Epiroc’s Hedblom eager to do more deals

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Epiroc CEO Helena Hedblom: 2021 a record year for the company.
Further digital technology, automation and electrification bolt-ons in Swedish company's sights

Sweden’s Epiroc will be hunting further acquisitions this year after a successful 2021 saw eight deals completed and about US$120 million of annual revenue added, according to CEO Helena Hedblom. “We have a very healthy pipeline when it comes to acquisitions,” she said on the company’s annual results call.

Hedblom indicated the pace of deal-making in 2021 shouldn’t be seen as extraordinary.

“We have done 19 acquisitions since the [2018 Atlas Copco-Epiroc] split. We invest organically for the future and we complement it with strategic M&A, so I have good hope that we will continue the good work in acquisitions within the coming years.”

In Epiroc’s sights are more of the same types of companies that it has recently bought: digital technology, automation and electrification. “Also acquisitions to strengthen our aftermarket,” Hedblom said.

Continuing strong growth in the company’s aftermarket business, in the face of supply chain disruptions and surging demand for service labour in some key markets, helped Epiroc post 12% revenue growth in 2021 to SEK39.64 billion (US$4876 million). Net profit was up 30% at SEK7069m (US$755m), while orders for the year jumped 25% to SEK45.65 billion (US$4876m).

Epiroc finished 2021 with net cash of US$140m on its balance sheet.

Demand for new equipment and aftermarket services from the company’s core mining and infrastructure markets remained strong, Hedblom said. That, and rising costs, was contributing to higher prices which would remain pressured in 2022. Asked about “material risk” of lost market share due to extended equipment delivery lead times “because you are prioritising aftermarket business”, Hedblom said she saw no risk.

“I think we have competitive lead times … I think the situation is the same for all players,” she said.

“It’s a couple of months longer than normal, which is not a lot.”

She said large mining equipment orders (above US$10 million) that contributed to lumpy quarterly sales were a factor in record annual orders and revenues.

“When we look at the underlying demand [in mining], and the small and medium-size orders [have also] continued to be very healthy for the last year, what we have also seen is customers are taking decisions to do brownfield investments, larger replacement orders, etc. It can always vary between quarters and the large orders are always bulky in nature.

“But the underlying demand is there.

“If we look at previous peaks I would not really compare it from a level standpoint, I would just say today customers are much more focused on the technologies that will secure sustainable, more productive solutions. So that is why we see good demand for automation, digital, as well as electrification.”

Epiroc’s ongoing investment in technology, remanufacturing and on-the-ground support in key markets continued to pay dividends, Hedblom said. Asked about the company’s 10% organic growth in its service business in a four-year period that had seen 1% growth in worldwide mine production – an “extraordinarily high growth trajectory” – Hedblom said the installed base of equipment the company had put out into the market over the past 10 years or so represented “the biggest opportunity we have to boost aftermarket growth”.

“It’s not really rocket science, it’s hard work and focused effort from the team,” she said.

“If we take a 10-year perspective I think we are today much more professional in the way we manage the aftermarket and that is paying off.

“Services launched in the last 3-4 years are growing faster than the components part of the business. This is where we are in a way creating our own aftermarket by bundling parts and hours into something that adds more value than the pieces. That’s really how we’ve been able to get a good boost by growing the service business.”

Hedblom said Epiroc had “more than 6000 machines now that have been delivered with connectivity” and the connectivity was a factor in improved maintenance and servicing outcomes.


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