Hello, and a warm welcome to the Epiroc Q1 results presentation. My name is Karin Larsson, Head of IR and Media here at Epiroc, and by my side I have our CEO, Helena Hedblom, and our CFO, Håkan Folin.

As always, they will briefly present the results before we do a Q&A session. The drill.

Helena, please. Go ahead.

Thank you, Karin. Epiroc delivered a strong start to the year with solid operational performance and record high orders received in the first quarter.

Organically, orders increased 23% to 18.3 billion, and this is a record, which is meaningfully higher than both the previous year as well as previous peaks. The demand was supported by historically high mineral prices in segments to which we have a large exposure, such as copper and gold.

The equipment orders increased 44% organically, and the service orders increased 12% organically. We also noted double-digit growth in exploration and tools.

The infrastructure demand improved somewhat, although geopolitical instability creates uncertainty. Revenues grew organically by 2%, and adjusted operating margin increased to 20%, supported by organic measures such as disciplined execution and cost-saving initiatives.

As we had currency headwinds, tariffs, and higher input costs for tungsten in the quarter, the improvement is particularly pleasing to see. Looking deeper into orders, in total, orders increased 11% year-on-year.

Currency was still a headwind and impacted negatively by 12%. The organic increase was 23%, driven by strong demand from mining customers and was supported by several large mining equipment orders.

The large orders amounted to 1.3 billion compared to roughly 300 million in the previous year. Please note, as from this quarter, we say that large orders are 150 million and above compared to 100 million previously, and the numbers presented on this slide are restated.

Equipment growth was again very strong, and this time at 44% organically despite tough comps of 29% organic in Q1 '25. Sequentially, compared to the previous quarter, group orders increased 17% organically, driven mainly by the high mining activity, but we also had a seasonally better demand from infrastructure customers.

Our strong order intake shows that customers value our reliability, strong service, high parts availability, and equipment that performs. Thank you to all 19,000 employees around the world for relentlessly delivering tangible value to our customers.

Moving on to innovation, in the quarter, we noted that demand from autonomous surface drilling equipment was particularly strong. Link-OA, our technical solution behind the world's largest fully autonomous mixed fleet mine, Roy Hill, was recognized as Engineering Product of the Year at the 2026 Digital Engineering Awards, further underlying Epiroc's leadership in automation.

Across our portfolio, innovation for improved safety and efficiency continues to support growth. In exploration, our new Uphole Break improves safety in deeper and more technically demanding exploration drilling.

In surface drilling, the next-generation PowerROC T25 delivers higher fuel efficiency, lower operating costs, and simpler operation through an upgraded control system. Finally, in underground operations, customers have responded very positively to our MT66 S e-Drive, the successor to the MT65, the world's highest payload underground truck.

Compared with a conventional diesel truck in the same size class, it delivers up to 11% higher ramp speed, up to 7% lower fuel consumption, and higher productivity through greater payload and more efficient cycles, all without any changes to the mine's infrastructure. Let me now show a short video from when we demonstrated its performance to customers in Australia.

That'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 MT66 S e-Drive. The MT66 S e-Drive has the John Deere JD18 engine.

We then have two generators in place of the transmission. Those generators then power four electric wheel motors on the machine to propel it up and down the decline.

The torque that put on the axle is just amazing, and the speed of gradient, it's evident. If you have a look at the unit, it's a diesel motor, but it's a lot smaller, you got less emissions driving a genset 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. Being 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.

Partners in innovation, and a lot of them had a hand in the design of this unit. We listened, and we've delivered.

On the demand side, aftermarket demand was strong, driven by mining. We had especially strong demand for mid-life upgrades in the quarter, which will be translated into revenues within the next few quarters.

Within tools and attachments, we also saw an initial recovery in the demand for attachments used in construction. Our aftermarket represented 69% of revenues in the quarter, which is 2 percentage points more than the same quarter last year.

As we include service and tools and attachment in our aftermarket definition. Glad also to say that we have agreed to acquire Aventspark in South Africa, which will strengthen our service offering further.

They provide high-quality spare parts and services mainly to mining companies in South Africa. The company has around 120 employees and had revenues in 2025 of around 160 million.

Acquisition is expected to close in the third quarter this year. Moving on to operational excellence, our efficiency measures are clearly gaining traction.

In the quarter, these measures supported the organic EBIT contribution of 138 million, corresponding to approximately 0.5 percentage points despite external headwinds from tariffs and increased prices of tungsten. The margin progress we are seeing is gradual, structural, and sustainable.

