Coor Service Management Holding AB

Welcome to Coors Q2 presentation for 2026. During the questions and answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to President and CEO Ola Klingenborg and CFO and IR Director Patrik Scholland. Please go ahead.

Hello everyone. Good morning. Welcome to our Q2 report. The agenda for the day is first I'll make a short update of the current trading and account business. Then we'll go through the financial numbers with Patrik and then we'll summarize with some key takeaways. And then we will open up for questions. We'll skip right into the CEO update here. We see a continued market activities with a lot of things going on throughout our markets and we have made some good extensions. We have a good retention work in our Swedish, but also in our other markets. Particularly in our cleaning segment, we've signed a lot of medium and small-sized contracts in the Swedish market. In Norway, we've had quite a bit of success in the public space. And in Denmark, we prolonged our important and large IFM contract with DSB. and there is a lot of tenders where we are present and where we are working with some really large tenders. The growth in Sweden and Finland continues to be strong, and we work at 3-4% growth there. While in Norway, we have a negative growth in the quarter, which we communicated earlier is due to fluctuations in the oil and gas business, where we had a really, really strong quarter last year. Denmark continues to be a challenge, and we are decreasing versus last year. Our EBITDA margins continues to develop towards our financial targets and we hit 5.5% in Q2 and our cash conversion remains in line with our financial targets. The leverage is at 2.5, which is stable, which is very strong, I think, given that we have also made dividends during the period. We had a capital markets day a couple of months ago where we presented our strategy, and we are working now with all those initiatives outlined during that day. And they are progressing well. In Denmark, we do a lot of improvement activities to get the market back on track and I think they're doing a good job there to handle the decreased volumes. We've also had some changes in the management where Patrik has joined as a CFO. We've had a new HR communications director and in line with what we discussed at the Capital Markets Day, we have strengthened our leadership within our property technical maintenance business with a new manager for that area. With that, let's turn our eyes to Q2 numbers and I hand over to Patrik.

