Earnings Release • Feb 5, 2019
Earnings Release
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| 2018 | 2017* | 2018 | 2017* | |||
|---|---|---|---|---|---|---|
| SEK million | Q4 | Q4 | Δ | Full year | Full year | Δ |
| Orders received | 9,468 | 8,058 | 17% | 39,400 | 33,831 | 16% |
| Revenues | 10,558 | 8,464 | 25% | 38,285 | 31,364 | 22% |
| Operating profit | 2,162 | 1,528 | 41% | 7,385 | 5,930 | 25% |
| Operating margin, % | 20.5 | 18.1 | 19.3 | 18.9 | ||
| Profit before tax | 2,116 | 1,443 | 47% | 7,201 | 5,793 | 24% |
| Profit margin, % | 20.0 | 17.0 | 18.8 | 18.5 | ||
| Profit for the period | 1,623 | 1,104 | 47% | 5,437 | 4,298 | 27% |
| Operating cash flow | 2,242 | 944 | 138% | 3,884 | 4,610 | -16% |
| Basic earnings per share, SEK | 1.35 | 0.91 | 48% | 4.50 | 3.55 | 27% |
| Diluted earnings per share, SEK | 1.35 | - | 4.49 | - | ||
| Return on capital employed, % | 32.0 | 27.4 | ||||
| Net debt/EBITDA ratio | 0.14 | 0.75 |
*Financial statements prior to 2018 are combined. See page 14.
In the fourth quarter, orders received were SEK 9,468 million, corresponding to an organic growth of 11% compared to Q4 2017, and largely unchanged sequentially. We have been able to ramp up our capacity in manufacturing and service to support our customers, and revenues reached a record SEK 10,558 million, up 19% organically. Our operating profit increased by 41% to SEK 2,162 million. The profitability improved with support from both organic growth and currency. For Tools & Attachments, the margin improved reinforced by our efficiency actions. The costs related to the split from Atlas Copco are gradually decreasing as planned, and including a positive change in provision for long-term incentive programs the impact was, net, SEK +8 million. The operating margin was 20.4% (18.6) excluding these items. We had a strong cash flow in the quarter, supported by the strong operating profit and a reduction of working capital.
In our first year as Epiroc we achieved strong growth in both top and bottom line, in parallel to a successful split and introduction of the new company. Reported orders and revenues increased 16% and 22%, respectively. Our operating profit increased by 25% and the operating margin, adjusted for split costs and provision for long-term incentive programs, increased from 19.4% to 20.3%.
The customer demand for our equipment, services and tools remained at a good level during the quarter. In mining we continue to see that the majority of the equipment orders are for expansion, including also some orders for greenfield projects. The demand remained robust in infrastructure. Our aftermarket business was supported by the high activity among our customers and achieved strong growth. The mineral prices did not change materially during the quarter and our customers seem reasonably confident about the future. While we expect the demand to continue to remain at the current level in the near-term, there are uncertainties related to the development of the economic cycle and global trade tensions.
We launched the second generation of battery-operated equipment in November at an event in Örebro, Sweden. It created strong interest from our customers and we have started to see orders coming in. Our customers are ready for a major technology shift towards more automation, digitalization and battery power. While the complete transition will take time, it is exciting to already now see the positive customer reactions. During the quarter, we acquired a minority position in ASI Mining. The capabilities of ASI are highly complementary to our existing portfolio of digital solutions and we will further strengthen our automation and digital offerings.
Our target is to grow at least 8% per year on average over a business cycle. While we grew well beyond that in Q4 and in 2018, we believe we continuously need to make acquisitions to secure long-term growth as well as access to new technologies, markets and geographies. In addition to the ASI acquisition, we agreed to acquire Fordia, New Concept Mining and Sautec. This will strengthen our position in exploration, rock reinforcement and service, and add some SEK 1.2 billion in annual revenues. We welcome our new colleagues to the Epiroc family. Noteworthy also is that we have signed a cooperation agreement with leading communications technology provider Ericsson to jointly help mining companies achieve optimal wireless connectivity in their operations through 5G technologies.
We have built a solid base for Epiroc during 2018 and our target is set on further value creation. Looking into 2019, we will continue to focus on improving our customer offerings, our efficiency, agility and resilience. These are, and will continue to be, the strengths of Epiroc.
Per Lindberg President and CEO
Orders and revenues
| Epiroc Group | ||||||
|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |||
| SEK million | Q4 | Q4 | Δ Full year | Full year | Δ | |
| Orders received | 9,468 | 8,058 | 17% | 39,400 | 33,831 | 16% |
| Revenues | 10,558 | 8,464 | 25% | 38,285 | 31,364 | 22% |
| Operating profit | 2,162 | 1,528 | 41% | 7,385 | 5,930 | 25% |
| Operating margin, % Return on capital |
20.5 | 18.1 | 19.3 | 18.9 | ||
| employed, 12 months, % | 32.0 | 27.4 |
The demand for products and services remained strong in the fourth quarter 2018. Orders received increased 17% to SEK 9,468 million (8,058), corresponding to 11% organic growth. Sequentially, the orders received for the Group remained largely flat.
The largest increase in orders received took place in North America, followed by South America, where a large order was received in Peru for the Quellaveco open-pit mine. Orders in Europe were down compared to the same period last year.
Mining customers represented 73% of orders received in 2018.
Revenues increased 25% to SEK 10,558 million (8,464), corresponding to 19% organic increase. Revenues from acquisitions and contract manufacturing of road construction equipment contributed with 3% and currency with 3%.The book to bill ratio was 90%. Asia/Australia had the Group's highest revenue share in the quarter.
| Epiroc Group | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Orders received | Revenues | Operating profit | |||||||
| SEK million, | SEK million, | SEK million, | Margin, %, | ||||||
| Δ, % | Δ, % | Δ | Δ, pp | ||||||
| Q4 2017 | 8,058 | 8,464 | 1,528 | 18.1 | |||||
| Organic | +11 | +19 | +407 | +1.0 | |||||
| Currency | +3 | +3 | +143 | +1.0 | |||||
| Structure and other | +3 | +3 | +84* | +0.4 | |||||
| Total | +17 | +25 | +634 | +2.4 | |||||
| Q4 2018 | 9,468 | 10,558 | 2,162 | 20.5 |
*Includes operating profit/loss from acquisitions, contract manufacturing, one-time costs, and change in provision for share-based long-term incentive programs.
The operating profit increased to SEK 2,162 million (1,528) and includes costs related to the split from Atlas Copco and change in provision for longterm incentive programs of net SEK +8 million (-50). Costs related to the split were SEK 59 million and change in provision for share-based long-term incentive programs was SEK +67 million (-50). The costs for Epiroc Group's corporate functions were SEK 52 million in the quarter.
The operating margin was 20.5% (18.1), affected positively by organic growth and currency. Adjusted for split costs and change in provision for long-term incentive programs the margin was 20.4% (18.6).
Net financial items were SEK -46 million (-85). Net interest was SEK -37 million (-109).
Profit before tax amounted to SEK 2,116 million (1,443), corresponding to a margin of 20.0% (17.0). Income tax expense amounted to SEK -493 million (-339), corresponding to an effective tax rate of 23.3% (23.5).
