Interim report Q1 2020 April 23, 2020 Helena Hedblom, President - PowerPoint PPT Presentation

Interim report Q1 2020 April 23, 2020 Helena Hedblom, President and CEO Anders Lindén, CFO

Direction forward Innovation Aftermarket Operational excellence Sustainability 2

Limited effect on Q1 results from Covid-19 Key highlights Q1 2020 • Impact on operations • High customer activity – Continued growth in service – Stable equipment demand, sequentially – Order intake somewhat higher than in Q4 • Lower revenues – Negative impact from Covid-19 • Improved underlying margin • New members of Group Management and a more efficient working structure • Challenging Q2 • Efficiency actions initiated 3

Key financials Q1 2020 Orders received, MSEK and change, % • Order intake declined 3%, -4% organic -3% 10 200 10 063 • Revenues declined 7%, -8% organic 10 000 -4% • Operating profit at MSEK 1 932 9 772 9 800 0% +1% – Items affecting comparability of MSEK +21 (costs related to efficiency improvement -44 and LTI +65) 0 – Positive contribution from currency Q1 2019 Organic Currency Structure & Other Q1 2020 Revenues, operating profit and margin • Margin improved to 21.2% (19.7) 12 000 50 10 558 10 626 – 10 280 Adjusted margin 20.9% (20.3) 10 158 9 843 9 785 9 651 10 000 9 134 40 8 233 – Margin supported by currency, but diluted by lower 8 000 30 revenues 21.7 21.3 6 000 21.0 20.7 20.9 20.4 20.3 20.2 19.6 20 21.3 4 000 21.2 • Operating cash flow at MSEK 1 532 (472) 20.5 19.7 19.7 19.6 19.0 18.4 18.4 10 2 000 2 263 2 162 2 016 • Board proposes to the AGM to decide only on 1 898 1 930 1 927 1 932 1 810 1 515 0 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 the first installment of the dividend of SEK 1.20 Operating margin, % Operating Profit, MSEK per share Revenues, MSEK Adj. Operating margin, % 4

Covid-19 Current status Impact Equipment Impact Aftermarket • Operational, but with negative impact on • Our sales, service and distribution in the field supply of components are operational in most places, with restrictions • Equipment manufacturing closed in India • Consumables manufacturing closed in India, and Italy South Africa and Canada • Challenges with commissioning • Some mines have temporarily stopped or reduced activity • Construction customers also impacted 5

Efficiency improvements Q1 2020 Actions with short-term impact • Reduce additional workforce and consultants • Work-time reductions and temporary layoffs • Reduce expenses Actions with long-term impact • Efficiency initiatives with expected annual savings of more than MSEK 500 • Consolidation of manufacturing • Supply chain program 6

Increased resilience through the aftermarket Q1 2020 • Solid development in service Aftermarket revenues, MSEK – Service products 30 000 26 987 26 829 • Rock drilling tools affected by optimization of the +6% product offering 25 000 23 822 21 348 Revenues in the quarter 19 895 20 000 19 113 Equipment Service Tools & Attachments 15 000 27% 28% 10 000 72% Aftermarket (66) 5 000 45% 0 2015 2016 2017 2018 2019 March 2020 7 12 months figures.

Leading the way in innovation Q1 2020 • Epiroc, in partnership with automation specialist ASI Mining, to convert Roy Hill’s haul trucks to autonomous use • HATCON – remote monitoring for hydraulic attachments using MyEpiroc platform • Epsilon premium tricone bits • DM30 II SP – Rotary blasthole drill DM30 II SP – Rotary blasthole drill 8

New long-term sustainability goals 2030 goals • Halve CO 2 emissions • Health and safety • Diversity and inclusion – – – No work-related injuries From operations Double the number of women in operational roles – From transport • Code of Conduct – From our equipment 9

Financials

Profit impacted by items affecting comparability Q1 2020 Operating profit and margin 4 000 24 21.7 21.3 21.0 20.9 20.7 20.4 20.3 20.2 3 500 21 19.6 21.3 21.2 20.5 19.7 19.7 19.6 3 000 18 19.0 18.4 18.4 2 500 2 302 15 2 154 2 160 39 2 131 1 991 2 024 1 989 115 1 911 233 2 000 12 126 59 181 1 610 95 1 500 9 2 263 2 162 1 000 2 016 6 1 930 1 927 1 932 1 898 1 810 1 515 500 3 0 -8 0 -21 -3 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Operating margin, % Items affecting comparability*, MSEK Operating profit, MSEK Operating margin, adj., %* * Q1 2018-Q4 2018 includes costs related to the split from Atlas Copco. * Q1 2018-Q4 2019 includes change in provision for long-term incentive plans. * Q1 2020 includes items affecting comparability of MSEK +21. Costs of efficiency actions of MSEK -44 and change in provision for long-term incentive plans of MSEK +65. 11

