The timing of the announcement of Helena Hedblom becoming Epiroc President and CEO might have caught investors off-guard, but the actual appointment is no big surprise.
The news came just 12 days after the company held its second annual Capital Markets Day where Hedblom and Per Lindberg, current President and CEO, gave investors an update on the progress the company has made on its strategy since starting operations under the new brand in November 2017.
Hedblom, who currently heads up the mining and infrastructure divisions for Epiroc and is due to take on the top role from March 2020, has been a major part of Epiroc’s Group Management team since it was formed. Her ties to Atlas Copco, meanwhile, date back to 2000, with her roles including Head of Research and Development and General Manager for rock drilling tools business Secoroc and, then, becoming President of Atlas Copco Rock Drilling Tools.
Epiroc has launched a number of new initiatives in the mine automation, digitalisation and electrification spaces since the end of 2017, and Hedblom has been instrumental in all of these, spelling out the business case to investors, making sure the engineering capacity is available and taking all of the technical questions that may come Epiroc’s way.
With mining making up 76% of order intake for Epiroc in the nine months to the end of September – and the company keen to build on its leading position in the sector – it is logical for someone with Hedblom’s experience to take the top job following the successful establishment of Epiroc under Lindberg.
On a conference call today following the announcement, Ronnie Leten, Chairman of Epiroc, said current company head, Per Lindberg, had achieved the goals set for him by the board and that Hedblom had been given a new mission: to achieve “higher levels” of growth for Epiroc.
That is a bold statement considering the company has achieved a compound annual growth rate (CAGR) of 10% over the period from 2015 to 2018 through a number of organic and inorganic investments, and a 14% CAGR in the 12 months to end-September 2019. This is all while retaining a comparatively high average operating margin of 18.3% and 20.1%, respectively, over those same timeframes.
Hedblom, speaking to IM shortly after that call, explained the growth mission given to her by her incoming Chairman.
“It’s a combination of organic initiatives within the company, as well as inorganic initiatives,” she said. “But, of course, within that, the big technology shifts with automation, digitalisation and electrification give us an opportunity to help our customer gain safety, productivity and energy benefits. That is a big focus area for us.”
She is also looking to grow the company’s aftermarket business – which already accounts for 65% of revenue – explaining: “This is where we can make a difference with our customers and really be a productivity partner. It also gives us resilience across the cycle.”
Looking to the “initiatives”, specifically, she said there could be some organic product developments to close some “gaps we have in the portfolio”, but also strengthening “our presence… in some areas where we don’t have the market reach today”.
While these growth initiatives will most likely be in markets the company has already deemed to be core, she said all divisions within the company had a roadmap looking into opportunities that are “adjacent to core”.
One area of Epiroc investment Hedblom was keen to talk up was R&D, which in recent years has enabled the company to retain a leading position in the likes of autonomous surface drilling, battery-powered underground vehicles, and mine digitalisation and automation.
“We have a good level of investment in R&D,” she said, adding that, at the moment, it is heavily skewed towards automation, digitalisation and electrification.
“Bear in mind that 65% of our revenue is in the aftermarket and we are already investing 2-3% of revenue in R&D – that represents quite a big investment on the capital equipment side,” she said.
She concluded: “That (R&D investment) is needed. For me, innovation is key. That is how we stay ahead of technology leaders in all of these areas.
“I expect R&D investments to stay at this level, and this is extremely important to creating sustainable growth for the company over the long term.”
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