Interim report Q3 2019 October 25, 2019 Per Lindberg, President - PowerPoint PPT Presentation

Interim report Q3 2019 October 25, 2019 Per Lindberg, President and CEO Anders Lindén, CFO

Growth in aftermarket, lower equipment demand Key highlights Q3 2019 • Strong aftermarket - High customer activity Solid and improved underlying margin • Revenue mix positive – • Good cash flow • High interest for automation and information management, and for battery-electric vehicles • Order intake of equipment lower than expected – Infrastructure relatively weaker than mining Actions to improve resilience and safety • – Restructuring in Tools & Attachments 2

Key financials Q3 2019 Orders received, MSEK, and change % +2% • Order intake up 2%, -6% organic 9 600 9 600 Revenues up 5%, -3% organic • 9 413 +3% 9 400 Operating profit up 2% • 9 200 -6% – Currency and acquisitions contributed positively +5% 9 000 – Restructuring costs of MSEK 179 in Tools & Attachments 0 • Margin at 19.0% (19.7) Q3 2018 Organic Currency Structure & Other Q3 2019 – Adjusted for restructuring costs and LTI at 21.3% Revenues, operating profit and margin • Operating cash flow improved to MSEK 1 883 (777) 12 000 30 10 626 10 558 10 158 9 843 9 785 9 651 10 000 25 8 464 8 233 7 879 7 610 7 411 8 000 20 21.3 20.5 20.0 19.7 19.7 19.1 19.0 18.6 18.4 18.4 18.1 6 000 15 4 000 10 2 000 5 2 263 2 162 1 810 1 898 1 930 1 927 1 468 1 520 1 528 1 515 1 414 0 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Operating margin, % Operating Profit, MSEK Revenues, MSEK Adj. Operating margin, % 3

Leading the way in innovation Q3 2019 • Strong market attention for the 6th Sense automation and information management solutions A large mining equipment service contract • won in Chile with possible implementation of automation features • No. of connected machines increasing rapidly • Strong interest for battery-electric equipment • Scooptram Automation Total Mobilaris Onboard ™ • Scooptram ST14 Battery and Minetruck MT42 Battery at Agnico Eagle’s Kittilä mine, Finland. • New Powerbit Underground The batteries are supplied from Northvolt, aiming for minimal carbon footprint and the highest levels of recycling

Continuous strive to improve operational excellence Q3 2019 • Workforce reduced by 500 organically in 2019 Further efficiency improvements will be carried out in • the coming quarters and expected to give visible effects in the first half of 2020 • Divestment of geotechnical consumables product line in Tools & Attachments • Restructuring of handheld rock drilling tools in China Supply chain program progressing according to plan • Expansion of a production facility in Örebro, Sweden •

Sustainability as a competitive advantage Q3 2019 • Safety and well-being – Positive trend in reducing work-related injuries • Highest ethical standards – “Speak Up” launched • Passionate people and courageous leaders – Epiroc Days – Leaders committed to value creation for all stakeholders • Responsible use of resources – CO 2 emissions from transport improved – Energy/CoS decreased 6

High proportion of recurring business Per segment Q3 2019 Order intake, MSEK and growth, % Revenues in the quarter (Total growth / Organic growth) Equipment Service Tools & Attachments +2% / -6% 9 600 9 413 2 727 27% Equipment 32% 3 601 -24 / -27 68% Aftermarket (63) 4 147 +16 / +11 Service 3 589 41% 2 665 +17 / -3 Tools & Attachments 2 285 Q3 2018 Q3 2019 7

Segment: Equipment & Service Orders received, MSEK and change, % -4% • Orders received down 4%, -8% organic 7 190 7 200 • Service orders up 11% organic 7 000 – High customer activity 6 874 -1% -8% 6 800 +5% • Equipment orders down 27% organic 6 600 – Investment decisions postponed 0 – Cancellation of large order Q3 2018 Organic Currency Structure & Other Q3 2019 Revenues up 2% • Orders received, revenues and operating margin Supported by currency – 10 000 30 29 7 325 7 178 8 094 7 677 7 442 7 947 7 702 7 334 • Margin increased to 26.3% (24.6) 8 000 7 248 7 190 7 116 7 115 28 6 874 6 263 5 788 6 323 6 262 6 200 5 943 – Positive revenue mix 27 26.3 5 495 6 000 5 406 5 220 25.6 26 24.6 4 000 25 24.2 23.9 24 23.3 23.2 23.0 22.9 2 000 22.6 23 22.3 0 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 Q3 2019 2019 Operating margin, % Order intake, MSEK Revenues, MSEK 8

