Release Date: April 23, 2025
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) demonstrated a significant improvement in EBITA margin for Q1, rising to 4.7% from 3.3% in the previous quarter.
- The company successfully renewed a major contract with Equinor in Norway, providing a stable base for future business.
- Cash conversion improved significantly to 81% from 57% in the previous quarter, driven by reductions in working capital.
- The implementation of a new organizational structure is expected to generate full-year savings of SEK120 million, with positive reception from staff.
- Coor Service Management Holding AB (FRA:COE) maintained strong customer relationships and a stable market position, unaffected by international market turbulence.
Negative Points
- Organic growth was negative 2% in the first quarter, attributed to ended contracts and lower variable volumes.
- Net sales decreased by 2% compared to the previous year, with organic growth at negative 1.8%.
- The company faced redundancy costs of SEK20 million due to organizational changes.
- High personnel costs continue to negatively impact parts of the operations, despite some improvements.
- The Finnish market experienced a significant decline with organic growth at negative 9% due to ended contracts and lower variable volumes.
Q & A Highlights
Q: Could you provide an update on how the new organizational structure is performing and when you expect to reach your margin target?
A: The new organizational structure has been well received, focusing on administrative and overhead costs at the group headquarters. This has rejuvenated energy in the central team without affecting customer delivery. As for the margin target, I need more time to assess and will provide a detailed plan later.
Q: Do you foresee any changes in your customer portfolio or the competitive landscape that might hinder reaching your margin target?
A: We remain strong in the integrated facility management space with no indications of changes in our market position. In single service markets, there is significant growth opportunity, and we must remain efficient to stay competitive.
Q: How has the international market turbulence affected your customers, and what are your growth expectations?
A: The international market turbulence has had a limited effect on us, and we don't foresee any impact going forward. We have a stable customer base, and I am working with the team to find a path for continued growth.
Q: Are you surprised by the efficiency program's lack of short-term negative impact, and do you anticipate any challenges in the coming quarters?
A: While it's difficult to say if I'm surprised, the reorganization has been completed with minimal turbulence. However, I remain cautious as there is still much work to be done, and I wouldn't rule out potential challenges in the future.
Q: What is your view on the current market environment and new contracting opportunities?
A: We have a strong pipeline of projects and a good retention rate. The market remains stable, and we are selling efficiency and focus on core business, which is highly relevant in turbulent times. Variable volumes remain stable, but we are monitoring them closely.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
