Epiroc AB (publ)

Hello and a warm welcome to this Epiroc Q4 results presentation. My name is Karin Larsson and I'm head of IR here at Epiroc. With me today, I have our CEO, Helena Hedlund, and our CFO, Håkan Folin. They will briefly present the results before we do a Q&A session. Please note, today you need to register in advance to receive the phone numbers to the Q&A session. The link is provided in the invitation as well as on our homepage. So with this, Helena, please, the stage is yours.

Thank you, Karin. So starting with the full year highlights for 2022, a strong performance in a challenging market. On the demand side, the customer activity remained high and we won many large equipment orders and we had a strong development in the aftermarket. During the year, we handled significant supply chain challenges, including disruptions as a consequence of the war in Ukraine. And in March, we stopped deliveries into Russia, which at the time was our fourth largest market. But despite all this, the organization executed well and we delivered record results and profitable growth. So well done to everyone. We also launched many groundbreaking innovations and we made several acquisitions that help customers increase safety and productivity as well as reduce emissions. Demand is continuously increasing for electrification, digitalization and automation solutions. And we strengthened our position as a market leader in these areas. So all in all, it was a record year for Epprock. So moving on to the fourth quarter then, the demand remained high. That said, large equipment orders are lumpy in nature. And in the fourth quarter, we did not receive as many large orders as in the previous quarters. We had around 400 million of large orders in Q4. Service continued to grow strongly, supported by a high customer activity. So after a period of strong growth, the easing supply challenges in combination with a good output level from our production sites led to record high revenues and operating profit. We also had a high acquisition pace in the quarter, and we finalized four acquisitions with a combined annual revenues of 1.9 billion SEK. And on top of this, we signed another two. We also launched many innovations, but some of them are more game-changing than others. One example is our collaboration with Roy Hill and ASI Mining in Australia to create the world's largest autonomous mine. The goal is to convert Roy Hill's haul trucks, regardless of OEM supplier, from manned to autonomous use. And you might remember our announcement a few years back. Well, the testing phase has been a success. In fact, the mixed fleet that is now running autonomously proved to be more productive and safe than manual use. I will tell you more about this later on. Another successful milestone is Avatel's first commercial blast in Agnico Eagle's Kittila mine in Finland. The Avatel is the world's first semi-automated charging system for underground use. It is and will be a game changer for the mining industry as it significantly improves safety during the charging cycle. The Avatel has been created in collaboration with Orica, a world leader in commercial explosives and advanced blasting systems. So a few words on the financials in the quarter. In total, our orders increased 18%, though with some help from currency and acquisitions. Organically, excluding Russia, we achieved 3% growth. We did, as I said, not receive as many large orders as in the previous quarters. Large orders are lumpy, but we still have a good pipeline of potential orders ahead. And in Q1, we have already announced one large order from African Rainbow Minerals for use at a platinum mine in South Africa. In total, the orders received in the fourth quarter was 13.7 billion, and sequentially it's up 4% organically. Our revenues were record high at 13.9 billion and grew 8% organically. And our adjusted margin increased to 23.7%. Our cash flow was lower than last year and amounted to 1.5 billion. So after a period of strong growth in equipment with long lead times due to supply chain disruptions, we have a large portion of work in progress as well as receivables. So back to one of my favorite topics, innovation. I did already mention the milestone we achieved with Avatel, and safety is, as you know, always prioritized. Another purpose with our innovations is to reduce emissions, and therefore we are particularly happy to take our battery electric offering one step further. We are collaborating with SSAB, a Swedish quality steel manufacturer, and we have created a 42 tons battery electric mine truck made by fossil free steel. So to use fossil-free steel in this mine truck saves 10 tons of carbon emissions per bucket. And on the topic of electrification, we have the widest offering in the market today, and we see great demand for all our battery electric machines. In fact, we received the first battery electric order from an underground infrastructure customer in the quarter for a tunneling project. So it's good to see that our offering is also attractive for the infrastructure segment as well. In addition to providing the best machines, we also provide critical battery electric infrastructure solutions on site, which enable the electrification. And as we have a standardized approach to our battery solution with all its benefits, we also take this approach when it comes to the charging solutions. So in Q4, we joined the Char-In, which is a leading global association with over 300 members promoting interoperability based on the combined charging system. So we want to make it easy for our customers to do the transformation into electrification. And finally, then back to the world's largest autonomous mixed fleet solution, which we are very proud of, of course. I will show you a short movie where Roy Hill can tell you about the project, the success and the next step.

Over the next 12 to 18 months, we're actually going to go from 10 trucks autonomous that's running at the moment to the full 90 plus trucks. So this is an ideal opportunity for us to retrain our truck drivers to actually go and work in the lab, go and become apprentices, trades assistants, go and work at Port and Rail. So it's a great way for us to actually give a next career, a different career to our truck drivers and we're absolutely committed to this.