Epiroc AB

STO:EPI A

Earnings Call Transcript 2023-Q1

[Unknown Attendee]

Hello, Helena. So Epiroc today reported its financial results for the first quarter 2023. How would you summarize the quarter?

[Helena Hedblom, executive]

I mean, it's a strong quarter. Orders received ended up above SEK 15 billion, which is a new record. Excluding Russia, we're up 1% organic and then very good contribution from acquisitions as well. With strong demand, both we have won several equipment orders in the quarter and very good activity levels in the aftermarket. And of course, the highlight of the quarter is the automation order to Roy Hill of SEK 500 million. But also solid revenue at SEK 13.9 billion. And all in all, good execution by the organization, and we ended up at 23% adjusted margin. So I think it's a solid quarter.

[Unknown Attendee]

And Epiroc completed 2 acquisitions in the quarter, Mernok Elektronik and CR, and the third one after the quarter, AARD Mining Equipment. What would you say that these companies have in common?

[Helena Hedblom, executive]

It's strong companies and it's -- it complement our offering very well. So if we look on CR, of course, they have a strong position in ground engagement tools. So that's a new niche for us. But it fits very well with our Tools & Attachments business. It's the same business logic ground engagement tools. If we take AARD, that adds also to our underground portfolio with -- towards mines with low mining heights. And then Mernok is a very good fit related to automation because they bring us collision avoidance capabilities to the highest level, which is needed when you go for full autonomous fleets.

[Unknown Attendee]

And on innovations, one highlight in the area was that Epiroc's drill rigs now have drilled autonomously the equivalent length of one lap around the world, please tell us a little bit about this.

[Helena Hedblom, executive]

We started this journey many, many years ago. And of course, we have expanded the automation capabilities across the globe and this is really an industrial scale everywhere now. But I think it's quite amazing that these drill rigs have now drilled one lap around the globe, of course, giving our customers a more safe and more productive environment.

[Unknown Attendee]

And on the people front, Epiroc launched a new parental leave policy that again ties all employees across the global organization who are new parents, a minimum of 12 weeks paid parental leave. This is unusual for global companies. What was the reason for this?

[Helena Hedblom, executive]

Well, I believe -- I strongly believe in diversity and in inclusion. And to future proof Epiroc and to be an attractive employer for the younger generation, I think this is an important action that we're taking. I also believe that, as a company, if we can encourage our employees to spend time with their child, that's also something that they will benefit from -- during the whole life. It's an important time in life when you get to child and we would like to be supportive for all our employees during that very important moment.

[Unknown Attendee]

And looking ahead, Epiroc repeated its outlook that in the near term, it expects that the underlying demand, both for equipment and aftermarket, will remain at a high level. Your reflections on that?

[Helena Hedblom, executive]

So we see the commodity prices are still holding up. And what we -- when we look at the different activities -- activity levels in the market, it's clear that -- it's high activity levels. We see that on the equipment side, both with the replacement and expansion opportunities but also good activity levels in the aftermarket.

[Unknown Attendee]

Any final words?

[Helena Hedblom, executive]

I think it's a strong start of the year, a strong first quarter and really good execution by the organization.

[Unknown Attendee]

Thank you, Elena.

[Helena Hedblom, executive]

Thank you.