Epiroc AB (publ): history, ownership, mission, how it works & makes money

A Brief History of Epiroc AB (publ)

Epiroc AB, a major player in the mining and construction equipment sector, originated as a part of Atlas Copco, which was established in 1873. Epiroc was spun off from Atlas Copco on January 1, 2018, becoming an independent entity listed on the NASDAQ Stockholm under the ticker symbol EPI A.

In its first year as a standalone company, Epiroc reported a revenue of SEK 34.6 billion (approximately USD 3.9 billion) for the full year 2018. The company demonstrated solid growth, with an operating profit (EBIT) of SEK 5.5 billion, resulting in a margin of 15.9%.

By 2019, Epiroc continued its upward trajectory, achieving revenues of SEK 36.6 billion and an EBIT of SEK 6.2 billion, a margin of 17.0%. The company focused on innovation and technology, enhancing its product offerings in automation and digital solutions.

In 2020, despite the impacts of the COVID-19 pandemic, Epiroc's resilience shone through with revenues of SEK 32.2 billion. The operating profit came in at SEK 4.9 billion, maintaining a margin of 15.2%. The company emphasized cost control and operational efficiency during this challenging time, which contributed to its stability.

The fiscal year 2021 marked a significant rebound for Epiroc, as revenues soared to SEK 38.4 billion, and EBIT rose to SEK 8.0 billion, representing a robust margin of 20.8%. This performance was bolstered by strong demand for mining and construction equipment, along with the successful introduction of several new products.

In 2022, Epiroc reported revenues of SEK 48.3 billion, achieving an EBIT of SEK 10.7 billion and an impressive margin of 22.1%. The company's strategic acquisitions, including the purchase of Meglab and the acquisition of the Canadian mining technology company, contributed significantly to this growth.

In its latest financial report for Q2 2023, Epiroc recorded a revenue of SEK 13.4 billion, an increase of 9% year-on-year. The EBIT for the quarter was SEK 2.9 billion, yielding a margin of 21.6%. This performance indicates ongoing strength within the mining and construction sectors, especially considering the company’s commitment to sustainable practices and innovation in product development.

As of October 2023, Epiroc has expanded its global footprint, with operations in over 150 countries and employing around 15,000 people. The firm continues to invest heavily in research and development, dedicating about 5% of its revenue annually to innovation.

The company maintains a strong commitment to sustainability, with plans to achieve net-zero emissions by 2050. Epiroc's efforts in digitalization and automation are expected to play a significant role in enhancing efficiency and reducing environmental impact in the mining industry.

A Who Owns Epiroc AB (publ)

Epiroc AB (publ), the Swedish manufacturer of mining and infrastructure equipment, is publicly traded on the Stockholm Stock Exchange under the ticker symbol EPI A. As of the latest financial reporting, Epiroc has a diverse ownership structure comprising institutional investors, mutual funds, and private shareholders.

As of the third quarter of 2023, the largest shareholders of Epiroc AB are:

Atlas Copco, a global leader in sustainable productivity solutions, is the principal shareholder, holding a robust majority stake. This relationship is historically tied to Epiroc's inception in 2018 as a spin-off from Atlas Copco.

As of Q3 2023, Epiroc reported a market capitalization of approximately SEK 97 billion (around USD 9.5 billion), reflecting its status as a vital player in the industrial sector.

In the latest earnings report, Epiroc demonstrated a strong performance, recording revenues of SEK 13.5 billion for Q3 2023, a year-over-year increase of 8% compared to Q3 2022. The company also reported an operating profit of SEK 2.8 billion and a net profit margin of 20.7%.

The stock performance has shown resilience, with Epiroc's share price fluctuating between a low of SEK 180 and a high of SEK 250 over the past year. The stock price as of the latest trading day stood at approximately SEK 220.

Epiroc has a strong commitment to sustainability, aligning with global trends favoring environmental responsibility, which is increasingly influencing investment decisions among institutional investors. This ethos is reflected in their ambitious targets for emissions reductions and their innovation in battery-powered equipment.

Epiroc AB (publ) Mission Statement

Epiroc AB, a leading productivity partner for the mining and infrastructure industries, operates with a core mission statement aimed at delivering innovative and sustainable solutions to its customers. The mission emphasizes a commitment to customer success, operational excellence, and sustainability. Epiroc's solutions are designed to enhance productivity, safety, and efficiency in mining and construction.

The company's mission statement also reflects its dedication to pioneering technology and sustainable practices in its sector. Epiroc focuses on providing advanced equipment, services, and solutions that minimize environmental impact while maximizing operational benefits.

The commitment to sustainability is further evidenced by Epiroc's ambitious goals outlined in their sustainability performance, aiming for a 50% reduction in carbon emissions across the full lifecycle of their products by 2030. The integration of digital solutions, including automation and data analytics, is also central to their mission, helping clients optimize performance and reduce operational costs.

Epiroc's strong focus on research and development underscores its mission of innovation. In 2022, the company invested approximately 6% of its sales in R&D, enhancing its product offerings in line with customer expectations and industry requirements.