Profit for the period totaled SEK 1.623 million (1,104). Basic earnings per share were SEK 1.35 (0.91).
The return on capital employed during the last 12 months was 32.0%. Return on equity was 33.2%.
Operating cash flow improved to SEK 2,242 million (944) in the quarter. Net cash flow from operating activities was SEK 2,487 million (1,016). Net financial items paid was SEK -24 million (-279). Taxes paid in the quarter was SEK -326 million (-180). Working capital decreased by SEK 415 million (increased by 157), mainly due to reduction in inventories. Net investments in rental equipment were SEK 13 million (112). Net investments in property, plant and equipment were SEK 149 million (76) and investments in intangible assets were SEK 146 million (73).
Acquisitions impacted cash flow by SEK -64 million (-). Other investments, net, including divestment of some Payment Solutions credit portfolios, gave a positive cash flow of MSEK 118.
Net working capital was SEK 12,897 million (10,173) at the end of the period, an increase of 27% compared to last year, mainly driven by higher volumes and the related increase in inventories and receivables, partly offset by higher payables. As a percentage of revenues last 12 months, the average net working capital was 31.8%. Sequentially the average net working capital as percentage of revenues remained at approximately the same level as in Q3 2018.
The supply-chain improvement program that was initiated in the first quarter, with the aim to improve delivery service to customers, reduce costs, e.g. for transport, and reduce capital tied-up in inventories, continued according to plan.
Average net working capital/revenues, 12 months (%)
Net debt and Net debt/EBITDA
Q2 Q3 Q4
Net debt (SEK million, end of period)
Net debt/EBITDA ratio
0 500 1,000 1,500 2,000 2,500
Q1 2018
The Group's net debt amounted to SEK 1,208 million, of which SEK 283 million was attributable to post-employment benefits. The net debt/EBITDA ratio was 0.14. The net debt/equity ratio was 6.4%.
In the beginning of December 2018 S&P Global Ratings assigned Epiroc a BBB+ long-term issuer credit rating with a stable outlook.
0.00 0.06 0.12 0.18 0.24 0.30
In December 2018 a major part, SEK 4,000 million of the utilized amount of SEK 5,000 million, of the bridge facility was replaced with long-term financing. The refinancing was made through capital market borrowings of SEK 2,000 million and a bilateral loan facility of SEK 2,000 million. The remaining SEK 1,000 million of the bridge facility will be replaced in the beginning of 2019.
The Board of directors proposes to the Annual General Meeting a dividend of SEK 2.10 per share, equal to SEK 2,519 million. The dividend is proposed to be paid in two equal installments with record dates May 13 and October 30 2019.
The Equipment & Service segment provides rock drilling equipment, equipment for mechanical rock excavation, rock reinforcement, loading and haulage, ventilation systems, drilling equipment for exploration, water, oil and gas, as well as related spare parts and service for the mining, infrastructure and natural resources industries.
| 2018 | 2017 | 2018 | 2017 | |||
|---|---|---|---|---|---|---|
| SEK million | Q4 | Q4 | Δ | Full year | Full year | Δ |
| Orders received | 7,116 | 5,788 | 23% | 29,695 | 24,574 | 21% |
| Revenues | 8,094 | 6,262 | 29% | 28,540 | 22,383 | 28% |
| Operating profit | 1,876 | 1,438 | 30% | 6,751 | 5,107 | 32% |
| Operating margin, % | 23.2 | 23.0 | 23.7 | 22.8 |
The orders received for Equipment & Service increased by 23% to SEK 7,116 million (5,788), corresponding to 17% organic growth.
Geographically, North and South America had very strong order growth, while Europe had a slightly negative development. A large order was received in Peru for the Quellaveco open-pit mine.
Equipment had an organic growth of 17% and orders received amounted to SEK 3,355 million (2,676). The demand for equipment from mining and infrastructure customers was good. Orders for underground equipment had a strong growth, while orders for surface equipment were largely unchanged. Most of the orders from mining customers continued to relate to expansion in or adjacent to existing mines rather than to replacement.
The service business continued to perform well and orders received increased by 21% to SEK 3,761 million (3,112). The organic growth was 16%, supported by a continued positive market development and additional marketing and sales activities. Acquisitions contributed with 3%.
Revenues increased by 29% to SEK 8,094 million (6,262), corresponding to an organic growth of 22%. The measures taken to ramp up the production had a positive impact. Currency contributed with 3% and revenues from acquisitions and contract manufacturing of road construction equipment contributed with 4% growth. The book to bill ratio was 88%. Equipment accounted for 54% (51) of the revenues in the segment and service 46% (49). Asia/Australia had the segment's highest revenue share in the quarter.
| Equipment & Service | ||||
|---|---|---|---|---|
| Orders received SEK million, Δ, % |
Revenues SEK million, Δ, % |
SEK million, Δ |
Operating profit Margin, %, Δ, pp |
|
| Q4 2017 | 5,788 | 6,262 | 1,438 | 23.0 |
| Organic | +17 | +22 | +308 | -0.3 |
| Currency | +3 | +3 | +105 | +0.9 |
| Structure and other | +3 | +4 | +25* | -0.4 |
| Total | +23 | +29 | +438 | +0.2 |
| Q4 2018 | 7,116 | 8,094 | 1,876 | 23.2 |
*Includes operating profit/loss from acquisitions and contract manufacturing.
| Equipment | Service | |||||
|---|---|---|---|---|---|---|
| Orders received SEK million, Δ, % |
SEK million, Δ, % |
Revenues Orders received SEK million, Δ, % |
Revenues SEK million, Δ, % |
|||
| Q4 2017 | 2,676 | 3,174 | 3,112 | 3,088 | ||
| Organic,% | +17 | +29 | +16 | +16 | ||
| Currency,% | +4 | +3 | +2 | +2 | ||
| Structure and other,% | +4 | +5 | +3 | +3 | ||
| Total,% | +25 | +37 | +21 | +21 | ||
| Q4 2018 | 3,355 | 4,350 | 3,761 | 3,744 |
Revenues Q4 2018 (SEK million)
Operating profit was SEK 1,876 million (1,438), corresponding to a margin of 23.2% (23.0). The margin was supported by currency, while investments in marketing and R&D, mix effects as well as acquisitions and contract manufacturing diluted the margin.
Two acquisitions were completed in the quarter:
In February 2019 Noland Drilling Equipment, a US distributor of water well drilling equipment and related parts, services and consumables was acquired.
A cooperation agreement was signed with communications technology provider Ericsson, to jointly provide mining customers with LTE (Long-Term Evolution) and 5G mobile technology solutions to help the customers to build the ecosystem required for automation and digitalization.
The contract manufacturing of road construction equipment was discontinued in the end of 2018.
The second generation of battery-operated machines was launched consisting of larger underground equipment, 14 and 18-ton loaders, a 42-ton truck and a range of mid-sized drilling rigs. The battery-driven vehicles will create a number of benefits for the customers.
