Annual and Sustainabil ity Report 2023
150Celebrating
years of innovation
Our roots date back to 1873 as part of Atlas Copco and in 2018 we became an independent listed company. We see ourselves as a 150-year-old startup company, which enables quick decision making and speed in the launch of innovative solutions.
We have the advantage of being a young company with passionate employees in a decentralized organization, while also having long and strong customer relationships built on a legacy
of reliability and productivity.
1873 | 1898 | ||
AB Atlas was founded in | AB Diesels Motorer was | ||
Stockholm, Sweden. The | founded in Sickla, Sweden. It | ||
company offered all types of | was a technically prominent | ||
equipment used in the building | company that made several | ||
and maintenance of railways. | important improvements on | ||
the diesel engine, such as | |||
enabling a quick switch from | |||
forward to reverse, which | |||
opened up the market for | |||
marine engines. |
1915
AB Atlas expanded internationally. Within a few years, there are operations in Russia, England and Norway.
1925
The newly formed company moved to Sickla, Sweden, where the headquarters have been ever since. The engines produced, mainly stationary and marine diesels, could be loaded onto railcars inside the factory, which was connected to the entire European railway network.
"AB Växlar & Signaler" i Örebro, Sweden, (AVOS) was acquired. Today, this is Epiroc's largest production site with almost
3 000 employees.
1874
Best wishes from His Majesty King Oscar II. "I wish this company, so beneficial to the fatherland, all happiness and success".
1905
1917 | ||
The first rock drill was | AB Diesels Motorer merged | |
produced. The Cyklop and | with AB Atlas, creating AB | |
Rex light rock drills were | Atlas Diesel. | |
hand-powered, light, and | ||
hard-hitting, making drilling | ||
much more efficient for | ||
customers. |
1936 1951
1953 | ||
The ground-breaking Swedish | Dr. Peter Wallenberg began his | |
Method was introduced. "One | life-long career at Atlas Copco, | |
man - one machine". Key | lasting 62 years. By giving | |
innovations in the solution | employees a large degree of | |
were the combination of a | personal responsibility as well | |
"pusher leg" and hard-metal | as accountability, he established | |
drill bits. | a customer-oriented and | |
decentralized culture. |
...and cel ebrating 5 years as a stand-al one company
2018 Epiroc was listed on Nasdaq Stockholm with Ronnie Leten as Chair of the Board and Per Lindberg as President & CEO.
2020 Helena Hedblom was appointed President & CEO. "Helena has a strong business focus, an in-depth knowledge of the business and is an appreciated leader who is living and breathing the Epiroc values," said Ronnie Leten, Chair of Epiroc's Board of Directors.
Epiroc in 2023
2021 Epiroc's ambitious climate targets were validated as science based.
2023 Epiroc partners with ispace for Moon missions. The long-term collaboration agreement means that Epiroc will contribute with both technology and solutions for future commercial Moon missions.
1956
A leading productivity and sustainability partner serving mining and construction customers around the globe with innovative equipment and solutions.
■�Presence• in around 150 countries.
■�• More than 18 000 employees, +41% since 2017 (12 948). ■�• Revenues of MSEK 60 343, +92% since 2017 (31 364).
■�• Industry-leading EBIT margin of 21.8%, +2.9 ppt since 2017(18.9%).
1984 | 1991 | 2005 | ||
After the acquisition of Arpic | The legendary face drilling | |
Engineering NV in Belgium, the | rig Boomer was introduced. | |
company's name was changed | It was, and still is, a robust | |
to Atlas Copco. Copco came | face drilling rig for tunneling | |
from the French words | and mining applications. | |
Compagnie Pneumatique | Today, customers can have | |
Commerciale. | the Boomer with either | |
diesel or battery driveline. | ||
1970s
For a period of ten years at Dinosaur Cove in Australia, the company's products were used for historical excavations. A new dinosaur species was discovered, and in appreciation of the help received, it got the name Atlascopcosaurus Loadsi.