This is not about short-term fixes, but about systematically strengthen how we operate. Cost discipline remains high across the group, and we are seeing improved workshop efficiency, particular within equipment and service, where execution and productivity are improving step by step.

We have also taken a number of targeted actions to mitigate higher import cost in tungsten, which is impacting our tools business in the Tools & Attachments business area. Actions include intensified collaboration with suppliers, increasing prices through surcharges, and continued rollout of our drill bit recycling program.

As in previous quarters, we continue to mitigate tariff impacts as well. With this, I hand over to Håkan to cover the financials.

Thank you, Helena. I will start then on group level, and our group revenues decreased 8% to 14.4 billion, however, with an organic increase of 2%.

We had a negative impact from currency by as much as 12% in the quarter. Q1 is normally a weaker quarter when it comes to invoicing, and we now have a lot of machine on its way to our customers.

The operating profit, EBIT, amounted to 2.8 billion. That includes items affecting comparability of -22 million, which is fully explained by change in provision for our share-based long-term incentive programs.

If we look at the margin, the operating margin was 19.8%. The adjusted operating margin, when we then exclude the items affecting comparability, increased somewhat to 20.0 to compare with 19.9 in the previous year and actually 19.6 in the previous quarter.

I would say that this is an achievement given the headwinds that we have talked about. Despite then tariffs cost, increased input cost for tungsten, we have a positive organic contribution, which is explained by efficiency measures we have taken in previous quarters.

As Helena just mentioned, net impact on our group EBIT from tariffs is just below 0.5 percentage point. If we then move on to the business area Equipment & Service, here we have orders which amounted to 14.2 billion, and that corresponds to a strong 27% organic increase.

Currency impacted negatively also here, and here it was -12%. To repeat what Helena already said, there was a strong underlying growth within equipment, where we saw as high as 44% organic growth.

The large orders, which we now define as orders above 150 million, totaled 1.3 billion, which is up then from 280 million in Q1 2025. Even if we saw a large increase on large orders, even if we were to exclude these, we would still have delivered a double-digit growth, which then indicates that we have a broad-based and strong underlying demand within mining equipment.

Exploration was also, again, strong, which is encouraging then for mid- and long-term. For exploration, it's particularly strong when it comes to gold.

On the service side, we had an organic increase of 12%, and this was supported by circular solutions and, for example, mid-life upgrade. We have talked a lot about nickel in our calls in the last year, and now the comps for nickel, which was weak in '25, have eased somewhat.

I would still say though the comparables have eased, but we still have many customers which have their nickel mines still under care and maintenance. If we look sequentially instead, orders received increased by 17% organically.

Then on the revenues for the same business area, they were 10.8 billion, and that corresponds to an organic growth of 2%. Again, negative impact from currency, -10%.

On the revenue side, the organic increase for service was 3%, while equipment actually had an organic decrease of -1%, and therefore the mix between service and equipment shifted towards slightly more service revenues. The EBIT for Equipment & Service was 2.6 billion, and that corresponds to an EBIT margin of 24.0.

We had a positive organic contribution explained by disciplined execution in the measures we have taken in previous quarters. Also, if we look sequentially, we had organic improvements in the margin.

Then I will move on to the other business area, Tools & Attachments. Here, orders received decreased by 2%, but we had a negative impact of -11% from currency, and therefore, organically, orders for the business area increased by 9%.

In total, orders were 4.1 billion to be compared then with 4.2 billion in the first quarter in the previous year. The growth here we are seeing is mainly driven by mining, but we also see an initial recovery in the demand for attachment used in construction.

When we look sequentially instead, orders received increased by 16%, again, partly due to the strong mining, but we also in Q1, we have seasonally better demand from our infrastructure customers. Next slide then, revenues for Tools & Attachments, they increased 5% organically and were 3.6 billion.

Operating profit, EBIT, decreased 12% to 404 million, which is down from 461 in the previous year, and we had a margin here at 11.3% versus 12.1 in the previous year. We had currency headwind, and we also had increased input cost for tungsten and tariffs, which impacted the margin negatively.

Sequentially, we also have the increased input cost for tungsten, which had a significant negative impact on the margin. When we presented the Q4 result in January, I said that the full-year impact on this business area EBIT would be a few tenths of a percentage point.

Given that the tungsten prices since then have continued to increase substantially, we now anticipate this number to be higher for the full year, and the most severe impact we have seen now in Q1. Helena mentioned this already, we have taken several actions to offset these cost increases, and as for now, we anticipate that the negative impact will be reduced gradually during the year.

