Coor Service Management Holding AB

Our long-term efforts to improve the management and governance of the operations are continuing. There is a focus on strengthening leadership skills and creating a clear division of responsibilities within the operations. And after summer here, Peter Hasbach will take over as CEO of the Danish operations and will be a valuable addition to this ongoing work. In Norway, we see organic growth of 23%, and that comes from unusually high variable volumes related to maintenance stops in the energy sector. While maintenance stops occur annually, the scope and timing in the year varies from year to year. Around half of the organic growth we see in this quarter comes from above normal levels. Adjusted EBITDA for the quarter amounted to 37 million and margin was 5.4%. The strong improvement compared to both previous quarter and last year is driven by the high variable volumes. And last among the countries, Finland. Organic growth of negative 1% in the quarter from a couple of smaller contracts that was ended. Adjusted EBITDA and margins are in line with last year. Moving on to cash flow and balance sheet. During last year, we saw an increase of working capital as a result of changes in the contract portfolio. We also had year-end balance sheet effects and to a certain extent due to inefficiencies in ways of working. A number of measures have been taken to reduce the level of working capital in 2025. And in the first six months, working capital has been reduced by 113 million compared with a build-up of working capital of 142 million in the same period last year. With that, our net working capital position has been restored to a negative 7.5% as a percentage of LTM net sales. As a result of improved networking capital, our key metric LTM cash conversion also improves in the quarter to 88%. That is an improvement with 31% compared with the full year 2024. And with that, we are essentially back in line with the company target of staying above 90%. And finally, leverage that is on the bottom right of the slide increased to 2.9 after paying out dividends in the quarter. And with that, I hand it back over to you, Ola, to sum it up.

Thank you, Andreas. So summarizing all that we've heard now, we continue to extend some important contracts. There's a lot of activity going on in the market and we're paddling through that in a successful way, I think. The organizational change that has been on the agenda here for the first half year is now completed. We are working a lot with improving systems and support to enable us to have a higher operational efficiency throughout our operations. And the networking capital is now restored. So I think that's what to bring along from this quarter into the next. So that's what we're working on at the moment. So having said that, we now go over to the Q&A section of the presentations.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Simon Johnson from ABG. Please go ahead.

Good morning, guys. I have a few questions about Norway specifically. You have very good momentum right now, especially in the variable volumes, of course, but you have also started to sign some contracts with the public sector. So, I mean, can you talk a bit about what you think the long-term opportunities for that, looking a few years out? Could you reach sort of a similar

share as you have in sweden and and denmark you think i think the if we if we talk about norway i think they're doing a lot of right things uh simultaneously at the moment they have a new manager since one and a half year and i think she's doing a fantastic job with both kind of working with the sales culture, working with operational efficiency questions, working through some of the contract portfolio that has been less profitable in the past, etc. So I think there's a lot of explanations for the strength of the Norwegian results. Now, particularly in terms of the public sector, it's obviously, I mean, a huge opportunity, given that the Norwegian economy The Norwegian markets are largely untapped there. And just recently, we've had some other contracts where we are in a very good position to win. So I think it's a big opportunity. I think the exact market size of that remains to be seen. But obviously, it's a big opportunity if all the municipalities and regions in Norway starts to outsource in the same way as in Denmark and Sweden.

we don't have an exact number got it thank you and as a follow-up on that then how do you think that could impact margins let's say you continue to have good momentum with the public sector continue to grow in norway do you think the segment and the country could be you know coming back to becoming a creative to group margins again i mean it's rich six or seven percent historically when you have the big Equinor contract, maybe that's a stretch, but do you still think it could become a creative group?

I think that generally speaking, if we look at all our markets, the public sector contracts generally have a little bit lower margin. But we also see a trend where there are many that are going for quite strong quality conditions in the tender conditions. And that is something that's really, really helpful for us. And that's where we want to play. And then, of course, it would be possible to have that type of margins in a new contract. But we have to be careful. We have to ensure profitable growth and not only growth. But we see some positive signs, I think, in terms of that in the Norwegian market. But as we know, the public sector is moving perhaps slower than the private sector. The kind of speed at which this is happening, it's a little bit difficult to predict, but a large potential if it does happen.

All right. Thank you. That's all for me. The next question comes from Raymond K. from Nordia. Please go ahead.

