Swedish Capital Goods Company Epiroc AB Affirmed At 'BBB+' On Solid Operating And Financial Performance; Outlook Stable

Epiroc AB's operating performance is likely to benefit from moderately supportive end-market demand, some inorganic growth, and its high share of aftermarket sales revenue over 2022-2023. We anticipate that revenue will grow by 10%-14% in 2023 (20%-22% in 2022) and that Epiroc will sustain its industry-leading EBITDA margin at 25%-26%. Epiroc's relatively large build-up of working capital in 2022 constrained its free operating cash flow (FOCF), which we estimate at Swedish krona (SEK) 4.5 billion-SEK5.5 billion in 2022, down from SEK6.4 billion in 2021. In 2023, we forecast that FOCF will improve to SEK8 billion-SEK10 billion. Although we expect Epiroc to maintain a strong balance sheet--with funds from operations (FFO) to debt above 100% and debt to EBITDA under 1x--it

...December 23, 2022 - Epiroc AB's operating performance is likely to benefit from moderately supportive end-market demand, some inorganic growth, and its high share of aftermarket sales revenue over 2022-2023. We anticipate that revenue will grow by 10%-14% in 2023 (20%-22% in 2022) and that Epiroc will sustain its industry-leading EBITDA margin at 25%-26%. - Epiroc's relatively large build-up of working capital in 2022 constrained its free operating cash flow (FOCF), which we estimate at Swedish krona (SEK) 4.5 billion-SEK5.5 billion in 2022, down from SEK6.4 billion in 2021. In 2023, we forecast that FOCF will improve to SEK8 billion-SEK10 billion. - Although we expect Epiroc to maintain a strong balance sheet--with funds from operations (FFO) to debt above 100% and debt to EBITDA under 1x--it could still deploy some of its financial flexibility to make acquisitions, the amount and quantity of which are largely unknown. - We affirmed our long-term issuer credit rating and senior unsecured...

Ratings Action