Thank you, Ola. We will start with an overview of the business KPIs. In the second quarter, organic growth is at minus 3.3%. Sweden and Finland grow at 3-4% organically, but we are having a negative growth of 15% in Denmark due to previous communicated contract losses. And in Norway, we see a negative growth of 10% due to, as also already indicated, high variable volumes starting in Q2 last year, which kind of affect that. Strong quarter, the EBITDA margin of Q2 is 5.5%, which is an improvement comparing with last year that ended at 5.2%. Margins continue to improve with strong results in Sweden, driving margin improvements combined with stable margins in Norway with lower revenues versus last year, which is a good indicator. In Finland, we see an improvement from 1.7% to 2.6%. Cash conversion continues to be solid at 90% on the last 12 months basis. And as Ola said, strong. And with that said, we also did the dividend lately. Leverage also an LDN number at 2.5 multiple continues to be stable. On the P&L Net sales ended at 3.1 billion SEK. That is 2.5% below last year. Organic growth was negative with 3.3% and FX positive with 0.8%. Adjusted EBITDA amounted to 170 million, which gives us an adjusted EBITDA margin in the quarter of 5.5%. Both EBITDA in absolute numbers and margin percent is an improvement compared to last year, despite lower net sales. Items affecting comparability during the quarter amounted to 13 million compared to 22 million last year, which mainly relates to restructuring costs in Denmark and to some extent startup costs in other contracts in the Nordic region. Net income is 87 million and adjusted net income when added back amortization amounts to 95 million SEK, both improving well versus last year. On the LTE-M numbers, we see that net sales is at 12,361,000,000 SEK. Organic growth is 0.9% and FX negative with 1.1% in the total over net sales versus full year 2025. The LTM adjusted EBITDA level is 630 million SEK, which gives us an LTM EBITDA margin of 5.1% versus 4.8% for the full year 2025. Adjusted net income for the LTM is 302 million SEK versus 274 million SEK full year 2025. Looking at Q2 country by country, we start with Sweden. Organic growth of 3% in a quarter primarily relates to a favorable activity level and higher income in all three areas, EFM, cleaning and property services. Adjusted EBITDA and margins are improving with strong performance across all businesses in Sweden. CORE signed extension contracts with Skanska and Boralis and Göteborgs hamn and Stockholm live but also we can see that a number of customers within the small and medium segment for cleaning was also signed if we Move on to Denmark. During the second quarter, sales in the Danish operations declined with 15% due to the negative organic growth of minus 14.5% and a negative forex exchange effect of 0.7%. This negative organic growth was due to previously communicated ending contracts, which are estimated to also negatively impact coming quarters in the year. This also negatively affected adjusted EBITDA for the quarter that amounted to 16 million SEK compared to last year, which was 27 million SEK. An adjusted EBITDA margin of 2.7% versus last year, 4.0%. The work with decreasing the cost base is ongoing, but with still lack of revenues, the adjusted EBITDA negative compared to last year. Activity in the market remained high and Denmark are participating in a number of tenders and will be participating in future tenders both in our own portfolio and in the market in general. In the second quarter, Core signed an EFM agreement and extension with DSP for three years and also Fredrik Berg's Multimunicipality. Denmark continuously work to adjust their business with a lower volumes with a balance to position themselves for future growth. On July 7 in this year, Core received a final arbitral awards in a long-term running arbitration proceedings with a customer that has been pending since 2022. Awards was in favor of the customer, which have a financial impact of 20 to 25 million in the Danish company, which will be recognized in Q3. This will be treated as a non-recurring item as it does not have anything to do with the present Danish performance and business. For Norway, during the second quarter, the organic growth was negative of 10% and foreign exchange effects of 4.7% positive. The negative organic growth was due to the variable costs from last year from Q2 and onwards. We are now during 2026 can see a normalization of the level of variable volumes. Operating profit adjusted EBITDA for the quarter amounted to 35 million compared to 37 million last year. The operating margin remained at 5.4%, which is in line with the last year. Hence, the contract portfolio develops well. The earlier one contracts with Juton and Avinor is progressing successfully. In the second quarter, Norway also signed cleaning contracts with Gertrum and Drammen Kommune. Turning to Finland. During the second quarter, sales was 3% higher in Finland compared with the second quarter last year, due to the contract started in Q1. Organic growth was positive and amounted to 4%, while foreign exchange effects were negative and amounted to 0.9%. Adjusted EBITDA amounted to 4 million SEK compared to 3 million SEK last year. The operating margin was positive with 2.6% compared to last year, 1.7%. The activity in the market is high and there are several tenders in the market in the quarter and upcoming quarters which Finland will participate in. If we go to cash flow and balance sheet, we can see that we have a continued solid cash conversion with 90%. Working capital is negative with minus 7.6%, which is in line with the seasonal pattern in prior years. The leverage continues to be stable and strong at 2.5 times EVDA. We are also considering that we have done a dividend, which kind of includes in the cash conversion of 90%. And with that, I hand it back to you Ola to summarize.

Thank you, Patrik. So, in summary, it's another stable quarter and we have some positive development, I think, in several areas. We see a lot of market activity going on and a lot of tenders in the market. We see organic growth in Sweden and Finland continuing to be good. I think the underlying business in Norway is also developing positively, although there was a fluctuation in variable volumes, particularly compared to Q2 last year. Denmark struggles with the lost contracts from last year but they're doing a good job I think to try to manage that loss of volume. Continued improvements of the margins is really closing in on our financial targets, which is 5.5% LTM. We see a good cash conversion. Leverage is stable, particularly given that we already did the dividends decided on the AGM. Strategy implementation progresses as planned. A lot of activities going on to both strengthen our growth and also our margins. And three new EMT members coming in that I think will further strengthen our ability to deliver on our strategy. So a stable quarter and continued improvement work. So that concludes our presentation, and we'll head over into the Q&A and open up for questions.

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 Sundal Collier. Please go ahead.

Good morning Ola and Patrik and thanks for taking my questions. If we first start with some of the positives here. I think margin in Norway is holding up quite well despite the lower variable volumes. Do you expect that this will continue and you can sustain the current margins coming quarters as well even though Variable volumes continues to decline or how should we think about Norway's margins here?

First of all, I think it's a good observation that the drop in variable volumes would usually imply that we would see also a drop in margins. But that has not occurred in this case. And as you see, I think it's a sign of strength in the underlying Norwegian business. So we are definitely working towards... towards improving the margins in the underlying business. And we see a positive trend there. So good observation.

