We are Epiroc. A very warm welcome to the Epiroc Capital Markets Day 2026 here in Örebro. I'm very glad to see so many familiar faces in the crowd, but also many new ones. To those of you watching the webcast, a warm welcome to you as well.
For those of you who made an early trip this morning, we promise it will be worth it.
Yes. If you don't know me, my name is Karin Larsson, and I work with the investor relations and media here at Epiroc. By my side, I have Alexander Apell, Investor Relations Officer.
Next slide. As you can see on this slide, Karin and myself have more than around 20 years in the group. On the stage today, we have almost 120 years of experience within the group.
That's impressive. Before we go into the content, one thing we always emphasize here at Epiroc is safety. This is not just a slide for us, this is how we operate every single day.
Today here in Örebro, we have safety emergency exits there, and over there, and we also have health-educated staff in case of emergency.
The agenda. We will start with our CEO, Helena Hedblom. She will walk you through the group strategy and how we create value and where we are heading. Håkan Folin, our CFO, will take you through the financials and how our strategy translates into performance and cash flow, then w e take a short break.
After the break, we will go deeper into the business. First, Equipment and Service with Jess Kindler, then Tools and Attachment with José Sánchez . We will leave, of course, plenty of time for questions. You can ask online throughout the presentation. We will, however, prioritize questions in the room.
Once we're done with the presentations and the Q&A, the people here tonight, we will walk to the dinner. You can go to the hotel, leave any luggage if you need to, and then we'll walk jointly to the dinner location.
If today will be repeating strategy, tomorrow will be all about creating memories.
Yes. Today is nice, but t omorrow will be much better. Tomorrow is really when you get to experience Epiroc, really. We will pick you up at 7:30 A.M. Be on time and bring your luggage. It's not about seeing tomorrow, it's about engaging, you will have opportunities for hands-on challenges where you can interact with our employees and our equipment, so you will feel the performance yourself.
Buses tomorrow after the tour will depart at 2:45 P.M. and 4:45 P.M., taking you back either to Stockholm, Arlanda, or to Eskilstuna to participate in the Volvo Capital Markets Day. You can find the details in your calendar. It's time to welcome our first speaker on stage, our CEO, Helena Hedblom. She has more than 26 years in the group. She started out within Innovation and Rock Drilling Tools. After having spent her whole career in the group, she knows our customers very well.
Yes. She's been traveling the world to see customers for decades. The thing is, today, with technology, customers are never far away. During the presentations today, you will see a lot of interaction between Helena and our customers, small films, and we really hope that you enjoy them.
At the end of the day, everything we will show you today comes down to one thing, how we create value for our customers and how that translates into long-term profitable growth for you shareholders.
Yes. Thank you. Helena, the stage is yours.
Thank you so much. Also from my side, a warm welcome to Örebro. It's great to have you all here. I've been in this industry for 26 years and also in this company. We always start with safety. I would like to start with this accident that happened in Canada last summer. Three miners were trapped roughly 300 m underground. Within 24 hours, we managed to bring our tele-remote system, and we mounted it on a non-Epiroc loader. That loader, after roughly 60 hours, managed to rescue these three workers. I think this is a story not only about us as a company. For us as a company, safety is not just a slogan. Safety is real. It also tells the value of OEM-agnostic solutions when it matters the most.
End of the day, the most important things that comes out from a mine is the miner. Epiroc, I usually say we are 153-year-old startup. We are a leading productivity and sustainability partner for the mining and infrastructure industries across the globe. We have a strong focus on innovation, and that has kept us in this leading position for so many years. We have a resilient, strong aftermarket business, roughly 2/3 of our revenues, and that gives recurring income over a cycle. Customers in 150 countries. We will today also talk about our footprint and how we serve these customers across the globe, but it's a very diversified customer base. Stable and solid margins. We have 19,000 passionate employees, many of us, especially in leading positions, we have 20+ years in the company. You will meet my colleagues later during the day.
We have this decentralized organization model that has been supporting us over the years with the person closest to the problem solving it the fastest way. If we then look on our performance, we have, since the listing, been delivering 16.9% CAGR in total shareholder return. We have been growing 8% revenue since the listing, and also 8% in adjusted EBIT, and with an industry-best margin. If we look on our financial goals, we have a goal to grow 8% over a cycle. Roughly 2/3 of that growth should come from organic growth, 1/3, roughly, from acquired growth. We target to have an industry-best margin and resilience in that margin over the cycle, to have long-term stable and rising dividends over 50% of net profit, and to have an efficient capital structure, and to continuously work on improving our capital efficiency.
Håkan will talk more later on the financial performance, when I look at our performance the last 10 years, especially since the listing, it's good to see that we have delivered upon our ambition and on our goals. If we then talk a little bit about sustainability and our goals for sustainability, both for people and planet, we have ambitious goals, both for people and for planet. If we look on the progress, we have good progress towards the 2030 goals. In some areas, I would say the areas that we control ourself, if we take CO2 emission from operations, for example, or compliance, or building a fossil-free assortment, there we have very strong achievements year -t- date.
We also have good progress when it comes to diversity, when it comes to safety, there is always more things we need to do, and we continue to do that. Where we need to push even more in the coming years is also to roll out the emission-free products to our customers, and we will talk more about that, of course, during the day. Our strategy for profitable growth, it's simple. You have seen this picture before, the ones of you that has followed us over the years. We focus on attractive niches where we can outperform. Very strong focus on being that technology leader pushing the boundaries, focus on growing the aftermarket, operational excellence, and then the foundation being then sustainability and our strong corporate culture built on a decentralized model. Our strategy is also our investment case.
We focus on the niches where there is a healthy underlying trend for growth. We focus on innovation in the areas where we can accelerate productivity or sustainability for our customers. The more aftermarket we have, the more recurring revenue streams we have and the less dependent we are on where we are in a cycle of mining or infrastructure. We have a well-proven business model. That has been shown during, I would say, the last eight years. There has not been easy years in the world. There's been several different challenges, but we have proven that we are resilient in our performance. The ambition is then to outperform and to create value for our stakeholders. Our mission is to drive and accelerate the productivity and sustainability transformation for our industry. Hopefully during today, you will see that it all starts with customers.
It starts with their needs, their needs for productivity, for safety, or for more sustainable solutions. That's how we build our strategy, that's how we create our product roadmaps and our solutions. What do we mean with our industry? It's very much hard rock formation. The harder the rock is, the more difficult it is to drill and to excavate. That's where we are at the best. We have roughly 80% of our revenue towards mining and 20% towards infrastructure. A big portion of the mining exposure is towards copper, gold, and iron. When it comes to infrastructure, the biggest exposure is toward tunneling, so underground tunneling, but also major civil engineering. Let's start with deep diving into Mining, then. Last year, it represented 79% of our orders received. We estimate long-term underlying market growth of 3%-5% per annum.
Now we're talking long term. Our offering, I will not cover it. Hopefully, you know our offering, but we have a very strong position on surface when it comes to surface drilling applications. We have strong position underground, complete range, underground drills, loaders, trucks, bolting equipment. We have a very strong set towards exploration. I will touch base on that a little bit later. Also then a very strong aftermarket offering towards mining. That's spare parts, it's maintenance, it's rock drilling tools, it's rock reinforcement. It's different type of technological solutions for automation, for electrification, for digital, and more and more also solutions than towards say the infrastructure customers, but also products that we maybe got from infrastructure that now can be used in mining as well. Mining is a fascinating industry. It's a huge industry.
There are more than 5,000 copper, gold, and iron mines in the world. This industry depends heavily on quite few mission-critical machines. If you take a small mine, that can depend on between 20-50 equipments. That is important because that tells the story of how important, how mission-critical our business is. If you take the largest mine sites, they could be somewhere between 250 and 500 critical heavy mining equipment, in that system developing that mine. We are exposed to the niches and the products where it matters the most, where performance matters. When one of these machines is down, then that's a lot of production loss for that customer. That means that uptime is crucial, the service of these machines are crucial, and this is why the aftermarket is then so critical, and why we are seen as position in a mission-critical environment.
Our demand correlates very well with the commodity prices. Here you see the weighted index of our mineral exposure and our orders. Here you see we have a 83% positive correlation. Of course, short-term, right now, the commodity prices are at a very high level, especially for copper and gold. Short-term, that gives increased need for rock drilling tools, increased need for service because customers trying to keep the equipment up running at high productivity. Mid-term, of course, this gives an indication of more CapEx. Long-term, it also gives then initiative to do exploration drilling, but also expansion projects like greenfield. If we look into the fundamentals then of the commodities where we have a high exposure. 36% of our orders from mining are towards copper. Copper are at historical levels. We are at very high prices right now.
It's of course driven a lot by the electrification journey and sustainability journey of the world. Here we see strong activity levels, both when it comes to expansion, but also when it comes to exploration. Copper is maybe different compared to the other commodities that we serve since there is a clear long-term gap between demand and supply. There is clearly not enough copper mines up running to really close this gap. This is also why we see spend going into expansion towards copper. Another exposure for us is gold, which is also at very high level. It's 29% of our exposure on the orders received right now. Here, of course, the demand is mainly driven by the jewelry consumption, but also investments and central bank purchases. We see a lot of exploration ongoing right now towards gold, but also expansion projects.
In Q1 we also said that a lot of the large orders we landed during Q1, they were towards gold. Iron ore is not maybe at peak levels. It's more at historical average level. We have today 14% of our orders towards iron, but we have a very strong position towards iron. A lot of the iron ore mines, it's big open pits where we have our surface equipment, and this is where we have a very strong position from a market share standpoint, and also where we right now see a replacement happening in several of these mines. If we talk then broadly about our customers, there are a number of challenges for our customers. We have surface deposits being depleted. Customers need to either go deeper in a surface mine, or they need to go underground.
It's also the underground mines, they also will have to go deeper. We roughly say that 30 m deeper every year, that's the average depth of underground mines, how it's increasing. With depth comes complexity. It comes first with lower grades, but also more complex ore bodies. We also see that many of the mines that will come on board in the coming decade are also in water-stressed areas or in conflict areas. It's also becoming more and more difficult to attract labor towards these industries. That is something where technology really can make a difference. We focus on solving these challenges for our customers. You can see on the lower side here, the utilization, both in underground as well as surface, is still quite low utilization. That means a fantastic opportunity for us to work with productivity with our customers.
Automation is one of the solutions that we have been working with now for over a decade in rolling out different levels of automation. From tele-remote up to fully autonomous mixed-fleet, both drills and loaders and trucks. We have today more than 3,900 driverless machines, and it has been growing with a CAGR of 17% since 2023. This part of the business is growing in a very healthy way. Where we are unique here is our mixed-fleet offering. Before we jump into the details on innovation, I also would like to show a movie, how to unlock the power, and this is from Antofagasta Los Pelambres in Chile.
Sharing the vision that the basis of sustainable mining is to guarantee the safety of its workers. Epiroc Chile, together with Los Pelambres Mining Company, undertook a project to convert the Pit Viper series drilling rig fleet to fully autonomous. The deposit where copper and molybdenum concentrate is produced is 240 km northeast of Santiago, the capital of Chile. It is located in the Andes Mountains of the Coquimbo Region, near the border with Argentina and almost 3,600 m above sea level. The full autonomy of the Pit Viper 351 has allowed Los Pelambres to withdraw the operators' face-to-face shifts and decrease the presence of the maintainers in the drilling areas, which reduced the risk exposure times. The company also reduced evacuations due to blasting, offered new professional opportunities among workers, made the transitions of operators in the room smoother, and strengthened some process, such as the supply.
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Benefits of autonomous operation: greater safety, remote operation outside the mine, obvious improvement of utilization in remote drilling versus manual operation, productivity, increased operational drilling speed, higher hole depth precision, increased hole location accuracy, maintenance cost, and longer service life of drilling steels. The application of Epiroc automated solutions at Los Pelambres shows the interest of both companies in leading the mining of the future.
For us, it's both to get the most out of each and every machine so that each and every machine can perform the best. It's also to get a set of machines to work as efficiently as possible, as what you saw here on the film. Of course, to keep the machines up running. This is where each and every new development that we bring to the market, we increase productivity. The example you see here, that is one of our electrified machines that gives 11% more tonnage out. It's not just a switch from diesel to BEV, it's also a productivity improvement. When it comes to maintenance, there is huge potential, both when it comes to preventive and predictive maintenance. We see that when we apply these methodologies, we can reduce the downtime by up to 50%.