What I would like to emphasize though is that despite all the headwinds, we actually have a positive absolute organic contribution, and we have a good traction on efficiency measures that we have already taken. Moving on to the next slide where we look at cost, and start with cost for admin, R&D, and marketing, they were 8% lower than Q1 last year.

We are continuously working on being more efficient. We have made good progress on admin and marketing both year-on-year, but also sequentially.

In percentage of revenues, it was 17.4%, and it was 17.5% last year. Net financial items were quite low at -84 million, clearly lower than what we had last year, 207 million, and this was to a large extent driven by lower interest rates.

Our tax expense, -657 million, in line with last year's, and corresponding to an effective tax rate of 23.8%, which is also within the guidance rate we have of 22 to 24%. Moving on to the cash flow, operating cash flow was 1.1 billion, to be compared then with 1.6 in the previous year.

Main explanation is lower profit level, and also net financial items. Cash conversion rate 12-month is now at 88%, while it was at 100 a year ago.

Working capital then, which is obviously a meaningful factor for the cash flow, and when we compare to previous year, the net working capital have increased to 3%, it's now 23.5 billion. It also increased sequentially compared to Q4.

Increased inventories is the main explanation after a period of strong equipment orders. Our lead times are still at normal levels, but given the strong order intake, we are now ramping up production, which means that we are increasing inventories as we're building more equipment, but we will see increased output and deliveries in the coming quarters.

When we look at the average net working capital in relation to revenues, it was now 37.4% compared to 36.9% in last year. Next slide on capital efficiency, our net debt decreased to 10.5 billion.

That's down from 12.3 last year. Our financial position is strong with a net debt to EBITDA ratio of 0.71, and that has strengthened further than from 0.76 last year.

Return on capital employed, 18.5%, down from 20.3, explained by lower profit level. Please note then that all these numbers are rolling 12-month figures.

At the end of the quarter, we had a cash position of 9.2 billion. If you join our Annual General Meeting next week, the board is proposing for the AGM to decide on a total dividend of 4.6 billion, of which half of that will be distributed already in May, and the next installment will be paid out in October.

With that, I hand back to you, Helena.

Thank you, Håkan. To wrap up, the first quarter clearly demonstrates the strength of our business.

We delivered record high order intake with strong organic growth driven primarily by mining. Mining demand remained robust across all regions, while we also started to see early signs of improvements in infrastructure and construction from a low level, but moving in the right direction.

Looking ahead, we expect mining demand to remain high in the near term, and for construction customers, we anticipate somewhat improving demand supported by gradual market normalization and customer interest in productivity-enhancing solutions. With a strong order book, proven innovation, and a clear focus on execution, we are well positioned as we move forward.

Thank you, and over to you, Karin.

Thank you, Helena. Thank you, Håkan.

Before we move into the Q&A session, just a quick reminder that we will be hosting our Capital Markets Day on June 8 to 9 in Örebro in Sweden. Many of you have already signed up, and we're really looking forward to hosting you.

To those of you that were worried about transport back to Arlanda Airport already on Tuesday evening, or in other words, you are not joining the Volvo Capital Markets Day, I have good news. We will adapt the program and add buses to safeguard that those of you that need to get on the plane around 7:00 PM on Tuesday will do so.

We have around 20 seats available for the Capital Markets Day as of now, and if you don't know if you are registered or not, the answer is not far away. All registered and approved guests have received a calendar invitation for the event.

If you don't have the calendar invitation in your calendar, you need to sign up. Thank you.

Operator, you may open the line for questions.

Hi guys, thanks for taking my question. Maybe the first question from me is on the drop-through within Equipment & Service.

Obviously a very strong performance. I calculate a 66% organic drop-through.

Do you mind just kind of helping us bridge how that sort of performance happened? I guess normal operating leverage in the business should be maybe 30% to 40%.

So, 66% is a step above that. Do you mind just sort of giving us a bit of color in terms of the sort of difference between the two?

Maybe I can start. What we have been focused on has been to improve our service operation, which is pure efficiency measures.

We sit with roughly 7,500 service technicians, there is always work to be done there in addressing efficiency. That is one area.

The other area is efficiency measures we have taken within the overhead structure, so that is more admin, the consolidation of customer centers, for example, is one of them, but also I would say general efficiency measures when it comes to transactional HR, finance, those type of more back-office structures. Then also of course with an increased volume now in our factories, that of course also gives higher absorption in our factories.

We have a good development when it comes to overhead variance in our manufacturing footprint in Equipment & Service, as well as in Tools & Attachments.

