Epiroc AB (publ)

Hello, and a warm welcome to the Epiroc Q1 results presentation. My name is Karin Larsson, Head of Investor Relations and Media here at Epiroc. And with me today to present the results, I have our CEO, Helena Hedblom, and our CFO, Håkan Folin. And today, before we start, I would like to highlight three things. Number one, don't forget to register to our CMD on September 24th in Las Vegas. More than half of the seats have already been taken. Number two, we have made several improvements in our key figures file online, including an adjusted EBIT bridge. And hopefully the increased transparency can help you all make even better investments decisions in the future. And three, and this is the last quarter, we will speak about orders on hand, i.e. order book impacting the structure in the sales bridge. Onwards, when we acquire companies, we will only add actual orders received in the quarter. So with this said, Helena, please, the stage is yours.

Thank you, Karin. So let me start with some highlights of the quarter. So on the customer side, the first quarter was very similar to previous quarters. Mining activity is high, which is reflected in a strong service business and a high demand for rock drilling tools. The large orders are, as we have said before, lumpy, and we received fewer large orders in Q1 than we did last year. We do not see this as a change in demand. On the contrary, there is a lot of business cooking and the pipeline of potential large orders is solid. The construction demand was weak, and again, this was reflected in the demand for hydraulic attachments. We are increasing our focus on profitability. We are not happy with the level we are at, but we have taken action, and sequentially we have achieved structural savings in SG&A. Our cash flow improved. The working capital is still at levels that we are not satisfied with, mainly due to high inventories of finished goods of equipment, and that is machines ordered by and on its way to customers around the world. We are increasing capacity in customer centers to speed up final modification to shorten delivery time and improve invoicing. And on April 1st, we finalized acquisition of standard infrastructure, which will position us for construction growth in the future. So more on this later on. So first, I would like to spend some time on the demand. So organically, our orders declined 3% versus last year to 14.2 billion SEC. And this corresponds to a total decline of 4%. The demand picture was mixed. As I said, there was a high mining activity among our customers. And this was particularly evident in the demand for service and rock drilling tools. So we had strong demand for automation solutions, including mixed fleet, and a high demand for larger rebuilds. The level of large equipment order was however lower than in Q1 last year. We received 400 million krona in large orders in the quarter compared to 900 million in large orders in Q1 2023. Construction remained weak as anticipated, which was especially evident for our hydraulic attachments. We had a positive 2% contribution from acquisitions, mainly CR and hard mining equipment. And sequentially, that is versus the previous quarter, we had a positive 2% organic order growth. So coming to innovation, then a topic that is especially close to my heart, given that I started my career within product development. So we have a long and proud history of launching innovations. And in the quarter, we built a new training facility in Australia. So our goal with this new facility is twofold. Firstly, we aim to cultivate a highly competent workforce. And secondly, we're passionate about setting a new benchmark for outstanding customer support. So by providing comprehensive training and support services, we're helping customers maximize the value from our products and from our solutions. We have also launched batteries with service, which offer the same benefits as battery as a service, such as battery telematics, equipment audits and extended warranties. But with the difference being that the customers themselves, as opposed to Epiroc, own the batteries. The transition to battery electric vehicle or BEVs is accelerating as more and more of our customers discover the advantage such as higher productivity, less maintenance needs, better work environment and no emissions in operations. And I will speak more about electrification soon. We are also a leading supplier of safety solutions, and we are particularly proud of our collision avoidance solutions. And in the quarter, we won an order valued at 36 million for our CAS9 solution, the highest level of collision prevention system in the market. In short, the system intervenes if or when the operator does not act when the system is warning of a potential collision. So we have seen that when customers combined our Cas9 solution with our real-time positioning solution, for example, from Mobilaris and MiningTag, they enjoy both strength and safety and increased productivity. So I would like to show you a short movie on our safety solutions. So enjoy.

Epiroc Titan is a fourth-generation collision avoidance system assisting minds in implementing level 7 to 9 controls with vehicle-to-vehicle, vehicle-to-pedestrian and vehicle-to-hazard features for surface and underground operations. The solution integrates a variety of in-house developed sensing technologies such as GPS, ultra-wideband time of flight, magnetic field sensing and AI cameras with object detection. It builds on the success of previous generations, reducing risks, saving lives and emphasizing quality and reliability. The system is modular and can be customized with additional sensors for different applications and vehicle sizes, ensuring a purpose-fit solution. Explore our innovations in mine safety to enhance your company's safety, productivity, and profitability.