All right. Makes sense. Sounds very good. And on growth in Norway, the drop here in organic sales versus last year is still pretty good considering that you grew 20% last year. And if you take out the volatility in the variable volumes, you talk about portfolio expanding with new customers and so on. How is the underlying portfolio growing, you would say, currently?

It is growing, and we have won some really good contracts, the ABINEO contract, JUTUN, as Patrik mentioned, some municipal contracts. So they are contributing definitely to volume. But usually when we start up new contracts, there is a lower margin in the beginning and the first year or two. So I think we see an increase in volume. We are, of course, working to make sure that that produces our required and desired margins. But we see that it will take a couple of months or quarters before we see the same margins on those new contracts as we had with some of the old contracts that was moved out of the portfolio last year. But we see a growth and we are positive in transforming that into improved margins.

All right. Currently, you have both new contracts and the variable volumes potentially holding back the margins in Norway. Is that correct to view it?

Yes.

All right. I will follow up on that. What's your longer-term view on margins in Norway then? Maybe it's a stretch to assume it could reach Swedish levels, but I think it's a stretch to imagine the Swedish levels, but it's definitely in our ambitions to improve the current margin levels.

At the same time, we are quite dependent on some of the bigger oil and gas business where the margins are notoriously low, but volumes are very significant. So it's a bit of a mixed question as well. But moving up from our current margins levels is definitely our ambition.

All right, interesting. Thanks for that. Then moving to Denmark. I think even though you are struggling with contract losses, it was still a bit of a negative surprise on the margin here in this quarter. And when you say that you are continuing to work on stabilizing margins in Denmark, taking out costs, et cetera, what does that mean for margins in the second half of this year, you think? Does it mean that you expect to stay around the 3% level or so, or do you expect it to bounce back a bit here from this level?

We usually don't make forward-looking statements and forecasts, but to understand the current numbers, I think we see two effects simultaneously in the Danish business here. First of all, and most importantly, the contract losses from from 25, where we're doing a lot of work to mitigate those revenue losses with more efficient operations. The other thing here in Q2 is some of our businesses where we have been challenged on the margin side, which is a little bit more of a temporary challenge. So we do think that we can work to improve the margins from Q2 into the second half of the year. But it is a lot of work that needs to be done. We do not make forward-looking statements like that, but we think that there is room for improvement now as the situation stabilizes a little bit.

Alright, and the second factor you mentioned there on the pressure you're seeing right now, what sort of time frame is that? Can you explain a bit more on those effects specifically? What are causing that and and how long could those temporary pressures persist?

I wouldn't call it pressures. It's more like temporary challenges in the operational delivery, which is Things that happen in this business and that maybe wouldn't be as noticed if the business in itself was 100% stable. But it's something that in this time period where we see an underlying decrease of the revenue and the bottom line, it further affects the profitability. But I would, as I said before, I think we see that the Danish team is doing a good job, I think, to manage the situation and ensure that we maintain the contracts that we have already in our portfolio. DSB contract being an important prolongation this quarter, for example. We have a number of different prolongations coming up as well during the the coming year, as well as participating in new tenders. So we need to make sure that we have resources for that as well while we are adjusting to a new top-line level. So my impression is still that the Danish team is doing a good job in the circumstances that they're in.

All right. Then just a final one from me on the cash flow, and I know that the cash conversion you are communicating is looking solid, pretty much in line with what you're targeting. But if you look at the free cash flow generation conversion from the adjusted EBITDA, for example, it remains a bit below historical levels. There are some factors. like restructuring costs and higher interest costs and so on. And maybe most importantly, the lack of organic growth that is holding back prepayments. If you look ahead here and see that you come back to organic growth in coming years, do you also expect that you would come back to that sort of tailwind from prepayments boosting the free cash flow? or how should we view that in the coming years?

I think it's the same as Ola said we don't comment on the future but of course we constantly work on increasing our operating free cash flow as well as increasing the cash conversion so of course that has to do with the organic growth and of course as we have said earlier we are working on increasing the organic growth, balancing the contract losses that we've had, and also the restructuring cost, they are decreasing and will continue decreasing as well, which will affect that free cash flow as well.

