Engcon: What's so special about tiltrotators, and why is the company so profitable?

[Verneri_Pulkkinen]

Are there people on the forum who use excavators, doing REAL work? Or people familiar with the industry.

For a few years now, I have been following a Swedish, infuriatingly profitable (how do Swedes manage it!) bucket company called engcon. (Follow companies here on Inderes)

The company’s innovation, which is changing the excavation industry, is simply… some gadget (“tiltrotator”) that makes the bucket rotate.

Look at this picture, where “engcon” is written in small print on the bucket:

I understand that a rotating bucket offers enormous benefits for excavation work. But I don’t understand how this can be so revolutionary. Hasn’t this really been invented before?

However, this innovation, which seems “modest” to my eyes, has created a business whose invested capital yields over 40%! In other words, every euro invested in the business generates 40 cents per year. For basic companies, it’s good if they reach 10%.

The stock has been languishing in a weak construction cycle, but the ever-optimistic Swedes are currently keeping it afloat on the stock exchange with a market capitalization of over one billion euros, even though the company’s revenue is… approximately 170 MEUR. Thus, revenue multiples are higher than those of an average software company.

When it listed in 2022, the company envisioned strong growth based on market forecasts (as always), but a difficult construction cycle has kept sales growth suppressed: revenue has decreased from a couple of billion in 2022 to 1.7 billion SEK in 2024 (in SEK).

The company’s margins have faced a slight headwind since the peak cycle of 2022, but the company’s estimate of its 45% global market share has remained since its listing. Five players account for almost the entire market. Cheap competition may emerge from Asia, but on the other hand, according to the company, customers prefer reliability and a service network. That argument is easy to buy in the sense that an expensive machine and operation would be halted if the tiltrotator broke down. It is therefore the wrong place to save money.

Here are the competitors and market shares according to the 2022 listing prospectus:

The stock may also have been pressured by weakness in North America, but at the same time, one of the successes of recent years has been Europe’s rise as the largest segment.

What’s the main point? Well, it’s that the current global market share of tiltrotators, which is a couple of percent, will grow to the level of Sweden’s over 90% share! A tiltrotator significantly increases excavator productivity, which would be important in countries plagued by lower productivity and labor shortages. And more and more countries around the world definitely fit this description, not to mention fuel savings and climate impact.

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Questions for experts:

a) Have engcon’s products changed your excavation experience?

b) Do these products face competition, or do you consider them completely unique, something no one else (besides these five players) can manufacture?

These questions are of immense importance for engcon. The company’s current profitability would hardly be possible in a world where competition in bucket rotation systems was tougher. On the other hand, the company needs to spread the good word of tiltrotators everywhere. If the message doesn’t get through, global growth will remain just a dream.

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A word on stock valuation.

Indeed, the company’s current market capitalization is 11.5 billion SEK, with revenue of 1.8 billion SEK.

If we assume that the current ~2% penetration rate in new excavators (forgetting the potential of maintenance, spare parts, and retrofits) rises to 40% over the next 20 years and the company maintains its market share, revenue would roughly increase 20-fold.

Situation in 2021:

However, since the company’s market share is weaker in, for example, the large American market according to the listing prospectus, and as the market grows, we can assume competition will increase, let’s assume that the company’s global market share still decreases to a juicy 30% from the current 45%. This is a terrible assumption; no one knows where the world will truly be in 20 years. What I do know is that, with high probability, people will be drinking coffee and eating Italian food with forks, all traditions that have lasted for hundreds of years, but what will be the popularity of tiltrotators? Who knows.

Excavator market distribution globally in 2021. Don’t look at the listing prospectus forecasts. They are what they are. Certainly, those CAGRs are probably acceptable figures in the long run.

In any case, these assumptions would therefore lead to an approximately 15-fold increase in revenue.

Revenue would therefore be just under 30 billion SEK in 2045 (3 billion euros at current exchange rates).

Let’s assume that the industry is still experiencing strong growth at that point, as the Swedish vision of tiltrotators conquering the world is proving to be somewhat correct. The industry remains relatively concentrated, and engcon’s operating profit margin is approximately 20%, supported by maintenance and spare parts. AI has not disrupted the industry, and Chinese players have not gained significant popularity globally except in Africa and South America.

