Epiroc AB

In first-quarter 2023, Epiroc closed the acquisitions of CR, Mernok Elektronik, and AARD Mining Equipment--entities with combined revenues of SEK2.4 billion--to complement and strengthening its offerings in digital, automation, and safety solutions for mining operations. We expect that Epiroc will continue to use some of its balance sheet flexibility to grow through acquisitions and we believe its related spending could increase to SEK8 billion–SEK10 billion in 2023. Epiroc doesn't have a specific M&A envelope, nor for shareholder distributions, which makes its leverage ratios and targets less predictable than for peers with more-stringent financial policies. Nevertheless, we expect the group to manage its balance sheet prudently and to maintain strong credit metrics, such that FFO to debt remains well above 60%.

...Epiroc is an established provider of rock drilling, excavation equipment, consumables, and services, and is expected to continue to benefit from strong momentum in the mining industry. Epiroc has a long history of coming up with innovative solutions and is an established technological leader in its niches globally. With continued supportive demand from the mining industry, notwithstanding a less-supportive economic environment, its revenue increased to a record high SEK49.7 billion in 2022, up from SEK39.6 billion in 2021. This represents 25% growth, of which 11% was organic. Acquisitions and currency contributed 3% and 11%, respectively. In 2022 orders received increased to SEK53.2 billion, representing 17% growth for the year, driven by 2% organic growth (11% excluding the effects of cancelled Russian orders; a positive currency impact of 10%; and acquisitions about 5%). This growth has been supported by equipment orders (33% of orders in 2022) driven by demand for automation, digitalization,...

Full Report