Investing.com - Epiroc AB (BIT:1EPIA) on Wednesday reported third quarter revenue that fell short of analyst expectations, despite posting strong order growth and improved profitability, with shares falling 5.3% following the results.
The Swedish mining equipment manufacturer reported revenue of SEK 16,775 million for the third quarter, missing IBES estimate of SEK 17,389 million. Revenue increased 10% compared to the same quarter last year, with organic growth of 7%. Orders received rose 15% to SEK 17,467 million, with organic growth of 12%, driven by strong mining demand which now represents 83% of group orders.
Adjusted earnings per share reached SEK 2.00, up from SEK 1.62 in the prior year period. The adjusted operating margin improved to 20.4% from 19.0%, while the reported operating margin reached 20.3% compared to 18.4% last year.
"Mining demand was strong in the quarter," said CEO Helena Hedblom. "Equipment orders increased 16% organically, supported by strong demand for underground equipment. Interest in our new diesel-electric solutions continued to strengthen following successful product launches."
The company secured its second-largest order ever during the quarter, worth SEK 610 million from MMG for the expansion of the Khoemacau Copper Mine in Botswana. Large equipment orders totaled SEK 790 million compared to SEK 470 million in the prior year period.
Operating cash flow declined to SEK 1,438 million from SEK 2,476 million, as increased equipment orders led to higher inventory levels. The cash conversion rate on a rolling 12-month basis was 78% compared to 105% in the prior year.
Epiroc stated it expects mining demand to remain high in the near term, while demand from infrastructure customers is expected to remain stable.
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