Operating profit would therefore be approximately 6 billion SEK.

If the company were to trade at an EV/EBIT of 15x, in the spirit of a high-quality engineering company, the enterprise value (which for a debt-free company is practically the same as market capitalization, assuming there isn’t a huge net cash position) would therefore be 90 billion SEK.

Great, so with these assumptions, we would have a stock that increases 8-fold in 20 years!

But 20 years is a long time. On an annual basis, the return would be approximately 11%, plus a little in dividends (dividend yield currently 1.3%). By no means bad, but not spectacular either.

And there are a lot of assumptions here. Will tiltrotators become as commonplace globally as they are in the Nordic countries? What if the competitive dynamics change? Could engcon’s hitherto well-managed house fall into disrepair along the way? What do the main owners think about the company’s ultimate purpose?

The painted scenario will most likely go awry, but it could also be exceeded if the whole world goes crazy for Swedish buckets. Time will tell.

[tuuba]

I know something about the industry even though I’m not directly a user of the devices. Yes, there are manufacturers outside of those big five, and there’s production in our home country too. And of course, the product is not impossible to copy.

The product is not very new; to my understanding, the first ones were made in the 80s, and I myself saw the first ones in use in the mid-90s. There has been a lot of development in user comfort over the years, and nowadays, for example, hoses do not need to be separately detached and attached; everything works with quick couplers. As mentioned, they significantly improve productivity compared to traditional rigid structures, and with these devices, a skilled machine operator can significantly ease previously manual auxiliary work or act as an extra pair of hands in installation tasks.

Mainly, tiltrotators are a European thing. So far, the sales area has been very narrow. In North America and Asia, these have not been used at all until very recently, which is why sales are small or non-existent. In recent years, to my understanding, some have been sold, even though, for example, Rototilt has been trying to enter the market for quite a long time, as can be seen from the table. Price might be one factor, or there might be a lack of understanding of how beneficial these devices are. In my opinion, North America is 20 years behind Europe in all earthmoving development, for example, machine control systems in addition to these tiltrotators.

[Thyme]

Great company acquisition

I can’t answer the nitty-gritty questions, but I need to keep my eyes and ears open as I am in the industry anyway.

The valuation is still quite high.

A quick search shows the company has had patent disputes with competitors, but these have been resolved.

Why wouldn’t big excavator manufacturers develop their own product?

[TSH1]

A. Yes, no professional digs without a “spinner”

B. Many brand loyalists in the industry

C. Would be interested - even more to ask those who are more knowledgeable about excavator 3D equipment, does Trimble have a similar market position?

[Verneri_Pulkkinen]

Thanks for the answers!

[Theooj]

Interesting acquisition! Over the last decade, I’ve worked, among other things, with excavators on the aftermarket side, and these tiltrotators also became familiar. It should be noted for the title that Engcon is not really a bucket company, but rather, in common parlance, tiltrotators are their core business.

Engcon’s strength lies in its long-standing expertise in tiltrotators, user experience, and definitely the best aftermarket knowledge among these manufacturers. Service and spare parts, at least in Finland, work best among these three major brands. Users appreciate that these can also be tinkered with themselves, and a service technician doesn’t always have to be called on site.

As stated earlier, the biggest bottleneck for growth is selling the necessity of this product to the US and Asia. There, they still dig with rigid booms, and from a Finnish perspective, it looks really Stone Age.

Excavator manufacturer JCB has sold Steelwrist tiltrotators factory-installed on some machines, and now they have their own “Raptor” product. These manufacturers’ own tiltrotators always raise suspicions among customers, and they prefer to get the familiar and safe one at the end of the boom rather than trying something new.

I would suspect that these tiltrotators are not installed on excavators at the factory because they are largely customized according to the customer’s preferences. There are at least two different types of bucket attachments alone, and the tiltrotator can be equipped in various ways (with or without grippers, number of pass-throughs, etc.), so if one package suits one, it may not suit another, and for this reason, it would have to be removed by the dealer.

These are my own thoughts on the industry.

[Kuokkavieras]

I never excelled in math class, so I’ll focus on wielding the sword of words on the practical, working-man’s side of things.

