As the September reports roll in, Swedish major original equipment manufacturer (OEM) Epiroc has announced softer headline figures, with revenue and profit both down year-on-year. Still, a resilient mining market and stronger cash generation suggest firmer operating momentum in the months to come. 

Group revenues slipped by 3% this quarter to SEK 15.24 billion (US$1.38 billion), while orders fell 2% to SEK 15.14 billion ($1.37 billion).

Adjusted for currency, however, both grew (revenues up 5% and orders up 7%). The weak krona cut nearly 9 percentage points from the top line.

Operating profit declined 14% to SEK 2.8 billion ($255 million), producing an 18.4% margin, compared with 20.9% a year earlier.

The company cited tariffs, an unfavourable product mix and slower activity in the nickel segment as key drags.

Adjusted operating profit was SEK 2.9 billion ($264 million), a 6% fall from 2024. Earnings per share dropped 16% to SEK 1.62 ($0.15).

By contrast, cash flow strengthened sharply with operating cash flow rising 38% to SEK 2.48 billion ($225 million), aided by lower working-capital requirements. Net debt fell to SEK 11.1 billion ($1 billion), giving a net-debt-to-EBITDA ratio of 0.73, down from 0.97 a year ago.

"Within mining, customer activity was high, which led to strong order growth both in equipment and rock drilling tools," said president and chief executive Helena Hedblom.

"We also noted high demand within exploration. Large mining-equipment orders, which are lumpy in nature, amounted to SEK 600 million ($55 million)."

She added that "tariffs impacted profit and margin negatively," but expressed confidence that efficiency measures, particularly in the Tools & Attachments division, "have started yielding results".

Mining offsets construction slump

Epiroc continues to rely heavily on mining, which accounted for 78% of total orders in the quarter.

Hedblom said demand "remains high" and is expected to stay so in the near term, while construction orders "are expected to be stable at a low level" after an extended downturn.

Sequentially, orders were flat on an organic basis, matching the June quarter's SEK 15.1 billion  ($1.6 billion) result.

In the June quarter, Epiroc had reported an 8% headline revenue fall but a 1% organic gain, suggesting a modest improvement in underlying growth this period.

The Equipment & Service division, which includes drill rigs, loaders, trucks and aftermarket support, recorded orders of SEK 11.44 billion ($1.04 billion), down 3% but up 6% organically.

Large-equipment orders were weaker at SEK 600 million ($55 million) versus SEK 1.4 billion ($150 million) a year earlier. The division's adjusted operating margin narrowed to 21.9% from 22.9%, with EBITA down 25%.

The Tools & Attachments unit fared better: revenues fell 3% to SEK 3.7 billion ($337 million) but operating profit rose 2% to SEK 436 million ($40 million), lifting its margin to 11.8%.

The company said that product rationalisation and restructuring, including last year's closure of its Langley, Canada, tool factory, have begun to bear fruit.

Regional performance milestones

Currency-adjusted orders rose across Europe (+19%), Africa and the Middle East (+16%), and South America (+9%), while Asia–Australia fell 8% amid softer Australian demand.

North America remains Epiroc's largest market, with SEK 4.1 billion (US$375 million) in orders, up 9% in local terms.

This quarter also saw the culmination of a major automation project in Western Australia, where Epiroc converted all 78 trucks at Hancock Iron Ore's Roy Hill operation to fully driverless mode.

The company further booked SEK 300 million ($27 million) in revenue from the project, creating what it called "the world's largest fully agnostic autonomous mine".

Through RCT, Epiroc continues to make strides in automating mines. Most recently, RCT announced that it will aid in the introduciton of a new suite of non-line-of-sight excavators and dozers at Fortescue's Solomon mine.

On the safety side, an initiative was a strategic partnership with Hindustan Zinc to install Epiroc's collision-avoidance system across all of the Indian producer's underground mines. The system is OEM-agnostic and can be retrofitted to non-Epiroc vehicles.

Cash discipline and outlook

Hedblom highlighted improved working capital control, with average net working capital falling to 37% of revenues from 38% a year earlier.

"The cash conversion rate, rolling 12 months, was 105% (88)," she said. The company ended the quarter with SEK 10.05 billion in cash ($910 million).

Despite lower margins, Epiroc reiterated its focus on "profitable growth" through efficiency measures and a sharpened business structure.

From September, the group reorganised into two main business areas, Equipment & Service and Tools & Attachments, with the aim of improving accountability and cost control.

For now, the near-term picture is somewhat mixed for the company, with mining activity looking robust. Steady exploration spends and traction in automation are offset by weaker construction exposure and trade-related cost pressures.

The company expects mining demand to "remain high", though margins may stay under pressure until tariff effects and product mix normalise.