1988
Marianne Hamilton became the | An almost silent surface drill |
first woman in Group | rig was launched, perfect for |
Management and successfully | use around the clock at |
transformed the internal job | construction sites in densely |
market. It enforced a | populated areas. |
decentralized organization with | |
high job mobility. |
2004
1962 | 1973 | ||
The rig-mounted hydraulic | The first 100 years were | ||
breaker helped create the 11.6 | celebrated with an | ||
km long Mont Blanc tunnel, | exhibition with royal | ||
which at the time, was the | presence in Sickla. | ||
world's longest. It reduced the | |||
distance between Paris and | |||
Rome by 150 kilometers. |
2011 | ||||||
Through the acquisition of | Ingersoll-Rand Drilling | R&D center opened in Nanjing, | ||||
Secoroc in Fagersta, Sweden, | Solutions, a manufacturer | China. The engineering is | ||||
Atlas Copco became the | of large blasthole drilling | focused on the needs of | ||||
world's largest supplier of | rigs in the USA, was | Chinese customers and leads | ||||
complete rock drilling | acquired. The strategic | to shorter time-to-market. | ||||
equipment. | acquisition makes Atlas | |||||
Copco a leading supplier | ||||||
in surface drilling. |
Leading productivity
and sustainabil ity partner
With ground-breaking technology, Epiroc develops and provides innovative and safe equipment, such as drill rigs, rock excavation and construction equipment and tools for surface and underground hard-rock applications.
We also offer world-class service and other aftermarket support as well as solutions for automation, digitalization and electrification.
Our role is to ensure that our customers within mining and infrastructure can work in the safest, most environmentally friendly, and efficient way possible.
Europe
26%
North | Revenues |
America | |
14% | |
18% | |
Revenues | |
26% |
Africa/ | Asia/ |
Middle East | Australia |
16% | 31% |
Revenues | Revenues |
16% | 30% |
South
America
9%
Revenues
14%
Gl obal presence
Average employees and share of revenues in 2023
Contents
Val ue-creating strategy | 14 |
Attractive niches with structural growth | 16 |
Drive the productivity and sustainability | |
transformation in our industry | 20 |
High proportion of recurring business | 34 |
Well-proven business model | 38 |
Value for our stakeholders | 40 |
Our success is based on sustainabil ity | |
and a strong corporate cul ture | 42 |
We use resources responsibly | |
and efficiently | 46 |
We invest in safety and health | 51 |
We grow together with passionate | |
people and courageous leaders | 54 |
We live by the highest ethical standards | 58 |
Administration report | 62 |
The Epiroc share | 74 |
Corporate governance report | 76 |
Internal control over financial reporting | 86 |
Risk management | 88 |
Financial information and notes | 94 |
Signatures of the Board of Directors | 151 |
Auditor's report | 152 |
Notes on sustainability performance | 156 |
Auditor's Limited Assurance | 171 |
Sustainability performance | 172 |
Mul ti-year summary | 174 |
Financial definitions | 175 |
Sustainability report
Annual Report
The audited annual accounts and consolidated accounts can be found on pages 62-93 and 94-151. The corporate governance report examined by the auditors can be found on pages 76-93. Epiroc reports its sustainability work for 2023 according to the Global Reporting Initiative (GRI) Standards. The sustainability report has been prepared in accordance with disclosure requirements set out in the Swedish Annual Accounts Act, chapter 6, paragraph 11. The sustainability information that has been reviewed by the auditors, excluding information related to the EU Taxonomy, can be found on pages 42-61 and 156-173. The assurance report issued by the auditors can be found on page 171 and a detailed GRI and other sustainability reporting standards index can be found at www.epirocgroup.com.
LEADING PRODUCTIVITY AND SUSTAINABILITY PARTNER
Mining
Equipment
Our equipment is mainly used when customers need to break, excavate and work with hard materials, such as rock and concrete. It is often business critical for our customers. We provide a wide range of battery-electric equipment and electrification solutions, as well as hardware and software for automation and digitalization. Underground and surface equipment and solutions represent each roughly half of equipment revenues.