The product itself is the Mercedes of tiltrotators, carrying the mantle of a pioneer in durability, aftermarket, usability, and innovations. This also likely determines the product’s price, which is on par with the three biggest players.

We live in a conservative ecosystem in the earthmoving industry, where neighbor Markku’s user experiences weigh more than the facts promised by the seller’s catalog about the product’s superiority. Because of this, it’s harder for new players to enter the field and gain a foothold. If the product is something other than what the seller promised, it’s often both the first and last sale. Engcon has been on the market for a long time, and this aspect is in order. There is already evidence from the Nordic countries. The product is made durable in the Nordics, so it will last elsewhere too.

Market. The tiltrotator is really only common in the Nordic countries. The “tilt” has become the industry norm when ordering a machine, and without it, there’s no business on the worksite. In Southern Europe, just changing the bucket at the end of the boom makes the Pepes’ mouths drop open. Let alone getting it to rotate/tilt. The situation is the same in America, so the market is huge.

I wouldn’t be worried about copyability. Companies have been seen over the years, and few have been able to make a qualitatively better product. Here too, the three biggest are on par. Machine brands (CAT) have tried bringing “their own” tilt in conjunction with machines, which in reality is a Rototilt painted a different color. First-installation tilts, on the other hand, have only started to be seen from different machine manufacturers in the last five years. (Volvo, Develon, JCB.) Machine manufacturers have also started to wake up to the topic, and some machines can get Engcon readiness from the factory, meaning the control system is already in the machine. Just attach the iron to the end of the boom and plug it in, and the bucket starts to rotate / tilt. Convenient!

The previous questioner also asked about 3D measuring devices. Trimble and Leica Geosystems are at the forefront globally in this. In Finland, the way is paved by domestic Novatron. After tilts, this will be the next step that revolutionizes earth excavation.

[TradingLady]

I forwarded this thread to a contractor I know and asked for his opinion, as he has an Engcon tiltrotator on his own excavator. He replied that in Finland, the tiltrotator is highly rated in public contracts because it speeds up and refines finishing work in particular, e.g., in pipelines, green areas, and generally working in tight spaces. Manual shoveling is completely or almost completely eliminated, which provides a clear competitive advantage to contractors who do not have a tiltrotator.

According to him, most excavators used in contracts for municipalities and cities are equipped with a tiltrotator. As a weakness, he mentioned that the tiltrotator adds weight and length to the boom, which reduces digging force. Therefore, it is not suitable for heavy roughing work but is mainly used in finishing machines (which, for example, level road shoulders and green areas). A tiltrotator can also be used in heavier machines, but it does not withstand continuous heavy roughing use for very long.

[xlat]

I discussed the matter with an acquaintance who knows more about it. Many of the same points were considered that have already been said in this thread. The device is very useful, and for that reason, it’s worth paying for. A couple of additional considerations on this:

• The device is not technically easy to manufacture; a seemingly simple device must reliably withstand considerable torque, meaning the materials, design, and manufacturing must be in order.
• In this business, reliability is paramount; if a machine is down due to a broken part, it is very expensive and unpleasant. Therefore, people are willing to pay for quality, and for that reason, they don’t just jump from a proven brand to a cheaper but lesser-known one. Market entry is thus difficult.

This company is an interesting observation and an interesting business.

[Cezeta]

My own experiences and gut feelings. Indeed, when in Austria, it came up that the tiltrotator is expensive and no one demands it. Well, it is, but Engcon has a reputation for durability and brings many benefits, which have already been mentioned here. It’s essential, in fact, if even slightly more precise work is done. The USA market is certainly open, as my own experiences, for example, from Florida, brought to mind the Stone Age. I could imagine it’s not used in China, not to mention African countries. However, at least excavators are known to be used in those countries. A truly interesting investment case!

[Vapaa]

An excavator is an expensive machine, often purchased at least partly with debt. In the monthly installment, it doesn’t weigh much if you can save thousands on the tiltrotator by choosing a cheaper option. The machine only earns money when it’s in good condition and working, so reliability is more important than price. That’s why it’s difficult for a new player to enter the industry, because price rarely determines the choice. Furthermore, one should not underestimate the fact that by buying an Engcon, you don’t have to be ashamed on the job site and explain to others why you bought something else. At the same time, you can stop wondering if you could have gotten a better tiltrotator for the money and focus on getting the work done.