Hi, good morning. A couple of questions from me and I'll start with Norway as well regarding the exceptionally high maintenance volume that you saw here in Q2. When did that take place approximately during the quarter and do you see any of that trickle into Q3?

Hi, Raymond. Primarily the second half of the quarter, there might be some trickling over here in Q3, but limited, I would say, because that maintenance stop is actually coming to an end here in the coming days.

Got it. And then on Denmark and the Velux contract that you lost... When does that contract end, just so we can understand when it sort of falls out of your numbers?

It ends towards the end of Q3. So you will see the impact of that from Q4 onwards.

And finally, just on Sweden and Denmark, you saw lower variable volumes behind the negative organic growth there. Could you help us understand if that's something that we should expect to change shortly? Or is this sort of the team maybe going into H2 as well?

Thanks. Sorry to go ahead, Ola.

No, I think a general comment on that is that it is a little bit challenging to predict because we have certain of our segments that are affected, of course, by the economic environment and have a little bit slower kind of projects It takes a longer time for them to start up new projects and it's longer decision times and it's smaller projects. But then on the other hand, we work with the defense industry, energy and so on. And there is really a lot of things going on and we see a lot of volumes coming in. So it's a little bit difficult to see how this kind of balances out. So that's more of a general comment. Go ahead, Andrea. Sorry to interrupt you there.

No, I mean, you're perfectly right. It's very hard to predict. Looking at the trend right now, they are somewhat lower than previous year. And it's not a massive decrease, but still it's there. And we'll see how that sort of plays out in the second half of the year.

Great. And just one final one. The restructuring costs that you had in this quarter, 21 million. Are we correct to understand that this should fall or be lower going forward?

Yeah, that is correct, because now we have concluded the restructuring related to the reorganization that we announced earlier this year. So that is correct. It will decrease.

okay perfect that's all for me thank you very much the next question comes from Carl Johan Bonnevier from DNB Carnegie please go ahead yes good morning all under the a first of all congratulations to the good to continue to turn around the love of the company after last year's struggle at got to conclude on more way and Andrea Could you remember, and I'd like to know how is the comparison for last year? I can't remember that you mentioned variable volume being particularly high in that quarter, or is it a fair base to compare with?

Yeah, exactly. We had quite high volumes both in Q2 and Q3 last year, but I think looking ahead in Q3, it's a fair comparison, I think. But not on the unusually high levels that we have seen in Q2, but should be on balance with last year, I believe.

Excellent. And on the cost savings program and realizing the 120 million, I see you mentioned that you've taken down costs on the central level of about 8 million in the quarter. Can you just enlighten us how you see the full effect of the 120 million coming through on the central level or on the country level? Is it half-half or how should we see it?

It's roughly half-half. That is correct.

And when you look at now having implemented, maybe it's too early to say, but obviously taking out that amount of employees, have you seen any detrimental effects on your business taking out 130 employees?

No, I think it's a good question, but... I think we've seen an increased focus actually on the core questions that we need to work on. operational efficiency, some of our IT challenges, etc. So far, we've actually seen an ability for an increased focus. And I think we should also remember that we're kind of now back to the more normal HQ cost levels that I think you've been used to seeing in core companies. you know, over the historic time. So I think it's back to normal levels. You should think about it more like that than that it's a decrease.

Ola, on that topic, you have already given a lot of comments about how you see the strength in the Norwegian operation and maybe the volatility still underlying in the Danish operation. If you look at the general stability of the operation, how would you say envisage the different countries at this stage?

I think, as I mentioned, I think Norway is on a good path where we see a stability and a predictability in the work that they're doing. Sweden is perhaps... somewhere a little bit less kind of predictable and stable than Norway. And then Denmark is probably at this time the least predictable, where we see some changes from month to month that we work with getting under control. So I think this is the primary task for the new Danish manager to really to really get an even tighter control of the costs and the operations in the Danish business. So I would probably rank them, you know, something like that. And this is also, you know, the result of the historic growth pattern where we've grown a lot and taking a lot of new contracts. And how are you able to... How have you been able to manage the integration of that rapid growth? And the countries are there on a little bit varying levels.

And when you look at the stability into the perception of what kind of market opportunities you see out there, is it easier to let the Norwegian organization for the moment going for growth opportunities than maybe the Swedish and the Danish organizations?

