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Epiroc sees bigger Q2 virus hit to sales

Epiroc president Helena Hedblom says the Swedish mining and construction equipment manufacturer is expecting increased negative effects of COVID-19 mitigation measures by governments and customers on its June quarter results after it reported 7% lower Q1 revenues of SEK9.13 billion (US$904 million), year-on-year, and flat operating profit for the quarter.
Epiroc sees bigger Q2 virus hit to sales Epiroc sees bigger Q2 virus hit to sales Epiroc sees bigger Q2 virus hit to sales Epiroc sees bigger Q2 virus hit to sales Epiroc sees bigger Q2 virus hit to sales

Staff reporter

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"We expect that the demand both for equipment and in the aftermarket will be lower and that the effects of the pandemic will have a significant negative impact on revenues and profit in Q2," the company CEO said, noting overall effects of market changes on its Q1 results were limited.

"Revenues declined 8% organically … mainly because of lower equipment revenues, and partly as COVID-19 caused some delays in deliveries. The service business was, again, strong, which contributed to the resilience in our profitability. The adjusted operating margin improved to 20.9% [20.3% in the same period in 2019].

"Our business in China was impacted by the pandemic in February, but the situation has since improved. During March however, the impacts of the growing pandemic created a rapidly changing global situation, as restrictions from various governments and authorities started to disrupt the supply of components, transportation systems and manufacturing facilities. Some customers stopped or reduced the activity."

Epiroc's March-quarter orders fell 3% yoy to SEK9.77 billion (US$967 million), but were up 5% from the December quarter level. Operating profit was US$191 million.

Stockholm-listed Epiroc's (EPI-A) share price is down about 17% in the year to date to SEK96.8, capitalising the company at SEK116.74 billion (US$11.55 billion).