Thanks. Maybe just one follow-up on that was just in terms of whether the actual service mix itself, the internal service mix, did that improve in revenue terms year-on-year?

All right, but no, I would say it's

If you look at the whole BA, I guess your question is specifically on service. If you look at the whole BA, then we had more service this year compared to Q1 last year.

If you look within service specifically, I would say the mix is rather similar this quarter as in Q1 2025.

Okay. Thank you.

Then just one more question for me. You mentioned the autonomous orders.

I seem to remember you said following the delivery of the Roy Hill project that you were basically going to open up the order book. How is this sort of what happened in the quarter?

Is this one of the big drivers for the equipment growth? Do you mind just maybe giving us a sense of how material this was during the quarter?

What is supporting the order growth in this quarter is autonomous solutions related to drill rigs. It's fully autonomous drill rigs and quite a lot towards the surface drilling, where we have a very strong position.

It's not related to truck automation, but it's the same system we're using for both now. Of course, we're leveraging the strength of the platform also on the rig side.

Perfect. Thank you very much.

Hi Helena and Håkan, Klas at Citi. A couple of questions from me.

First, coming back to the E&S margin, it's obviously great to see that the drop-through is improving, and it seems like the self-help actions are biting, and it's a bigger driver than the improving mix. I still wanted to ask if there are any positive one-offs above the line.

Obviously, inventory days are moving higher, which is to support the backlog deliveries into the second half. Do you see any overproduction effect boosting EBIT?

Also, Håkan, on other operating income and expenses in the P&L that move to a positive 267 million, just wondering what's going on here. Is this cost out or something else, and how should we think about this line going forward?

Thank you.

I can start and then you can continue. We have no, what to say, one-offs that, what to say, explains, what to say, the good drop-through.

This is structural efficiency measures that we have taken that supports the margin development. We produce to orders, on the equipment side, there is almost zero speculation orders.

I wouldn't say that there is any, we'll say, overproduction. It's more that we're ramping up, and that gives of course better fill rate in our factories as I explained.

If I take the second question then on operating expenses, that line in the P&L, it's very much related to revaluation of outstanding AR and AP. If you follow the dollar during the quarter versus the Swedish krona then, it started slightly above 9, it was actually below 9 for a while, but then it went up again just by the end of the quarter up to 9.57 I think was the final rate.

Then when we revalue our outstanding receivables, especially then at the end of the quarter when they are in US dollars, then we get quite positive impact on those. That's very much where that line comes from.

That is part when we then do the FX portion in the bridge, that is one portion of this negative 0.6 in the FX. That was a positive, and then we have other negative.

Got it.

No, totally understand, yeah. It's not double counting, I totally get it, okay.

Then my second one is on the T&A margin. If you could say, Håkan, what the underlying margin was in the quarter ex the tungsten impact.

Then on the compensation, great to hear that you think this was the worst quarter. When you say that this effect will level off, is this because you were a bit late introducing the surcharge, the full surcharge effect will come already in the second quarter?

Obviously, the actual tungsten absolute numbers should probably go up, right, in COGS. Just interested in that dynamic, and how quickly you can fully compensate through the year.

Thank you.

I wouldn't say that we were late, but it's not just pressing a button and then you fix all the pricing. We're also under contract with customers, it takes some time, and obviously it's a competitive situation as well.

In the quarter, it was actually more than 1 percentage point impact on the Tools & Attachments business area. What we are expecting is that we will gradually reduce that over the year, but it's not going to be gone in Q2.

There will be a gradual decrease over the year.

Got it. My absolute final one is on the billings.

A pretty low sales growth after the backlog and obviously it's back-end loaded in terms of deliveries through the year. Do you see increased bottlenecks or lead times getting more extended?

Just trying to understand how we should think about sort of the sales trajectory in equipment as we go through the year. What kind of lead times should we assume now in equipment?

Thank you.

We are at normal lead times. I would say that this is a timing issue, and we have seen gradually increased output from our factories.

Then, of course, you have a lead time over sea to reach the end market. We don't have any bottlenecks in the system.

I think we are ramping up according to plan. During my years in this company, we've done this many times.

I think this follows a normal ramp-up phase. Thank you.

Thank you.

Hi, good afternoon. I wanted to ask firstly about the equipment orders.

Obviously we've taken a pretty significant step-up this quarter, both in large orders and base business. Could I just get a sense of the large order pipeline, I don't want to pin you to a number, but when we think about kind of individual orders and opportunities over the next few quarters, is it conceivable to stay at least sort of somewhat around this level?