Yeah, I think it's my management philosophy that you always have to kind of earn the right to invest. To do that, if you are managing good operations and you know your control of what you're doing, then you have a better opportunity to absorb new growth. So, of course, that is one of the factors that is playing into this. But of course, we're very long term. So if there is a good opportunity coming up, we'll just have to make sure that we support that, even if it's in a market that is currently a little bit less successful than the Norwegian one.

Excellent. And one final, maybe for you, Andreas, looking at... I guess the annual gearing cycle normally peaks in Q2 with the dividend payment and the kind of normal kind of working capital headwind you have in the quarter from a seasonality perspective. I've noticed that you really talked about starting the share buyback program directly after the AGM. I haven't seen anything happening in Q2. How do you see that going forward? What kind of consideration has made you postpone slightly?

No, you're absolutely correct. It's been somewhat postponed here with handling the reorganization internally and so on, but something we will look into and prepare for the board after summer and take a look at it.

And the outlook of, I think it was 50 million you detailed for coming up to March next year, that's still a valid number.

it's still the number we're looking at, correct.

Excellent. Thank you very much and all the best out there.

The next question comes from Rauli Juva from Indiers. Please go ahead.

Yeah, hi. It's Rauli from Indiers. I would still have two more questions related to the Norway development. So first of all, you mentioned that the A larger scope of the shutdowns contributed to about half of the growth. So what was the main drivers behind the other half, which is still double-digit as such?

It's coming from both new contracts that's been started up and also more in sort of a normal fluctuation of the maintenance stops. So even... Taking away the unusually high ones, the maintenance stops this year is somewhat higher than last year in Q2. Okay. But I would say in sort of... And then secondly... Sorry, go ahead.

No, no, go ahead.

No, I would say even though higher, but still sort of in normal fluctuations that we see year on year.

Yeah, yeah, that's clear. And then secondly, your Norwegian sales was up around 100 million and the EBITDA was up some or exactly 10 million. So 10% of the sales growth is that kind of a fair level for you as a kind of operative leverage when you see higher volumes. How would you describe that?

So I'll take that again.

I didn't fully catch your... Just looking at the Norwegian numbers, you had a 100 million increase in sales and a 10 million increase in the EBITDA line. So I was wondering, is that ratio kind of a typical drop of the sales increase when you see volumes?

It's hard to sort of have that as a general view because it depends on where that growth is coming. Is it coming in building density that then you can sort of grow with the healthy margins? If it comes with a more sort of scattered geographical spread, then the margin profile might look different. So it's hard to say sort of in general that growth comes with a certain margin.

All right. Any more questions?

All right. The next question comes from Oliver Ucetillo from Acti Esperana. Please go ahead.

Hello, guys. Good morning. I suppose we will finish up with a few questions from my end. I think you mentioned in the report that there are some large deals coming along in Denmark. And considering the recent status of your Danish operations, Do you feel that you have resources to be a competitive player in these upcoming bids? Do you think we can see some... Is this the low point for the Danish market?

It's a really good question. I think since there is a movement in many different parts of the market, the answer varies a little bit. But, I mean, we still remain one of the top players in the Danish market. We have some challenges with the operational efficiency in terms of how to generate profit. But I think it doesn't mean that we're not competitive. So I wouldn't say that. Also, even if we have now done some resource work, optimization on the central level, we still have a large team there that works internationally to support in the big tenders. That's not something that is done in the local markets, but in cooperation with the international team that kind of supports in the big cases. And in the small cases, I'm sure that the Danish business is quite capable to manage it. But it's always a stronger situation, of course, when you are performing well and when you have a predictable and stable business. But we are definitely working to make the Danish situation even better and more stable for us. Do you have anything else on that, Andreas?

Okay.

Nope.

Yeah, fine. Thank you. And just one follow-up question on the Norwegian market as well. I mean, the margin is also strong there, and you said that half of the growth is considered above normal levels. How much has the margin been affected? And would you say that you've been able to expand your margin year over year, even without this about not normal growth?

Yeah, I mean, also taking away the volume and the variable volume here, there is a continued focus on operational efficiency in Norway as well. And as Ola mentioned before, I believe Stine in Norway is doing a very good job on handling that as well. So there would have been some margin expansion even without the volume here in the quarter.

Okay, great. Thank you so much. I think that's it from my end.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

All right. Any further questions?

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

So thank you very much for joining the Q2 call, and we wish you all a good day. Thank you very much.