Supportive conditions in mining, Epiroc's main end-market, should fuel growth in 2026-2027. We expect strong demand in mining (79% of Epiroc's orders in 2025), as high prices for Epiroc's key commodities (gold and copper, contributing about 65% of mining orders) support continued high activity levels in the mining sector. Continued demand for productivity-enhancing solutions should continue to drive demand for autonomous and electric equipment, alongside digital solutions. Moreover, Epiroc's average equipment fleet age reached 8.6 years in 2025, which is a record high for the company, and 38% of the fleet was older than 10 years. The replacement cycle should drive equipment sales, while the age of the fleet also supports service and spare part sales. For the remaining 21% of orders, Epiroc is exposed to infrastructure. Demand remained weak in 2025 due to the continued subdued construction market. There are early signs of recovery from low levels, and distributors destocking activity for attachments seemed to have finished toward the end of 2025. We assume a modest recovery in the sector over 2026-2027, while macroeconomic uncertainties and heightened geopolitical tensions may continue to represent headwinds. Epiroc's order intake increased 1% to SEK62.974 billion in 2025, increasing organically by 7%, acquisitions contributing 2%, while foreign exchange effects had a negative 8% impact. Order growth was particularly strong for equipment, which was up 15% organically in the year. We forecast total revenue growth of 4% in 2026, of which organic growth 7%, acquisitions contributing 1%, and foreign exchange impact of negative 4%. We anticipate 9% growth in 2027, based on continued strong organic growth of 7%-8% with additional contributions from bolt-on acquisitions.

Epiroc's profitability is expected to gradually improve over 2026-2027. The group has a track record of maintaining strong profitability, thanks to its agile cost structure and high share of resilient aftermarket sales (66% of total sales in 2025). This translated into an S&P Global Ratings-adjusted EBITDA margin averaging 25% over 2018-2023. Profitability slightly weakened in 2024-2025, because of the dilutive impact of acquisitions, the one-off costs related to the acquisition of Stanley Infrastructure, and restructuring costs, as well as tariffs and the underabsorption of costs in the tools and attachments segment in an unsupportive market environment. S&P Global Ratings-adjusted EBITDA margin reached 22.9% in 2025, the same level as in 2024. For 2026-2027, we expect a gradual improvement in profitability, supported by lower one-off costs, the results of recent efficiency and restructuring measures, pricing initiatives, and a better cost absorption in the tools and attachments segment in a context of gradually more favorable market conditions, leading to adjusted EBITDA margins of 23.7% in 2026 and 24.3% in 2027. Still, we don't expect Epiroc will completely restore its 2022-2023 adjusted EBITDA margin levels (25.5% average), given the dilutive impact of 2024's mergers and acquisitions (M&A). Epiroc's profitability remains high compared with the average profitability of the capital goods companies we rate globally.

 

We forecast FOCF to remain strong at SEK8.5 billion-SEK9.0 billion annually, with FOCF to sales remaining above 10% over 2026-2027. Epiroc's operations require relatively little capital expenditure (capex), typically representing about 2%-3% of sales, as it outsources the manufacturing of its noncore components and predominantly manufactures equipment to order. We estimate that about 75% of its product costs for equipment come from purchased components. Coupled with its strong profitability, this typically results in strong FOCF generation. Improving earnings should compensate for the expected working-capital cash absorption, assumed at SEK500 million-SEK2 billion annually, driven by the growing volumes; but partly mitigated by the company's working capital optimization and efficiency measures.

 

We forecast that Epiroc's credit ratios will continue to strengthen over 2026-2027, and we expect FFO to debt at 80%-85%. Epiroc delivered solid profitability and cash flow generation in 2025, despite geopolitical uncertainties and currency headwinds. FOCF reached SEK8.6 billion, from SEK 8.3 in 2024. Together with relatively low acquisition spending of about SEK440 million in 2025, mainly related to the acquisition of the remaining shares in Radlink, first acquired in 2022. This compares with SEK9.6 billion on acquisitions in 2024, mainly related to the acquisition of Stanley Infrastructure, and SEK3.7 billion in 2023. As a result, its S&P Global Ratings-adjusted debt declined to SEK13.6 billion at year-end 2025, down from the spike at SEK17.8 billion in 2024 (SEK9.6 billion in 2023). As a result, FFO to debt recovered to 76% in 2025, from 59% in 2024 (115% in 2023). We assume that the forecast FOCF of SEK8.5 billion-SEK9.0 billion annually over 2026-2027 should cover shareholder distributions and bolt-on acquisitions. As a result, FFO to debt should continue to gradually improve to around 80%-85%.

Epiroc's financial policy does not specify an explicit leverage target, which makes its credit ratios less predictable than those of peers with defined leverage tolerances. Its financial targets are growth oriented, reflecting its aim for 8% annual growth through the cycle, and designed to provide stable returns to investors, with a dividend policy of 50% of net profit over the cycle. From a credit perspective, the company is committed to maintaining a solid investment-grade rating, without specifying a net leverage target. This somewhat limits the predictability of its credit ratios. In particular, reported leverage temporarily increased to 0.9x at year-end 2024 after 0.5x in 2023, 0.3x in 2022 and net cash positions in 2020 and 2021 due to acquisitions. Our base case assumes bolt-on acquisition spending of SEK3.5 billion annually. The group has the financial flexibility to pursue meaningful M&A transactions or to increase shareholder returns currently. Nevertheless, we expect Epiroc will maintain credit ratios commensurate with the 'BBB+' rating, including a FFO-to-debt ratio above 45%.

 

 

The stable outlook reflects our view that Epiroc's agile cost structure and low leverage should allow it to remain relatively resilient to industry volatility, with FFO to debt above 45% at the bottom of the cycle. We expect Epiroc's EBITDA margin to remain above 18% through the cycle.

 

 

We could lower our rating on Epiroc if its credit ratios materially weakened, such that FFO to debt fell below 45%, with limited prospects of recovery in the short term. This could occur, for example, due to a substantial deterioration in demand or profitability, or because of sizable debt-financed acquisitions or shareholder remuneration.

Albeit a remote scenario, we could also lower the rating if Epiroc's EBITDA margins materially deteriorate below 18% without near-term prospects for recovery. This could stem from substantial restructuring expenses because of a significant weakening of market demand, or dilutive impact from acquisitions, including potential integration costs.

 

 

We see limited upside potential in the near term, given that Epiroc is smaller and has narrower business diversification than companies we rate in the 'A' category. We could raise the rating if Epiroc continued to increase its scale and broaden its product offering, while maintaining its leading market position and remaining at the forefront of new technologies. An upgrade would also depend on Epiroc maintaining market-leading margins and FFO to debt above 60% over the industry cycle, supported by management's commitment to maintain such levels.

 

 

Sweden-based Epiroc AB is a leading provider of equipment, consumables, and services for use in mining, infrastructure, and well drilling. It operates in two segments:

The company generated revenue of SEK62.0 billion in 2025 (€5.7 billion) and its adjusted EBITDA margin was 22.9% (22.9% in 2024).

Copper (36% of the group's 2025 mining orders), gold (29%), and iron (14%) are the main metal production markets that Epiroc is exposed to.

Epiroc is listed on Nasdaq Stockholm, and its market capitalization was SEK294.9 billion as of April 17, 2026. As of Dec 31, 2025, the company's largest shareholder was Investor AB (AA-/Stable/A-1+), which holds a 17.1% stake and 22.7% of votes.