Is there anything in the kind of ex large order equipment business that you think is seasonal, whether that's kind of CapEx budgets being replenished and all the customers coming back and ordering immediately, or do you just more see this as a reflection of the strong environment and high commodity prices? Effectively just trying to gauge sort of to what extent this was a kind of one-off boost or at least we should be continuing at somewhat around the 7 billion level going forward.

When I look at the pipeline of large orders out there, it looks very healthy. It's a lot of expansion projects ongoing in the world, brownfield expansion.

There is a lot of replacement orders out there. I would say it looks strong, I would say, in all regions, especially towards gold and copper, where we have a strong position.

Also that we see the underlying activities is also healthy. I wouldn't say that there is anything, we'll say, extraordinary.

I think what I see is that this geopolitical situation that we are in in the world, it's bringing countries and governments to the position that controlling the value chains is a strategic topic, and we see also a lot of governments working on shortening the permitting time, giving faster permit to expand mines, etc. Of course, the very strong commodity prices are helping as well customers to take the decision.

When I look at the pipeline, it's a very healthy pipeline. Our fleet out there is also older than ever, which of course gives a good support also for replacement.

It's always the lumpiness of large orders. This quarter now we had 1.3 billion.

A year ago, we had only 300 million. Of course that lumpiness you can't really predict quarter by quarter.

When I look at it from an 18-month perspective, which is how we look at the business cooking or the pipeline, it looks healthy.

That's great. Then just second, when you think about your capacity, obviously, given the strong equipment growth, the revenues will follow.

At what point does your kind of capacity become an issue? Can we grow the equipment business 10, 15% for a couple of years before we have any capacity issues?

How should we think about that?

I don't see capacity as an issue on the equipment side. We have a very good footprint.

We have a large footprint in US, we have in Europe in Sweden, we have in India in Nashik as well as in Nanjing. We've also worked during the last I would say 5, 6 years in making sure that we can leverage this footprint in a better way, we can produce the same product in several locations.

That of course supports also the ramp-up. We also are investing and expanding our footprint in India as we speak.

That will come on board, that space or that new factory will come on board later this year. We're not running full shifts in all these facilities, there's much more room to increase capacity.

Because here it's more manning for us, that's what it is to increase assemblers. Space we have.

It's more a matter of getting the manning in, training them, because it's not simple operations, making them able to produce our equipment, getting our suppliers to also increase their production so we can get the components, but it's not about really our own facilities or space. It's more ramping up to the level where we want to be, which is what we are in the process of doing right now.

Okay. Just very finally, you've called out in the last 12 months some issues at the Kamoa mine that's affected your service business.

I see from the kind of customer they've had some challenges again this quarter. Did that have any impact on your service business and your service orders this quarter, and would you expect it to in the coming quarters?

We have had an impact during during during last year, we had quite big impact. That has gradually, what to say, it has gradually improved.

I wouldn't I There is always There is always it's not something that I would like to point out as as, an issue in this quarter. I think we're back on back on healthy levels in in in Kamoa.

As you say, they still have have have They're not back to the same production level as as before.

Fantastic. Great to hear.

Thank you.

Hi, good afternoon. John from Deutsche.

A couple, if I may. First, wanted to know if you're seeing any pre-buy or abnormally strong activity in your divisional exposures.

We, yeah.

Ahead of anticipated price increases?

Yeah. It's of course always difficult to see if it is, say, pre-buying or not, given also the high activity level in especially in mining.

There might be some pre-buying on the tooling side, given that the carbide prices has turned up so rapidly. That's the only area where I fear that there could be some pre-buying.

There's no verification that that is the case, but that would be a logic reaction given the very, what to say, steep increase in tungsten also during this quarter.

One of the things I think we're seeing globally is kind of costs implications of the conflict in the Middle East. I'm just wondering if you could give us a bit of context on your energy cost, logistics cost, and how you're handling pricing through the year.

Are you putting preemptive increases up in Q2? Is that not a feature?

Is it normal that you do quarterly? Should we expect a large price upcoming?

Energy cost is not a big part of our production cost, since we do very little manufacturing ourselves, we do more assembly. What to say, energy for us is not really material from a cost standpoint.

Of course, would this continue could have indirect impact for our customers, of course, that cost for energy if it stays up high. For us as a company, it's not material.

What is more likely that we will feel is if logistic cost and also shipping time extends, that might have a bigger impact than our direct energy cost. Of course, if we get higher logistics cost getting the equipment out or tools out, then we usually try to push that through to the customers.

Understood. A final question, if I may.