But we also see that in particularly as you note in the variable revenues where we have where we have large volumes coming in, that's usually a more advantageous payment terms on those as they are kind of paid as they're being performed rather than the more running business where there are different payment terms. So it's a bit of a mixed question as well. So that's another nuance to that perhaps.

So looking at last year, for example, the free cash flow was actually very strong and it also had very strong verbal volumes, especially in Norway. So I'm guessing then it's fair to assume that there was a contributing factor last year that is now absent.

Yes.

All right. Perfect. Thanks for that. And that's all for me.

The next question comes from Oliver Ussitillo from Akshi Sperana. Please go ahead.

Good morning, guys, and thank you for taking my question. I would like to start off with the organic growth outlook in the Swedish market. You're stating that all segments are growing in this quarter, and I guess that provides you with some optimism that this 3% rate could be persistent over the well second half of the year and perhaps in 2027 as well and also if you can't say anything about the variable volumes coming into the second half of the year here do you see any activity regarding conferences and such in Sweden or is that still too early to say

It's always a bit tricky to predict the variable volumes in the Swedish market, but we have had a good first half of the year and there's not that much to indicate that that would change dramatically in the second half of the year. And we are doing a lot of work to increase our ABILITY TO UP-SELL TO EXISTING CUSTOMERS. THIS IS ONE OF OUR KEY COMPONENTS OF THE STRATEGY THAT WE DISCUSSED ON THE CAPITAL MARKETS DAY AND OUR ABILITY TO DO THAT. THERE IS ROOM FOR IMPROVEMENT AND THERE IS There is quite a bit of work going on there. Then predicting exactly how that will look and when it will come and so on. That is always a challenge, but we see positive signs. At the same time, we are participating in a quite significant number of larger tenders that we want to win and that we... have the ambition of winning, and I think that's also necessary to sustain the organic growth from a longer time period perspective. So, working on many fronts there. Patrik, I don't know if you have anything to add.

Thanks for that clarification. A short follow-up regarding the upsell that we discussed a bit on the CMD. Do you see that this has affected the growth in Q2 already or are we kind of waiting for that effect to be visible?

I think we see traces of it but definitely not the full impact of it. And I think it's... It's something that is partly a cultural shift, which by definition takes time. But we have definitely an increased focus on it. So I see we see partial effects of that, but not the full potential effect of it.

All right. And what feedback have you received organization-wise for this project? Well, new change in sales.

I think it is something that is energizing the organization after some years of the cost reductions and change programs and reorganizations. I think it's to many, many, it's a... It's a positive change to be talking about revenues and the future and new business and so on, rather than perhaps the margin focus in the same way. So it is generally speaking a positive change. Then it's always challenging to change your mindset and become more sales-oriented in your day-to-day business. But that is the cultural challenge or change that we're looking to achieve. And I think we're making some progress, but making all of our thousands of employees actually change their behavior is something that takes some time.

Yeah, for sure. Thanks for that. And I have a question also regarding the margin in Norway, just a short one. Are there any one-time effects here that's positively affecting the margin, perhaps on the FX side or anything like that?

No, this is an underlying performance, which is a strong indicator as well, depending on that we are shifting out variable volumes versus last year. And as we also stated in the report, the underlying portfolio is growing or developing really good, especially where we have new started contracts with Aminoun and Yutong. So we look very positive on that.

And then I think just a short one from me. Also on the CMD we discussed M&A particularly to support your offer within technical solutions and such. How is this progressing and in terms of the balance sheet are you confident how today or are you perhaps looking to reduce that further?

I I think it's a good question. And as we discussed earlier on this call, we just recently were joined by a new manager for our technical solutions property department. And of course he needs to put his fingerprints on this and take a look at what is needed in order to strengthen our customer offering and our service capabilities. But we are in some active discussions with particularly kind of smaller and mid-sized acquisitions that can strengthen our technical capabilities. And that will not have a significant effect on our balance sheet.

Right. I see that. Sorry, I missed the comment regarding the new employees. That's it for me. Thank you so much.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Carl Johan Bonnevir from DNB Carnegie. Please go ahead.

Yes, good morning, Ola and Patrick. A couple of questions, if I may. First, looking at organic growth, How would you see the pricing component of that being for the moment? And looking at pricing, do you feel that you are getting coverage for your cost inflation looking at salary increases and materials and these kind of things at present?