The Tools & Attachments segment provides rock drilling tools and hydraulic attachments that are attached to machines used mainly for drilling, deconstruction and recycling as well as rock excavation. It also provides related service and spare parts and serves the mining, infrastructure and natural resources industries.
| 2018 | 2017 | 2018 | 2017 | |||
|---|---|---|---|---|---|---|
| SEK million | Q4 | Q4 | Δ | Full year | Full year | Δ |
| Orders received | 2,306 | 2,197 | 5% | 9,611 | 9,047 | 6% |
| Revenues | 2,440 | 2,139 | 14% | 9,519 | 8,738 | 9% |
| Operating profit | 324 | 218 | 49% | 1,239 | 1,146 | 8% |
| Operating margin, % | 13.3 | 10.2 | 13.0 | 13.1 |
The business environment in both the infrastructure and mining industry continued to be good for Tools & Attachments. The orders received increased by 5% to SEK 2,306 million (2,197), corresponding to an organic growth of 1%. The hydraulic attachment tools business achieved solid growth. The rock drilling tools business recorded a lower order intake, which was impacted by product mix and efficiency actions.
Geographically all regions had a positive growth, except North America which had a slight decrease. Europe had the highest growth.
Revenues increased to SEK 2,440 million (2,139), corresponding to an organic growth of 10%. Currency contributed with 3% and acquisitions with 1%. The book to bill ratio was 95%. Europe had the segment's highest revenue share in the quarter.
| Orders received | Revenues | Operating profit | ||
|---|---|---|---|---|
| SEK million, Δ,% |
SEK million, Δ, % |
SEK million, Δ |
Margin, %, Δ, pp |
|
| Q4 2017 | 2,197 | 2,139 | 218 | 10.2 |
| Organic | +1 | +10 | +71 | +2.0 |
| Currency | +3 | +3 | +34 | +1.1 |
| Structure and other | +1 | +1 | +1* | +0.0 |
| Total | +5 | +14 | +106 | +3.1 |
| Q4 2018 | 2,306 | 2,440 | 324 | 13.3 |
*Includes operating profit/loss from acquisitions.
Operating profit was SEK 324 million (218), corresponding to a margin of 13.3% (10.2). The margin was positively affected by organic growth, efficiency actions and currency.
In the quarter, two acquisition agreements were made:
Three new ranges of drum cutters were introduced. The new drum cutters are allowing even higher accuracy and productivity in challenging applications, and narrow trenching. The auger drive units are suitable for challenging soil and soft rock drilling applications. The new models deliver high reliability and productivity for a wide range of excavation and demolition tasks.
LTIFR Work-related lost time injury frequency rate (12 months)
| 2018 | 2017 | |
|---|---|---|
| Q4 and full year | Q4 and full year | |
| Wokrelated lost time injury frequency rate, LTIFR (12 months) |
3.4 | 4.3 |
| Sick leave (%, 12 months) | 2.2 | 2.2 |
| MWh energy from operations/Cost of sales (SEK million, 12 months) |
7.6 | 8.5 |
| Transport CO2 (tonnes)/Cost of sales (SEK million, 12 months)* |
5.6 | 6.2 |
The number of work-related lost time injuries per million working hours (LTIFR), improved compared to the 12-month period ending December 31, 2017. Preventive measures and a continued focus on training and activities contributed to the reduction.
MWh energy from operations/Cost of sales has continued to decrease in the last 12 months from concentration of production to fewer entities in US and China.
CO2 emissions from transport improved compared to the 12-months period ending in December 2017. During 2018, actions have been initiated to reduce CO2 emissions from transportation. Examples of this are combined transport of products and material, reduction in and development of local suppliers substituting imports, and increased pre-planning of orders enabling a higher share of sea shipments instead of air freights.
At year end, the number of employees was 13,847 (12,948). The number of consultants/external workforce was 1,610 (1,397). For comparable units, the total workforce increased by 6.8% from December 31, 2017. The increase of the workforce mainly took place in service. Sick leave continued to stay on a low level.
As part of Epiroc's safety culture, a number of safety commitments that all employees are required to follow have been introduced. The commitments are both about physical and behavioral safety. For example, everyone is responsible to perform a risk assessment before commencing any kind of common work task like welding, assembling, moving equipment etc and report hazardous observations and occurrences. The commitments will be included in trainings.
*Restatement of previous year's Transport CO2 / Cost of sales ratio has been made due to refinement of calculation methods. Previous stated result for Q4 2017 was 5.8. Key ratios for all quarters of 2018 are impacted by this restatement.
Orders received in the full year of 2018 increased to SEK 39,400 million (33,831) corresponding to an organic growth of 13%. Revenues were SEK 38,285 million (31,364), corresponding to 18% organic increase.
| Epiroc Group | ||||||||
|---|---|---|---|---|---|---|---|---|
| Orders received | Revenues | Operating profit | ||||||
| SEK million, Δ, % |
SEK million, Δ, % |
SEK million, Δ |
Margin, %, Δ, pp |
|||||
| 2017 | 33,831 | 31,364 | 5,930 | 18.9 | ||||
| Organic | +13 | +18 | +1,500 | +1.1 | ||||
| Currency | +1 | +1 | +132 | +0.2 | ||||
| Structure and other | +2 | +3 | -177 | -0.9 | ||||
| Total | +16 | +22 | +1,455 | +0.4 | ||||
| 2018 | 39,400 | 38,285 | 7,385 | 19.3 |
Operating profit was SEK 7,385 million (5,930) including costs for the split from Atlas Copco of SEK 328 million and change in provision for share-based long-term incentive programs of SEK -66 million (-163). The operating margin was 19.3% (18.9). Excluding split and incentive program costs, the operating margin was 20.3% (19.4).
Profit before tax was SEK 7,201 million (5,793), corresponding to a margin of 18.8% (18.5). Profit for the period totaled SEK 5,437 million (4,298). Basic earnings per share were SEK 4.50 (3.55). Operating cash flow amounted to SEK 3,884 million (4,610).
On June 18, 2018, Epiroc entered into two credit facility agreements with a group of banks, a revolving credit facility of SEK 4,000 million (not utilized) and a bridge facility of SEK 6,000 million, of which SEK 5,000 million was utilized. The revolving credit facility has a maturity of five years with two one-year extension options. The bridge facility has a maturity of twelve months with two six-month extension options. In addition, Epiroc has been granted a bilateral loan of EUR 100 million from the European Investment Bank with a maturity of four years. In December, SEK 4,000 million, of the utilized bridge facility, was replaced with long-term financing. SEK 2,000 million was refinanced through capital market borrowings with a maturity of five years. SEK 2,000 million was refinanced by a bilateral loan facility with a maturity of five years with two one-year extension options. The remaining SEK 1,000 million of the bridge facility will be replaced in the beginning of 2019.
Martin Hjerpe was appointed Senior Vice President M&A and Strategy, starting March 1, 2019. Martin Hjerpe will be a member of Epiroc's Group Management.
Fordia Group, a Canadian manufacturer of exploration drilling tools was acquired in January 2019. The company has about 250 employees and annual revenues of about CAD 85 million (SEK 580 million).
Noland Drilling Equipment, a US distributor of water well drilling equipment and related parts, services and consumables was acquired in February 2019. The company operates in several states mainly in the southeastern United States.