Epiroc Group – Profit bridge Looking into the numbers Margin: 19.7% Margin: 21.2% Adj. margin: 20.9% -1% 2 000 1 930 1 932 44 65 1 911 +91 +1.1 pp -222 1 800 -0.9 pp +133 +1.3 pp 1 600 0 Q1 2019 Organic Currency Structure and other Q1 2020 Items affecting LTI Adjusted operarting profit comparability, excl. LTI “Structure and other” includes operating profit/loss from acquisitions and divestments MSEK +1, costs of MSEK -44 related to efficiency improvements, split costs of MSEK +10 = -7-(-17), and change in provision for long-term incentive programs MSEK +124 = +65-(- 59). “Items affecting comparability” includes change in provision for long -term incentive programs MSEK +65 and costs of MSEK -44 related to efficiency improvements. 12

Segment: Equipment & Service Q1 2020 Orders received, MSEK and change, % • Orders received -3% organic 7 400 -2% 7 300 • Service orders +12% organic 7 248 7 200 – High customer activity -3% 7 101 0% 7 100 +1% • Equipment orders -17% organic – Investment decisions postponed 0 Q1 2019 Organic Currency Structure & Other Q1 2020 • Revenues -8% organic Orders received, revenues and operating margin • Operating profit at MSEK 1 595, including costs 10 000 40 7 325 7 178 8 094 7 677 35 related to efficiency improvements of MSEK -34 7 947 7 702 7 740 7 334 7 442 8 000 7 248 7 190 7 116 7 115 7 101 6 874 30 6 710 6 579 • Margin at 24.2% (24.2) 5 943 25 6 000 26.3 25.6 24.6 24.2 24.2 23.9 23.9 23.2 20 22.9 – Supported by currency and mix 4 000 15 – Negatively impacted by lower revenue volumes and 10 2 000 5 costs related to efficiency improvements 0 0 – Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Adjusted margin 24.8% Operating margin, % Order intake, MSEK Revenues, MSEK 13

Equipment & Service – Profit bridge Looking into the numbers Margin: 24.2% Margin: 24.2% Adj. margin: 24.8% 1 800 -5% 1 719 1 700 1 629 -185 -33 1 595 -0.8 pp 34 1 600 +94 -0.5 pp +1.3 pp 1 500 1 400 0 Q1 2019 Organic Currency Structure Q1 2020 Items affecting Adjusted and other comparability operating profit 14

Segment: Tools & Attachments Q1 2020 Orders received, MSEK and change, % • Orders received -7% organic 2 900 -5% – Negative for both rock drilling tools and orders for 2 800 2 760 hydraulic attachment tools 2 700 -7% 2 619 • Revenues -5% organic 0% 2 600 +2 • Reported margin of 13.5% (14.2) 0 – Q1 2019 Organic Currency Structure & Other Q1 2020 Costs related to efficiency improvements MSEK 10 – Adjusted margin 13.9%, supported by currency, but Orders received, revenues and operating margin 3 500 35 negative impact of the lower volumes 2 926 2 826 2 765 2 619 3 000 2 760 30 2 665 2 452 2 382 2 605 2 550 2 470 • Consolidation of production in Canada 2 505 2 517 2 503 2 440 2 500 2 306 25 2 285 2 245 2 000 20 13.9 12.5 1 500 12.2 15 14.6 14.6 14.2 14.2 13.6 13.6 13.5 13.3 13.3 1 000 12.8 12.8 10 12.4 12.4 11.8 500 5 5.7 0 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Adj. operating margin, % Order intake, MSEK Revenues, MSEK Operating margin, % 15

Tools & Attachments – Profit bridge Looking into the numbers Margin: 14.2% Margin: 13.5% Adj. margin: 13.9% -6% 390 371 360 347 -11 337 -69 10 -0.4 pp +46 330 -2.1 pp +1.7 pp 300 270 240 60 0 Q1 2019 Organic Currency Structure Q1 2020 Items affecting Adjusted and other comparability operating profit 16

Costs, net financials and tax Q1 2020 • Lower comparable costs Administration, marketing and R&D expenses – Expenses adjusted for change in provision for 2 000 30 LTI and items affecting comparability 1 745 1 708 1 671 1 663 1 637 1 640 25 1 569 • Net financial items MSEK -46 (-100) 1 482 1 500 1 386 – Interest net MSEK -33 (-39) 20 18.0 17.0 16.8 16.6 16.4 16.5 15.9 15.5 15.4 • Tax expense MSEK -464 (-456) 1 000 15 – Effective tax rate 24.6% (24.9) 10 – Guidance: below 25% 500 5 0 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Expenses in % of revenues A, M and R&D expenses, adj. for change in LTI provisions and restructuring, MSEK 17