This tells how important it is to work on both areas, both constantly to drive more and more efficiency for each and every machine, the full system of the machines, and then also the uptime of each and every machine. I will move over to Service since it is such a critical part of our business. This represents 41% of our orders, and we have been growing with 9% since 2015. A good growth story. Here presence is the thing. We have today 7,800 service technicians, and they are working, many of them on the mine sites together with our customers. They are embedded in their operations. We have 1,200 customer sites with service agreement. We have 300 sites with service contracts where we have labor on site. And we serve also these customers in all these markets with workshops.
We have more than 75 workshops across the globe, and we are constantly building out this network, and then 10 global distribution centers for spares and consumables. Talking about service, here you will see the first discussion I had with Marna Cloete. She's heading Ivanhoe.
With Kamoa -Kakula, Ivanhoe has been on a fantastic journey to create one of the world's largest premier mine sites and in a complex country like DRC. What role do you see that Epiroc has played in that journey?
Helena, you and your team at Epiroc have been extremely supportive. From the onset, building a new mine, you have to choose the equipment you're going to go with. Without a doubt, we said Epiroc has by far the best drilling equipment in the world, so we pursued a relationship with you, and we managed to secure much-needed financing in the early days at Kamoa -Kakula through Swedish government support, and that was really on the back of the quality of your equipment. It's been a fantastic partnership for us.
How do you view Epiroc's aftermarket capabilities, like service and maintenance in the country?
Your team has been excellent in setting up local hubs and being able to supply us with critical space. It's a complex environment, it's nice to have people that's on the other end of a phone and people that can visit your site quite quickly to assist when you need assistance in servicing machines, in getting access to critical space. That relationship with Epiroc has been very meaningful for Ivanhoe Mines in general at Kamoa, but also in South Africa and also at Kipushi in the DRC.
Moving over to Equipment then. Here you see our growth since 2015. We have been growing with 11% per annum on the equipment side. You also see the split between replacement and a brownfield expansion and now also the greenfield. If you look on this, of course, majority of the growth we have seen that has been replacement as well as brownfield expansion. It's also good to see now that the green part of the bar also increases. That is new greenfields. We also have the exploration embedded in that definition. That sits today at 16%, which is, as you can see, higher than it has been historically. Greenfield , it has always been a cyclical market. It peaked at 2011, 2012.
If we look on the total CapEx going into exploration is still not at peak, even though it has been on SEK 13 billion, SEK 12 billion, but it's not at peak level. A big portion, roughly 50% of all the CapEx going into exploration goes towards gold, 37% towards copper. This is roughly 90% and also where we have a high exposure. Then our offering on exploration. We have over the years step by step invested in this offering. We have been develop our offering organically, but we've also done a number of acquisitions towards these segments because we believe in this segment long-term. Today, our exploration business sits at SEK 3.1 billion. We have been growing with 17% CAGR, the low since 2023, I have mentioned in several of my quarterly calls that it has been the fastest-growing segment for us, and we believe strongly in this.
When we look at exploration, we have a complete offering towards exploration now. We have core drilling machines, we have reverse circulation machines, we have all the consumables that is needed for these methodologies, and we have digital components. Strong focus for us to capture the activity level in exploration. Moving over to Infrastructure. Infrastructure represents 21% of our orders, and here we estimate a long-term market growth between 4%- 6% per annum. Our offering towards infrastructure, we have also a very solid offering here. We have strong position both on underground and surface on drill rigs, but also for underground loaders as well as trucks. We also have ventilation systems. We have a full -suite of aftermarket products. We have digital products for tunneling, for example.
We have, of course, spare parts, maintenance, rock drilling tools, and a very good set now of specialty attachments. It all aims at driving safety at construction sites, higher productivity within infrastructure, and to lower emissions. Here you see our exposure split between the different types of infrastructure. To be mentioned here is that attachments is actually used in all these boxes. The biggest part for us is tunneling. It's underground tunneling, and then w e have major civil engineering. We see a growing trend towards deconstruction and recycling. We have been working with indirect channels for many years towards this industry. Here you see me talking with the owner of one of our dealers in U.S. It's Mike Paradis. He's the CEO of Bramco.
What do you think about Epiroc's offering in general?
I'd say in general, Epiroc is probably best seen as a class-leading manufacturer of not just high-quality products, but solutions. When I talk to our customers about the Epiroc offering, they really see the value of the quality of what they're getting. The customers that really appreciate what Epiroc brings are those that value production, productivity, safety, everything that Epiroc has been focused on for the past few years and decades.
What about our offering for the construction market? How do you see that?
I see that continuing to be a more important and growing aspect of our business with Epiroc. We've had a lot of customers across our footprint that have migrated to using Epiroc products, both the tools but also attachments. We want to be partners with those customers that truly see the value of the product that they're getting from Epiroc. We've seen quite a bit of success with that over the past few years.
How would you describe Epiroc's strength compared to some of the other OEMs?
It's not just, here's your solution, here's your product or whatever, but Epiroc, and I think part of it is because of the hybrid model you have here in the U.S., you really understand the value of having the right parts available, having the right service technicians available, having trained people, having really good response time. That's a huge value that we see that frankly, we don't see from a lot of your competitors. Also, I'd say the safety focus and the whole overall safety culture of Epiroc is much stronger than I tend to hear and see from other competitors and other manufacturers. I think altogether, that suite that you bring just makes you a great option for our construction customers.
If we look the last, I will say two years, of course, the infrastructure segment has been slow for us. When we look at this long term, we see a lot of initiatives going into rebuilding. If we look on what is happening in U.S., for example, and the plans there when it comes to infrastructure, also when it comes to Europe, especially Germany, with the rebuilding of the German infrastructure, both bridges, railways, roads, et cetera. This is where we are very well positioned now for that uptick. Also, we see that the more spend that goes into defense, that also drives the need for some of our products. Of course, a clear trend also toward more and more de-construction and recycling. Moving over to Engineering then, and Product Development. We invest roughly 3% in product development.
That has been the level we have been at for some years now. We have roughly 2,000 engineers across the globe in many different parts of the world. We are also leveraging the strength both of our customers' R&D and technology teams, as well as our suppliers' development projects. We do acquisitions also to gain speed when it comes to innovation. It is all about digitalization, automation, and electrification, and having the best machines and the best solutions, and you will have the chance to see them tomorrow in real life. Some words on digitalization then. When it comes to digitalization in mining, it is all about connecting people, machines, and assets and to make them work in a transparent way for faster decision making. By doing that, you can unlock a lot of productivity potential.
In this case, 8% higher output, 50% shorter evacuation time if you have a fire incident underground, et cetera. Digitalization for us brings us closer to our customers. It gives us higher service penetration and recurring revenue streams. When we look at our position, where are we today? As I mentioned, we have 3,900 driverless machines out running. We have more than 100 system of the highest level of collision avoidance installed in the world and more than 3,000 installed systems now on the lower levels of collision avoidance. We have a scalable digital platform. We have done a number of acquisitions that we now have brought together into one digital platform that we now can scale. I will show a movie now from Hindustan Zinc when I had a discussion with Arun Misra.
He is the CEO of Hindustan Zinc, India's largest mining company and one of the world's largest zinc producer. They have chosen Epiroc to equip their full fleet from all different types of OEMs with our collision avoidance system. Please play the movie.
Last year, you and I, we signed a partnership on collision avoidance solutions for your mines. Can you please tell us a little bit about your ambition when it comes to safety and what role collision avoidance can play?
We have been pursuing zero fatality goal for a long time. However, off and on, we had fatalities in the mine and especially when 900 odd equipments operate in the mine with about 10,000- 11,000 people working in various underground mines. We were looking for the right solution, and Epiroc came to our help and being our very trusted partner for a long time. We signed the agreement last year that we would go for collision avoidance system. Already more than 100 people have been given the tags, and equipments have been fitted. Extremely happy. Primary reports are all extremely positive. Operators are happy. They are able to locate people anywhere in the near vicinity. We have just decided to roll it out across all equipment, which may see a very spike in expenditure, but it is a very small amount to pay for saving lives of people.
Technology-wise, what Epiroc has provided, I believe it is state of the art, and my people are extremely happy with the quality and also the accuracy with which the entire system works.
Epiroc has a large production capacity in India, and we are currently expanding our factories there and also building more R&D capabilities in Nashik. What does it mean for Hindustan Zinc that Epiroc has these local production capabilities and local R&D resources?
For Epiroc to manufacture in India is a great boon to us, not only from a cost point of view because, of course there is a very high import duty on mining equipment that we import, but also, the fact that India is expanding in a big way in critical mineral mining. Most of these critical minerals are deep-seated minerals, meaning they have to be mined in the underground fashion only. Next maybe 15- 20 years, we'll see a spurt and huge boom in mining in India, requiring hundreds and hundreds of machines. I'm sure this opportunity will be grabbed wholeheartedly by Epiroc. We have got about 10 new mines, and in next five years, they will all be opening up one by one. That might require maybe another 2,000- 3,000 odd machines in play. It's a huge opportunity.
Moving over to Automation then. I spoke briefly about automation earlier in my presentation as well. The automation journey we started a decade ago, and we have come far on this journey together with customers across the globe. When we look at for customers, of course, it's driven by safety, but also clearly productivity. It lowers TCO if you include the consumption of diesel, including the drill steel, et cetera. For us, this brings us closer to our customers. We get even more embedded into our customers' operation. It also increases the stickiness, I would say, with customers. It gives us higher service penetration, and Jess will talk about that later on today. When it comes to automation, we have a unique position because we have OEM-agnostic solutions, meaning that we can automate our own equipment but also other OEM's equipment.
We can today automate more than 150 different machine types from our peers or competitors. That gives us a strength to take on an automation project together with a customer no matter what fleet they have. As I said, this is growing rapidly. We see today that more than 3,900 driverless machines. Here our service presence is also crucial because with these more advanced systems, of course, service and local presence is key to safeguard the uptime, not only of the machines, but also the uptime of the system itself. The customer we started this journey with, it's almost 10 years ago, that was BHP in Australia. Here we have a conversation between myself and Sebastian Greco. He's the VP of Procurement at BHP.
I would like to start to talk about automation. At BHP, you are in the absolute forefront of automation, and we began the journey together around automation of drill rigs almost 10 years ago. Can you describe your automation journey a bit and what role Epiroc has played in it?
Epiroc has been a key partner from the outset. Together, we moved from early-stage experimentation of these technologies to co-developing capabilities like object detection through close collaboration with the factory and with our business planning teams and operations, to mature large-scale autonomous drilling operations. That success, obviously, it's underpinned by the strong partnership I think that we have built together, common principles and common focus on operational performance, and particularly on safety, Lena.
Can you describe what say the type of benefits that you see in your operation or related to productivity and safety?
Safety is the primary driver with automation reducing obviously exposure of our people to high-risk activities, and removing them from hazardous environments and creating more controlled operations. At the same time, obviously enhance productivity and lower our total cost of ownership, making it a core pillar for BHP long-term strategy. Looking ahead, we see this as a high-value strategic partnership with a strong foundation and clear opportunities to deepen that further as we enter into the next phase or the next generation of automation and operational optimization in our sites.
We have proven autonomy at scale in mining, both on surface as well as underground, and mixed -fleet in both underground environment and surface environment. Now we're expanding this beyond mining also into quarries and aggregates. As mentioned here in the movie, we have been working with BHP roughly 10 years to build up the position we have with them on automation, with Newmont in Cadia, been working since 2017 on that solution. We have talked about Roy Hill, where we have implemented mixed -fleet automation for their surface trucks, and now we're expanding together into quarries and taking our LinkOA platform together with Heidelberg Materials. We just signed that, and we will now roll that solution out also towards quarries and aggregates. That's exciting. Moving on, some words on Electrification.