The Group's and Parent Company's significant risks and uncertainty factors include market and external risks, financial risks, operational and commercial risks, and legal risks. Further information on risks and risk management can be found in the prospectus "Admission to trading of shares in Epiroc AB on Nasdaq Stockholm" published in May 2018. See www.epirocgroup.com/en/investors.
Nacka, February 5, 2019
Epiroc AB
Per Lindberg President and CEO
This report has not been audited.
The consolidated financial statements of the Epiroc Group are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by EU. The accounting principles applied in the preparation of this interim report apply to all periods and comply with the accounting principles presented in the prospectus "Admission to trading of shares in Epiroc AB on Nasdaq Stockholm" in note 1 Significant accounting in the combined financial statements except for the adoption of new standards effective as of January 1, 2018, which comply with the accounting principles presented in note 2 Changes in accounting policies in the combined financial statements. The interim report is prepared in accordance with IAS 34 Interim financial reporting.
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement. Comparative information was not restated. Among other things, IFRS 9 introduced a new model for impairment of financial assets. The purpose of the model is to recognize credit losses earlier than IAS 39. Additionally, the classification of some financial instruments have changed. For Epiroc there were no material effects due to the implementation of IFRS 9.
IFRS 15 Revenue from Contracts with Customers replaces IAS 11 Construction Contracts and IAS 18 Revenue. The standard has been applied by Epiroc Group from January 1, 2018, using the full retrospective method. The same accounting principle for revenue recognition has therefore been applied for all periods presented in the interim report. For further details regarding the effects on the timing of revenue recognition due to the implementation of IFRS 15, see note 2 Changes in accounting policies in the combined financial statements in the prospectus "Admission to trading of shares in Epiroc AB on Nasdaq Stockholm".
| Balance sheet | |||
|---|---|---|---|
| Dec 31, 2017 | Dec 31, 2017 | ||
| SEK million | Before restatement | Restatement | After restatement |
| Deferred tax assets | 407 | 18 | 425 |
| Inventory | 8,272 | 152 | 8,424 |
| Trade and other receivables | 7,633 | 16 | 7,649 |
| Equity | 12,108 | -61 | 12,047 |
| Other liabilities | 3,053 | 247 | 3,300 |
| Income statement | |||
| Q4 2017 | Q4 2017 | ||
| SEK million | Before restatement | Restatement | After restatement |
| Revenue | 31,440 | -76 | 31,364 |
| Cost of sales | -20,157 | 56 | -20,101 |
| Income tax expense | -1,500 | 5 | -1,495 |
IFRS 16 Leases is effective from January 1, 2019 and replaces the existing lease standard IAS 17 Leases and related interpretations. IFRS 16 requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. Lessor accounting is substantially unchanged compared to current accounting under IAS 17. IFRS 16 also requires additional disclosures for both lessee and lessor.
Epiroc Group has during the year performed a detailed analysis of the impact on the financial statements. In transition the modified retrospective approach will be applied. Comparative information will therefore not be restated. At the date of initial application of IFRS 16 the right-of-use asset is measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the statement of financial position immediately before the date of initial application. Thus, there is no impact on the Group's equity. The lease liability is measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate (IBR). Epiroc Group has established the incremental borrowing rate (IBR) at the date of transition based on the different contract currencies and lease terms. Lease contracts for property, equipment, vehicles and machinery used in manufacturing facilities is been recognized in the balance sheet as a non-current asset and financial liability. The main effect is related to Epiroc's property leases. Nonlease components such as cost for maintenance is excluded from the amount of right of use asset and lease liability for the Groups property leases.
The Group has applied the practical expedient that permits not to reassess whether a contract is, or contains, a lease at the date of initial application. The Group also has applied a practical expedient to exclude leases that ends within 12 months of initial application, and leases for which the underlying asset is of low value. Such leases are recognized as an expense on a straight-line basis over the lease term. The Group has leases of certain office equipment (i.e., personal computers, printing and photocopying machines) that are considered of low value. There is no material impact on the Groups income statement.
The lease expenses for previous operating leases in operating profit has been replaced by depreciation on the right of use asset and interest expense on the lease liability, the latter is presented in net financial items. The timing of current cash flows are not impacted by the new standard. However, the amortization portion of Epiroc's lease payment will be reported as a financing cash flow instead of operating cash flow. Lease payments for low value and short term leases will continue to be reported as operating cash flows together with interest payments on the lease liability. The expected effect on relevant lines are presented in the table below.
| SEK billion | |
|---|---|
| Assets | |
| Right-of-use assets | 2.0 |
| Liabilities | |
| Lease liabilities, interest bearing | 2.0 |
| Net impact on equity | - |
The term "combined financial statements" refers to financial information prepared by aggregating financial information for entities under common control that do not meet the definition of a group according to IFRS 10. The formation of the Epiroc Group comprised transactions between entities that are under common control. Since these transactions are not covered by any IFRS standard, a suitable accounting principle has been applied in accordance with IAS 8. A suitable and established method is to use the previous carrying amount (predecessor basis of accounting), which is the principle that the Epiroc Group has applied.
The accounting principles are also available in the prospectus "Admission to trading of shares in Epiroc AB on Nasdaq Stockholm" published in May 2018. See www.epirocgroup.com/en/investors.
The interim financial statements of Epiroc AB have been prepared in accordance with the Swedish Annual Accounts Act and the accounting standard RFR 2, accounting for legal entities. The most recent annual financial statements of Epiroc AB have been prepared in accordance with the Annual Accounts Act and the standard from the Swedish Accounting Standards Board BFNAR 2012:1 Annual report and consolidated accounts (K3). The transition did not have an impact on the parent company.
Participations in subsidiaries are accounted for by the Parent Company at historical cost. The carrying amounts of participations in subsidiaries for the group are reviewed for impairment in accordance with IAS 36, Impairment of Assets. Transaction costs incurred in connection with a business combination are accounted for by the Parent Company as part of the acquisition costs and are not expensed.
Defined benefit plans are not accounted for in accordance with IAS 19. In the Parent Company defined benefit plans are accounted for according to the Swedish law regarding pensions, "Tryggandelagen" and regulations issued by the Swedish Financial Supervisory Board. The primary differences as compared to IAS 19 are the way discount rates are fixed, that the calculation of defined benefit obligations is based on current salary levels, without consideration of future salary increases and that all actuarial gains and losses are included in profit or loss as they occur.
Financial guarantees issued by the Parent Company for the benefit of subsidiaries are not valued at fair value. They are reported as contingent liabilities, unless it becomes probable that the guarantees will lead to payments. In such case, provisions will be recorded.
