Release Date: July 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Epiroc AB (EPIAF, Financial) secured its largest contract ever, valued at SEK2.2 billion, for autonomous and electric mining equipment with Fortescue in Australia.
- The company achieved a 2% organic growth in orders, driven by strong mining demand, despite a 7% overall decline due to currency effects.
- Innovations in electrification and automation, such as the BEV trolley truck solution, have significantly increased productivity and reduced costs.
- The aftermarket segment, which includes service and tools, represented 67% of revenues, indicating a strong recurring revenue stream.
- Epiroc AB (EPIAF) has made progress in sustainability, reducing CO2e emissions and being recognized as one of the World's 500 Most Sustainable Companies by TIME Magazine.
Negative Points
- Overall group revenues declined by 8% due to a negative currency impact of 9%, with only a 1% organic growth.
- Orders for large equipment decreased significantly from SEK950 million last year to SEK500 million this quarter.
- The construction sector showed weak demand, negatively impacting the Attachments business.
- Operational challenges, including tariffs and rerouting logistics, have led to increased costs and some impact on EBIT.
- The Tools & Attachments segment experienced a 5% decrease in orders, with a negative currency impact and weak demand from construction customers.
Q & A Highlights
Q: Could you provide details on the underlying development in Equipment & Service (E&S), particularly by commodity, and any insights on the pipeline for the remainder of the year?
A: Helena Hedblom, CEO, noted high activity levels in copper, gold, and iron ore, with less activity in nickel. The pipeline includes expansion projects, particularly in copper and gold, with exploration activities increasing. The demand remains strong in these areas.
Q: The Attachments business has been weak for some time. Is the mix impact still negative?
A: Helena Hedblom confirmed a negative mix effect but noted that the destocking in indirect channels is ending, which should help with factory absorption and support margin development.
Q: Can you provide more color on the efficiency measures booked in the quarter and any future plans?
A: Helena Hedblom explained that the biggest action was the closure of the Langley facility in Tools & Attachments (T&A), with ongoing smaller efficiency activities in acquired companies and customer centers. These actions are part of a continuous effort to return to profitable growth.
Q: On the service mix in E&S, did software and rebuilds grow faster than parts and kits? What should we expect for the rest of the year?
A: Helena Hedblom stated that the mix will likely remain, but efficiency measures are being taken to mitigate the mix effect. CFO Hakan Folin added that actions are ongoing in both T&A and E&S, with a focus on smaller, spread-out initiatives in E&S.
Q: Regarding the parts and kits business, when can Epiroc start to grow this segment again?
A: Helena Hedblom mentioned that while some customers have faced challenges, the long-term strategy is to systematically increase customer share of parts and kits. The company aims to offer a better value proposition than smaller players to capture more market share.
Q: Why are we not seeing more large orders despite strong demand?
A: Helena Hedblom attributed this to timing, noting that large orders are lumpy by nature. The pipeline remains strong, with many opportunities in copper and gold, particularly in South America.
Q: Can you elaborate on the 5% order contribution from exploration and the broader order mix?
A: Helena Hedblom explained that exploration demand is improving, driven by both brownfield and greenfield projects. The company has a comprehensive offering in exploration, including consumables and equipment, and expects more greenfield projects in the future.
Q: Could you discuss the impact of tariffs on your operations and financials?
A: CFO Hakan Folin noted that tariffs have a slight negative impact on results, mainly due to rerouting and longer lead times. The company is working with suppliers and customers to find solutions and mitigate costs.
Q: What are the expectations for organic revenue growth in the coming quarters given the current equipment backlog?
A: Helena Hedblom expressed confidence in the pipeline and underlying demand, noting that timing affects invoicing. The company remains focused on delivering equipment and maintaining strong activity levels.
Q: How are you addressing the efficiency and profitability challenges in the Tools & Attachments segment?
A: Helena Hedblom highlighted ongoing restructuring efforts, including consolidating manufacturing sites and integrating acquired entities. These actions aim to improve cost efficiency and profitability in the segment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
