Coor Service Management Holding (Stockholm:COOR) Q3 2026 Earnings Call

0:00 Welcome to Coors Q3 presentation for 2026. During the questions and answers 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 Sjöland. Please go ahead.

0:23 Hello everyone and welcome to Coors Q3 report 2026. The agenda for today, I will be going through the first CEO update from me, then Patrick will take us through the financials. We'll then summarize with some key takeaways and finish off with a Q&A session. So summarizing Q3, we had a top line, which is largely flat versus last year, slightly negative. And that decrease is driven by previously communicated contract losses in Denmark. Sweden and Finland are growing.

1:08 And Norway is flat versus Q3 last year. And this is quite good work, I think, as we were comparing to 2025 with very high variable volumes in Norway in Q3. So good work from Norway there. Looking at EBITDA, we continue to improve our EBITDA by 12%. and our margin improves from 4.5% to 5%. This represents for Sweden an all-time high EBITDA for a Q3. So it's a strong performance on the EBITDA side.

1:54 and we're improving our earnings in Sweden, Norway and Finland. So good work, I think. Turning to the commercial and operations side, we appointed a new commercial director where we appointed Stine Solheim, who has been the Norwegian director the head of our Norwegian business, into a commercial role at the group level. We've had quite a bit of success with our sales in Norway, so we think that that will be an interesting choice that will propel us to the next level of growth. We made a customer satisfaction survey, which showed that we increased our customer satisfaction index to an all-time high level as well. And the same with our customer net promoter score.

2:44 So we're doing some good work out with our customers, it seems. That is proven also by the fact that we extended quite a few of big contracts including ABB, CGI, the student housing of Oslo, part of Kaulinska and UPP Vele in Denmark. and we are participating in a lot of tenders. There's many things going on in the market and we are actively participating. To do that and to realize our strategy, we've also strengthened our sales force and recruited quite a bit new sales people, both on the central level, but also in our markets.

3:31 Part of our strategy has also been, or is, to strengthen our property business, which is our technical maintenance services. And one example of that is that during the quarter we launched Core Connect, which is a newly launched 24-7 monitoring center that will enable us to provide new digital services for our property customers. We're also, as we have previously communicated and described, a quite comprehensive program for operational efficiency. And as you see in the margin numbers, that seems to be paying off. Particularly on the AI side, we are working with an agents program that we're rolling out across our business.

4:25 And as a fun fact, yesterday we won an innovation award from the International Facility Management Association for our AI agents. And I think AI is a good opportunity for productivity and service development within our industry. If we look a little bit forward, we continue to see high market activity, a lot of things going on in the market, and we are focusing on what we previously communicated, cross-selling opportunities, efficiency improvements, margin enhancement, and growth where we're putting in more resources to produce organic growth. We see positive development in Sweden, Finland, Norway and we're expecting that to continue and in Denmark we continue to work on our stabilization efforts. And as a highlight for Denmark, I think we have lost some revenue.

5:28 But if we look at the bottom line effect, there is actually a particularly smaller effect on the bottom line than you perhaps could expect with such a loss of revenue. So really good work from the Danish business to maintain profitability. With that introduction, I'd like to hand over to my CFO Patrik.

5:51 Thank you. And we start with an overview of the business KPIs. In the third quarter, organic growth is minus 1.5%. Importantly, Sweden and Finland grow 3-4% organically, while Norway is having a slightly negative organic growth of 0.9%. We are having a negative organic growth of 15% in Denmark due to the previous communicated contract losses. The EBITDA margin for the Q3 is 5% which is an improvement comparing to last year's third quarter.

6:39 Margins continue to improve with improvements primarily in Sweden and Norway driving the margin improvements. Cash conversion continues to be solid at 87% on the LTM basis. Leverage on the last 12 months numbers are also in favor. 2.3 times EBITDA continues to be stable. On the P&L, net sales ended at 3 billion SEK, which is in line with last year. Organic growth was negative with minus 1.5% and FX positive with 1.6%.

7:31 Adjusted EBITDA amounted to 149 million SEK, which gives an adjusted EBITDA margin in the quarter of 5%, which is an improvement from last year's 4.5%. This leads to that the EBITDA in absolute numbers compared to last year's increase. Items affecting comparatively during the quarter amounted to 40 million versus 21 million last year. 27 million relates to the arbitration decision regarding a customer case in Denmark from 2022, as mentioned in quarter two that it will be booked in quarter three, which is this quarter.

8:19 Net income is 48 million SEK and adjusted net income when adding back amortizations amounted to 56 million SEK. On the LTM numbers, we see that the net sales is at 12,363,000,000 SEK. Organic growth is 0.7% and FX negative with 0.4%. The LTM adjusted EBITDA level is 646 million SEK which gives us an LTM EBITDA margin of 5.2% versus 4.8% for the full year 2025.

9:04 Adjusted net income for the LTM is 264 million SEK versus 280 million SEK full year 2025. Looking at Q3 country by country, we start with Sweden. Organic growth of 3.5% in the quarter, primarily a result of favorable activity level and higher income in all three areas, IFM, cleaning and property services. Adjacent EBITDA and margins are improving with strong performance across all our business in Sweden. During the third quarter sales in Denmark declined with 15% versus last year. The negative organic growth is minus 15% was due to previous communicated ended contracts which are estimated to also have negatively impact upcoming quarters.