In Sweden, Group contributions are deductible for tax purposes but shareholders' contributions are not. Group contributions are recognized as appropriations in the income statement. Shareholders' contributions are recognized as an increase of Shares in Group companies and tested for impairment.
| 2018 | 2017 | 2018 | 2017 | |
|---|---|---|---|---|
| SEK million | Q4 | Q4 | Full year | Full year |
| Revenues | 10,558 | 8,464 | 38,285 | 31,364 |
| Cost of sales | -6,721 | -5,563 | -24,317 | -20,101 |
| Gross profit | 3,837 | 2,901 | 13,968 | 11,263 |
| Marketing expenses | -668 | -597 | -2,574 | -2,280 |
| Administrative expenses | -621 | -569 | -2,589 | -2,121 |
| Research and development expenses | -281 | -232 | -977 | -795 |
| Other operating income and expenses | -105 | 25 | -443 | -137 |
| Operating profit | 2,162 | 1,528 | 7,385 | 5,930 |
| Net financial items | -46 | -85 | -184 | -137 |
| Profit before tax | 2,116 | 1,443 | 7,201 | 5,793 |
| Income tax expense | -493 | -339 | -1,764 | -1,495 |
| Profit for the period | 1,623 | 1,104 | 5,437 | 4,298 |
| Profit attributable to | ||||
| - owners of the parent | 1,622 | 1,104 | 5,430 | 4,298 |
| - non-controlling interests | 1 | 0 | 7 | 0 |
| 2018 | 2017 | 2018 | 2017 |
|---|---|---|---|
| Q4 | Q4 | Full year Full year | |
| 1.35 | 0.91 | 4.50 | 3.55 |
| 1.35 | - | 4.49 | - |
| 1,201 | 1,212 | 1,206 | 1,212 |
| 1,201 | - | 1,206 | - |
| 20.5 | 18.1 | 19.3 | 18.9 |
| 15.63 | 9.94 | ||
| 32.0 | 27.4 | ||
| 33.2 | 29.1 | ||
| 0.14 | 0.75 | ||
| 6.4 | 45.0 | ||
| 52.1 | 43.7 | ||
| 13,847 | 12,948 | ||
| SEK million | 2018 Q4 |
2017 Q4 |
2018 Full year |
2017 Full year |
|---|---|---|---|---|
| Profit for the period | 1,623 | 1,104 | 5,437 | 4,298 |
| Other comprehensive income | ||||
| Items that will not be reclassified to profit or loss | ||||
| Remeasurements of defined benefit pension plans | -93 | 4 | -122 | 65 |
| Income tax relating to items that will not be reclassified | 20 | 0 | 25 | -14 |
| Total items that will not be reclassified to profit or loss | -73 | 4 | -97 | 51 |
| Items that may be reclassified subsequently to profit or loss | ||||
| Translation differences on foreign operations | 79 | 291 | 8 | -756 |
| Cash flow hedges | 22 | - | 22 | - |
| Income tax relating to items that may be reclassified | -5 | - | -5 | - |
| Total items that may be reclassified subsequently to profit or loss | 96 | 291 | 25 | -756 |
| Other comprehensive income for the period, net of tax | 23 | 295 | -72 | -705 |
| Total comprehensive income for the period | 1,646 | 1,399 | 5,365 | 3,593 |
| Total comprehensive income attributable to | ||||
| - owners of the parent | 1,643 | 1,400 | 5,358 | 3,594 |
| - non-controlling interests | 3 | -1 | 7 | -1 |
| 2018 | 2017 | |
|---|---|---|
| SEK million | Dec 31 | Dec 31 |
| Intangible assets | 3,620 | 3,121 |
| Rental equipment | 1,233 | 1,215 |
| Other property, plant and equipment | 2,473 | 2,271 |
| Investments in associates | 208 | 94 |
| Financial assets and other receivables | 1,119 | 1,101 |
| Deferred tax assets | 543 | 425 |
| Total non-current assets | 9,196 | 8,227 |
| Inventories | 10,516 | 8,440 |
| Trade receivables | 8,005 | 6,271 |
| Other receivables | 1,289 | 1,362 |
| Income tax receivables | 333 | 287 |
| Financial assets | 944 | 1,152 |
| Cash and cash equivalents | 5,872 | 1,808 |
| Total current assets | 26,959 | 19,320 |
| Total assets | 36,155 | 27,547 |
| Share capital | 500 | 21 |
| Retained earnings | 18,297 | 12,020 |
| Total equity attributable to equity holders of the parent | 18,797 | 12,041 |
| Non-controlling interest | 50 | 6 |
| Total equity | 18,847 | 12,047 |
| Interest bearing loans | 5,095 | 2,250 |
| Post-employment benefits | 283 | 181 |
| Other liabilities and provisions | 412 | 289 |
| Total non-current liabilities | 5,790 | 2,720 |
| Interest bearing loans | 1,702 | 4,808 |
| Trade payables | 4,711 | 3,966 |
| Income tax liabilities | 605 | 436 |
| Other liabilities and provisions | 4,500 | 3,570 |
| Total current liabilities | 11,518 | 12,780 |
| Total equity and liabilities | 36,155 | 27,547 |
The carrying value and fair value of the Group's outstanding derivatives and borrowings are shown in the tables below. Fair values are calculated based on market rates and present value of future cash flows. The fair values of bonds are based on level 1 and the fair values of derivatives and other loans are based on level 2 in the fair value hierarchy. Compared to 2017, no transfers have been made between different levels in the fair value hierarchy for derivatives and borrowings and no significant changes have been made to valuation techniques, inputs or assumptions.
| 2018 | 2017 | |
|---|---|---|
| SEK million | Dec 31 | Dec 31 |
| Non-current assets and liabilities | ||
| Assets | 0 | - |
| Liabilities | - | - |
| Current assets and liabilities | ||
| Assets | 108 | 193 |
| Liabilities | 7 | 21 |
| 2018 | 2018 | 2017 | 2017 | |
|---|---|---|---|---|
| SEK million | Dec 31 | Dec 31 | Dec 31 | Dec 31 |
| Carrying value | Fair value | Carrying value | Fair value | |
| Bonds | 1,996 | 2,010 | - | - |
| Other loans | 4,801 | 4,852 | 7,058 | 7,058 |
| 6,797 | 6,862 | 7,058 | 7,058 |
| Equity attributable to | |||
|---|---|---|---|
| SEK million | owners of the parent |
non-controlling interests |
Total equity |
| Opening balance, January 1, 2018 | 12,041 | 6 | 12,047 |
| Impact of change in accounting policy | 1 | - | 1 |
| Restated balance January 1, 2018 | 12,042 | 6 | 12,048 |
| Changes in equity for the period | |||
| Total comprehensive income for the period | 5,358 | 7 | 5,365 |
| Transactions with shareholders | 2,693 | 37 | 2,730 |
| Acquisition and divestment of own shares | -1,308 | - | -1,308 |
| Share-based payments, equity settled | 12 | - | 12 |
| Closing balance, December 31, 2018 | 18,797 | 50 | 18,847 |
| Opening balance, January 1, 2017 | 15,813 | - | 15,813 |
| Impact of change in accounting policy | -47 | - | -47 |
| Restated balance January 1, 2017 | 15,766 | - | 15,766 |
| Changes in equity for the period | |||
| Total comprehensive income for the period | 3,594 | -1 | 3,593 |
| Dividends to Atlas Copco | -5,178 | - | -5,178 |
| Transactions with shareholders | -2,096 | 7 | -2,089 |
| Share-based payments, equity settled | -45 | - | -45 |
| Closing balance, December 31, 2017 | 12,041 | 6 | 12,047 |
Transaction with shareholders represents the shareholder contribution from Atlas Copco of SEK 4.4 billion, offset by the acquisition of subsidiaries owned by Atlas Copco of SEK 1.6 billion and other cash transfers between Atlas Copco and Epiroc, totaling SEK 2.7 billion net as cash transfer between Epiroc and Atlas Copco.