If you look on the benefits for customers, it's clear it's both higher productivity, it's lower emissions, it's lower temperatures. You can reduce the maintenance cost, you can reduce the need for ventilation, et cetera. The benefits for us is, of course, to stay in the leading position in the niches we are in, but also that we strengthen the partnership with customers. More advanced machines requires more advanced service, and this is where our technicians make a difference. We get higher value out from each and every machine if we look on this consolidated. Of course, it also gives recurring revenue streams across the full equipment lifetime. As you can see with the numbers here, it's not all about reducing CO2. I think this is important. It's all about driving productivity, lower TCO, and of course, lower energy cost.
We have a very strong offering towards these industries when it comes to electrification. We have the electrical infrastructure capabilities, we can do retrofit, and we have roughly 43% of our assortment ready in some type of fossil-free version. It's yet only 3.8% of our revenues, meaning that this potential is still ahead of us. We have today 40 sites with BEVs up running. 40% of these customers have replaced recurring orders on us, and this technology is proven. We are busy helping our customers to scale this in the coming years. We are convinced that fossil-free versions and being it BEV, being it cable electric machines, hybrid machines, et cetera, will be the solution for this industry.
We have a couple of very interesting projects ongoing right now, but one that is ongoing here in Sweden where we have proven really good outcome when it comes to performance is together with Boliden and ABB, where we have a battery truck with a trolley system. This is a large truck, and that is why we have a trolley system then because the ramp is long. This is a 5-km ramp. As you can see on the productivity numbers here, this is massive improvements. 50% higher ramp speed. That means 23% higher productivity and 126 tons more transported per shift. If you turn this into money, this is massive for a mine. There will be different solutions supporting the electrical journey here.
We also see at the same time then lower maintenance cost for, and this is the Boliden case, so 25% lower maintenance cost for them. If we talk about the market in general and we will zoom out. The markets where we are in, both mining as well as infrastructure, they are served by a few number of high-end peers. It is high barriers to entry. This is not so easy. It is not easy applications. The buying criteria for our customers, and that is general, the buying criteria is not price, it is total cost of ownership. So the cost for the equipment through its lifetime. This is where we make the true difference. This is also what creates this stickiness to our customers, and of course, something that we build on.
A lot of the strategy that I have presented, but also what Jess and José will present, is toward creating that stickiness and to protect our very strong position towards these customers. I will say some words on some key markets for us. China is, of course, a very important market for us. We see China as a home market. We have been in the country for many decades. We have a strong presence, w e have full capabilities in China with product development, several manufacturing sites, so we are leveraging the agility and the performance of the Chinese supply chains fully. We have also, the last, I would say three, four years, developed a multi-brand in China. It is called GIA. So we have a tiered offering in China, where we are capturing also the more value segment in China with completely separate R&D and separate sales channels.
We are following the Chinese customers when they go abroad, and we do that business from China. So we have customer service representatives from China placed in the different parts of the world as key account managers in Zambia, in DRC, et cetera. For us, China is an extremely important market, and the Chinese customers is extremely important. Today, we have 900 employees. It represents 4% of our revenue, and we are step-by-step investing and building more and more capabilities in China. Here you will hear some words from Lin Pusheng. He is the CEO of Dazhong Mining, which is a long-term partner for us in China.
Epiroc has been active in China for several decades now, and today we employ around 1,000 people at several sites in China. We have several manufacturing sites in the country, as well as an innovation center. We consider China as a home market for us. How important is it for you to collaborate with a long-term industrial partner with deep local roots in China?
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Do you have a favorite memory working with Epiroc?
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Moving over to India, then. India is also a key market for us, and we see this also as a home market. We have had a strong presence in India for decades. It represents 3% of our revenues, but as you could hear from Arun Misra as well, there are plans to expand the mining industry in India and, of course, its rapidly growing infrastructure country as well. Our focus in India is to leverage the capabilities of producing strong supply chains, but also the engineering capabilities in India. We have today 2,000 employees in India. We have a large engineering center in Bangalore.
We have factories, and we are expanding these factories. We did it last year, and we are taking another step during this year as well to build even more capacity in India to be able to both, of course, supply this industry needs in India from infrastructure as well as mining, but also to use India as a global hub to produce for Asia. There are a lot of potential in the world. There's a lot of projects ongoing. It's a high activity level in Chile, Peru, and Argentina. This is more mature markets for us. As we have said, we are early on in investing then in workshops in these countries to make sure that we will be there when the projects kicks off. There's also a lot of projects and expansion plans in both DRC and Zambia. We have a strong presence there as well.
This is also where we are investing in more capacity, more workshops. Saudi Arabia as well. To mention, we have a presence in Saudi Arabia already, but impressive plans to become a mining nation as well. We are early on investing in these countries to capture the growth opportunities for the future. One, this is new, w e have not presented this before, but we have over many years been using a multi-brand approach. Of course, Epiroc being our main brand and our premium brand. We have also over the last six, seven years, built up a comprehensive offering for multi-brand. This is to be able to capture a broader share of the customers, and to be able to play with different value propositions depending on the end customer.
Here you see GIA as an example, this Chinese multi-brand, but also other brands that we are working with in parallel. I will close my presentation with a statement. For decades, innovation and global presence have been at the heart of Epiroc. It's the same combination that will continue to drive our growth and define our future. Thank you, and we will see a movie on this.
Innovation defines our leadership. Presence where performance matters. It all began in Stockholm, 1873. A small engineering company that clearly didn't plan to stay small. One country at a time, we followed the rock, and soon the rock started following us. In 1936, the Swedish method changed everything. Proof that sometimes the best export from Sweden isn't just music. From mines to mega projects like Mont Blanc, when others saw mountains, we saw opportunities with a deadline. We continuously launched new innovative equipment like the Boomer, setting new standards for underground mining productivity. In the 1970s, we went where roads didn't exist, and neither did excuses, 4,600 m up in Bolivia. In the 1990s, Ertan Hydropower Plant in China. Big project, big ambition, still running today. In 2004, we acquired something in Texas that made Epiroc the global undisputable market leader in drilling, the Pit Viper.
In 2011, we opened up an R&D center in Nanjing, China, because innovation travels better when it's local. On June 18th, 2018, Epiroc was listed on Nasdaq Stockholm. In 2022, Epiroc exited Russia, leaving our fourth largest market, 7% of the order intake, and 500 employees behind. Let's stay positive. In 2023, we won our largest ever equipment order, SEK 700 million, for the expansion of the Kamoa-Kakula copper mining complex in DRC. In 2020, at Roy Hill in Australia, we started proving that modern mining can be autonomous, connected, and a little bit smarter than yesterday. We raised the bar again, SEK 2.2 billion with Fortescue. Electric, autonomous, and very hard to beat. In 2025, we decided to expand our manufacturing footprint in India further with a new rock drilling tools facility in Hyderabad. Closer to customers means closer to growth. Innovation defines our leadership.
Presence where performance matters. Together, we are just getting started. United in performance, inspired by innovation.
Thank you, Helena. It is time for our next presenters. I got some questions about the Wi-Fi. Conventum Wi-Fi, the password is conventum with small letters. Next presenter is Håkan Folin, my manager. He is really showing that the centralization and accountability works in this company. Thank you, Håkan, for your trust. You have been five years in this company, and you have adapted well to our culture, so it is a pleasure to have you presenting next. Thank you.
Thank you very much, Karin. Thank you everyone for joining us here in Örebro today. I will start talk about outperformance. Outperformance for us is really the result of the actions that we are taking. Since Q1 2018, we have grown our orders by 83%. We have grown revenues and EBIT by around 90%. We have grown the operating cash flow by 80%. Last but not least, we have grown our EPS or earning per share by close to 100%. This outperformance is really driven by a well-proven business model where we combine a high share of direct sales, around 80%, with a strong aftermarket. We have 66% of our revenues coming from aftermarket, and also with an asset-light manufacturing setup. This gives us flexibility, resilience, and strong margin. Importantly, this model, based on decentralization and innovation, it's been refined for decades.
First when we were part of Atlas Copco, now for the last eight years as Epiroc Group. Before I dive into the numbers, I want to provide you with an overview of how we report. We have two business areas, we have three revenue streams, and we have eight divisions. A key strength is our revenue mix, where 66% comes from aftermarket. This is a combination of Service, including digital, which is around 40%, the Tools and Attachment business. This high portion of aftermarket revenues, it creates good visibility for us, strong margins, lower cyclicality. I will go through our financial goals and start with our goal on revenue. Here our target is that we should grow by 8% per year.
As you can see here, this is from 2015, which is where we first have official Epiroc number. We have actually grown with this 8% on average. Revenue growth is, however, not a straight line , it will never be. We will not chase growth at any cost every year. We want to protect the ability to grow over many years. In this graph, you can see two times where we've had a revenue decline. First in 2020, when we were hit by COVID. We stayed focused, serving our customers all around the world. I would say that was rewarded later years, which you can see through our service growth. The second decline, it came from two factors.
One is the decline in construction demand and also the stronger Swedish krona, which had an impact on our reported revenues, which you see in 2024 and 2025. I mentioned that the construction market weakened. How much did it really weaken? You can see here that from the peak in 2022, up until Q1 2026, rolling 12 months orders from infrastructure was down 22%. The attachment business was especially impacted by this, and we have responded with cost actions, efficiency improvement, and improving our flexibility in our operations. You can see the result of this now on the bottom line for the attachment business. Another positive thing is that the destocking phase that started taking place from the second half of 2023.
Our view is that that was basically finalized in Q4 2025, w hich means that we now have a fairly positive outlook for demand for attachments. On the margin side, our financial goal is to deliver industry-leading operating margins with a strong resilience across the cycle. On this graph, you see exactly that. It's a business with limited margin adjustments. We have low so-called one-offs, and that gives you a very transparent earning profile. I would say that over time we have built a model that delivers high profitability. The recent margin decline, you can see it's basically due to three factors. One is acquisition, and that's roughly half of it, then it's the weaker construction market that I was just talking about.
Thirdly, it's also a change in revenue mix, where we have a lower share of attachment and service, but actually also mixed within service, where we had stronger growth in some areas, where we have a bit lower margin. If we look into the details and to your right you can see the tools and attachment. Here, demand decreased first and so did also the margins, as you can see. We started taking actions here earlier, and you can also see actually on the bottom of this slide, here is the flow-through and where from Q1 2024, we have started seeing positive organic flow-through in our attachment business. For Equipment and Service, the margin decline came later, mainly explained by acquisitions, as I mentioned before, and also the mix.
We have taken actions here as well, improving our service efficiency, working on our production footprint optimization. In Q1 2026, we were back at organic flow-through also for our equipment and service business. We're not standing still. We are working with small pinpointed measures, without too many complex saving programs. After all, we're still in the growth mode, and we want to make sure that the savings that we do, they actually protect profitable growth over time. Over time, I will speak about long-term now as well. Because cycles don't disappear, they repeat. Our job is not to protect them, but it's really to make sure that we are ready when they come. What you see on the chart here it's Atlas Copco Construction and Mining Technique and Mining and Rock Excavation Technique.
It's not the perfect measure of Epiroc as of today, but I think it's good enough to show the long-term determination of this company. What you can see is that margin have shown a clear upwards trend over decades, despite cycles and despite volatility. The key message is that we recover quickly after downturns, and we reach higher levels over time. We don't want to have growth at any cost. We don't want to have margin at any cost either. For example, we won't cut in R&D short term just to improve the margins. What we want to have, we want to have a balanced delivery on margins, returns, and cash. So for us, performance is not about the peaks, performance is really about continuous improvements over time. Another goal is on the capital efficiency side.
We deliver strong return on capital employed while we continue to invest in growth. The decline in return on capital employed, as you can see here, is mainly because increased cash and also acquisitions, because the acquisitions we have made will generate intangibles on our balance sheet. In terms of acquisitions, we have made 30+ since the creation of Epiroc in 2018, and they have in total been around 14% of, sorry, not 14%, SEK 14 billion of revenues. What has been very strong over time is the growth in equipment orders. It's been 11% per year since 2015. Our equipment is made to order, so as growth accelerates, working capital will also increase. Also, the regions where we have seen the most growth over the last few years are in faraway markets, remote areas, and that has led to somewhat higher lead times and inventory levels.