83%
of orders
received 2023
Surface mining
A significant portion of the world's deposits of copper, gold and iron ore is found above ground in what is normally referred to as "open pits". For surface mining, we provide
a complete range of rigs for blasthole drilling. Our largest drill rigs, the Pit Vipers, can drill holes up to 406 mm in diameter with up to 19.8 meters clean hole single pass capability.
Underground mining
Underground mining is becoming increasingly common. For underground applications, we provide drilling rigs for blasthole drilling and rock reinforcement, loaders and trucks, equipment for mechanical rock excavation, and ventilation systems. We have the widest offering of battery-electric machines in the market as well as electric infrastructure solutions and Batteries as a Service.
Expl oration
Exploration is performed to ensure a continuous supply of minerals and metals, both in the search for new deposits and in the expansion of existing ore bodies. We provide a wide range of exploration drilling rigs and digital solutions to analyze ore and ore grades. We also provide exploration drilling tools.
Infrastructure
17%
of orders
received 2023
Surface infrastructure
Construction work above ground often involves removing unwanted rock from an area or producing aggregate for construction. It could also involve drilling for water or geothermal energy. We provide drill rigs for blasthole drilling for both construction work and quarries. We also supply well-drilling equipment.
Underground infrastructure
Underground construction work is carried out, among other things, for road and railway tunnels and for hydropower plants. We provide drill rigs for blasthole drilling and rock reinforcement, grouting systems, loaders and trucks, as well as ventilation systems.
Equipment
32%
of orders received 2023
- Epiroc Annual and Sustainability Report 2023
LEADING PRODUCTIVITY AND SUSTAINABILITY PARTNER
Aftermarket
Equipment requires spare parts, maintenance and consumables to achieve optimal
performance. We offer a wide range of aftermarket solutions, including new circular services, such as productivity-enhancingtechnology-agnostic digital solutions, mid-life upgrades, diesel-to-battery conversions and remanufacturing of components. The type of service our customers want varies. Our service offering is therefore tailor made, ranging from supplying spare parts to having service technicians on site 24/7, performing all maintenance for
the customer.
Service
Thanks to our global network of workshops and service technicians, we can support our customers anytime and anywhere. We focus on availability through strategically located distribution centers and an efficient supply chain.
Examples of services and solutions:
- Replacement parts and kits.
- Service agreements and audits.
- Midlife services, including diesel-to- battery conversions.
- Remanufacturing solutions for components.
- Digitalization solutions, including enablers such as wireless connectivity.
- Custom-engineeredsolutions, including mixed-fleet automation solutions.
- Training and other service.
Rock Drilll ing Tool s and Ground Engaging Tool s (GET)
We offer a wide range of efficient drilling tools that provide our customers with the best possible drilling quality, the most drilled meters per hour and the lowest production cost. We offer advanced ground engaging tools, such as cast lips, teeth, and protective shrouds installed on mining buckets and loaders as well as related digital solutions, mainly for the mining industry.
Examples of tools:
- Rock drilling tools - underground and on surface.
- Advanced ground engaging tools and related digital solutions.
- Tools for rock reinforcement
- Exploration drilling tools (reported in the Surface Division).
Attachments
We offer a wide range of high- quality hydraulic attachments. The attachments are used, for example, for rock excavation in construction and mining, for deconstruction, and for recycling.
Examples of attachments:
- Hydraulic breakers, shears and pulverizers.
- Concrete cutters and busters.
- Drum cutters.
- Excavator grapples.
- Excavator magnets.
- Hydraulic compactors.
- Crusher and screening buckets
- Auger drive units.
- Couplers and thumbs.
- HATCON - Hydraulic Attachment Tools Connectivity.
Aftermarket
68%
of orders received 2023
Epiroc Annual and Sustainability Report 2023 | 7 |
2023 IN BRIEF
2023 in brief
Orders received | Revenues | Operating margin, EBIT, % |
MSEK 59 332 | MSEK 60 343 | down from 22.4% in 2022 |
+11% | +21% | 21.8% |
Return on capital employed | Share price development | Dividend (proposed) |
down from 28.0% in 2022 | (A share) | SEK/Share |
27.0% | +6.5% | 3.80 |
Safety on top of the agenda | Automation leadership | Acquisitions (completed) |
KPIs improving, but | 2 850 driverl ess | Three acquisitions |
we can do better. | machines, incl uding | Approx. MSEK 2 400 in |
mixed fleet. | annual revenues |
In the picture
In February 2023, Epiroc finalized the acquisition of CR which provides advanced ground engaging tools (GET) and related digital solutions mainly for the mining industry. With approximately BSEK 1.7 in annual revenues and 400 employees, the company expands Epiroc's first-rate offering of essential consumables and digital solutions. Revenues from the acquisition are reported in "Tools & Attachments".
