Epiroc: Mixed-Fleet Automation and Electrification Drive High-Teens CAGR as Service Capture Remains Under 50%
Capital Markets Day in Örebro, Sweden, June 8, 2026
Epiroc laid out an ambitious growth strategy at its Capital Markets Day centered on scaling automation and electrification technologies that are still in early innings despite strong uptake. The company disclosed that driverless machines have grown at a 17% CAGR since 2023 to reach 3,900 units, while service contracts now cover just 33% of the addressable fleet, up from 26% at the last CMD. The revelation that machines under service agreements generate twice the revenue of those without agreements underscores the enormous upside as the company targets 40% fleet coverage in coming years.
Automation Revenue Still Single-Digit Market Share Despite Explosive Growth
The company's mixed-fleet automation business represents perhaps the most significant untapped opportunity. CEO Helena Hedblom confirmed the installed base of 3,900 driverless machines amounts to roughly 3% to 4% market share of the 112,000 addressable machine market disclosed in presentation materials. At the current 17% to 18% growth rate, this would reach approximately 9,000 machines by 2031, still representing less than 10% market share. Equipment and Service President Jess Kindler emphasized that RCT, the company's teleremote technology featured in last summer's mine rescue in Canada, remains "one of our most profitable parts of that digital portfolio" but operates in only "a handful of countries today."
The dilution from digital acquisitions has been material, representing roughly half of the margin decline in Equipment and Service from the 2022 peak. Management deflected questions about when margins would stop being dilutive, with Kindler stating only that acquired businesses need to reach stability and profitability before entering growth mode. The company has made over 30 acquisitions totaling SEK 14 billion since the 2018 spinoff, with several digital assets still in the stability phase.
Electrification Economics Driving 80% Underground Adoption by 2040
Epiroc projected that 80% of mobile underground equipment will be electric by 2040, driven primarily by economics rather than ESG mandates. The company's battery electric vehicles deliver 11% more tonnage output while reducing ventilation costs by up to 40% of underground mine OpEx. The Minetruck 66 eDrive showcased at the event transports 20% more tons per hour while cutting fuel consumption by 25% and cycle time by 15%. CFO Hakan Folin noted, "When we sell BEV equipment, we also get actually more aftermarket business," with electrified machines generating at least 15% more service revenue over five years.
However, electrification remains nascent at just 3.8% of revenues despite 43% of the product portfolio being available in fossil-free versions. Hedblom acknowledged that "a big share" of equipment sales would need to be electric by 2030-2035 to reach the 2040 target, given that 37% of the installed base is already over 10 years old. The company expects automation and electrification to move in tandem, with Hedblom stating, "I do predict that a large number of the large orders will be both automated and fossil-free version" by 2035.
Service Penetration at 50% Despite Mission-Critical Operations
The service business delivered 9% organic growth since 2015 but still services just over 50% of the installed fleet. This represents a striking gap given that small mines depend on 20 to 50 pieces of mission-critical equipment, while large operations run 250 to 500 critical units. Kindler explained that service agreements now cover 33% of addressable machines, up from 26% previously, with a target to reach "over 40%" within a few years. The company disclosed 7,800 service technicians globally, with 300 mine sites having labor on-site under service contracts.
The economic case for service intensification is compelling: automated machines already generate 14% more parts revenue for the Simba ME7 C and 33% more for autonomous Pit Viper drills due to higher utilization. Digital tools like the service technician copilot and asset performance management system aim to improve first-time fix rates and reduce working capital through better parts forecasting. Sebastián Ríos from Pucobre identified training as a critical gap, noting that "operations and maintenance technicians often have the same basic education that they had 5 or 10 years ago" despite technology advances.
Tools and Attachments Reset Complete as Construction Bottoms
The Tools and Attachments business area absorbed the brunt of the construction downturn, with infrastructure orders down 22% from the 2022 peak through Q1 2026. However, organic flow-through turned positive in Q1 2024 following decisive cost actions including portfolio rationalization, footprint consolidation and pricing initiatives. Tools and Attachments President Jose Sanchez emphasized, "What we are addressing here is cyclical, it's not structural. The fundamentals of our business remain strong."
