Epiroc Earnings: Aftermarket Services Support Resilient Order Demand in a Challenging Environment

Narrow-moat Epiroc reported a 3% decline in organic order intake, outperforming narrow-moat Sandvik, which reported its earnings on April 22. A 9% increase in organic orders for aftermarket services underpinned Epiroc's outperformance, driven by midlife rebuilds of an aging fleet of mining equipment as well as upgrading equipment with automation features. We believe both the above-mentioned themes present Epiroc with structural growth, which will reduce the group’s dependence on cyclical commodity prices to drive demand. Shares are trading at a premium to our SEK 165 fair value estimate, which we maintain.