- Epiroc Annual and Sustainability Report 2023
2023 IN BRIEF
2023 in brief
In 2023, the order intake increased 11% to MSEK 59 332, supported by a strong mining business, while demand from construction customers decreased. We had record-high revenues and operating profit and ended the year with a solid financial position. Our financial strength enables us to invest in innovation and acquisitions. Our investments in R&D were at all-time high and we announced our largest acquisition ever, the acquisition of STANLEY Infrastructure, in December.
In brief
2023 | 2022 | Δ,% | Financial goals | Average 2015-20232) | |
Orders received, MSEK | 59 332 | 53 222 | 11 | ||
To achieve annual revenue growth of 8% over a business cycle | Annual revenue | ||||
Revenues, MSEK | 60 343 | 49 694 | 21 | and to grow faster than the market. Growth will be | |
growth of 10% | |||||
organic and supported by selective acquisitions. | |||||
Operating profit, EBIT, MSEK | 13 183 | 11 147 | 18 | ||
Operating margin, EBIT, % | 21.8 | 22.4 | To have an industry-best operating margin, | 20.4 | |
with strong resilience over the cycle. | |||||
Adjusted operating margin, EBIT, % | 21.7 | 23.7 | 21.0 | ||
Operating cash flow, MSEK | 6 211 | 5 662 | 10 | ||
Basic earnings per share, SEK | 7.82 | 6.96 | 12 | ||
Dividend per share, SEK | 3.80 1) | 3.40 | 12 | To provide long-term stable and rising dividends. The dividend | 50% pay-out ratio |
should correspond to 50% of net profit over the cycle. | (2018-2023) | ||||
Return on capital employed, % | 27.0 | 28.0 | To improve capital efficiency and resilience. Investments | 25.9 | |
and acquisitions shall create value. | |||||
Net debt/EBITDA ratio | 0.49 | 0.28 | To have an efficient capital structure and the flexibility to make selective | BBB+ | |
acquisitions. The goal is to maintain an investment grade rating. | |||||
Total injury frequency rate (TRIFR) 3) | 5.1 | 5.7 | -11 | ||
Sick leave, % | 2.1 | 2.4 | |||
Total energy use 4), GWh | 169 | 175 | -3 | ||
Transport CO2e, tonnes/COS, MSEK 4&5) | 2.7 | 3.2 | -15 |
- Proposed by the Board. 2) See pages 62-69 and 172-174.3) Number of recordable injuries per million hours worked. 4) Comparable units, excluding new reporting units in 2023. 5) Carbon dioxide equivalent, CO2e, is a unit that standardizes the climate effects of various greenhouse gases. COS = Cost of Sales.