| 2018 | 2017 | 2018 | 2017 | |
|---|---|---|---|---|
| SEK million | Q4 | Q4 | Full year | Full year |
| Cash flow from operating activities | ||||
| Operating profit | 2,162 | 1,528 | 7,385 | 5,930 |
| Depreciation, amortization and impairment | 350 | 341 | 1,369 | 1,254 |
| Capital gain/loss and other non-cash items | -81 | -112 | 101 | -134 |
| Net financial items received/paid | -24 | -279 | -483 | -344 |
| Taxes paid | -326 | -180 | -1,747 | -666 |
| Pension funding and payment of pension to employees | 4 | -13 | -52 | -90 |
| Change in working capital | 415 | -157 | -1,875 | -403 |
| Investments in rental equipment | -238 | -243 | -896 | -793 |
| Sale of rental equipment | 225 | 131 | 522 | 422 |
| Net cash from operating activities | 2,487 | 1,016 | 4,324 | 5,176 |
| Cash flow from investing activities | ||||
| Investments in property, plant and equipment | -151 | -115 | -577 | -424 |
| Sale of property, plant and equipment | 2 | 39 | 26 | 70 |
| Investments in intangible assets | -146 | -73 | -459 | -289 |
| Acquisition of subsidiaries and associated companies | -64 | - | -546 | -137 |
| Other investments, net | 118 | 3,011 | 219 | 6,323 |
| Net cash from investing activities | -241 | 2,862 | -1,337 | 5,543 |
| Cash flow from financing activities | ||||
| Dividend to/from Atlas Copco | - | -1,222 | - | -5,178 |
| Acquisition of non-controlling interest | - | - | - | 6 |
| Sale/ Repurchase own shares | -207 | - | -1,307 | - |
| Change in interest-bearing liabilities | -110 | 56 | 2,367 | -889 |
| Net cash from financing activities | -317 | -1,166 | 1,060 | -6,061 |
| Net cash flow for the period | 1,929 | 2,712 | 4,047 | 4,658 |
| Cash and cash equivalents, beginning of the period | 3,949 | 728 | 1,808 | 481 |
| Exchange differences in cash and cash equivalents | -6 | 8 | 17 | -39 |
| Other cash flow from transactions with shareholders | - | -1,640 | - | -3,292 |
| Cash and cash equivalents, end of the period | 5,872 | 1,808 | 5,872 | 1,808 |
| Operating cash flow | ||||
| Net cash flow from operating activities | 2,487 | 1,016 | 4,324 | 5,176 |
| Net cash from investing activities | -241 | 2,862 | -1,337 | 5,543 |
| Acquisition of subsidiaries and associated companies | 64 | - | 546 | 137 |
| Other adjustments | -68** | -2,934* | 351** | -6,246* |
| Operating cash flow | 2,242 | 944 | 3,884 | 4,610 |
*Mainly changes in cash-pool with Atlas Copco prior to the split and currency hedges of loans.
**Mainly currency hedges of loans and divestment of Payment Solutions portfolios.
Epiroc has two reporting segments, Equipment & Service and Tools & Attachments. In addition, Epiroc reports common group functions, which includes Payment Solutions, offering financing to customers, Group management and common functions, as well as eliminations. Payment Solutions receives payments from credit arrangements, for example financial leases, which is reported as financial income. Payment Solutions also has a rental fleet generating operating lease payments, which are reported as revenue.
| Orders received | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2017 | 2018 | 2018 | |||||||
| SEK million | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | Q3 | Q4 | Full year |
| Equipment & Service | 6,200 | 6,323 | 6,263 | 5,788 | 24,574 | 7,442 | 7,947 | 7,190 | 7,116 | 29,695 |
| Equipment | 3,147 | 3,142 | 3,281 | 2,676 | 12,246 | 4,054 | 4,234 | 3,601 | 3,355 | 15,244 |
| Service | 3,053 | 3,181 | 2,982 | 3,112 | 12,328 | 3,388 | 3,713 | 3,589 | 3,761 | 14,451 |
| Tools & Attachments | 2,341 | 2,270 | 2,239 | 2,197 | 9,047 | 2,550 | 2,470 | 2,285 | 2,306 | 9,611 |
| Common group functions | -21 | 69 | 89 | 73 | 210 | 44 | 66 | -62 | 46 | 94 |
| Epiroc Group | 8,520 | 8,662 | 8,591 | 8,058 | 33,831 | 10,036 | 10,483 | 9,413 | 9,468 | 39,400 |
| Revenues | 2017 | 2017 | 2018 | 2018 | ||||||
| SEK million | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | Q3 | Q4 | Full year |
| Equipment & Service | 5,220 | 5,495 | 5,406 | 6,262 | 22,383 | 5,943 | 7,325 | 7,178 | 8,094 | 28,540 |
| Equipment | 2,219 | 2,469 | 2,414 | 3,174 | 10,276 | 2,678 | 3,640 | 3,570 | 4,350 | 14,238 |
| Service | 3,001 | 3,026 | 2,992 | 3,088 | 12,107 | 3,265 | 3,685 | 3,608 | 3,744 | 14,302 |
| Tools & Attachments | 2,161 | 2,297 | 2,141 | 2,139 | 8,738 | 2,245 | 2,452 | 2,382 | 2,440 | 9,519 |
| Common group functions | 30 | 87 | 63 | 63 | 243 | 45 | 66 | 91 | 24 | 226 |
| Epiroc Group | 7,411 | 7,879 | 7,610 | 8,464 | 31,364 | 8,233 | 9,843 | 9,651 | 10,558 | 38,285 |
| Operating profit and profit before tax | ||||||||||
| 2017 | 2017 | 2018 | 2018 | |||||||
| SEK million | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | Q3 | Q4 | Full year |
| Equipment & Service | 1,166 | 1,242 | 1,261 | 1,438 | 5,107 | 1,364 | 1,747 | 1,764 | 1,876 | 6,751 |
| Tools & Attachments | 321 | 328 | 279 | 218 | 1,146 | 287 | 304 | 324 | 324 | 1,239 |
| Common group functions | -73 | -102 | -20 | -128 | -323 | -136 | -241 | -190 | -38 | -605 |
| Operating profit | 1,414 | 1,468 | 1,520 | 1,528 | 5,930 | 1,515 | 1,810 | 1,898 | 2,162 | 7,385 |
| Net financial items | -23 | -10 | -19 | -85 | -137 | -57 | -44 | -37 | -46 | -184 |
| Profit before tax | 1,391 | 1,458 | 1,501 | 1,443 | 5,793 | 1,458 | 1,766 | 1,861 | 2,116 | 7,201 |
| Operating margin | ||||||||||
| 2017 | 2017 | 2018 | 2018 | |||||||
| SEK million | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | Q3 | Q4 | Full year |
| Equipment & Service | 22.3% | 22.6% | 23.3% | 23.0% | 22.8% | 22.9% | 23.9% | 24.6% | 23.2% | 23.7% |
| Tools & Attachments | 14.8% | 14.3% | 13.0% | 10.2% | 13.1% | 12.8% | 12.4% | 13.6% | 13.3% | 13.0% |
| Epiroc Group | 19.1% | 18.6% | 20.0% | 18.1% | 18.9% | 18.4% | 18.4% | 19.7% | 20.5% | 19.3% |
| Split and incentive program costs* | ||||||||||
| 2017 | 2017 | 2018 | 2018 | |||||||
| SEK million | Q1 | Q2 | Q3 | Q4 | Full year | Q1 | Q2 | Q3 | Q4 | Full year |
| Change in provision for share based long-term incentive |
||||||||||
| programs | -45 | -53 | -15 | -50 | -163 | - | -77 | -56 | 67 | -66 |
| Costs for split from Atlas Copco | - | - | - | - | - | -95 | -104 | -70 | -59 | -328 |
| Epiroc Group | -45 | -53 | -15 | -50 | -163 | -95 | -181 | -126 | 8 | -394 |
*Split and incentive program costs are reported in common group functions. Incentive program costs are reported as administrative expenses.