That's not only for equipment, but it goes just as much for our spare parts and for our tools. For us, focus is not on minimizing working capital, but focus is rather on making sure we have the right working capital for the current working conditions. To produce to order, it has its advantages. We produce only the core components where we want to safeguard our own innovation, and we want to have a flexible manufacturing setup. Actually, as much as 70% of the product cost for equipment, that is purchased from our suppliers. It enables us to be fast, both up when demand goes up, but also to adjust cost when demand goes down. It also results in quite low CapEx needs. We have said our need is between 2%-3%.
Actually, if you look for the last few years, it has been lower than that. As you heard Helena talk about before, we are looking to expand more in growth markets now in the coming few years. Now I'm going to spend a little bit of time on service. Service is a key driver for us, both when it comes to profitability and also cash generation. As you can see, service orders have been around +9% per year over time and really demonstrating structural growth and resilience across cycles. We have actually achieved consistent organic service growth over time. Majority of the years being above our target level, but actually all of the years being positive. From a financial perspective, this is very attractive because service deliver high margin, strong recurring revenues, and robust cash conversion.
Service is not only growing, but it's really increasing the quality, the resilience, and the cash profile of Epiroc Group. More details on the cash then. We have a high and strong cash generation, despite the strong equipment growth that I just told you about. Actually since 2015, we've had a cash conversion rate of over 100%. Recently, we are around 88%. We have a mindset that every krona in the result counts, and as much as possible of that should be converted into cash. The next financial goal is to have an efficient capital structure and the flexibility to make selective acquisition, with a goal to maintain investment-grade rating. We do that, o ur rating is BBB+ with a stable outlook from Standard & Poor's. I would say that this rating level is fairly comfortable for us.
We have the possibility to make acquisitions without being too tied up by financial metrics. Over time, our net debt to EBITDA level has been at 0.35x, which I would say a very low level. We are now at 0.7x, and even though it's obviously clearly higher than where we've been, we're still at a comfortable level, and we have flexibility to invest both organically and through acquisitions. We continue to add capability through M&A. When we look at M&A, we have three criterias. First of all, standalone attractiveness. Is this target attractive and well-performing in itself? Second, we look at strategic fit and synergies with Epiroc. Does it support the core business strategy of Epiroc? Thirdly, does it have the potential to become or remain number one? Does it provide a path to undisputable market leader?
Our target areas right now, we look into complementary core, we look into the aftermarket business, and we look into the digital business. Since becoming Epiroc, we have acquired more than 30 companies, bringing in broad set of technologies and capabilities. Like every business we do, we have three stages, which you see here on the slide. First is stability. This is really about ensuring predictable operations, strong process, high quality, reliable delivery, and if I simplify it, no surprises when it comes to deliveries and financials. The second stage is what we call profitability. Once the business is stable, focus shifts to improving performance in its current form, using operational excellence to give better profitability. Thirdly, we are in the growth stage, but this is only when we have the two first stages in place. Growth can then come both organically or through acquisition.
It can be about expanding capacity, footprint, or offering, but it's always on a controlled and profitable level. The key principle with this is that you need to earn the right to grow by first having your stability in place and then having your profitability in place. If we look at the acquired companies, they are in all three of these boxes. We still have a number of acquired companies in the stability portion. They are small and mainly they are part of the digital portfolio, but a low portion of the acquired revenues. We have some in the profitability, and we also have some in the growth path, not as many, but with a higher amount of revenue. One such example is RCT, the mixed -fleet automation solutions company.
Overall looking at this, I would say it's a quite well-balanced portfolio where we see a lot of potential value creation ahead of us. Next financial goal is to provide long-term stable and rising dividend to our shareholders. The dividend should correspond to 50% of net profit over the cycle. We have basically three priorities when it comes to how we use our cash. The first one is we want to invest in our organic growth. The second is we want to invest in acquisitions, the third is to give return to the shareholders according to the target I just mentioned. You see in the graph, the dividend we've been paying out and also what payout ratio we've had over the years. The average of this is 51%.
I would say we are fully in line with our financial target when it comes to dividends since the creation of Epiroc. For 2025, we will pay out the dividend, or we are paying out the dividend of SEK 3.80 per share, or in total SEK 4.6 billion. To conclude, we aim to generate an annual growth of 8% per year. If you do the math from where we are right now, 8% per year would give us SEK 100 billion in revenue by 2031. It's of course hard to predict where the industry-leading margin will be in 2031, but you can be certain that we will make our utmost to make sure that we are the one with the best industry-leading margin. Some final words. We don't promise perfection quarter by quarter. We promise discipline, transparency, and cash generation through the business cycle.
Thank you very much from me.
Thank you, Håkan. Well done. I know the energy in the room is high because everyone is awake and eagerly writing on their laptops. Maybe online, you would deserve a break. We will take a 20 minutes break. Here in Örebro, Sweden, we will serve coffee and some sweets outside. We will see each other again 10 past four local time. Thank you.
[Break]
Welcome back. I hope you enjoyed some fika. It is time to discuss and deep dive into the business areas. As you know, we have two business areas. We have Equipment and Service, and Tools and Attachments. We did this business area organizational setup the 1st of September last year. This is to be more focused in leveraging the full scale of our total offering for both business areas. With me today, we have both Jess Kindler and José Sánchez . I am super happy to have them in the team, and they will now present the different BAs and the strategies moving forward. First out is Jess Kindler. Jess, he has many, many years in the group as well. Welcome up, Jess. We have been working together for, I do not know, now 20 years almost. We know each other extremely well.
He has also been in many different roles in the company, as you can see on this slide. He has also lived abroad and traveled extensively. We have met now the last six months in many different parts of the world already. The show is yours. Go ahead.
In with a bang, Equipment and Service. I would like to cover a little bit historical performance. I know Håkan and Helena already covered quite a bit of it, but I will walk you through just from the equipment and service business area itself. After a few strong years there after we launched Epiroc, really driven by the services business and the help from the U.S. dollar, we kind of peaked at margin in Q2 2022. Now it has come down a bit. Håkan mentioned a lot of it is these acquisitions. We were quite acquisitive even back then as we started Epiroc, and it is always tough to find same level of performance in the acquisitions when we bring them on. We see that almost every time. The last few years, we have done a lot of activities like Helena mentioned.
Manufacturing operations, looking at where we can do rooftop consolidation and looking at where we can be the agile company that we normally are. Some other good things, though, that we have done the last couple of years is dynamic pricing and service. We have continued that kind of service agreement journey that started with the service division almost 10 years ago. More automation, then with this more automation, you see this higher attachment rate. Of course, the more complicated the agreements become, the more sticky we become with the customer. We like developing that business a lot. In Q1 2026, we reported the margin of 24%, even despite lower revenue. It is an achievement and it is definitely proof of the actions that we took the last few months. I am going to start off with equipment. Our strength really is the breadth of offering.
Helena mentioned, we have one of the most diverse and complete portfolios when you look at surface and underground equipment portfolio. We, of course, have stayed in exploration and invested in it and grown that as another leg for the surface and underground. The most important of all of this is, of course, this is supported by the aftermarket and the service division, both the consumable side that José is going to talk to you about, plus the services side on my side. Plus the technology kind of adding one more leg there. We will go through some achievements since the last Capital Markets Day. We clearly strengthened our leadership in autonomous drilling.
We were the first ones there, and then we were the first ones to get the most complete offering out there, the most, let's say, robotic machine that is out there. Today it is deployed globally. Helena's right, w e have seen each other in some really faraway places, and a lot of those faraway places, they go for automation. Even if labor is quite cheap there, they go for that automated solution just because the productivity is so high and maybe it is tough to get people out to those remote job sites. We have secured our largest electric drilling order, that was the Fortescue order that Håkan highlighted, SEK 2.2 billion. A great achievement down there, really showing that that electrification drive is real, it is driven by economics and it is definitely accepted in a main mining market like Australia.
Again, this is not about just about machines in the equipment division, but it is really about getting all the machines to talk to each other on the same system. Again, we started that OEM-agnostic journey almost 15 years ago, and now all of our own machines talk the same language, plus all these machines on that third-party system through our LinkOA platform. I think it is really powerful because I do not think we go to too many mine sites where there is just one brand of drill out there. There are multiple brands out there, and it is important that if you are offering automation or you are offering electrification, you make it work on all those solutions on the mine site. This is my favorite slide, I might get too excited. Drilling is my favorite.
The whole reason why Epiroc is in drilling is nothing else on that entire mine site moves until you have broken rock. To break the rock, you have to drill a hole, and then you have to put explosives and set it off. If something happens with the drills, it is quite a significant emotional event on the mine site. You do everything you can to get that drill back up and running so that you have broken rock to feed the loading and excavating crew, to feed the processing plant. That is why we are in it. But the better you can do it, you also have a lot of downstream effects, again, to improve the production of that mine site.
If you have quality drilling, you get good fragmentation, that is easier to load. There is no secondary blasting. It goes through the plant easier. It's a more consistent feed. You just drive that whole value creation cycle at the mine. For Epiroc, it really puts us right there at the beginning. I like to talk a lot about life of mine. When our people are there, we want our people there from the exploration stage all the way through closure, and drilling allows us to do that. Exploration all the way through production, and then finally curtailment at the mine site, and we live with the customer out there. Let's continue on Load and Haul, which is another critical part of the value chain. It's what comes after drilling. Since the last Capital Markets Day, we've increased our capabilities in that mixed-fleet automation.
Helena mentioned the mine rescue at the Red Chris Mine in Canada earlier last year, where we automated one of our competitor's pieces of equipment to rescue some people. Another example that Helena covered was Roy Hill, where we have the largest automated mixed-fleet on service haul trucks in the world. On electrified load and haul, we've also made some great achievements, and tomorrow you actually get to see and touch and feel and hear one of these achievements, and I'll cover it here in a second. We've made good progress on that. A lot of the examples that we have are creating really real value, and that's important because, again, people don't buy automation just for technology's sake. They buy automation because of the benefits economically to that mine.
Those benefits are running through the shift change, where the operators leave and go switch out with the next set of operators, the machines keep running. Or to the extreme, where you're operating a fleet, let's say up in the Pilbara in Australia, and your operators are 3,000 mi away, and one operator is really running nine machines. Again, that's huge economic benefit, and that's where we're at. Now I'm going to show you this one. Tomorrow, like I said, you'll get to smell, hear, and watch the race, this is really exciting for us because we took one of our really, let's say, segment-dominating products and made it even better. Here we go. Oh, sorry.
It's excellent. It's really good to see it on the ground moving dirt. Revolutionary. Top of the range. First in world. A solution that helps us bridge the gap between conventional diesel and battery electric.
Today we're showcasing the Minetruck MT66 S eDrive. The Minetruck MT66 S eDrive has the John Deere JD18 engine. We have two generators in place of a transmission. Those generators power four electric wheel motors on the machine to propel it up and down the decline.
The torque it can put on the axle is just amazing, and the speed up gradient, it's evident. If you have a look at the unit, it's a diesel motor, but it's a lot smaller, so you got less emissions driving a gen set and four electric wheel motors.
It was quite an unfair competition on all fronts, just with the increased acceleration at the beginning and then just the way the MT66 pulled away from the conventional truck up the hill.
We've had several operators being able to actually hop into the truck and drive it around the test track today. This has then given them the ability to test out some of the new features and the capability of the mine truck.
To be able to interact with all of the maintenance and support staff, and just being able to see the truck in operation and get the opportunity to drive it.
Great seeing everybody. We like to believe they're not customers, they're partners in innovation. A lot of them had a hand in the design of this unit. We listened, and we've delivered.
I realize I don't have to push the button to start the movie now, anyway, really excited about the new truck, of course, I love the numbers even better. Again, people don't buy stuff because it's new. They buy stuff because it adds more value. This Minetruck MT66 S eDrive, it transports 20% more tons per hour, at the same time reducing fuel consumption by 25%, and it has a 15% shorter cycle time. Again, that's kind of transformational when it comes to a fleet of these moving material. In the mining game, the faster you can move the material to the plant and get it through and refine it, that's where the value is created and captured. Moving on to loaders. In electric loaders, again, we're continuing to strengthen the position.
