EPIROC (+) : CMD feedback - room to grow further

Research evidence excerpt

EPIROC (+) : CMD feedback - room to grow further

potential for its automation offering and the transition to electrification will be meaningful over

the next ten years. We left the CMD strengthened in our view that Epiroc should be able to deliver solid growth in the

coming years, and that should give support to Epiroc’s profitability.

Financial targets/ market growth: Epiroc’s growth target implies revenue of SEK100bn in 2031, with “industry‑leading

margins”. In terms of market growth in Epiroc’s niches, the company expects long term annual growth of 3-5% for

mining, while infrastructure is expected to grow 4-6% annually. However, on the Q&A, Epiroc indicated that it believes

mining will be the strongest growing business in the near term, based on current performance and market trends.

Replacement cycle: Epiroc’s fleet of machines has an average age of 8.7 years and 37% of its fleet is older than ten

years. Assuming the oldest part is surface related and that ~70 % of the total installed base is surface, this implies that

~50% of the surface machines are more than 10 years old, which should open for a potential replacement cycle coming.

BEV’s and productivity improvements: From a pricing perspective on equipment, the electric offering is not inherently

more expensive just because it is an electric machine. Rather, the productivity uplift – driven by automation capabilities

that enable higher utilisation – is what raises the value opportunity for Epiroc. Epiroc said that ~80% of underground

mobile equipment will be electric by 2040 which should drive a significant mix shift (in terms of new sales) over the next

ten years. Epiroc illustrated the productivity improvement from BEV’s by running the numbers for one of its underground