| Geographical distribution of orders received | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK million | 2017 | 2017 | 2018 | 2018 | |||||||||
| % currency adjusted | Q1 | Q2 | Q3 | Q4 | Full year % | Q1 | Q2 | Q3 | Q4 | % | Full year % | ||
| Epiroc group | 8,520 | 8,662 | 8,591 | 8,058 | 33,831 | +21 | 10,036 | 10,483 | 9,413 | 9,468 | +15 | 39,400 | +16 |
| North America | 1,967 | 2,092 | 1,897 | 1,657 | 7,613 | +19 | 2,176 | 2,076 | 2,180 | 2,379 | +36 | 8,812 | +14 |
| South America | 1,167 | 1,189 | 1,105 | 1,262 | 4,723 | +23 | 1,488 | 1,844 | 1,236 | 1,657 | +29 | 6,225 | +31 |
| Europe | 2,246 | 2,190 | 1,937 | 2,031 | 8,404 | +21 | 2,488 | 2,503 | 2,388 | 1,969 | -4 | 9,349 | +11 |
| Africa/Middle East | 1,033 | 990 | 1,339 | 1,220 | 4,582 | +14 | 1,478 | 1,518 | 1,191 | 1,260 | +0 | 5,446 | +17 |
| Asia/Australia | 2,107 | 2,201 | 2,313 | 1,888 | 8,509 | +25 | 2,406 | 2,542 | 2,418 | 2,203 | +16 | 9,568 | +13 |
| Equipment & | |||||||||||||
| Service | 6,200 | 6,323 | 6,263 | 5,788 | 24,574 | +25 | 7,442 | 7,947 | 7,190 | 7,116 | +20 | 29,695 | +20 |
| North America | 1,371 | 1,349 | 1,179 | 1,008 | 4,907 | +25 | 1,426 | 1,385 | 1,572 | 1,709 | +61 | 6,093 | +22 |
| South America | 928 | 1,015 | 896 | 1,062 | 3,901 | +25 | 1,255 | 1,633 | 1,023 | 1,449 | +34 | 5,360 | +36 |
| Europe | 1,518 | 1,498 | 1,280 | 1,368 | 5,664 | +25 | 1,662 | 1,765 | 1,790 | 1,275 | -7 | 6,491 | +15 |
| Africa/Middle East | 690 | 675 | 983 | 881 | 3,229 | +18 | 1,127 | 1,056 | 811 | 906 | +0 | 3,899 | +19 |
| Asia/Australia | 1,693 | 1,786 | 1,925 | 1,469 | 6,873 | +28 | 1,972 | 2,108 | 1,994 | 1,777 | +20 | 7,852 | +15 |
| Tools & | |||||||||||||
| Attachments | 2,341 | 2,270 | 2,239 | 2,197 | 9,047 | +12 | 2,550 | 2,470 | 2,285 | 2,306 | +2 | 9,611 | +5 |
| North America | 646 | 701 | 623 | 604 | 2,574 | +10 | 737 | 662 | 689 | 634 | -2 | 2,721 | +4 |
| South America | 239 | 174 | 216 | 201 | 830 | +13 | 232 | 211 | 213 | 209 | +2 | 865 | +5 |
| Europe | 709 | 677 | 646 | 641 | 2,673 | +14 | 804 | 715 | 598 | 691 | +7 | 2,807 | +4 |
| Africa/Middle East | 343 | 315 | 358 | 339 | 1,355 | +5 | 350 | 462 | 380 | 354 | +1 | 1,547 | +12 |
| Asia/Australia | 404 | 403 | 396 | 412 | 1,615 | +18 | 427 | 420 | 405 | 418 | +0 | 1,671 | +4 |
| Geographical distribution of revenues | |||||||||||||
| SEK million | 2017 | 2017 | 2018 | 2018 | |||||||||
| % currency adjusted | Q1 | Q2 | Q3 | Q4 | Full year % | Q1 | Q2 | Q3 | Q4 | % | Full year % | ||
| Epiroc group | 7,411 | 7,879 | 7,610 | 8,464 | 31,364 | +14 | 8,233 | 9,843 | 9,651 | 10,558 | +21 | 38,285 | +20 |
| North America | 1,806 | 1,722 | 1,785 | 1,823 | 7,136 | +14 | 1,888 | 2,118 | 2,141 | 2,300 | +19 | 8,447 | +16 |
| South America | 1,100 | 1,104 | 969 | 1,103 | 4,276 | +18 | 1,024 | 1,199 | 1,230 | 1,573 | +39 | 5,026 | +16 |
| Europe | 1,758 | 2,109 | 1,977 | 2,148 | 7,992 | +14 | 1,864 | 2,471 | 2,224 | 2,545 | +17 | 9,104 | +13 |
| Africa/Middle East | 997 | 1,003 | 1,037 | 1,048 | 4,085 | +2 | 1,103 | 1,350 | 1,444 | 1,456 | +34 | 5,353 | +28 |
| Asia/Australia | 1,750 | 1,941 | 1,842 | 2,342 | 7,875 | +19 | 2,354 | 2,705 | 2,612 | 2,684 | +12 | 10,355 | +31 |
| Equipment & | |||||||||||||
| Service | 5,220 | 5,495 | 5,406 | 6,262 | 22,383 | +17 | 5,943 | 7,325 | 7,178 | 8,094 | +21 | 28,540 | +21 |
| North America | 1,126 | 958 | 1,084 | 1,189 | 4,357 | +17 | 1,173 | 1,410 | 1,412 | 1,644 | +26 | 5,639 | +23 |
| South America | 827 | 880 | 745 | 859 | 3,311 | +21 | 813 | 981 | 1,020 | 1,361 | +49 | 4,175 | +18 |
| Europe | 1,323 | 1,564 | 1,484 | 1,710 | 6,081 | +20 | 1,235 | 1,696 | 1,488 | 1,807 | +0 | 6,225 | -2 |
| Africa/Middle East | 615 | 647 | 691 | 685 | 2,638 | +1 | 766 | 972 | 1,054 | 1,031 | +40 | 3,823 | +36 |
| Asia/Australia | 1,329 | 1,446 | 1,402 | 1,819 | 5,996 | +21 | 1,956 | 2,266 | 2,204 | 2,251 | +17 | 8,678 | +39 |
| Tools & | |||||||||||||
| Attachments | 2,161 | 2,297 | 2,141 | 2,139 | 8,738 | +9 | 2,245 | 2,452 | 2,382 | 2,440 | +10 | 9,519 | +6 |
| North America | 649 | 683 | 635 | 546 | 2,513 | +11 | 700 | 681 | 703 | 641 | +9 | 2,725 | +5 |
| South America | 189 | 184 | 196 | 213 | 782 | +7 | 211 | 218 | 210 | 212 | -3 | 851 | +6 |
| Europe | 638 | 694 | 641 | 620 | 2,593 | +8 | 607 | 750 | 688 | 738 | +17 | 2,783 | +5 |
| Africa/Middle East Asia/Australia |
319 366 |
324 412 |
320 349 |
334 426 |
1,297 1,553 |
+3 +12 |
337 390 |
378 425 |
390 391 |
425 424 |
+22 -3 |
1,530 1,630 |
+13 +4 |
| 2018 | 2017 | 2018 | 2017 | |
|---|---|---|---|---|
| SEK million | Q4 | Q4 | Full year | Full year |
| Administrative expenses | -26 | -8 | -143 | -8 |
| Marketing expenses | -4 | - | -13 | - |
| Other operating income and expenses | -9 | -4 | -43 | -6 |
| Operating profit/loss | -39 | -12 | -199 | -14 |
| Financial income and expenses | -8 | 0 | -17 | 0 |
| Appropriations | 4,424 | 14 | 4,424 | 14 |
| Profit/loss before tax | 4,377 | 2 | 4,208 | 0 |
| Income tax | -963 | 0 | -927 | 0 |
| Profit/loss for the period | 3,414 | 2 | 3,281 | 0 |
| 2018 | 2017 | |
|---|---|---|
| SEK million | Dec 31 | Dec 31 |
