Coor Service Management Holding AB (FRA:COE) Q3 2024 Earnings Call Highlights: Navigating ...

GuruFocus News
4 min read

In This Article:

  • Net Sales: SEK 2.9 billion, down 2% compared to last year.

  • Organic Growth: Flat for the quarter.

  • EBITA Margin: 4.1% for Q3, with a last twelve months (LTM) margin of 4.8%.

  • Cash Conversion: LTM cash conversion at 77%, below the target of 90%.

  • Leverage: 2.7, in line with the target to stay below 3.

  • Net Income: SEK 17 million for the quarter.

  • Adjusted Net Income: SEK 32 million when adding back amortization.

  • Restructuring Costs: SEK 27 million included in Q3 for staff reductions.

  • Sweden Organic Growth: 1% for the quarter.

  • Denmark Organic Growth: Negative 5% for the quarter.

  • Norway Organic Growth: Lower compared to previous quarters.

  • Finland Organic Growth: Negative 3% for the quarter.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Coor Service Management Holding AB (FRA:COE) successfully extended several important contracts, including a six-year contract with AMA in Sweden valued at SEK 780 million.

  • The company won new small and midsized contracts, strengthening its position in those segments, such as a security contract with Gavle municipality and a cleaning contract with Degerfors municipality.

  • Coor Service Management Holding AB was recognized as the most equal listed company in Sweden in Allbrights annual Gender Equality report.

  • The market outlook for facility management in the Nordic region remains strong, with a robust pipeline of new business opportunities.

  • The company has made progress in reducing CO2 emissions, achieving a 22% decline in emissions compared to its base year 2018, despite a 30% growth in the company.

Negative Points

  • There is a lower demand for variable volumes in Denmark and Sweden, leading to staff reductions affecting approximately 70 employees.

  • The EBIT margin remains below the company's target, with a current margin of 4.8% against a target of 5.5%.

  • Net sales decreased by 2% compared to the previous year, with organic growth flat.

  • The company's cash conversion rate is below target, ending at 77% against a target of 90%, due to increased accrued revenue.

  • Lower profitability was observed in parts of the Swedish cleaning operations, attributed to excessive resource utilization.

Q & A Highlights

Q: How does the negative turnover impact operating margins, and do you have expenses in foreign currencies that balance this effect? A: Most of our business expenses are in local currencies, so the negative effects on turnover have corresponding expenses in each country.

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