Coor Service Management (COOR) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were SEK 3,180 million, up 1% year-over-year, with organic growth at -1% and acquired growth at 1%; H1 net sales reached SEK 6,304 million, up 3% year-over-year.

• Achieved several successful contract extensions and new wins, especially in small and midsized segments, with a strong customer retention rate of 94% in H1 2024.

• Integration of Skaraborgs Städ completed, contributing to Swedish operations and ongoing M&A activity.

• Action program to accelerate margin improvement is progressing, with expected effects by year-end, though financial impact is taking longer than planned.

• Expanded partnership with ICA and major IFM contract prolongation with Danish Police valued at SEK 900 million.

Financial highlights

• Q2 net sales were SEK 3,180 million; adjusted EBITA SEK 161 million, EBITA margin 5.1% for both Q2 2024 and Q2 2023.

• Net income for Q2 SEK 60 million; adjusted net income SEK 77 million.

• Full-year net sales SEK 12.6 billion, organic growth 3%, acquired growth 3%, FX 1%.

• Cash conversion (LTM) was 92%, leverage ratio at 2.7x adjusted EBITDA.

• Net working capital at -7.4% of net sales; equity/assets ratio at 20%.

Outlook and guidance

• Solid pipeline of medium and small contracts, with some large contracts in progress and low volume of renegotiations left in 2024.

• Continued growth opportunities in the Nordic market; limited retention risk for the remainder of 2024.

• Expectation of normal variable volumes in Norway Q3 after early oil and gas activity in Q2.

• Confident in achieving full effect of margin improvement program by year-end.

• Long-term targets: organic growth 4-5%, adjusted EBITA margin ~5.5%, cash conversion >90%, leverage <3.0x.