We have an electrified Scooptram 14-tonner called the ST14 G, it already stands out as the best -in -class in both operating time and safety. With the design enhancements coming shortly, we expect to extend that again another 15% in 2027. At the same time, we're really reducing the charging time from 85 minutes today to approximately 35 minutes using the Megawatt Charging System, or MCS technology. This combination of higher productivity and faster charging simplifies the integration of battery electric onto the mine site, that gets the customer's acceptance even faster. Looking ahead, we're going to continue to improve both range, speed, and charging time going forward. That's kind of how you develop these BEVs over time. Looking at electrification, again, one of the biggest benefits of electrification, if you remember the very first movie, this deep automation movie.
As you get deeper into the Earth, as you go down, the temperature goes up. You need more and more ventilation the deeper and the longer your tunnels are underground. Ventilation is responsible for about 40% the OpEx cost on a mine site. That ventilation, of course, is consuming a lot of electricity. When you put electric machines underground, they don't have that same requirement for the amount of basically, the ventilation is diluting what's coming out of the diesels, the more diesels you have underground, the more air you need flowing down there. When you have electric down there, you don't need near as much, and you're not generating as much heat from the equipment as well. Electrification becomes more of a business decision versus just a ESG or sustainability decision.
The other thing, you saw Wayne Symes in the movie talk about the torque. I got to drive one of these machines up in Canada when we were looking at the very first generations, it's amazing. There's no noise at all, the thing is just quite powerful. You just get in, mash the gas. It's not gas anymore, you just go, it digs into the pile with a lot more power. This will be driven by economic decision going forward. Talking about safety. Helena mentioned we always start with safety, safety with batteries, of course, is very important. We design ours with all these different backup safety systems.
From mechanical protection to the advanced energy management and cell design that we have, we've done very well to have zero injury-causing accidents in the years that we've had these electrified pieces of equipment. Because operations underground are inherently high risk, it's very important that we're not adding to that risk by putting some new solution down there. It was very important to us then to make sure we have all these different redundant safety systems on the machines. Okay. Let's talk about Service, another one of my favorite subjects after drilling. Service has been a core driver of Epiroc since the spin, we see consistent long-term growth and strong underlying demand. Since 2015, we've achieved that 9% order growth rate, and that's mainly organic. This is driven by using the fleet more.
It's also driven in combination with the age of the fleet and also the initiatives that we put on our side to productify service and make service in a package that's easy to sell at the customer center. Whether it's a service agreement type or whether it's some new solution that we have to extend longevity or improve performance, all these different initiatives then have added to that ability to grow in service. Most importantly is that service is highly profitable and cash generative to Epiroc. The more that we can invest in service, the more workshops, the more technicians, the more presence that we have. Like Helena mentioned, leaving Russia and then able to go to Congo and Zambia and grow those businesses to make up for it was big for us. I think we've learned those lessons over the years. Okay.
Did I switch? There we go. Okay. The service offering is broad and robust. We talk about parts and kits. We talk about agreements and audits. We talk about these circular solutions. When I say circular solution, again, this is something that helps both the planet and the customer. The customer saves money because he's not having to buy a new component, and we're helping to, let's say, recycle or remanufacture that component and put it out there. Whether it's a major component like an engine or transmission or a hydraulic pump or motor, or if it's the entire machine, we're prolonging the life of that mineral content and energy that's already been spent. The last is around training and support and digital.
We see this digital enablement more and more, and we're going to give you an example here shortly on that. The digital enablement really allows us to get technicians up to effectiveness faster. Before, when I started 25 years ago, it was a lot of books. You had these big binders, and you had to kind of dig through these books as you were troubleshooting a machine or fixing a machine. Now all of that information is compressed into one device, and it's just at the technician's fingertips. Okay. I like this slide as well. It really shows all those different offerings, when do they occur when the machine goes to the site.
You have this initial new machine, and then you have a warranty period where you're not going to see tons of revenue, but you set the stage when you sell the machine and you agree with the customer on a maintenance strategy and how the equipment is going to be maintained on the site. You set the stage to sell all these products over, again, that life of the fleet and then hopefully multiple fleets over the life of the mine. That's how we do it and how we make sure that we do well on that first fleet, so we get that next fleet and the next fleet after that. Service always secures the follow-on sales from the initial fleet sale. Okay. Downtime is driven by the harsh conditions that we're operating in.
If you think about a drill, another reason why I like drills and I like hard rock, is the machine is basically shaking itself to death. Right? As you're out there, it sounds graphic, but that's why we like these machines, because it's out there putting maximum energy into the rock to break the rock faster than anybody else. In the process, it's seeing dust, it's seeing heat, it's seeing vibration, and yeah, that's why it's going to hit that breaking point. What we can do now that we couldn't do, again, 10, 15 years ago, is we can analyze the machine, and we can come up and be much more prescriptive and predictive on when those components are going to fail. That way, we're not experiencing this kind of random downtime, but we can really plan it out with our customer.
I mentioned earlier, we agree with what's called a maintenance philosophy, and that philosophy could be that we run the machine to failure, and then we fix it. It could also be that we run it under a planned time cycle, and we replace the components before they fail. If we get very advanced, then we're monitoring the machine, whether it's oil sampling or temperature control, and then we can make suggestions to the customer when they should change out those components or when they should take the machine down for maintenance. This is what our fleet profile looks like. The fleet is prime time for services. About 37% of the machines in our installed fleet are older than 10 years. Helena mentioned that besides service growth, we also have the chance for replacement.
I think she mentioned in iron ore where we had a big fleet installed more than 10 years ago. Now that fleet is coming due for replacement. We'll see more mid-life rebuilds and end-of-life rebuilds, and we'll also see more equipment demand coming from that. That's why we see that kind of consistent order growth over time, because as the fleet ages and then the boom comes or the downturn comes, you're always working on the equipment. You're either prolonging the life of it, hoping to sweat the assets more, or you're replacing it to get the latest generation, most productive piece of new equipment out there. That's why it's important that we're on that journey with the customer. Okay, we also see some structural changes in the fleet.
There's fewer machines out there, but there's more work that has to be done on each one. Just like the 65-ton truck that you saw the movie on, it goes up to 66 tons, and it's running 20% more tons per shift. You're gonna have less of them, but of course 66 tons is more than 65 tons, so that machine is going to see a higher duty cycle on the equipment. At the same time as that, there's a labor shortage. Whether we're in Nevada, or we're in Santiago, or we're in Perth, Australia, it's becoming more and more difficult to staff the mine sites. They go for more and more automation solutions, and then you have to really agree with the customer on the technicians. Is it our technicians or is it their technicians, because we're drawing from the same pool.
Again, it goes back to that initial discussion that you have with the customer about philosophy. If the philosophy is they hire the technicians, then we train them. If the philosophy is we use our technicians, we also have to train them. Training is a big piece for us, and that's why I go back to that technology discussion and using the technology tools that we have today to get that training to effectiveness much shorter time. More than 50% of our fleet was serviced in some form in 2025. There's still half of that fleet out there that is opportunity for us to go after. Okay. We'll again go back to Lin Pusheng from Dazhong and talking with Helena about service.
How is Epiroc performing service on the machines?
[Non-English content]
Okay, the strength starts with the people closest to the problem. Helena said that, and I believe it. We have 7,800 service employees across the globe. Sometimes they're on a mine site in a group of 200, like we mentioned in Mongolia, and sometimes it's just one man or one woman with a service truck that's going around a metropolitan area like Chicago that has multiple quarries around it and servicing one machine at a time. We have both models. We invest early on in these technicians because they truly are an asset to the corporation. We work with schools and universities, technical schools, welding schools, hydraulic schools, and then mining engineering schools to make sure that we're securing that next generation of talent. We were one of the first companies to start training technicians in China to expat into Africa.
We had an academy there that made a big difference when Zijin and JCHX and these companies moved out of China into Latin America, into Africa, to make sure that we could send technicians from the Epiroc side with them to make sure that we secured that services business. I'm going to talk, the next slide is a video about a good customer of ours. He was actually here last week, but Sebastian is the CEO of Pucobre, and he's been with us on this journey of solutions. I remember 10 years ago when I was running the service division and Pucobre started, it was very important that both his people and our people learn this new philosophy.
That philosophy is, Sebastian told me, he said, Jess, I don't know if this solution you're proposing is worth 3 million or 10 million, but I want you to have your person on site until that value, whatever that value is delivered. That was this transition, and I think he's been really good at pushing us then to make sure the value is extracted from those solutions that we're selling. It's been a great learning ground for us.
We always try to improve and do things in a better way. What can we do better?
The technology is evolving very quickly. I believe that one area that we can improve together is training and capability development. Why? Because operations and maintenance technicians, at least in our case, often have the same basic education that they had five or 10 years ago. A clear example of this is the adoption of Simba COPROD. While the technology delivers clear benefits, in this case, in drilling accuracy and control, it comes along with a very steep learning curve, which affected how fast Pucobre can reach the full potential of the machine. This experience showed that the advanced equipment alone is not enough. To address that, for example, we are working with Epiroc to develop internal drill masters with Pucobre.
People who deeply understand the technology and can train others in day-to-day operation. It's a real challenge, and I think it's an area where Pucobre and Epiroc must continue working together, focusing not only on the equipment but on the people who operate and maintain it, and which specific capabilities they will need for deploy the full value of the equipment.
Okay. I'd like to welcome on the stage Ms. Christel Füllenbach. She's our Global Vice President of Operations for our service division.
Thank you, Jess.
Yep.
Yeah. Hello, Christel. Welcome to the Capital Markets Day.
Thank you.
It's great to have you here. We talk about service, and we often jump right into systems and tools. What is really the challenge that we are solving?
Yeah. At the core, it's just imagine sitting here in the room. Imagine you are standing in front of a machine. Everything comes together, forecasting, planning, customer expectation, and you need to solve a problem, and you need to solve it fast. This is what our service technicians see as reality every single day, several times. This is also why we decided to invest heavily in digitalization of service to support our service technicians. Means we did not start at, okay, which tools are available? We started, really, what is the problem of our service technician today, and how can we support them in the best way?
Sounds good. How does this look in practice?
I can show you. We have a technician co-pilot, and just imagine I asked this co-pilot, okay, I'm a new service technician and I want to do the daily maintenance work of a SmartROC D65. I get directly the answer. I asked additionally also, okay, but how can I change the air filters? I don't have hand free. Means I'm just talking with the co-pilot, and it's also working. We often think everybody is speaking English, but this is not always the reality of our service technicians. Means I can even ask, I asked it in German, can I have some videos to explain it to me? It also got me the answer.
You see that this is a really fast solution, how we can reduce really the fixed rate of failures, how we can improve our repair times, and also invest in our service technicians so that they are getting faster to the problem solved.
Sounds good. Once the technician has this support in the field, how can we scale this across Epiroc and all those thousands of mines?
Really good point, because this is for sure a good interface for the service technician, but we know always behind AI or a tool, there are always a lot of processes and other tools. One tool I want to highlight is our asset performance management system, Epiroc Uptime. This is really our backbone of machine data, of forecasting, of parts availability, and where everything comes together.
Good. Everyone in this room is very eager about business impact.
Yeah.
What does it mean for us?
Yeah. Let's say it this way, when we have better forecasting, we have better parts availability, this means our working capital can be optimized, because at the end, it's inventory optimization. On the other hand, for sure, also the machine uptime of our customer is improved, which means that the customer satisfaction is much higher. On the other hand, also, they come and repeat business with us because we are there to support.
Okay. We've spoken a lot about customers, if you would conclude, what about the customer experience from this?
Yeah. The customer really sees that the uptime of the machine is higher on the one side, and this is what it is about. Jess mentioned, our machines are the first point in operations. If our machines are stopping, it means has a lot of impact for our customers. The availability is much higher, and on the other side, also, we can improve the uptime, the trainings, and all of this together with our customers.
Loyalty.
Loyalty. Exactly.
Perfect.
Yeah.
Do you think we can improve this further, or are we already excellent?
No. This is part of our service ecosystem. Service ecosystem is good, but what we have done now and what we further do is that we get the feedback loop back to engineering, R&D, and parts planning. Means with the feedback loop, we not just solve the issue when it's occur, we even prevent that failure occur because we are looking into repeating failures, changing our engineering and R&D work, and then we have much better customer satisfaction again, customer uptime, and also we invest a lot in lifetime of our machines.
Perfect. Thank you very much, Christel. Keep up the good work with all service technicians.
Thank you.
Thank you.