Segment: Tools & Attachments Orders received, MSEK and growth, % +17% • Orders received up 17%, -3% organic 2 665 2 700 – Rock drilling tools orders negatively impacted by 2 600 optimization of product offering 2 500 +15% Hydraulic attachment tools decreased organically – 2 400 2 285 2 300 • Revenues up 16%, -3% organic +5% -3% Margin of 5.7% (13.6) • 0 Q3 2018 Organic Currency Structure & Other Q3 2019 – Restructuring cost of MSEK 179 Orders received, revenues and operating margin Handheld rock drilling tools in China o 6 000 18 Divestment of geotechnical consumables o 14.8 16 14.6 14.3 14.2 Adj. for restructuring, the margin was 12.2% 5 000 13.6 o 13.3 13.0 12.8 14 12.4 – Collection claim towards distributor, provision of MSEK -41 4 000 12 10.2 2 926 2 765 2 826 10 2 760 2 452 2 382 2 470 3 000 2 297 2 341 2 270 2 665 2 197 2 550 2 605 2 440 8 2 285 2 306 2 245 2 239 2 161 2 141 2 139 5.7 2 000 6 4 1 000 2 0 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Adj. operating margin, % Revenues, MSEK Order intake, MSEK Operating margin, % 9

Financials

Profit impacted by restructuring costs Q3 2019 Operating profit and margin 4 000 24 22 3 500 21.3 20 20.5 20.0 19.7 19.7 19.1 18 19.0 3 000 18.6 18.4 18.4 18.1 16 2 500 2 302 14 2 154 2 160 39 1 991 2 024 1 989 12 233 2 000 126 59 181 1 610 1 578 1 535 10 1 521 1 459 50 95 15 1 500 53 45 8 2 263 6 2 162 1 000 1 930 1 927 1 898 1 810 4 1 528 1 520 1 515 1 468 1 414 500 2 0 0 -8 -2 -4 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Operating margin, % Items affecting comparability*, MSEK Operating profit, MSEK Operating margin, adj., %* * Q1 2017-Q4 2018 includes costs related to the split from Atlas Copco. * Q1 2017-Q3 2019 includes change in provision for long-term incentive plans. * Q3 2019 includes restructuring costs of MSEK 179 in Tools & Attachments. 11

Profit impacted by restructuring costs Looking into the numbers Operating profit and margin Underlying Margin: 19.7% Adj. margin: 21.3% Margin: 19.0% margin: 21.7% +2% +14% +16% 2 250 2 201 2 200 +41 2 160 2 150 54 2 100 2 050 +179 2 000 -63 +89 1 950 1 927 -1.3pp -0.1pp 1 898 +3 1 900 +0.7pp 1 850 50 0 Q3 2018 Organic Currency Structure Q3 2019 Restructuring LTI Reported Collection claim Underlying margin and other adj. margin “Structure and other” includes operating profit/loss from acquisitions and contract manufacturing MSEK 55, one-time items MSEK -120 (restructuring costs of -179 + net split costs of +59 = -11-(-70), and change in provision for long- term incentive programs MSEK +2 = -54-(- 56) “Items affecting comparability” includes change in provision for long -term incentive programs MSEK -54 and restructuring costs of MSEK 179 in Tools & Attachments. Provision for collection claim of MSEK - 41 is included in “Organic”. 12

Equipment & Service: Profit bridge Looking into the numbers Margin: 24.6% Margin: 26.3% +10% 1 932 1 940 +5 +0.3pp 1 920 +61 1 900 -0.3pp 1 880 1 860 1 840 +102 1 820 +1.7pp 1 800 1 780 1 764 1 760 1 740 20 0 Q3 2018 Organic Currency Structure Q3 2019 and other 13

Tools & Attachments: Profit bridge Looking into the numbers Underlying Margin: 13.6% Adj. margin: 12.2% Margin: 5.7% margin: 13.6% 377 380 360 +41 336 340 324 320 300 -88 280 -2.0pp +50 260 +1.4pp +179 240 -129 220 -7.3pp 200 180 157 160 140 20 0 Q3 2018 Organic Currency Structure Q3 2019 Restructuring Reported Collection Underlying and other adj. margin claim margin 14

Costs, net financials and tax Q3 2019 • Marketing and administration expenses higher Administration, marketing and R&D expenses – Growth, but also some inefficiencies 2 000 30 – Acquisitions and currency 1 745 1 671 1 663 1 637 Expenses adjusted for change in provision for 25 – 1 569 1 482 LTI MSEK -54 (-56) 1 500 1 386 1 348 1 277 20 1 239 – Expenses adjusted for restructuring costs MSEK 62 1 169 17.0 16.8 16.4 16.5 15.9 15.9 15.5 15.4 • Net financial items were MSEK -61 (-37) 16.7 1 000 15 16.2 15.4 – Interest net was MSEK -54 (-34) 10 • Tax expense MSEK -525 (-449) 500 Effective tax rate 28.1% (24.1), affected negatively by the – 5 restructuring costs in Tools & Attachments – Guidance: below 25% 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 Expenses in % of revenues A, M and R&D expenses, adj. for change in LTI provisions and restructuring, MSEK 15