COOR Q1 2025 slides: Cash conversion improves despite organic growth decline

Introduction & Market Context

COOR Service Management AB (STO:COOR) presented its Q1 2025 interim report on April 23, 2025, revealing mixed results as the company navigates organizational restructuring while facing organic growth challenges. The presentation was delivered by recently appointed CEO Ola Klingenborg, who started his position seven weeks prior, alongside CFO Andreas Engdahl.

Despite reporting an earnings miss with an actual EPS of -0.14 against a forecast of 0.71, COOR’s stock rose 6.17% on the day of the presentation, closing at SEK 37.16, reflecting investor optimism about the company’s cost-cutting measures and improved cash conversion.

Quarterly Performance Highlights

COOR reported declining year-over-year performance across key metrics in Q1 2025, though showing improvement from the previous quarter. The company posted negative organic growth of -2% compared to positive 2% growth in Q1 2024, while adjusted EBITA margin contracted to 4.7% from 5.1% in the same period last year.

As shown in the following comprehensive table of business metrics, COOR’s performance remains below its mid-to-long-term targets:

Net sales for Q1 2025 amounted to SEK 3,052 million, down from SEK 3,124 million in Q1 2024. Adjusted EBITA decreased to SEK 144 million from SEK 160 million year-over-year, resulting in a net income of SEK 50 million compared to SEK 62 million in Q1 2024.

The following table provides a detailed breakdown of COOR’s profit and loss statement:

Detailed Financial Analysis

A notable bright spot in COOR’s financial performance was the significant improvement in cash conversion, which increased to 81% in Q1 2025 from 57% in Q4 2024, though still below the 90% reported in Q1 2024 and the company’s target of >90%. This improvement was driven by a reduction in working capital of approximately SEK 200 million during the quarter.

The company’s cash flow metrics and leverage position are illustrated in the following chart:

COOR provided a detailed breakdown of the factors contributing to the improved cash conversion:

Performance varied significantly across COOR’s geographic segments:

• Sweden (54% of net sales): Reported -1.6% organic growth and an 8.7% adjusted EBITA margin, down from 9.4% in Q1 2024 but improved from 7.3% in Q4 2024.
• Denmark (23% of net sales): Posted -4.8% organic growth and a 4.8% adjusted EBITA margin, slightly below the 4.9% margin in Q1 2024.
• Norway (18% of net sales): Achieved 4.8% organic growth and a 3.7% adjusted EBITA margin, improving from 3.5% in Q1 2024.
• Finland (5% of net sales): Experienced -9.4% organic growth with a minimal 0.3% adjusted EBITA margin, slightly up from 0.2% in Q1 2024.

Strategic Initiatives

A central focus of COOR’s presentation was the implementation of a simplified organizational structure aimed at reducing personnel expenses. The restructuring affects approximately 130 positions and is expected to generate annual savings of SEK 120 million.

"The implementation of the new organization has progressed well during the first quarter," noted the company in its presentation. "Staff functions are now conducting their work with partly new assignments and with an increased focus on operational efficiency."

The reorganization officially took effect on April 1, 2025, with savings expected to materialize gradually throughout the first half of the year. According to CEO Ola Klingenborg during the earnings call, "The purpose of the changes have been well received in the company, and we now have partially new assignments for our staff functions with higher focus on operational efficiency."

COOR also highlighted its continued success in contract extensions, particularly with Equinor in Norway. The five-year extension, with an option for an additional five years, is valued at approximately SEK 260 million annually and provides a stable foundation for the company’s Norwegian operations.

Forward-Looking Statements

Looking ahead, COOR emphasized its focus on operational efficiency and profitability improvement rather than growth. During the earnings call, CEO Klingenborg stated, "We are selling efficiency, and we are selling a focus on core business for our clients. And I think in these turbulent times, that is more relevant than ever."

The company maintains its mid-to-long-term targets of 4-5% organic growth and an adjusted EBITA margin of approximately 5.5%, though current performance falls short of these goals. When asked about the timeline for reaching these targets, Klingenborg noted it was too early to provide specific guidance given his recent appointment.

Regarding working capital management, CFO Andreas Engdahl expressed confidence: "We remain confident that with the actions being implemented, our working capital profile will be restored during 2025."

Despite the challenges evident in the Q1 results, COOR’s management described market conditions as stable and unaffected by broader market turbulence. The company’s focus remains on leveraging its strong customer relationships and service delivery capabilities while implementing operational efficiencies to improve financial performance in the coming quarters.

Full presentation:

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