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, Financial) 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 Gävle municipality and a cleaning contract with Degerfors municipality.
- Coor Service Management Holding AB was recognized as the most equal listed company in Sweden in Allbright’s 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.
Q: Is the reduction in workforce due to lower variable volumes in Sweden and Denmark a structural or cyclical change?
A: The recent quarters have seen high levels of variable volumes, and the current reduction is more of a normalization rather than a structural change.
Q: What is the booking situation for Q4, especially considering its importance for variable volumes?
A: Bookings for Q4 are currently at a lower level compared to the previous year, which is why we are downsizing in Sweden.
Q: Is there an increase in complexity in your business model that requires these annual programs?
A: No fundamental change in complexity; the adjustments are due to a need for more flexibility in the organization and cost base due to weaker demand.
Q: Can you provide more details on the expected savings from the procurement and harmonization of processes?
A: We expect to realize around SEK 50 million from procurement efficiencies, which should be gradually implemented over the coming quarters. The harmonization of processes is taking more time and resources than initially expected.
Q: Is there anything structural affecting working capital, or is it expected to normalize in Q4?
A: There is no structural issue; the buildup in accrued revenue is something we are focusing on to normalize during Q4.
Q: Can you provide some color on the variable volume situation across different sectors?
A: In Denmark, the decline is mainly from public contracts, while in Sweden, it's more related to property projects and conference services. We see this as a normalization rather than a dramatic change.
Q: How does the pipeline look geographically, and where is it strongest?
A: The pipeline remains strong, particularly in Sweden, with increasing activity in Norway, which is positive as we need more volume there.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