Total recordable injury | Energy consumption and | |||||
Revenues and book-to-bill | Operating profit and margin | frequency rate and sick leave | transport CO2e emissions | |||
60 343 | 22.9 | 23.7 | 177 | 175 | |||||||||||||||
21.2 | 21.8 | 169 | |||||||||||||||||
21.0 | |||||||||||||||||||
161 | |||||||||||||||||||
49 694 | 22.7 | 22.4 | 21.7 | ||||||||||||||||
146 | |||||||||||||||||||
20.4 | |||||||||||||||||||
40 849 | 19.9 | 6.0 | |||||||||||||||||
39 645 | 5.7 | ||||||||||||||||||
36 122 | 5.1 | ||||||||||||||||||
4.8 | 5.1 | ||||||||||||||||||
115 | 107 | ||||||||||||||||||
97 | 101 | 98 | 13 183 | 4.5 | |||||||||||||||
11 147 | 4.1 | ||||||||||||||||||
3.6 | |||||||||||||||||||
8 995 | 3.2 | ||||||||||||||||||
8 136 | 7 382 | 2.7 | |||||||||||||||||
2.4 | 2.4 | ||||||||||||||||||
2.1 | 2.1 | 2.1 | |||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | 2019 | 2020 | 2021 | 2022 | 2023 | 2019 | 2020 | 2021 | 2022 | 2023 | 2019 | 2020 | 2021 | 2022 | 2023 |
Revenues, MSEK | Operating profit, MSEK | TRIFR 3) | Total energy use in GWh 4) | |||||
Book-to-bill, % | Operating margin, % | Sick leave, % | Transport CO2e, tonnes/COS, MSEK 4&5) | |||||
- Adjusted operating margin, %
Epiroc Annual and Sustainability Report 2023 | 9 |
CEO-COMMENTS
Colll aboration and partnerships drive our l eadership
2023 was an exceptional year defined by major achievements and we ended the year with record revenues and record operating profit. In March, we announced a major order for mixed fleet automation for an iron-ore mine in Australia and we started an exciting collaboration with ispace to send equipment to the Moon. Another collaboration that enhanced was with SSAB, which will supply us with fossil-free steel. In September, a long-standing customer placed Epiroc's largest- ever order for equipment to be used in a copper mine in the Democratic Republic of the Congo. In the fourth quarter, we won three large orders, one of which is a digitalization order for a customer in Chile. We finalized the year by announcing the acquisition of STANLEY Infrastructure, which will make us a stronger supplier of excavator attachments and handheld hydraulic tools. If anything, the year has proven that collaboration and partnerships drive leadership.
Mixed demand and strong acquisition growth Our order intake in 2023 increased 11% to MSEK 59 332
(53 222). The activity level was high within mining, as well as for infrastructure projects, such as tunnels. The demand, however, declined sharply for hydraulic attachments and equipment used in quarries and in the construction of residential and non-residential areas.
We won several large orders, indicating a continued high willingness to invest among our customers. For example, we won our largest automation order ever, MSEK 500, to convert Roy Hill's mixed fleet of almost a hundred mining trucks to driverless operation in Australia.
Demand for automation and digitalization solutions was at a high level during the year, and in the fourth quarter, we won a multi-year digitalization order of MSEK 250 from Codelco in Chile. It is gratifying to see that we have further strengthened our leading position within digitalization and automation.
The aftermarket demand from mining customers remained high, supported by mid-life upgrades and service of customers' equipment. Our broad and attractive offering combined with the work of our dedicated service technicians contributed to the strong development.
Record-high revenues
For many years, we have been proud of our profitable growth and 2023 is no exception. In total, our revenues increased 21% during the year to a record-high MSEK 60 343 (49 694), driven by both acquisitions and strong organic development.
We completed three acquisitions and announced another two. Together, these five will add annual revenues of approximately SEK 7.2 billion.
It is pleasing to see that the completed acquisitions are growing well and contribute to increased revenues. In total, our completed acquisitions contributed to 9% of the revenue growth in 2023.
The acquisitions within automation and digitalization
are growing particularly well, which supports our view that customers benefit from our digital solutions that improve both safety and productivity.
Profitabil ity in focus
The operating profit, EBIT, also reached record levels, and increased 18% to MSEK 13 183 (11 147). This corresponds to an operating margin of 21.8%, down from 22.4% the previous year. There are several explanations for the weaker margin. One reason is the weakening construction market during the year, which reduced demand for our hydraulic attachments business. We have both lost volumes and suffer from a negative mix effect. Another margin headwind is that our acquisitions are growing rapidly, but with lower margins, i.e. they are dilutive.
Our costs were higher, which is partly explained by us investing in presence, such as more service technicians, salespeople and staff serving customers.
We have several activities ongoing to improve efficiency. For example, we announced the closure of our factory in Essen, Germany, in November.
10 Epiroc Annual and Sustainability Report 2023
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Epiroc AB published this content on 07 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 March 2024 11:30:27 UTC.