Coor Service Management (COOR) Q4 2024 earnings summary

Executive summary

• Stable market conditions in Q4 2024, but profitability was negatively impacted by operational challenges, especially in Sweden and Denmark, and a complex organizational structure increasing costs.

• Major contract renewals and new wins, including PostNord, Telenor Towers, and Borealis, contributed to a strong pipeline and an 88% contract retention rate on renegotiated contracts worth SEK 2.9 billion.

• Net sales for 2024 were SEK 12,439 million, essentially flat year-over-year, with organic growth at -1% and adjusted EBITA margin at 4.4%.

• Implementation of a simplified organization, reducing 130 positions and targeting SEK 120 million in annual savings, is underway to support a long-term margin target of 5.5% by 2026.

• Board proposes a dividend of SEK 1.50 per share and a share buyback program of up to SEK 50 million for 2024.

Financial highlights

• Q4 2024 organic growth was -3% (vs. 3% in Q4 2023); full-year organic growth -1%.

• Q4 net sales: SEK 3,192 million (-3% year-over-year); full-year net sales: SEK 12,439 million (flat year-over-year).

• Q4 adjusted EBITA: SEK 105 million (margin 3.3%); full-year adjusted EBITA: SEK 546 million (margin 4.4%).

• Q4 profit after tax: SEK -13 million; full-year profit after tax: SEK 126 million; earnings per share: SEK 1.3 for 2024.

• Cash conversion for Q4 LTM was 57% (vs. 86% last year), below the 90% target, mainly due to working capital build-up.

Outlook and guidance

• Measures to restore profitability and working capital are being implemented in 2025, with a long-term margin target of 5.5% for 2026.

• Cash conversion expected to normalize in 2025 as temporary working capital effects are addressed.

• Confident in restoring working capital and reducing leverage below 2.5 during 2025.

• Market remains stable with continued contract wins and extensions.