Thank you both. Appreciate that. Okay. This slide really shows why service agreements matter so much to us. Today, about 33% of our addressable fleet is covered by some type of service agreement. A simple one like a preventative maintenance assist, all the way up to a full service agreement. That's up 26% since the last Capital Markets Day, and that progress is important. Machines under agreement generate twice the revenue that machines not under agreement generate. How high do we want to go? The important thing is that we keep climbing that service ladder and increasing the amount of machines covered, but I would like to see us within a few years be up at the 40% coverage rate.
Service agreements strengthen that kind of loyalty and satisfaction. Again, going back to what I said earlier, it puts us there for the life of mine and makes sure that we secure life of fleet and then in the mine. Let's go to the next one. If we take the next step, which is really service agreements to full partnerships, we can see that the top 10 customers at Epiroc represent 18% of the group revenues. They're growing faster than the group average. That's not a coincidence, it's the way that we work with those customers. With many of these customers, we're deeply embedded in their operation.
Whether it's the 200 technicians in Mongolia or the 700 technicians in India, it's important that we, again, live and breathe on that mine site with our customer as they go through the journey. This is exactly what we aim to scale. More service agreements and then that kind of deeper customer intimacy and relationship driving the quality of our growth and earnings going forward. Having more customers treated in this manner, as we do with our top 10. Automation. Earlier, I talked about the automation and the benefits of running those machines through the shift and getting those extra tons to the crusher and out the back gate at the customer as really being that value driver.
As utilization increases, so as you run those machines more and more hours without stopping them for operator changes or anything else, it means more maintenance, it means more demand for parts and service consumption. The data is clear. Over seven years, a Simba ME7 C in production generates at least 14% more parts revenue, and a Pit Viper 351 automated generates 33% more revenue for us just because it's running those extra hours and not stopping. This is the direct link between automation, utilization, and then the service growth that we're seeing. The same applies for electrification. The electrification journey, it adds new service layers such as the batteries, the infrastructure like chargers, and then the life cycle management of those batteries, including the end of life and recycling of them.
We see at least 15% more service revenue on electrified machines over five years, all else being equal. This next one is a video talking about the benefits of electrification. Again, going back to that story, it's about the economics, not necessarily the ESG benefits of going electrified. Go ahead.
We entered into the journey on electrification some years ago together. Can you describe, let's say, Glencore's ambition when it comes to electrification, and also give some insight of the work we have been doing?
Yes. I think that certainly is an imperative. I think Glencore is committed to the clean transition. More importantly, I think what we've been able to identify are these opportunities to electrify which actually make commercial sense even if you didn't believe in any other imperative. Certainly our investment at Onaping Depth with your equipment there has really underlined and highlighted the opportunity. That mine is very deep. It's got a very high heat load. The opportunity to deploy battery technology, which is mature and developed into that environment certainly was a great opportunity for us. That investment has then provided a platform for the region, for the city, and ensures ongoing nickel production, ongoing employment, and the ability of our business to continue contributing there.
Okay. Let me step back a little bit and talk about what is that next phase of growth. To me, it's really about digitalization at scale. So far I've shared with you what are those improvements that come with better productivity and uptime. The key opportunity, I think, for you guys to take away from here is the opportunity. Globally, there's thousands of mines and most are still not connected. They're still not connected to either automation or electrification. There's a huge opportunity to scale now these solutions across the globe. We focus on three areas. Connect, so making sure that we can connect all the machines on a mine site. That's why we focus on this kind of OEM-agnostic approach and make sure all the machines on site can speak that same language.
The second one is we focus on automating, so deploying autonomous solutions across large mixed-fleets. Then the last one, Helena mentioned about collision avoidance, it's about safety. Protect, plan, and sustain. Either we're making the fleet safer or we're making it more predictable when it comes to, like Christel mentioned, planning the spare parts and the technician availability on the site. We have the capabilities. Now it's all about scaling and teaching our teams, wherever they are, how it is we're going to deliver that value going forward. These solutions require low capital. They scale pretty fast. With the AI tools, they make it even faster because we can get, again, salespeople and technicians up to effectiveness faster with those tools. The profitability today is low in some of the parts of our portfolio, and it's high in others.
The growth potential is high, that scale then makes it possible for us to improve the margin on those smaller businesses. Okay. Again, Håkan went through this pretty much in detail, in our businesses, we also have different parts of the company in these different categories. Stability is really about making sure that in our decentralized structure, that our leaders understand that where they're at, where is my business today? Am I in the stability phase? Am I in the profitability stage or I'm in the growth phase? It's something that's instilled from us from the very first years that we started with the group, that's the way we want our leaders to look at their businesses and be honest and move forward up that ladder.
Okay, just to close this section, our goal is to give our customers that one consistent Epiroc experience, maximizing the value across their fleets, services, and geographies. Whether they're a customer that's operating regionally or globally, we want that kind of felt experience to be the same for them across the globe. When we do that well, our customers remain loyal, they come back to us, that service intensity increases because they trust us again to take that journey with them. Thank you very much for taking the time, it's time for me to bring the next speaker on and introduce him. I'm happy to know José most of my career and 38 years with the group. He's definitely one of my heroes.
Thank you, Jess. Amazing 38 years. I suppose that time flies fast when you enjoy what you do, for me, brings me a reflection, is when you found the dream company you want to work for. Let me start with introducing yourself, walk you through the Tools and Attachments business area. We operate where the productivity is created. At the drill bit, at the bucket, at the breaker. At the point where the machine turns power into output. As Helena said, we focus in attractive niches that provide recurrent demand, high customer relevance, and a clear profitable growth. We work in hard rock for mining and construction. To keep it very simple, i n tools, we complement the best equipment and service provided by Jess and his team with the best tools for the best performance for the customer.
In attachments, the carrier can be supplied by any OEM, the attachment is what defines what the machine can do. Best attachment, best performance for the customer. This is not a price game. What the customer buys is performance, is reliability, and total cost of ownership, Epiroc is the answer. Let me show you where we are today. The business area was affected badly by the slowdown of the construction, and the under-absorption of a few of our manufacturing units. We didn't stand still, we took actions, decisive actions to target our problems. Like what? Well, we did portfolio rationalization and optimization. We did operational improvement. We did also the pricing initiatives, the capability of the footprint, meaning that we consolidated a few of the sites.
What is important to notice is that what we are addressing here is cyclical, is not structural. The fundamentals of our business remain strong, o ur position is intact, and the long-term value proposition remains valid. This is a reset in performance, not a reset in ambition. Let's zoom in starting with Tools. This is a high-performance, recurrent, and innovation-driven part of our portfolio. Here the growth is clearly structural. The demand for metals increases, so does the mining activity and the drilling activity. The ore grades decline, t hat means that we need to excavate more rock. That demands more drilling, higher consumption of tools. Mines go deeper, become more complex and automated, as you heard from Jess. That needs higher performance tools, premium tools. Mines go deeper, needs also rock reinforcement and ground support, really to ensure stability and safety.
We offer high-end consumable for hard rock excavation. Our products include consumables, tools, and digital solutions for the ground support and the rock drilling. The majority of our business is done with mining customers, there is a strong correlation between the mining activity and the tools growth. For the tools business, it's built on clearly decades of innovation for over 120 years. Our story of history, so that is a story of solving one problem at a time and improving bit by bit.
From pneumatic drilling to the introduction of the cemented carbide bars with the so-called Swedish method, one man, one machine, that revolutionized the mining industry at the time, to the introduction of better tools when the first hydraulic rock drill was introduced in the 1970s to the better drill string, advanced drill strings during the first decade of the 2000s to one of the latest innovation, the Powerbit, that it was the answer for the shifting towards automation that demanded longer service lives of the bits. Now we are entering in a new era with the so-called PCD bits, the polycrystalline diamond bits that have their buttons covered with synthetic diamond. This is a really big boost of productivity. You see in the graph, a single bit just drills more than 3,000 m, it's a quantum leap in productivity.
This is the bit that changes the economics of the drilling. It's the beauty and the beast in one piece. Produces the higher productivity, higher uptime, longer service life in the range in the multiples of three to five or 5- 10, depending on the rock conditions. Also is the perfect match for automation that drives also safety and offer lower operational cost and lower CO2 footprint. Another impressive innovation is the COPROD for Simba that you heard Mr. Sebastian Rios from Pucobre talking about it. I want to show you one film just to let you know all about it.
As hole length increases, traditional long hole drilling becomes less accurate and more prone to deviation. This often leads to poor fragmentation. Improved COPROD for Simba hole deviation is minimized, giving you more accurate drilling, less dilution, and better alignment with the drill plan. The result, improved fragmentation and better ore recovery. You also gain a significant productivity boost thanks to extended stope height and the removal of a sub-level.
COPROD is our proprietary drilling system, widely used in surface drilling and now brought to the underground production drilling. It combines the strengths of the down-the-hole with the flexibility of the tophammer to provide longer holes, straighter holes, much higher accuracy. This translate into customer value immediately. Customers can drill twice as fast, can reduce 30%-50% the deviation, and at the same time could also have a benefit of having less development work. As you have seen in the video, longer holes, less sub-levels. That's money for the customers in their pocket. Now if we move to Attachments. Attachments sometimes are seen as an add-on. We see it differently. The attachments determine what the machine can do, the performance, the productivity. Very important. Here we see also that the growth is structural with all the mega -trends in the market.
Urbanization continues, that brings the need of tunnels, metros, water supply, sewage, energy network. At the same time, there are these announcement of big investments in larger scale infrastructure like railways. Overall, the market grow in a mid-single digits, that will give us a big opportunity to grow together with them. Let me show you a video about our specialty attachments in real world.
Infrastructure is moving underground. Railways are expanding, electrification is accelerating. Climate pressure is changing how projects are built. In these environments, standard tools are not enough. Reliability is critical. Performance is non-negotiable. This is where our portfolio stands apart and brings maximum force. Across multiple specialist brands, we cover the most demanding applications in infrastructure across the globe, from extreme power to precision and control. The world's largest and strongest breakers. High-performance shears cutting through the hardest steel. Trusted tools powering rail, electrification, and utilities. Solutions that make flooded job sites workable again. Because where infrastructure cannot fail, the right tools matter most. Epiroc offers one of the world's most comprehensive portfolios of specialist attachments built for the toughest environments.
We used to say we turn machines into productivity platforms. What do we mean by that? Clearly, one machine, single purpose, will have limited work and stand still idle for long time. When you can have a machine fit with different attachments, the multiplication of the tasks come as a really higher utilization, more money for the customer. That represents that the customer can do up to 6x the number of tasks that they do with a single machine. If we project this, how many tasks you can cover with one machine, that represents that the CapEx in new machines, single-purpose machines, are reduced. Feedback from customers is around 30%-40% lower CapEx. That's a lot of money for the customer. That creates also a good business for Epiroc because the attachments bring recurrent revenues. Parts, replacements, upgrades.
We need to notice that there are only few global players at the high end of the attachments worldwide. For us to remember, attachments are not just accessories add-on, they are productivity critical solutions, the key drivers of productivity. How do we scale the business? To scale attachments, we want to use multi-brand, multi-channel model. The market is very fragmented, c ustomers run mixed-fleets, a pplications vary widely, and purchasing criteria also changes very much by geography or by segments. A single brand approach would limit our reach. Our portfolio set for many different type of OEMs, different type of buying criteria, premium or more value attachment, also create the opportunity to select different attachments for different regions or different application, different demands of customers. Customers are not equal in all the parts of the world. How do we get the scaling?
Through our dealers network. We have today more than 2,700 points of sale, more touch points closer to customers that represent more opportunities for us. Model is clear, is multi-channel, multi-brand, broad, and rich. To grow attachments, also we need to be where the machines are, across brands, across fleet, across markets. OEM partnerships give us a perfect access to a much wider fleet population. What is the value for the customer or for the OEM? The right carrier with the right attachment for the right application. Excellent for the customer need at the moment in the place that they select. What does it mean for Epiroc? Higher revenues. We have access to global fleets. We have also service coverage better and give us capital-light growth. It's said that partnership is the new leadership, I cannot agree more.
