Coor Service Management Holding AB

Welcome to Coors Q3 presentation for 2025. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to President and CEO Ola Klingenborg and CFO and IR Director Andreas Engdahl. Please go ahead.

Hello, everyone. Welcome and thanks for listening in to the core Q3 report. I would start by giving you an update on some of the events during the third quarter and talk about some of the market conditions. I will then hand over to Andreas to present some more details around financials before we summarize some of the key takeaways for the quarter and have a Q&A session. At the end of the presentation, I would also share a little bit of news regarding a CFO interim solution that we identified as Andreas departs now during the fourth quarter. So a brief summary of the events during the third quarter. Starting with market conditions, we continue to see a high level of activity in the third quarter. We see a little bit varying outcomes depending on our different geographies. One of the key success factors for us is the ability to extend existing customer contracts, which is why customer satisfaction is one of our most important KPIs. This quarter, we got our annual customer survey, which was conducted during the autumn. I'm pleased to say that our results remain strong at 72, which is an improvement from last year's 70, and above our target. So that's good news. In Sweden, we have extended a couple of important contracts with Alstom and Vasa Kronan, and we continue to win new contracts in the Norwegian market with some good successes there. Both Avinor and Chaga Egendom was signed during the quarter. But we continue to see challenges in our Danish operation, which affects our commercial ability there. We have a couple of new expanded contracts in the quarter, but also a few contract losses. And some earlier contract losses are concluded in the fourth quarter and early next year. The net effect of these changes in the portfolio are net negative, and the value of our contracts that will be concluded in the next two quarters is approximately 300 million SEK in the Danish market. To further strengthen our operational focus, I've decided to expand the executive management team, and our three Swedish divisions will now join the executive management team, giving the heads of divisions an expanded mandate and clearer responsibility for the coordination and governance of the support functions. We enable, by this, more efficient and integrated management of the Swedish business segment. This will also flatten the organizational structure, which I think will allow for quicker decision-making and increased operational control. In 2025, we've also taken a lot of measures to restore the level of working capital, and I'm pleased to see that that has resulted in significant improvements in cash conversion. This quarter, it's 96% compared to 57% for the full year 2024. As commented in the previous quarter, we continue to prioritize long-term efforts to further strengthen our ability to deliver attractive services with high operational efficiency and profitability. We started preparations for the capital markets day early next year, where we will provide an update on our progress and share plans for course future. So handing over to Andreas, take a look at the numbers.

Thank you, Ola. We start with an overview of the business KPIs. In the third quarter, organic growth is 4%. And that comes as in the previous quarter, primarily from high variable volumes in Norway. The EBITDA margin for Q3 is 4.5%. That is an improvement comparing with last year, that ended at 4.1%. Cash conversion, that is an MTM number, ended at 96%, as Ola commented on here just a minute ago. A strong number that is above our target of staying above 90%. Leverage, also an MTM number at 2.7, a decrease from previous quarter. On the P&L, net sales ended at 3 billion, that is 2% up compared to last year, where organic growth was 4% and FX negative 2%. Adjusted EBITDA amounted to 134 million, which gives us a margin in the quarter of 4.5%. Both EBITDA and margins is an improvement compared to last year. At the end of the second quarter this year, the previously announced changes in the central staff organization was completed. And effects of these changes are now becoming visible in the P&L. We see lower cost for central group functions and also positive impact on cost for central functions in the countries. Items affecting comparability during the quarter amounted to 21 million and mainly comes from restructuring costs related to changes in the Swedish management structure that Ola just commented on. And consultancy costs related to strategic review to define the plans for core future to be presented at the capital market day early next year. Net income is 43 million and adjusted net income when adding back amortization amounts to 57 million. That is an improvement with 81% compared with last year. On the LTM numbers, we see that net sales remain close to 12.4 billion. The LTM adjusted EBITDA level is 548 million with a margin of 4.4%. Looking at Q3 country by country, we start with Sweden. We have organic growth of negative 2% in the quarter, mainly a result of ended contracts. In the face of a weaker economy, we also see somewhat lower demand for variable volume, primarily in our conference service. The adjusted EBITDA and margins are somewhat lower compared with previous year. We see positive effects from organizational changes implemented earlier this year. Well-ended contracts have a negative impact. The cleaning operation improved their profitability. Last year, high resource consumption had a negative impact, but the action plan that was implemented last fall to improve efficiency in resource planning has improved profitability back to expected levels. With lower demand for variable volumes, we also have a negative impact on profitability. Conference service have a relatively high share of fixed costs, which has a strong impact on profitability as volume change. If we then move over to Denmark, organic growth of 2% in the quarter, that comes primarily from indexations. Adjusted EBITDA margins are relatively stable compared with previous year. But as Ola mentioned earlier, we continue to see challenges in our Danish operations that also affects our commercial ability. Recent changes in the portfolio are net negative, and we have contracts of some 300 million per year that will be concluded in the coming two quarters. In August, Peter Hasbach took over as CEO of the Danish operation, and he is now evaluating appropriate measures going forward to ensure an improved commercial impact in the Danish market. In Norway, we see another strong quarter with organic growth of 22% coming from unusually high variable volumes related to maintenance stops in the energy sector. These maintenance stops occur annually. The scope and timing in the year varies from year to year. This year, around half of the organic growth we see in the quarter comes from above normal levels. Adjusted EBITDA for the quarter amounted to 29 million SEK and margin was 4.6%. The strong improvement compared to last year is driven by the high variable volumes. We have signed several new contracts in Norway the past few quarters. The majority of them will be started in the coming quarters, thus having a limited impact here in the third quarter. And last among the countries, Finland, organic growth of 3% in the quarter and a slight improvement in margins compared 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 and year-end balance sheet effects, and to a certain extent due to way of working. We have taken a number of measures to reduce the level of working capital in 2025. And in the last 12 months period, working capital has been reduced by 77 million compared with the build up of working capital of 88 million in the 12 months before that. With that, our net working capital position has been restored to a normal level of negative 7.7% as a percentage of LTM net sales. As a result of improved net working capital, our key metric LTM cash conversion also improves in the quarter to 96%. That is an improvement with close to 40% compared with the full year 2024. And with that also a level above our target of staying above 90%. And finally, leverage that is on the bottom right of the slide decreased to 2.7 as a result of a strong cash flow. And with that, I hand it over back to you Ola to sum it up.