The field is familiar, but I’ve mainly dug my nose and flower beds. Of course, I have my own machine for hobbies, but only equipped with a tilt unit.

[Kakskakkone]

The Swedish company Rototilt was the first manufacturer to start doing this, and others have followed suit. It originally developed from a bucket rotator, which Indexator AB manufactured and developed. Nowadays, in addition to rotation, it has tilt functionality, and the most advanced models include quick couplers, allowing work tools to be changed without leaving the cab.

Originally developed for finishing work and light earthmoving tasks where many tools are used, and they need to be changed and their position altered frequently. Heavy quarrying work is not really suitable for these.

In the Nordic countries, penetration is already very high, probably 80% are equipped with these. In Europe, perhaps at most half, and in North America, at most 5%, where there is great market potential.

Today, Engcon is the market leader, probably due to excellent management, its 2022 listing, and aggressive sales. There are also differences in products, for example, with Rototilt. Engcon has a grease-filled, relatively maintenance-free device, while Rototilt has an oil-filled, more gearbox-like device that requires more maintenance. Brand loyalty is exactly the same as with cars; it just depends on whose name one swears by.

Rototilt indeed has Caterpillar as an OEM customer and just announced that Komatsu will pre-equip its machines to be compatible with Rototilt. Steelwrist is in a partnership with Volvo, and Engcon is in deep cooperation with Develon in addition to Volvo.

Here are some thoughts and information, if this adds value.

[Pettersson]

Great that a thread was created for this company. The field is familiar; I have serviced and installed rototilts, at least engcon, Rototilt, Marttiini, and Steelwrist have become familiar.

I see engcon’s advantage in Finland as its well-functioning aftermarket and warranty. The product feels high-quality. However, I don’t see a clear difference in quality or aftermarket service compared to Rototilt. I know that one machine rental company ordered excavators with Rototilt because it’s slightly more affordable, but from the renter’s perspective, it serves exactly the same purpose as engcon.

Marttiini stands out with its style. Buyers justify Marttiini by its durability. There’s probably truth to this, meaning it’s more durable if used very roughly. At the same time, it’s also heavier and taller, which reduces the machine’s power and increases fuel costs.

Steelwrist, at a quick glance, is similar in style to engcon and Rototilt. However, the quality has been poorer. At some point, their gears broke. Replacing a brass gear cost over 5000€, and Steelwrist did not cover it under warranty. The purchase price at the time was around 20000-25000€ and was somewhat cheaper than engcon and Rototilt. At the same time, there was turnover in the Finnish organization, and aftermarket service didn’t work. I have since received professional support from them for repairs and installing rotation data for measuring devices, but customers will remember poor service and a non-functioning warranty for a long time.

I would say that the Finnish market is so strongly built as a field for engcon and Rototilt that no others are coming to take significant shares unless they give away their equipment almost for free. I would say that profit will come globally when they systematically take over well-defined areas, meaning they build country organizations with good sales, spare parts logistics, and technical support. Whoever builds that in an area first will have an advantage, and competitors will not be considered an alternative due to a small price difference.

[Pettersson]

In addition to the previous message, I would also answer the questions “What is so special about rotating buckets?”

Watch the video https://youtu.be/7_iyiOLpRVA?si=USF1v1Cwf6yat4nQ

By watching this, you will understand how engcon turns an excavator into a multi-purpose machine. It significantly reduces the need for other machines and manual labor. The video has 18 million views.

From an investment case perspective, it will be essential whether this working style is adopted globally. If it is, the growth potential is so enormous that there is room in the market, even if more manufacturers are entering it. I would assume that machine manufacturers should not develop their own devices but rather develop compatibility with tiltrotator manufacturers. Some machine manufacturers have already made their machines compatible with engcon, and as I understand it, in those cases, engcon’s adjustments and settings are made from the excavator’s display.

In Finland, in previous years, an additional price could be charged for excavator work if a tiltrotator was used. Nowadays, it is mandatory equipment, and there are very few jobs for which an excavator without a tiltrotator is taken. These markets (Nordic countries), where a tiltrotator is included in over 90% of new machines, will not shrink. In these markets, the market is directly dependent on the sale of new machines.