However, at the same time, in selected segments and applications, we go direct, like in mining. With our customer relationship, because of the rest of the portfolio in the company, we get closer to the customer, we can bring solutions for their entire fleet. We don't sell a product, we try to sell a solution, that allow us to be closer, listening, and bring the feedback for better and faster innovations. That bring me to innovation, I want to present you two amazing innovations among many others. To your right, we have the HATCON and InSite that give real-time full visibility of where the attachment is, location, usage, and maintenance. We have actually more than 5,500 attachment connected. Another amazing innovation, the Performance Booster. Have you heard about it? It's an add-on retrofitting component for the pulverizers.
What it does represents immediately customer value because increases the crushing force for the concrete to be demolished. Also has shorter working cycle and save fuel for the customer. Again, a big improvement, again in productivity. What is there for Epiroc? Is that we monetize performance. Let me show you now where we produce many of our premium tools. That is in the Kalmar factory in Kalmar in Sweden. That is not just a factory, it's our center of innovation, operational excellence, and provides long-term competitiveness. Let me show you what it's about
On the east coast of Sweden, in a town called Kalmar, Epiroc is redefining the future of manufacturing, setting a new standard for Sweden and beyond. After a complete production transfer from Germany to Sweden, bringing advanced manufacturing to the next level, this facility is designed for premium products, built with precision, scale, and unmatched engineering capability. One of the most automated production sites globally, combining cutting-edge technology with smart manufacturing processes. A strategic investment that strengthens capacity, efficiency, and long-term competitiveness. Powered by expertise, where experience meets innovation to deliver premium quality at every step. PC Kalmar is more than a factory. It's a blueprint for the future of high-performance manufacturing and the world's leading production facility.
You heard from Håkan. We run our business in three stages: stability, profitability, and growth. We build a business that performs through the different cycles and market fluctuations. We stay focused and selective, investing in products that create real value for the customers and, at the same time, provide strong margins for Epiroc. The growth will come with this broadening the reach through the multi-channels, through the multi-brands, or our, for instance, yellow on yellow programs. The ambition is clear. We want to deliver both growth and industry-leading margins. For me to conclude, I want just to leave another reflection. Traveling around the world for so many years, meeting customers, what I learned was that the most important thing that matters for the customers is really to deliver customer value and together in true collaboration. That makes a difference for them.
Because at the end, if and when the customer wins and makes money, we win. Thank you very much.
Thank you, José. Thank you, Helena, Håkan. José. It's time for me to wrap up before we do some Q&A. Just to summarize what we have tried to communicate today, everything starts with the customer, and the best thing that comes out of a mine is the miner. We make operations safer, more productive, and more sustainable every day around the globe. We focus on where performance matters. In our industry, downtime is the most expensive thing. Customers doesn't choose Epiroc because of the lowest price. They choose us because we improve uptime, productivity, and the total cost of ownership. We are also not just selling equipment. We are supporting our customers across the full life cycle through service, tools, attachments, and technology. That gives us recurring revenues, high margins, and resilience over the business cycle.
What you have seen today is a company that is evolving. We are moving from being an equipment supplier to becoming a productivity and technology partner. Through automation, electrification, and digitalization, we are helping our customers to get out more of every machine and their fleets. Outperformance is not about peaks, it's about consistency, delivering growth margins and cash over time. With our strong culture, global presence, and innovation leadership, we are confident in our ability to delivering profitable growth onwards to you, our shareholders. Before we start the Q&A, I want to show yet another customer movie, this time with Marna from Ivanhoe Mines, how we together, united as partners, will tackle the mining of the future. Please start the movie.
Do you have any favorite memory of Ivanhoe Mines' collaboration with Epiroc over the years?
I have many favorite memories about tough meetings we've had, but that's part of a partnership. In any family, you need to be honest in terms of what your needs are, and I think Epiroc's always met our needs. I think the standout moment for me was when we implemented advanced technologies at one of our sites, which we struggled to adopt, and Epiroc was willing to switch out equipment for us on short notice to enable us to meet our targets. That's been much appreciated and it's a strategic partnership that I'm sure will be in place for many years to come.
We always try to improve. Anything we can do better moving forward?
I think the biggest thing for all mining companies in the future will be cost, will be ensuring that the critical space we need is available, and when there's demands to grow our business, that we can do so quickly. It's responsiveness, it's price competitiveness, and then it's technology. How can we innovate? How can we do things better in the future? I think those are items we can all work on together to ensure that it's a sustainable industry, where we can all make the necessary profit margins, but also collaborate to make the industry more efficient and more long-lasting.
Thank you so much, Marna, for joining me today, and thanks for the feedback.
Thank you, Helena. Thanks for having me.
Perfect, thank you. I saw two hands here. I see one there. I'm going to start with you three. It's time for Q&A for those that didn't see. Okay, two here, two here. Klas, if you start, please.
Sure. Thank you. Klas at Citi. My first one is on the growth and implications for the margin. Obviously, if you put the target 8% CAGR to 2031, get SEK 100 billion. Call it 5%-6% organic on your typical organic versus M&A split, and then you say 3%-5% long-term mining growth, 4%-6% infra CAGR. On your exposures weighted, that becomes around 4% market growth, a little bit more. We're talking 1%-2% outperformance. Can we please unpack this? Where do you think you can take share? And if we can focus a bit on mixed-fleet automation, because you're talking a lot, yes, about this very, very strong growth. It seems like you have a low single-digit market share today. You talk about over 112,000 machine market potential on slide 114.
What kind of market share, yes, do you see necessary for that margin to stop being diluted to the E&S business? Is it 10%, 15%, et cetera? Yeah. Sorry, that was a long one.
It's kind of two questions as I take it. Where will we grow and take market share, and then on the mixed-fleet automation. Should we start with the first?
Maybe I can start, maybe if we try to unpack the growth of 8%. If we look on, as we say, general, then, okay, 2/3 being organic, 1/3 coming from acquisitions. If you look from our historical growth pattern, we have been growing faster towards mining compared to infrastructure. Of course, infrastructure is now hampered by very low activities. Of course, if infrastructure bounce back, that will of course boost that revenue stream. When we look at, we have a very strong, of course, position on equipment, but of course, the largest growth potential for us, that's the aftermarkets that is within service. We just mentioned we serve a little bit more than 50%.
Of course, that portion is a great opportunity to grow the service business, but also to grow, I would say, the tools business that José talked about, which is also related, also predominantly towards mining. I would say that where we see the biggest untapped potential given what we have today, and of course, in our strength and our history, I would still say it is within mining, even though of course, a strong uptick in infrastructure will, of course, support us greatly because we have the foundation and we have the products.
Good. The mixed-fleet automation?
Yeah. If I talk mixed-fleet automation, one of our most profitable parts of that digital portfolio is our RCT business, and that's the one Helena mentioned with the rescue, but that's one that we're operating in a handful of countries today that we see actually quite some opportunity to then expand it outside of the handful that we're in today.
You also have ASI Mining that sits within equipment, and then you have PLAN and PROTECT, which is sort of interlinked because that's the software to drive these, everything can communicate together. You have Radlink, which is a low margin. Here is my logic. I'm just going to try and explain a different way. Three years ago, same location, you had 2,400 units mixed-fleet. That's 3,900 today. That's an 18% CAGR. If I extrapolate that to 2031, that would be 9,000 machines. You gave this number 112,000 on slide 114. It could be more as a TAM. That's a 9% share. I'm just, when you have that package together, ASI Mining, RCT, and more units under the belt, what kind of market share do you need to see that margin stop being diluted to E&S? Maybe it's too detailed, a lot of investors ask us.
I think the opportunity here is tremendous. Of course, if we look on what we have acquired two entities, we, of course, also developed our own solutions towards this. The LinkOA platform, for example, now that is also controlling our automated rigs for drill rigs. When we look at the total potential here, it's a big potential and we're just getting started. Even though it looks like a 17%, 18% CAGR, which is good, we are still early stage, I would say, when it comes to rolling. As you mentioned, a handful of countries when it comes to mixed-fleet for surface, we haven't just nailed the solution and now we're scaling it. I would say this is great opportunities, and that's also why we have invested so heavily in this area.
Thank you.
Thank you, Klas from Citi. It's John from Deutsche Bank.
Hi, Helena. Thanks for the intro. Two questions, if I may. If we think maybe with a 10-year view, these newer initiatives, the leverage you're pulling in service, digitization, the BEV and the automation, what percentage of either group or E&S revenues do you aspire to? How much stronger are the growth rates in these verticals? 2x, 3x what you think your core business can do?
When we look at the new technologies, as I say, automation has been growing in a good way, that technology is further along. As I mentioned, the potential, of course, the total potential opens up rapidly when we can do mixed-fleet automation. For electrification, it's still early days. If we take 10 year from now, we believe that this will be a big portion of our revenues. That's also why we keep on pushing, of course, so much product development into these segments to make sure that we will be the one winning this race, because the business logic for customers is clear. We are convinced that this will be a big part of our business 10 years from now.
Okay. A quick follow-up, if I may. Take you into the weeds for a second. On slide 101, you have a decay of the effectiveness of the machine in the field. I think you presented it. I want to know if there's been any change in behavior on how customers in key hard rock verticals are choosing to refleet or refresh. We're enjoying very strong commodity prices. I think expansion of production has been challenging, has that actually led to faster turnover to actually de-age the fleet where there's structural demand?
I would say that what we have seen, you can reply as well, Jess, I think what we have seen so far is that, of course, the lead time for replacement, it's still, if it's the larger machines, it's 9- 10 month maybe. Of course, I think this is what we see both, that we have high growth levels of this type of midlife rebuilds trying to push up the life as much as possible, and at the same time, also more and more replacement. Jess?
Yeah. I think if you look at any of our key customers, maybe they have more than 50 mine sites, and one mine site might be in need of additional production, the other one might be in cost reduction, the other one might be steady state. It's a bit mixed. If they're able to wait for that replacement to show up, they will, but if they need to make hay while the sun is shining, then they keep that fleet running until the very end. It's kind of a mix, but we have both conversations happening today.
Good. I'm not sure if I'm online. Chitrita Sinha JP Morgan, please go ahead.
Yeah, hi there. If I could just follow up on the growth question. Clearly it seems like a very exciting time on the mining side, and perhaps it feels like the business can grow faster than the 8% growth target that you've outlined. If I think about the moving parts, how sustained do you think this growth can be, especially the Q1 results, very strong orders. In other words, should we expect a few years of outsized growth and then maybe some normalization? Thank you.
I think when we talk about the underlying activity levels, that is very healthy in mining, and it's healthy both on the equipment side as well as the activity levels driving then the aftermarket. Of course, if we look on, we have a couple of quarters now with, if you have large equipment orders like we had in Q1, which really boosted the orders received for equipment, of course, you can have quarters like that. When I look at the pipeline, and we are tracking the large projects that are out there, let's say 18- 24 months, it's a very solid pipeline. There are large fleets that are to be replaced, but there's also brownfield expansion projects and greenfield in the pipeline.
We are, of course, trying to maximize everything we can get when prices are at this level, but also there are structural need for replacement, especially towards certain commodities where the fleet starts to become older than what we showed here when we look at it from an average perspective.
I would say the 8%, that's over a cycle, as I'm sure you have seen us and heard us say. When we look back then 11 years, then we were basically spot on the 8%, maybe slightly by coincidence. Right now, just like Helena said, both short-term but also medium and fairly long-term, it looks very good. We talked in the presentation, I guess it was you, Helena, about copper, and that actually doesn't really match long-term demand and supply. We are optimistic, as I talked about, cycles come and cycles go, and 2031 is five years out in time. We'll see what happens. As it looks right now, for sure, we could have the potential to outgrow the 8%.
I'm sorry, if I can also follow up on the electrification opportunity. One of the stats I think that you mentioned was that maybe even at 80% of the fleet could become electric by 2040. Could you please size that in terms of the opportunity, maybe percentage that would mean for your growth? What the slide is saying is that of mobile equipment underground, by 2040, the estimate is that 80% of those vehicles, not only mining vehicles, but also utility vehicles, will be electric in some form.
For us, what this means is, of course, that we have a very strong position today, we will be able to defend that position and take market share, because there is still plenty, or there is still small regional players out there as well. Of course, for us, it's to protect and keep that, to take market share. If you can electrify a machine and at the same time improve productivity with 10%, that's something that it's not just the CO2 part of it's actually productivity as well. Of course, ambition is then to take market share as well based on this new technology.