You've seen kind of a change in the Section 232 tariffs with regards to metal and source of origin. I know you're a big producer in the US on the Pit Vipers.

Can you talk us through your exposures here and what sort of pass-through provisions you have in your contracts?

We've seen some changes during Q1 in terms of tariffs. We have the change in 232 that came now actually after Q1, and then we also had this IEEPA tariffs that were ruled illegal, and which were then replaced by this 10% the the general 15% were replaced by 10%.

I would without going into too much detail, I will say that those two changes net net, they will be somewhat positive for us.

All for. Thank you.

Good afternoon Helena, Håkan, Karin. I want to start on large orders.

I'm curious as to the decision-making around the increase in the definition there, 250 million. Is that about price, or is there some other basis?

Then as we think about the 1280 figure for the quarter, was there any contribution there from call-off on the Fortescue contract? I know that that launched about 12 months ago.

There was nothing from Fortescue in Q1 on orders. We have kept this 100 million as the limit for large orders since we created Epiroc, which given I would say the size of the deals that we're landing, but also what to say the total package that we normally sell, we felt that it's better actually to increase this, especially the more we include also different type of digital solutions, automations in a large deal.

It's a more relevant number to have 150 million as the number.

Fair enough. On T&A then, you've called out double-digit growth in North America.

Interested to hear if that's all attachments, and then in Europe still a decline, any indication of benefits from the German fiscal plan? Is there any sort of regional call-outs to make in Europe?

I guess just more broadly across T and A, how do we think about the balance of those two in terms of demand in the quarter?

It was strong in North America, and that is supported it's both attachment and it's tools. When we look into Europe, I wouldn't say that we have started to see an impact from this package in Germany yet, however, the sentiment out there among the dealers is becoming more and more positive, and we also see that is demonstrated in the order intake.

If I look on the demand, it's strong in both areas, but as we have explained, it's from a low level of the attachment side, which I think is important to remember. It's lower growth in attachment, and it's higher on the tools business.

Very clear. Thank you.

Hm.

Great, thanks very much for taking my questions. First, if I can start on the service side.

[crops?] , on orders in the quarter, clearly very strong.

You talked a little bit about a comps help there from nickel in particular, but I guess that's going to remain the case for a couple of quarters to come. Can we expect service to remain a double-digit growth business for the next few quarters, or anything exceptional there that you don't think can continue?

We see high activity levels across the different regions, and this is very much about taking customer share and working with a fleet. It's a good balance, I would say, on the growth we see in service.

In this quarter, it was also supported by strong demand for mid-life upgrades, and that of course comes and goes. I'm pleased to see that we can show this numbers in growth of service.

I would say we will do our utmost to keep on growing our service business. As we have also talked about for many years, we have the fleet out there, it's very much up to ourselves, high availability, the best service technicians, and very structured approach in how to capture this customer share of existing fleet.

Pleasing to see the development here now the last, I would say, last two quarters.

Great. Then just on capital allocation, on the M&A side, you announced a small deal this quarter.

Can you talk a little bit about your pipeline and whether we should expect that activity to accelerate going forward? Thank you.

We have our pipeline, and it's close to core, and it's areas and companies that we know well and that we've been working with for a long time. Then timing is everything.

I think we have for some years now stayed focused on integrating the acquisitions we have done, and making sure that we realize the values that we expected. Acquisitions, it's long process, of course, but we have a solid pipeline.

Hopefully we can also continue. Now we announced one in the aftermarket this quarter, very similar to some of the other acquisitions we have done previous years as well.

We stay with the themes, which is closing product gaps or regional gaps, strengthening the aftermarket, but then also could be technology capabilities that we would like to add.

Thank you.

good afternoon. It's Rory from OxCAP.

Thank you for taking my questions. Most of them have been asked.

I just wanted to come back to this point on service growth, the orders, double-digit order growth, but revenue growth just +3% in the quarter, and how that relates to the customer share comment that you made. Are there any numbers that you can put around that customer share, and I guess, a kind of broader, higher-level comment on how that is going, not just in the quarter, but how you see that going through the course of this year as we talk about autonomous trucks, autonomous drill rigs, etc., how that kind of those actions are helping that?

Any more color on that would be really helpful. That would be my first question, thanks.

On service growth, I think there are a number of different, what to say, areas that we're working on, of course, to make sure that we get more service contracts, but also that we get the availability in place so that we can capture the pure parts sales. This is very much about making sure that you are the most trustworthy supplier in that particular mine or that particular region.