Innovation continues to drive differentiation, with PCD (polycrystalline diamond) bits delivering 3,000-plus meters of drilling life compared to conventional bits, representing "3 to 5 or 5 to 10" times longer service life depending on rock conditions. The COPROD system for underground production drilling enables twice the drilling speed and 30% to 50% deviation reduction while requiring less development work. Sanchez noted that attachments transform machines into "productivity platforms," enabling customers to perform up to 6 times more tasks and reduce CapEx on single-purpose machines by 30% to 40%.
China and India Positioned as Global Hubs
Epiroc is deepening its manufacturing and R&D presence in key growth markets. China now employs 1,000 people across multiple manufacturing sites and a full R&D center, with the multi-brand GIA offering capturing the value segment domestically. Hedblom emphasized, "We are following the Chinese customers when they go abroad. And we do that business from China," with customer center representatives from China placed in Zambia, DRC and other markets where Chinese miners operate.
India represents 3% of revenues but is expanding rapidly as a production hub. The company operates a large engineering center in Bangalore and is expanding factories in Nashik. Arun Misra of Hindustan Zinc highlighted upcoming capacity needs: "The 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 that this opportunity will be grabbed whole-heartedly by Epiroc." Hindustan Zinc alone has 10 new mines opening in the next five years requiring "another 2,000, 3,000 odd machines."
Margin Recovery Path Remains Ambiguous
Equipment and Service margins of 24% in Q1 2026 compare unfavorably to peaks above 26% in 2022, with management unable to articulate a clear path back to prior highs. Folin acknowledged, "It will definitely be a stretch given that we've had a few years, '22, '23 with really very good margins. Since then, we've added on a few acquisitions, aware of at least one being quite large and will be hard to reach the group margin." Between 2021 and 2025, Equipment and Service grew SEK 12 billion organically but added only SEK 2 billion of organic EBIT, representing sub-20% incremental margins.
The company emphasized discipline over margin targets, with Folin stating, "For us, performance is not about the peaks. Performance is really about continuous improvement over time." Management committed to "positive organic flow-through quarter-by-quarter, year-over-year" but would not quantify normalized incrementals given the shifted business mix. The 8% revenue CAGR target through 2031 implies roughly SEK 100 billion in sales, but investors received no framework for margin trajectory beyond general aspiration for "industry-leading" performance.
Fleet Replacement Cycle Accelerating in Iron Ore and Copper
Approximately 37% of the installed fleet is over 10 years old, with surface equipment facing a 10-year replacement cycle and underground equipment turning every seven years. Hedblom noted, "We have a very strong position in that segment. So there's a big portion up for replacement," particularly in iron ore where large surface fleets installed over a decade ago are coming due. The company sees "good growth in all buckets right now" across replacement, brownfield expansion and greenfield projects.
Exploration remains the fastest-growing segment at 17% CAGR since 2023, now representing SEK 3.1 billion and 16% of equipment orders versus lower historical levels. Copper and gold account for roughly 90% of exploration spending, with both commodities at elevated prices. Hedblom characterized the copper supply-demand gap as structural: "There is clearly not enough copper mines up running to really close this gap. And this is also why we see spend going into expansion towards copper." The company has built a complete exploration offering through organic development and acquisitions covering core drilling, reverse circulation, consumables and digital components.
M&A Strategy Remains Tuck-In Despite Capital Capacity
Net debt to EBITDA of 0.7x provides substantial capacity for larger deals, but management indicated continued focus on bolt-on acquisitions in complementary core, aftermarket and digital domains. Hedblom stated, "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 and what is complementary to core, it is very much adjacent." The company seeks products that "fit well into our offering and where we can leverage then synergies in cross-selling these products across the globe."
Sales synergies from the 2023 STANLEY Infrastructure acquisition remain unrealized as the company prioritized operational improvements and footprint consolidation during the construction downturn. Hedblom acknowledged, "From a sales synergy standpoint, still early days," as management focused on bringing STANLEY to operational excellence ahead of volume recovery. The company maintains BBB+ investment grade rating from S&P with a stable outlook, providing flexibility for both organic and inorganic investment.