GICS Sector : Industrials
Epiroc AB (publ), together with its subsidiaries, develops and produces equipment for use in surface and underground applications in Sweden.It operates through Equipment & Service and Tools & Attachments segments.The Equipment & Service segment provides equipment and solutions for rock drilling, mechanical rock excavation, rock reinforcement, loading and haulage, exploration drilling, and ventilation systems, as well as drilling equipment for water and energy; and related spare parts, services, and solutions.
Epiroc achieved record highs for orders received and revenues in 2024, driven by strong demand for equipment and services, particularly in mining. The growth was supported by acquisitions and the development of strategic growth areas such as service agreements, circular services, and digital and automation solutions. The company reported an 11% increase in group revenues to NOK 17.3 billion and a 19.7% adjusted EBIT margin.
Publication Date: Feb -11
The operating cash flow was a record high, increasing more than 60% year-over-year to SEK 4 billion. The cash conversion rate was 104%, and the net debt-to-EBITDA ratio was 0.93%. The company proposed a dividend per share of SEK 3.80 to be paid in two equal installments. "We executed efficiency actions according to plan and reduced the workforce by 1,135 employees in 2024," said Helena Hedblom, CEO.
The segment results show a 5% increase in orders for Equipment & Service, driven by strong mining demand. Tools & Attachment had mixed demand, with a 39% increase in orders mainly due to the acquisition of Stanley Infrastructure. The aftermarket represented 63% of the group's revenue, and orders were driven by a high mining activity level.
Looking ahead, mining demand is expected to remain high, while construction demand is expected to remain weak. The company's acquisition strategy is focused on smaller bolt-on acquisitions, and it does not expect any big acquisitions in software and construction. "We have a solid platform now for organic growth in software and construction," said Helena Hedblom.
With a PE ratio of 28.87, the stock is trading at a premium to its peers. The price-to-sales ratio of 3.79 indicates that the market is pricing in strong revenue growth. The dividend yield of 1.82% provides a relatively attractive yield for investors. Analyst estimates suggest a revenue growth of 6.0% next year.
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Increasing demand for Epiroc's sustainable and autonomous mining equipment, driven by growing environmental concerns and need for operational efficiency, will drive growth. Expansion in emerging markets and investments in digitalization and electrification will further boost demand for Epiroc's services and equipment.
Epiroc AB's tools and attachments for drilling and mining is driven by increasing demand for electrification and automation in mining, growing need for efficient and sustainable mining practices, and rising investments in infrastructure development.
Epiroc’s common group functions support overall operations, driving growth through efficient resource allocation, technology innovation, and enhanced customer experience, ultimately contributing to the company's long-term success.
Epiroc AB's growth is driven by its focus on sustainability and digitalization, leading to increased demand for its drilling equipment and services.
Epiroc's drill rigs are designed for mining, quarrying, and construction applications, offering high productivity and reliability.
Epiroc's loaders and trucks are designed for efficient and safe transportation of materials in mining, quarrying, and construction applications.
Epiroc's rock drilling tools are designed for drilling and blasting in mining, quarrying, and construction applications, offering high performance and durability.
Epiroc's exploration drilling equipment is designed for geological exploration and mining applications, offering high precision and reliability.
Epiroc's in-situ rock reinforcement solutions are designed for stabilizing rock formations in mining, quarrying, and construction applications.
Epiroc's ventilation systems are designed for improving air quality and reducing heat in mining, quarrying, and construction applications.
Epiroc's digital solutions are designed for optimizing mining, quarrying, and construction operations, offering real-time data analytics and automation.
The threat of substitutes for Epiroc AB (publ) is medium due to the availability of alternative products and services in the mining and construction industries.
The bargaining power of customers for Epiroc AB (publ) is low due to the company's strong brand reputation and the lack of buyer concentration in the industry.
The bargaining power of suppliers for Epiroc AB (publ) is medium due to the presence of multiple suppliers in the market and the company's moderate dependence on them.
The threat of new entrants for Epiroc AB (publ) is low due to the high barriers to entry in the industry, including the need for significant capital investment and technological expertise.
The intensity of rivalry for Epiroc AB (publ) is high due to the presence of several established competitors in the industry, leading to a highly competitive market.
| Value | |
|---|---|
| Debt Weight | 27.51% |
| Debt Cost | 8.40% |
| Equity Weight | 72.49% |
| Equity Cost | 8.40% |
| WACC | 8.40% |
| Leverage | 37.95% |
Value: 6.3
Growth: 6.2
Quality: 4.6
Yield: 6.9
Momentum: 6.0
Volatility: 9.3
1-Year Total Return ->
Value: 4.7
Growth: 6.4
Quality: 4.4
Yield: 9.4
Momentum: 5.0
Volatility: 6.7
1-Year Total Return ->
Value: 3.7
Growth: 6.7
Quality: 6.1
Yield: 8.0
Momentum: 3.0
Volatility: 8.3
1-Year Total Return ->
Value: 2.4
Growth: 6.9
Quality: 4.8
Yield: 4.4
Momentum: 9.5
Volatility: 6.3
1-Year Total Return ->
Value: 6.2
Growth: 4.8
Quality: 3.1
Yield: 6.9
Momentum: 4.0
Volatility: 5.0
1-Year Total Return ->
Value: 1.8
Growth: 6.2
Quality: 7.0
Yield: 3.1
Momentum: 4.0
Volatility: 5.7
1-Year Total Return ->