We have a very structured approach. I've been saying that we have a little bit more than 50% customer share over many, many years, because in a way, we are building this opportunity ourselves.

It's trending in a positive way, and of course, the ambition here is to continue to grow this business in a structured way. Very pleasing to see, of course, the environment we see now with very high activity levels, that also supports that customers wants to keep existing equipment up running at the highest productivity, and that's why we see more mid-life upgrades as a product or as a service.

Also of course, that the machines are running with high engine hours, and high engine hours also consumes more parts. There is a correlation between the activity level and the what to say, the growth.

To your point here, we are step by step improving the customer share, and at a certain point, I will have to change the number, but so far we say that we have a little bit more than 50% customer share.

That's brilliant. Thank you.

Then, I think we talked about this on a previous call, but from memory, what was that customer share, where did that peak, I guess, at the peak of the last cycle? Can it get back there, and do you think you need to invest more significantly in your sort of downstream service network costs in order to do that, or you're happy with a sort of organic progression from here, from that 50% to a higher number?

When we had the mining peak before, we were at a lower customer share in the aftermarket, this is something that we have gradually worked on, since I would say 2011, 2012, especially since the creation of the parts and service division that happened during the Atlas Copco time. I would say that for us, it's a very structured approach, and it is very much the closeness to our customers that is key.

That service network with workshops, etc., that is something that we are investing in constantly, especially with new countries embarking on a mining journey. Then, of course, we are early on and making sure that we have a strong footprint.

This is about both having workshops in place, but also to train local people in that region or in that country. This is something we don't talk so much about it, but Håkan and myself, we are taking decisions like that more or less every quarter to do this type of investments in new workshops with very good returns.

This is not, what to say, a lot of money to get that presence and that footprint, and it matters a lot for our customers. We see this as it sends very strong signals to customers, and it's very much a prerequisite to be and to grow the service business with a large mine site over time.

We have a number of good examples where we have been very early on, and we have taken these rather small investments and built a very strong relationship and a strong business with customers.

That's really helpful. Thank you.

Then just finally from me, obviously, you've got this sort of intention to get net working capital as a percentage of sales down over time, but just given what you see in terms of deliveries for Q2, how should we think about that improving, or maybe getting worse in Q2?

It's rolling 12-month figures, the working capital of the sales ratio. Then I would say, we are still ramping up production and getting deliveries out.

For us right now, the most important thing is that we really get the equipment to our customers as soon as possible, while we continue to ramp up so we can meet deliveries versus the order intake we have had now for a few quarters. I wouldn't be too optimistic on the working capital development in the second quarter as such, but long term, definitely, yes, we think we can do better than where we are right now.

For now, it's really more about making sure we ramp it up as much as we can. One other factor playing into the working capital development and on the inventory side is of course the tungsten prices as well, given how much they have increased, that also has an impact on the inventory levels.

Thank you very much.

Thank you, and good afternoon. Two questions on the margin.

Firstly on the E&S margin, I think the service share of sales was at its highest levels in a couple of years, I guess you had a margin supportive mix. Based on the strong order intake in equipment, we should see equipment grow as share of sales in the coming quarters.

Is it fair to assume that the incremental margin on the equipment side will be higher than the business area margin, i.e., is it fair to assume an equipment drop-through of around 30% or more? Thank you.

Yeah. What would you say?

You're 100% right, of course, when it comes to the mix situation, that this was from profitability point of view a good mix in this quarter. It's fair to assume that for the equipment we sell, the kind of incremental equipment we sell will come with a better margin than the average margin for the equipment business.

I think we will stop there and not say exactly where it is versus the 24 that we have noted now.

It might not be accretive to the business area margin. That's what you're saying.

I said I didn't answer it really, your question. I said it's better than the average equipment margin.

Understood. Then, secondly on the gross margin, 35.4%, it's still down 300 basis points year-over-year and meaningfully lower than the 37.4 that you have achieved on average between 2022 and 2025 with the current group structure and now possibly higher sales volumes going forward.

Is it possible to improve the gross margin to the levels that we have seen in previous years?

We had a question before on the currency side, on the operating expenses, which were quite positive. All in all, currency was negative.

A large of the negative items you see on the gross margin, I think that's one thing you have to remember when you look at the development of the gross margin as well.

At current FX rates, we should not expect gross margin improvements or

We are obviously striving to do better all the time, I wouldn't say we cannot see better gross margins. I think that's one of the explanations why you see quite a big decrease on the gross margins.

Understood. Then, lastly on your PCD bits, do they also contain lots of tungsten?