Additionally, Epiroc actively pursues collaborations and partnerships aimed at advancing technology and sustainability. The company has engaged in multiple joint ventures and alliances, particularly focusing on electric and autonomous solutions, further aligning with its mission of being a leader in sustainable productivity.

How Epiroc AB (publ) Works

Epiroc AB (publ) is a leading provider of equipment, accessories, and services for the mining, infrastructure, and natural resources industries. Founded in 1873, the company is headquartered in Stockholm, Sweden, and operates in more than 150 countries globally. Epiroc focuses on innovation and sustainability, offering products and solutions that enhance productivity and safety in various markets.

The company operates through two main business segments: Mining and Infrastructure. In 2022, Epiroc reported total sales of approximately SEK 45 billion, with the Mining segment contributing approximately SEK 33 billion and the Infrastructure segment SEK 12 billion.

Epiroc’s products include hydraulic rock drills, surface drill rigs, underground loaders, and a variety of consumables and spare parts. The company's innovation strategy aims to develop technologies that improve operational efficiency and reduce environmental impact. In 2022, Epiroc invested approximately 6.5% of its revenue in research and development.

Geographically, Epiroc divides its operations into several regions including Europe, North America, South America, Asia, and Africa. In 2022, North America accounted for about 30% of total sales, while Europe contributed 35%.

In terms of sustainability, Epiroc aims to reduce its CO2 emissions by 50% by 2030 compared to 2020 levels. The company is implementing various green technologies in their operations, including electric and hybrid equipment, which are becoming an essential part of their product line. For instance, Epiroc's battery-electric underground mining vehicles have garnered significant interest due to their reduced environmental impact.

The company’s focus on digitalization is evident in its development of smart mining solutions, which leverage data analytics and automation technologies to optimize performance. Epiroc's digital sales were estimated to contribute roughly SEK 1.5 billion in revenue in 2022.

As of 2023, Epiroc’s stock is traded on Nasdaq Stockholm under the ticker symbol EPI A. The stock experienced a price increase of approximately 20% in the last year, reflecting strong market confidence in the company's growth potential and solid financial performance.

How Epiroc AB (publ) Makes Money

Epiroc AB (publ), a leading productivity partner for the mining and infrastructure industries, generates revenue through multiple channels. The company primarily focuses on the sale of equipment, aftermarket services, and technology solutions.

In 2022, Epiroc reported total revenues of approximately SEK 45.5 billion, marking a year-on-year increase of 16%. The significant rise in revenue can be attributed to their strong performance in both equipment sales and service contracts.

Revenue Segmentation

The company's revenue can be segmented into three main categories: Equipment, Aftermarket Services, and Technology Solutions.

The equipment segment includes the sale of rock drilling tools, hydraulic attachments, and other machinery necessary for mining and construction. In 2022, the equipment segment’s revenue grew significantly due to increased demand in the mining and construction sectors.

Aftermarket services contribute to a steady revenue stream through maintenance, repairs, and parts sales. Epiroc's focus on building long-term relationships with clients enhances the growth potential of this segment. In 2022, aftermarket services experienced a revenue increase of 18%.

Geographical Revenue Distribution

The geographical distribution of Epiroc’s revenues highlights its global footprint. In 2022, the company generated revenue from multiple regions, which is essential for mitigating risks associated with regional market fluctuations.

This geographical diversification not only supports revenue stability but also opens up opportunities for growth in emerging markets. For instance, Epiroc's investments in Africa are particularly noteworthy, given that the region is experiencing a surge in mining-related activities.

Innovative Technologies

Epiroc also focuses on innovation and technological advancements as a means to drive revenue. Their investments in automation and digitalization, including remote-controlled machinery and advanced analytics, have proven beneficial. In 2022, the technology solutions segment, which includes these innovations, generated about SEK 4.8 billion, reflecting a growth of 26% year-on-year.

The company actively engages in research and development, allocating approximately 6% of its total revenue to R&D efforts, which enhances its product offerings and maintains competitive advantage.

Financial Performance Metrics

In terms of profitability, Epiroc achieved an operating profit of SEK 10.2 billion in 2022, yielding a strong operating margin of 22.4%. This indicates operational efficiency and solid cost management.

The net income for 2022 stood at SEK 8.2 billion, representing a 7.4% increase compared to the previous year. Earnings per share (EPS) were reported at SEK 4.45, an increase from SEK 4.15 in 2021.

Epiroc's financial performance is underscored by a healthy return on equity (ROE) of 22%, showcasing the company’s effective utilization of equity to generate profit.

Market Position and Competitive Advantages

Epiroc holds a strong market position, competing with peers like Sandvik and Caterpillar. The company leverages its extensive network of service centers and skilled personnel, which are crucial for delivering high-quality aftermarket services. Additionally, Epiroc's commitment to sustainability and development of environmentally-friendly products aligns with industry trends, further enhancing its competitiveness.

The company’s operational strategy, which includes a focus on efficiency and customer centricity, positions it well to capitalize on growth opportunities across the mining and infrastructure sectors. Epiroc’s ability to innovate and adapt to market demands will remain central to its revenue generation strategy moving forward.