| Total non-current assets | 50,823 | 45,574 |
| Total current assets | 5,553 | 4,555 |
| Total assets | 56,376 | 50,129 |
| Total restricted equity | 503 | 24 |
| Total non-restricted equity | 49,553 | 43,886 |
| Total equity | 50,056 | 43,910 |
| Total provisions | 167 | 0 |
| Total non-current liabilities | 5,023 | - |
| Total current liabilities | 1,130 | 6,219 |
| Total equity and liabilities | 56,376 | 50,129 |
| Assets pledged | 4 | 0 |
| Contingent liabilities | 81 | - |
| Revenues | Number of | |||
|---|---|---|---|---|
| Date | Company | Segment | SEK million* | employees* |
| 2019 Feb 1 | Noland Drilling Equipment | Equipment & Service | 8 | |
| 2019 Jan 3 | Fordia | Tools & Attachments | 580 | 250 |
| 2018 Nov 2 | Sautec | Equipment & Service | 6 | |
| 2018 Oct 30 | ASI Mining (34%)** | Equipment & Service | 55 | |
| 2018 Feb 1 | Hy-Performance Fluid Power | Equipment & Service | 50 | 26 |
| 2018 Jan 3 | Rock Drill Services Australia | Equipment & Service | 90 | 37 |
| 2018 Jan 3 | Cate Drilling Solutions | Equipment & Service | 35 | |
| 2018 Jan 2 | Renegade Drilling Supplies | Tools & Attachments | 22 | |
| 2017 Jul 4 | Mobilaris MCE AB (34%)** | Equipment & Service | 30 | |
| 2017 Feb 2 | Erkat | Tools & Attachments | 110 | 38 |
*Annual revenues and number of employees at time of acquisition. For distributors, revenues are not disclosed.
**Included as an associated company
During 2018 there have been transactions between Atlas Copco Group and Epiroc Group related to lending and allocation of net debt between the groups. These transactions have been classified as transactions with shareholders and been carried out via equity and are presented in the consolidated statement of changes in equity. On March 31, 2018 Epiroc AB received an unconditional shareholder's contribution of SEK 4,150 million from Atlas Copco AB. As of April 26, 2018 the foreign exchange derivatives between Epiroc Treasury AB and Atlas Copco AB matured and was cash settled. On June 18, 2018 Epiroc AB repaid the borrowing of SEK 3,752 million to Atlas Copco AB. Receivables and payables between Atlas Copco and Epiroc from the period when Atlas Copco AB was the parent company, have been included in the balance sheet as external balances. The balances between Atlas Copco and Epiroc are not material. Since the distribution of the Epiroc shares from Atlas Copco on June 18, 2018, Atlas Copco is no longer a related party.
In the combined financial statements for the 2017 accounts receivables and accounts payables include receivables and payables that will be collected and paid by another Group entity than the entity included in the combined financial statements.
The Board of Directors of Epiroc has been authorized to purchase, transfer and sell own shares in relation to Epiroc's performance based personnel option plans. More information regarding the option plans can be found in the prospectus "Admission to trading of shares in Epiroc AB on Nasdaq Stockholm" published in May 2018. See www.epirocgroup.com/en/investors.
In the fourth quarter, Epiroc purchased 2,650,000 shares class A at SEK 208,179,228 and divested 4,002 shares class A at SEK 251,655 in accordance with mandates granted. As of December 31, 2018, Epiroc AB held 13,991,877 shares class A.
The total numbers of issued Epiroc shares as of December 31, 2018 were 1,213,738,703 shares, whereof 823,765,854 shares class A and 389,972,849 shares class B.
Financial definitions can be found on Epiroc's website www.epirocgroup.com/en/investors. Non-IFRS measures are also presented in the report since they are considered to be important supplemental measures of the company's performance. Further information on how these measures have been calculated can also be found on www.epirocgroup.com/en/investors.
Analysts and investors: Ingrid Östhols, Vice President Investor Relations E-mail: [email protected] Tel: +46 10 755 0106
Media: Ola Kinnander, Media Relations Manager E-mail: [email protected] Tel: +46 70 347 2455
March 13, 2019 April 30, 2019 May 9, 2019 July 19, 2019 October 25, 2019 January 31, 2020 Annual report 2018 (available on www.epirocgroup.com) Q1 2019 Annual General Meeting 2019 Q2 2019 Q3 2019 Q4 2019
This information is information that Epiroc AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 13:00 CET on February 5, 2019.
Epiroc is a leading productivity partner for the mining and infrastructure industries. With cutting-edge technology, Epiroc develops and produces innovative, safe and sustainable drill rigs, rock excavation and construction equipment and tools. The company also provides world-class service solutions for automation and interoperability. The company is based in Stockholm, Sweden, and had revenues of SEK 38 billion in 2018 and has more than 14,000 passionate employees supporting and collaborating with customers in more than 150 countries. Learn more at www.epirocgroup.com.
Epiroc AB (publ) Reg. No. 556041-2149 Box 4015 SE-131 04 Nacka Sweden Tel: +46 10 755 0000 www.epirocgroup.com
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