On top of that, as we also showed on one slide, when we sell them a BEV equipment, we also get actually more aftermarket business.
Thank you, Chitrita. James Moore from Redburn.
Thanks. It's James from Rothschild & Co Redburn. Two questions if I could on Equipment and Service, maybe for Jess, maybe for Helena. Between 2021 and 2025, your revenue grew about SEK 12 billion organically. If we take out currency and acquisitions, keeping the numbers simple. Your organic EBIT went up SEK 2 billion with a drop through below 20%, well below your gross margin structure. I'm familiar with the reasons you gave, the acquisitions and the mixed improvement in digital and the fact that you have a high share of equipment. Just broadly, we're in a good market. Copper and gold is high, it's off the top, but well above planning rates. You're going to grow low double digit for the next three years, sure as eggs are eggs. If you do that, what sort of drop through can we get in the equipment and service division?
Have we bottomed timing-wise? It looks like we have. What sort of drop through can you get? What's really credible, given the shifted mix of the company, given all the M&A that you've done? Is 2026 now totally off the cards because of the change in mix? What's a credible profit to gun for?
Okay, I'll take it. Yeah, that journey, 2021- 2025, was definitely affected by acquisitions and definitely affected by a couple of big events like the Russian war and COVID, right? The tail end of COVID, the inflation after COVID. That definitely affected the flow-through, and I would say that we always aim for this positive flow-through and accretive to the result. The team definitely understands it. I think no one up here can predict what's going to happen with the black swan events seem to be quite more common than they used to be. Let's see. I think the team really is quite disciplined, and I think Håkan said every krona is a prisoner here in our pocket, so we are very careful.
I think that journey, 2021- 2025, it was fantastic, but it was, again, really focused on every 10th of a percent that we could look at in the margin. We'll definitely execute the same way we did. Of course, market fluctuates and things happen, right?
Not just margin.
We don't have a margin target.
Fair enough.
Neither do we have a flow to target.
Just talking to the concept of have we bottomed, because it's been four challenging years. It looks in the first quarter like we're showing some encouraging signs. Do you feel like with the split of service into three pieces, with the digestion of all of the dilutive digital acquisitions that you've done, with the market turning, you've got some visibility that we don't have, and it's quite a lot of complex mix moving parts. Do you feel that you've got your hands around the business now and you can feel that we've had something of a floor at least, even if we don't talk about the expansion?
I would never hesitate to call a bottom, but I hope that we are, let’s say, on that uptick and the actions that Helena and the team took last year, that they are showing visible results. Yes, I have optimism that it is there, but I am not going to call it.
Thank you, James. Andreas Koski, BNP, please.
Thank you very much. We are here. My first question was also about the electrification data and the 80% of the mobile underground equipment being electric in 2040. I would guess that requires a relatively large part of your equipment sales already in 2030, maybe 2035, being electric, because you mentioned that of your total fleet, almost 40% of your installed base is older than 10 years. The first question is basically, do you believe that a very large part of your equipment sales already in 2030, 2035, will be electric? And what is the value opportunity of your electric equipment versus your diesel-driven equipment? You mentioned the upside potential in aftermarket, but is there also much higher value attached to an electric vehicle versus a diesel-driven vehicle? Thank you.
What really drives the age a lot is surface. The machines turn quicker underground. If we look on where we have started, where electrification has taken off, it is underground. Of course, the transformation will be quicker underground than on surface. We have seen more and more interest on surface as well now. We are selling more and more electric Pit Viper, for example, the Fortescue deal. I think surface will come on board. If you take 2035, I am convinced that a big share of the fleet we put on the market will be in some type of fossil-free version. Might not be BEVs fully, could also be cable electric ones for certain applications. What will that then give us?
Of course, this is much more advanced equipment than having a diesel. I would also like to say that we don't, for us, automation and electrification goes very much hand in hand. When we look 2035, I do predict that a large number of the large orders will be both automated and fossil-free version. That of course gives then higher aftermarket potential, but also that it's much more difficult for other smaller players to capture that share from us. That's how we will see brick wall that aftermarket. It's not only then service or even batteries service or service contracts, it's also the product that José mentioned, like PCD bits, for example. If you have a fully automated mine, you don't want someone to go in and change the bit all the time.
These technologies expand the potential of the full system, I would say.
The mix shift is not going to drive a higher equipment value as well. It's mainly in the aftermarket that you are seeing the growth opportunity or you are seeing on equipment?
It's also equipment value, I would say. The more advanced machines, the higher the value is of the machine when we sell them as well.
It's the automation. Let's be clear. It's the automation that drives that higher value of the equipment. When you go with the electric machine, you go for the higher automation level as well.
Okay, it's not that it is a better price than?
It's not that it's a better price just because it's electric. No.
Understood.
Yeah.
Just quickly, I was a bit surprised to see, I don't know if it was your estimate, but the market growth in mining of 3%-5% and in infrastructure of 4%-6%. Does that mean that a lot of your M&A will also happen in infrastructure because that will be a faster-growing market? Do you see yourself expanding into, say, new products in infrastructure that you do not have today because of that market growth? Thank you.
The market growth that we have shown is in the niches we are actively working in. It's not a general market and it's neither our growth from each, but it's basically in the niches we are. That's the growth that we anticipate in the long term.
When I look at it from a historical perspective, we have been growing faster towards mining. Of course, we have very solid presence and footprint and installed base and so I do expect that a lot of the organic and inorganic initiatives, the coming, let's say, 10 years as well, will be towards mining. If I look on infrastructure, it's a good complement, and what we do between these two segments is that we use the technology we developed within mining, and we bring it into infrastructure to help boost the productivity. It's a lot of shared technology between these two segments, even though it looks different, but, let's say, from a platform perspective, when it comes to technology, when it comes to also manufacturing footprint, of course, we share those footprint. I don't think you should be worried that the overall mix of the company will change.
We like to have a strong tilt towards mining.
Thank you.
Before we continue in the room, I will take one online. It's also on M&A, as we speak about it. It's from Max Yates. Strategically, how have Epiroc views evolved on whether they would be interested in doing larger M&A into midstream mining, for example, pumps and grinders?
As Håkan mentioned here on M&A, we are constantly looking into the opportunities that are out there. If I look on the different segments that we explore, it is complementary to core. What is complementary to core? It is very much adjacent. It's products that fit well into our offering and where we can leverage then synergies in cross-selling these products across the globe. I would say that it's in closing gaps of products. It's strength in the aftermarket. Could be companies that they can do consumables. They could be service providers that has a strong regional footprint, for example, or a regional business somewhere where we want to expand. Also technology companies. It's also towards technology.
I cannot answer specifically on that question with exactly that type of niche product that you mentioned, but I would say in general, this is our thinking around M&A. It will be close to what we know, where we know that we can leverage the strength of Epiroc.
Good. Thank you, Andreas. We should take Gustaf Schwerin, Handelsbanken.
Yes. Thank you. I have a question on the replacement cycle for surface drill rigs. If you could help us on how much of your installed base you think is either up for full replacement or larger rebuilds over the next couple of years. Thank you.
I will leave that to you.
Yeah. I think we showed that I think it's more than 30% of the fleet is older than 10 years. If we said that the underground, it's more like seven-year replacement cycle, surface is more or less 10-year cycle, you have 37% then over that 10-year age, yeah.
A majority?
We have a very strong position in that segment.
Yeah.
There's a big portion up for replacement.
Yeah.
Yeah. Thank you, Gustaf. We take Vlad behind Gustaf, we take over here.
Thanks very much. Two questions, one on growth, the other is on profitability. On growth, for new equipment, you simplistically split the revenue into three groups, right? Greenfield, Brownfield, and replacement. Are all three set to grow? Where you have the best visibility for growth within those three? On margin, you obviously have an ambition to be an industry leader on profitability. What makes you confident in that? Is it that you view yourself as the best operator or maybe the best innovator, or maybe you just have one of the best end markets out there? Drilling is a good end market.
I would say if we break down the equipment orders into these different buckets, we see good growth in all buckets right now. When we look at the pipeline, what we have ahead of us, it's also in all three. It's not so that it's one outgrowing the other. It could be, of course, if you look on the large orders only, there could be, I mentioned replacement for surface equipment, for example, being a potential. Also if we look on the last, I would say now, three quarters and look into the exploration, which is then more towards ground greenfield, then, of course, we expect that to continue to perform. It's both due to the underlying activity levels, but it's also due to the fact that we have a much stronger portfolio today than we had maybe five years ago.
We expect all areas to continue to grow. When we look into having an industry-leading margin, for us, I would go back to our decentralized organization and our setup and the way we run the company and have been running it for many years. We grow our leaders, as you can see, internally. You are trained very early on, a disciplined financial execution, to meet your targets every year. That's how you grow. I think we have a very strong culture of improving every year, every month, every week. If you would listen to the conversation in this team behind closed doors, it's always about what can we do better? That's the type of dialogue we're having always. Also when having a great month, we're still focusing on what can we do better.
I think this culture of that we're never satisfied, we always try to do better. That's what gives me confidence that this company and these people, because in the end, it's people. Of course, we focus on the right things. We have a clear strategy, but end of the day, it's people that delivers the result.
Thank you, Vlad. Thank you, Vlad from Barclays. Now we go to Alexander Jones.
Thanks. Alex Jones, Bank of America. Two as well, please. First on the aftermarket capture rate. Jess, you talked about being just over 50% today. Could you talk about where you think that could get to and sort of the pace of how you can reach that ultimate level? Just on margins, again, I think in the presentation, you said that you recover quickly after downturns and then reach higher peaks over time. Is there any reason after the downturn we've been in recently that you couldn't reach a higher peak subsequently? Thank you.
Okay. I'll start with the aftermarket question. Higher, right? I'd like to be higher than 50%. Of course, the usage of the machines is quite important. Remember we said that as the utilization driven by automation increases, the machine runs more hours. I think we finally have a great opportunity. We showed it at CONEXPO in Las Vegas, this automated drill rig in a quarry segment. We mentioned quite recently automated haulage in a quarry segment. Quarry segment is a segment where typically the customers ran day shift only and weren't really sweating those machines. Now that we see automation moving in there, it could be that segment then helps drive, let's say, more aftermarket than we haven't seen in the past. That's an example of where we see it possible.
That's very helpful.
On the second question on the margins, yes, we historically have seen that we have been recovering and reaching higher than where we were before. I think is it impossible was your question. No, it's not impossible. Nothing is impossible. It will definitely be a stretch given that we've had a few years, 2022- 2023, with really very good margins. Since then, we've added on a few acquisitions, where of at least one being quite large and will be hard to reach the group margin. We've said that during last year when we were below 20%, we said we were not happy at that level. We want to improve. Last quarter, we were at 20%. We also talked about flow-through before. The most important thing for us going forward is to make sure that we continue to deliver positive organic flow-through quarter-by-quarter, year-over-year.
Good. We have one final question from online, and that's about our acquisition of STANLEY from Pete Lace. Did you achieve any of the expected synergies from the STANLEY acquisition? Thank you.
We have work around it, I have said today, mainly we knew what to do, we have done actions to improve these synergies. One of the important things that Helena has said is our culture, how we do the business, and that is something that we need to have worked earlier with these acquisitions to really understand how to run the business in the Epiroc way. Actions in the execution are paying off today, and that's why we saw the improvement in the performance and I think that the two together will give us opportunity to grow.
If I may, when we did the STANLEY acquisition, of course, we have a lot of sales synergies, and I think that is what you are alluding to, Pete. Sales synergies, not yet so much. What we have stayed focused on in this environment has been consolidating footprint, making sure that, as you mentioned, José, that we bring the STANLEY Infrastructure business up to operational excellence so that when volume takes off, we will then be able to perform even better. From a sales synergy standpoint, still early days.
Thank you very much. Thank you everyone in the room. Thank you for those online listening. We will answer those questions that came through the webcast if we can. Some of them we will not answer, but if we can provide any color, we will, of course. Thank you very much. For everyone in this room, we will go to the Hotel Scandic, and then from there we will walk to the dinner, same 15, 25 minutes. Thank you very much here. Thank you online. Thank you, the management team. Thank you, Alexander, and everyone else. It's been a pleasure. Thank you