I think there are two components to the pricing question, Karl-Johan. First of all, what is the pricing on new tenders? What's the kind of price pressure that we see there? And we do see, as always, a tough price competition, as is always the case in our business. We need to be really efficient. and deliver. And there we see, if anything, an increased price pressure in the market. Now, more significantly for us is perhaps our capability to ensure that we get the price increases of our existing contract portfolio in all aspects of the business. So far, I think we were able to outweigh our cost increases, but as we discussed on the Capital Markets Day a bit, we think that there are opportunities to be even more efficient in our in our way to price our customer offering and to price our services delivered. And that is a component where I think there's also some potential and where we perhaps not fully used that improvement potential. So it's two components, but to answer your question, I think with our current way of operating, we are able to outweigh cost increases, and that is also what we see in the margin development that is slowly creeping upwards.

Coming back to the price component in organic growth, do you feel that you are getting 1-2% contribution from indexations in contracts and these kind of things for the moment or is it lower than that?

I think from our larger contract it's always stipulated in very much detail in the contract and that is now a large portion of our business and usually we have indexes there that reflect the cost increases or where we have an ambition to make efficiencies to outweigh any indexes that does not meet the cost increases and Generally speaking, we have been able to deliver on that. Then on the smaller contract portfolio, which is many, many thousands of customers, there's a very diverse picture of how our indexes look. And in some cases, it's better than cost development, and in some cases, it's lower. And we have quite a bit of work ongoing now to ensure that we... that we really get what we need out of those small and medium-sized businesses. But once again, that's thousands of customers and we're working to make that happen.

I hear you dodge a question of how that would look on an aggregated level for the whole operation. Is it hard to measure it? Is that why you dodge it? Because I know a lot of your peers are obviously commenting on this all the time.

Yeah, no, and it is a bit hard to measure, actually, given our diverse contract portfolio and so on. But we do have control over it in all of the larger customers. It's really detailed, regulated. Whereas in the smaller customers, we do make all of these indexations, but getting an aggregate picture that is absolutely correct and that we can communicate to the market and ensuring that it's not volume, it's only price and so on. We are not quite fully confident with any percent that we would get out of our systems at the moment, which obviously is a potential, as you indicate.

I'll back down on that one. So that's fair. So I understand the complication of it. Looking at the arbitration process that you have been driving in Denmark, Does that have any impact on the ongoing business or is this a concluded contract and a concluded relation? Do you have any similar processes ongoing somewhere else that we should be aware of?

No. It is a part of a much larger contract that is concluded and we don't make that service anymore to them since a couple of years. So it's not connected to our current delivery. And to your second question, do we have any more of this size? No, we do not. So we should not expect anything more of that size.

Excellent. Good to hear. And I just noticed your way of saying in your general remarks, Ola, that the strategy implementation is progressing according to plan. And just want to get some color on, given the new owner situation in the company with, say, two new large owners, the Swiss and the German guys, have they communicated that they are standing behind the strategy and what the company is doing? Or is it still, say, a black hole there?

Well, we have had some brief interaction with the new large owners and they are very much in understanding of the business as they have been operating similar type of businesses in other markets. And they were not that specific. but they said that they were impressed with the work that we're doing. And I guess that's an indication that they support the current strategy.

But it's logical as a minority owner of court to expect that the strategies that are presented are the ones that are acted on the financial targets and the capital allocation models that have been communicated are the logical ones to expect to be announced and done as well.

Yes, I mean, this is very much of an ownership and board question, so I'm not the one to direct these questions to, I think, but they seem to be very happy with what we're doing. and interested in staying on as owners. That's what they communicated. Otherwise, this is maybe not something that should be communicated by me or through this specific forum, but rather something that you need to talk to the board and so on about. But they've had some brief interaction with us and they are very positive. And that's the short conclusion of it.

Good to hear, good to hear. All the things we want to know is obviously that everything is lying where it should and you are developing in the way you should and you have the support from the owners to do that. So good to hear. Thank you very much and all the best out there.

Thank you, thank you.

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

All right. Me and Patrik would like to thank you all for joining this call and wish you all a great summer and see you again at the Q3 report. Thank you very much.

Thank you.