[Cezeta]

Exactly. An excavator without an Engcon, Rototilt, or whatever terms are used in the industry, is, in my eyes, a rather useless device nowadays. Well, okay, you can dig with it. I’ve often pondered to myself why this equipment isn’t becoming more common. It truly frees up the manual laborer for other tasks. There must be some old-fashioned thinking when such a useful attachment isn’t acquired. This is under thorough investigation as an investment case.

[Thyme]

Results out today
Consensus expects 465 MSEK revenue and 88 operating profit

[Verneri_Pulkkinen]

Results are out! Orders are growing, but sales are flat, and the result is already heading in a different direction. Profitability reportedly softened due to “currencies” and “market mix”.

Third quarter 2025

• Order intake increased 27 per cent to SEK 467 million (367); organic order growth was 31 per cent.
• Net sales increased 1 per cent to SEK 415 million (412); organic net sales growth was 4 per cent.
• Operating profit declined 23 per cent to SEK 70 million (91) and the operating margin was 16.9 per cent (22.0).
• Profit for the quarter decreased 18 per cent to SEK 52 million (64).
• Basic and diluted earnings per share amounted to SEK 0.33 (0.40) and SEK 0.33 (0.40), respectively.

January – September 2025

• Order intake increased 19 per cent to SEK 1,441 million (1,211); organic order growth was 22 per cent.
• Net sales increased 11 per cent to SEK 1,391 million (1,256); organic net sales growth was 14 per cent.
• Operating profit increased 7 per cent to SEK 248 million (233) and the operating margin was 17.8 per cent (18.6).
• Profit for the period was unchanged and amounted to SEK 175 million (175).
• Basic and diluted earnings per share amounted to SEK 1.12 (1.07) and SEK 1.11 (1.07), respectively.

CEO Krister Blomgren comments:

“The quarter was characterised by continued high demand with a record-high Q3 order intake. A strong order book is laying the foundation for future deliveries.

The order intake increased significantly in all regions and amounted to SEK 467 million (367) for the quarter, an organic increase of 31 per cent. Net sales in the quarter amounted to SEK 415 million (412), a weak year-on-year increase partly due to a build-up of inventory in our geographically distant markets. Operating profit amounted to SEK 70 million (91), down 23 per cent, and the operating margin amounted to 17 per cent (22). The operating margin declined mainly due to a weaker gross margin, which in turn is impacted by currency effects combined with a less favourable market mix.

In the coming quarter, we expect continued stable demand driven primarily by the Nordic region and Europe. The Nordic region has returned to its historical seasonal pattern, which would indicate some pre-ordering effects ahead of the spring digging season. We are also seeing continued solid demand in Europe driven by increased market penetration, while also carrying a strong order book from previous quarters.

engcon’s interim report Q3 2025 - Inderes

[Verneri_Pulkkinen]

Rototilt challenged engcon again in September over a patent, but the previous challenge also failed, so the company has not made any provisions.

Lawsuit

On 15 September 2025, engcon AB received lawsuits against engcon and its subsidiaries regarding alleged infringement of Rototilt’s patent. Rototilt has previously initiated legal proceedings against the same engcon companies for alleged infringement of the same patent. In March 2025, the Swedish Patent and Market Court of Appeal announced that there was no patent infringement by engcon or its subsidiaries and dismissed Rototilt’s action. In consultation with experts in the field of patent law engaged by engcon as well as with the company’s legal advisors, engcon has assessed that no patent infringement has taken place and in the claim sought that Rototilt’s lawsuit be dismissed since the issue has already been subject for examination in the Swedish Patent and Market Court of Appeal. engcon has not made any provision for the dispute in its accounts. The Swedish Patent and Market Court is expected to make a decision on whether the merits of the claim be examined or dismissed in the fourth quarter of 2025.

engcon-engcons-interim-report-q3-2025-251028.pdf

[Verneri_Pulkkinen]

I also made a short video about engcon for TikTok and IG, where I summarized the key takeaways from the thread into a minute. Excellent business, great growth potential, but with a quick judgment, the price already has a bit of good priced in.

[Verneri_Pulkkinen]

Awareness is spreading in France, but a deal over a million euros doesn’t really amount to much yet.

engcon advances European growth, receiving significant order in France - Inderes