Will the input cost go up also on your PCD bits, or is there a possibility that you will gain share in that part because of higher tungsten prices? If that's true, have you already started to see signs of that?

A PCD bit also contains tungsten, so that's the majority, but of course with the layers that you put on top of diamond that enhances the life of the bit substantially. With the prices on tungsten as they stand today, it's quite clear that the gap there and towards PCD has narrowed quite a lot.

We will do everything we can to push this solution, of course, because it's a brilliant solution, also from a productivity standpoint, but also from an automation standpoint. I think it's application driven.

It's not so that PCD will replace all the types of normal tungsten bits that we have. That's not realistic.

I do believe that we have not seen that yet, but I do believe that we will see more and more interest in this solution in the coming quarters.

Understood. Thank you very much.

Thank you.

Yes, good afternoon. Congratulations with record orders, obviously some impressive numbers out there.

Could you talk about base new equipment orders excluding large ones? Those, well, I believe up 6% year-over-year and over 20% sequentially.

Any particular driver for those to call out? Maybe your exposure to exploration spending played a positive role over here.

It's good underlying activity, both towards gold, towards copper, also replacement of few units towards iron, and of course for surface applications, that's quite high-value numbers, but also strong development towards exploration. We have a very solid offering towards exploration with both equipment for surface exploration, underground exploration, both core drilling as well as reverse circulation after we acquired the assets from Schramm.

We have a very strong position towards exploration now, and we are leveraging that strength with the upticking activity level now especially around brownfield exploration. I would say it's a combination.

There's nothing standing out. I would say it's more high-level across the different regions on the underlying activity levels on equipment.

That's great. Production ramp-up is a nice topic always to talk about.

How advanced are you on this ramp-up? When do you foresee yourself reaching the targeted production level?

Oh, that depends on where we are volume-wise quarter by quarter. We have initiated all the work that we normally do when we're ramping up, and we started that work during the autumn given the increase in order intake for equipment.

Of course, we are increasing the speed now given the orders we have received here in Q1, but also what we see in the pipeline for Q2. As I said, it's about increasing manning, working close together with our sub-suppliers to safeguard that lead times stays as short as possible.

Far, good on lead times. It's key to keep lead times short, of course.

That's great. Final one from me.

What sort of growth rates are you seeing in gold exploration in particular right now? Will you be prepared to share any rough ranges?

No, but

we see good growth, and of course, we have some, say, business with juniors, but majority of our business in exploration is towards large mining companies, and we see good exploration activities towards gold. What is boosting this is also that we have a different offering today than we had some years ago, especially with the reverse circulation products that came with the Schramm acquisition.

Thank you very much.

Hm.

Yes, hello. Thank you.

Firstly, on the orders in equipment, would you say that you have a larger share of rotary drill rigs as a percentage of total orders versus recent quarters? That's the first one.

We have a strong order intake for rotary drill rigs in the quarter, and several of the large orders were in that space, together with full autonomous solutions as well. That clearly supported the number there, 1.3 billion.

Perfect. Thank you.

Secondly, on service revenue growth, can you give us a sense of how much parts and kits grew this quarter?

It was a similar mix, I would say, between parts and traditional service, but then we had I would say an extra boost coming from mid-life upgrades, which is also more lumpy in nature, because you do it once, and then that is not coming back of a machine.

That was on orders, right? I was referring to revenues specifically, if parts and kits above the

sort

of reported growth.

If you think about what we could define as service, where we have both what we call parts and services and we have the digital part, then actually the parts and service business was growing somewhat faster than the digital business, if that was your question, Gustaf.

Yes.

Okay.

Thank you. Lastly, just adding to Andreas' question on the E&S margins, if we take that higher order growth for mid-life rebuilds in Q1, do you think that is a drag on the margin for Q2 and onwards, or can you compensate that by leverage, efficiency measures, etc.?

Thank you. Now,

I think we can compensate that, because mid-life upgrades, when we started this journey, of course, when you're in the first time you do it, of course, you're less efficient, and the more you do it, the higher efficiency you get from the service workshops. For us, it's positive to have a mid-life rebuilds, and it's a profitable product for us, and it keeps the stickiness to customers as well.

Perfect. Thank you very much.

Hm.

Thank you. I would like to interrupt there because time is up.

Thank you, everyone, and just on the revenues on service in Q3 and Q4, respectively, we had strong demand for traditional service, which of course has been invoiced now in Q1, and mid-life upgrades will come in later. With that, I know we have a few of you in line.

We will reach out to you after this call. Thank you very much, everyone, for taking the time.

Thank you.

Thank you very much.