Epiroc (AO) | Hold | CMD takes: targets confirmed; mining cycle strong, T&A recovery is key

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Epiroc (AO) | Hold | CMD takes: targets confirmed; mining cycle strong, T&A recovery is key

th consensus forecasts for operating margins

of 20.5% in 2026, rising to 21.75 in 2027 and 22.1% in 2028.

Market backdrop for both segments supports outperformance on growth targets: Eprioc highlighted that the largest

untapped organic opportunity is service currently covering only ~50% of the addressable installed fleet, plus the tools business,

both predominantly mining-exposed. Management disclosed that service agreement penetration of the addressable Epiroc fleet

has risen to ~33%, up from 26% at the June 2023 CMD. Setting a near-term aspiration of 40% within "a few years." The

commercial significance is material: machines under agreement generate 2x revenues versus uncontracted machines at group-

accretive margins. On OE demand management were confident that the high commodity prices (Gold, Copper, Iron) and

favourable conversion margins for miners continue to support increasing green and brownfield investments. Moreover, the

average fleet age has reached a record 8.7 years, with 37% of the installed fleet older than 10 years, creating a dual opportunity:

mid-life rebuilds and end-of-life replacements, with underground replacement cycles of approximately 7 years and surface of

approximately 10 years, implying a sizeable portion of the current fleet is overdue upgrades, representing a structural multi-year

aftermarket tailwind that does not require new mine development. The CFO characterised the order pipeline as "very solid"

across all three equipment buckets (replacement, brownfield, greenfield). M&A opportunities remain good and are expected to

add approximately one-third of total growth, creating upside. Management reaffirmed that M&A criteria are unchanged: