Epiroc emerges from watershed year in solid shape

Richard Roberts

Editor in chief

Top image :
Epiroc CEO Helena Hedblom with CFO Hakan Folin
Markets, acquisitions underpin manufacturer’s growth

Sweden’s Epiroc is expecting to continue to increase prices for its mining and tunnelling equipment and services in 2023 in response to ongoing cost inflation after pricing, and volume growth, contributed to 25% higher revenue and a 17% lift in orders in 2022.

Orders came in at SEK53.22 billion (US$5.09 billion) and revenues SEK49.49b (US$4.75b) for the latest full year. Net profit was up 19% at SEK8.41b (US$804 million) for 2022.

Epiroc chief financial officer Hakan Folin said this week the company responded quickly to severe cost inflation last year, and then consistently through 2022.

“Given what we see in terms of inflation we will need to continue with this journey in 2023,” he said.

“Whether we do it at exactly the same pace remains to be seen.”

The company’s latest full-year results were achieved despite the loss of Epiroc’s fourth biggest market, Russia, early in 2022.

December-quarter revenues grew 8% year-on-year to a record SEK13.94b (US$1.33b).

Orders for the period were down 4% yoy to SEK13.7b (US$1.3b) including Russia and up 3% ex-Russia. Nearly 80% of Epiroc’s Q4 orders came from the mining market, where CEO Helena Hedblom says the company is seeing ongoing “healthy underlying activity”.

Epiroc also included about SEK1b (US$95m) of backlog from new acquisitions, RCT and Radlink, which were among six acquisitions completed or announced in Q4. The four deals completed were said to add about SEK1.9b (US$182m) of annual revenue.

All up, Epiroc made nine acquisitions in 2022, adding circa-US$290m of annual revenue. There was no indication as to whether the acquisition pace would be maintained this year.

Epiroc says the purchase of Australian-based Remote Control Technologies made it the “world-leading automation solutions provider not only for surface and underground rock drilling but also for underground loading and haulage”, a claim also made by major rival, Sandvik.

The additions to Epiroc’s portfolio are expected to be dilutive to its profit margins this year.

“We always see dilution in the beginning, and then we work [profitability] up to a level that we expect as a company,” Hedblom said.

She said the late-2022 acquisition of another Australian-based company, CR, was a “very strategic” deal for Epiroc.

“We are moving into a new niche,” she said.

“And we have a strong footprint both in terms of our tools and attachments sales force, globally, but also we have very good relationships with our surface [mining] customers where we already have people on site [servicing surface drills, etc].

“I see opportunities in construction, but also in underground mining … to produce more smart buckets, etc.

“CR is also very smart when it comes to the digital solution, and building intelligence into the buckets, and the teeth. So I also see a great opportunity there.”

Hedblom said generally aging fleets owned by miners and contractors around the world were generating substantial parts replacement and machine rebuild business. She said roughly 50% of equipment being sold by the manufacturer was replacing machines at existing mines and 50% was for expansion projects.

Taking out currency gains (plus-11%) and the impact of new acquisitions’ orders meant new order growth was sluggish in Q4 (negative when compared with Q4 in 2021 with Russia included), Folin agreed. “[But] by doing that we want to give you full transparency in terms of what we expect to invoice going forward,” he said. “There probably hasn’t been the magnitude of backlog in the past [from acquisitions] that you have seen this quarter.”

However, analysts clearly remain exasperated at the lack of transparency when it comes to Epiroc’s battery-electric equipment orders and sales. The company continues to make positive noises about BEV activity, and prospects, without giving its shareholders anything credible to go on.

Hedblom said the business “has really started to take off”.

“It was up threefold compared the with previous year [in 2022],” she offered.

“And what was it in 2021?” one analyst asked.


“Billions [of SEK], or a few hundred million?”

“I will not indicate that.”

Hedblom said battery-electric mining equipment and aftermarket sales would not be dilutive to established diesel equipment business margins “going forward”.


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