on-year; and over 3000 level 7 and 8, and 100 level 9, collision avoidance systems delivered.
The major Roy Hill iron ore mine in Western Australia, Epiroc’s flagship mixed-fleet autonomy and digital products site, also shapes as a test of the company’s ability to “nail and scale” large technology deployments and grow revenues that are independent of its machine sales.
“We have a long pipeline of customers knocking at the door,” said digital solutions division president, Paul Bergstrom.
A circa-$50 million contract was signed with Roy Hill in 2023. Now more than half the 78 large haul trucks on site have been converted for autonomous use and about 25% of the mine is said to be “under autonomous operation”.
“We’re still in the nail phase,” said Hedblom.
“We are coming closer and closer to being able to scale the solution.”
Asked if similar-size orders could be expected to land in 2025, Hedblom said: “We can say it’s 2025, absolutely, because we have come so far with this project.
“But we need to make sure that we deliver.
“This solution needs to perform better than when you have operators in the cabins. That’s what it’s all about.
“This is a completely new revenue stream. It’s not related to our equipment at all. That’s, of course, also why we embarked on this journey many years ago.”