10:12 This affected the EBITDA negatively for the quarter that amounted to 17 million SEK versus last year 21 million SEK. The EBITDA margin is 3.0% versus last year's 3.2%. We can see in the quarter that the measurements being executed to size the business to, for the time being, a lower revenue are having an effect, as the EBITDA margin 3% is almost in line with last year's percent, despite the lower sales. As mentioned earlier, an ERC to the amount of 27 million related to the arbitration decision related to a customer case in Denmark from 2022 is accounted for in the Q43.

11:05 Denmark continues to work to adjust their businesses with the lower volumes with a balance to position themselves to future growth. Turning to Norway, during the quarter the organic growth was slightly negative with 0.9%. The negative growth was due to the high variable volumes from last year in Q3. We are now during Q3 year 2026 can see a normalization of the level of variable volumes. The new contracts have continued to have a positive impact on the volumes and profitability.

11:51 During the quarter, these contracts largely offset the decline in variable volumes compared with last year. when variable volumes were unusually high. This resulted in a more balanced contract portfolio in Norway for the time being. Adjacent EBITDA for the quarter amounted to 36 million to be compared to 29 million last year. The EBITDA margin increased to 5.4% versus 4.6% in last year. Turning to Finland, organic growth was positive and amounted to 4% and the foreign exchange effects were very 0.1%, very immaterial.

12:45 Operating profit adjusted EBITDA amounted to 11 million to be compared to 10 million in last year. EBITDA margin was reported to positive 6.2% which is exactly in line with last year. Finland continue to focus on increasing their organic growth. Moving on to cash flow and balance sheet. Continued solid cash conversion at 87% on the LTM basis. Working capital is minus 7.8%, which is in line with the seasonal pattern in prior years. And leverage continues to be stable for the time being in the quarter reported 2.3 times EBITDA in leverage.

13:39 And with that, I hand it back to you Ola to summarize.

13:45 All right. Thank you Patrik. So to summarize, we see a continued high level of market activity. There's a lot of tenders going on in the market. We've seen organic growth in Sweden and Finland. We see a flat revenue development in Norway, but a mixed shift from high variable volumes to more subscription-based, which is good. We see a negative growth in Denmark. We see continued improvements in EBITDA margin with a 12% increase in EBITDA and where we are approaching now our financial targets and delivering a 5% margin in the quarter.

14:34 Continued strong cash conversion. The leverage of 2.3 puts us in a very solid position and opens up for opportunities to do investments and continue to develop the business. We have a solid strategy that we have communicated on our Capital Markets Day last year and we continue to work on that and that is yielding positive results. We see positive development in Sweden, Finland and Norway and in Denmark we are stabilizing the business after some contract losses and working to regain organic growth in Denmark.

15:22 So it's only quarter all in all, I think. And with that, I'd like to end this part of the call and go into a Q&A session. So please open that up. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Simon Johnson from ABG Sundahl Collier. Please go ahead.

15:59 Good morning, Ola and Patrik. It was very encouraging to see organic growth and margins continuing to be on the right track here. I think Norway was the main region standing out here in Q3. Organic growth was a series of flat but holding up very well against the strong 22% last year. and especially considering the normalized variable volumes. So what would you say is the difference compared to last quarter when you had 10% negative organic growth? Is all of that difference coming from the new contracts you have signed or anything else boosting Q3 here in Norway?

16:43 And now I think it's a combination of the two that you mentioned. So we are facing in new contracts with subscription revenue and they are increasingly contributing to our top line. and we are facing a new contract. At the same time, we had a very high level of variable volumes in both Q2 and Q3 last year. And that came down from those levels. So I think it's a mix of these things that you see. But to me, I think the encouraging thing is to see the... the improvement in subscription volumes coming up so that we are less dependent on variable volumes. It creates a more stable and predictable business.

17:37 Got it and the follow-up on that is that usually variable volumes are quite good for your margins and New contracts tend to hold back margins. I think that's typically what we see and what you have communicated here from Norway as well. But here you had higher margins in Norway despite this mixed effect. So were the new contracts better margin they fought or how should we think about it?

18:08 I think we are seeing a general improvement in profitability and productivity across the Norwegian business. So if we double click, we see an improvement in our cleaning business, we see an improvement in many of our other businesses in Norway as well. So there's a general lift in productivity in the Norwegian business and we are managing the new contracts very well, I think, and maybe have less of a startup hiccup than what we usually see. And particularly now coming into Q3, those deliveries are really starting to stabilize. And then talking about the margins on the variable volumes, it is generally speaking, we see a good margin on those, but it's also the case that in these large oil and gas contracts, there are several different types of variable volumes and they have a different level of profitability depending on what it is.

19:14 So it's a little bit more complex.

19:19 Alright, so you think the current margin strength here is sustainable and something we should expect to continue here in Norway?

19:28 Well, we don't make forward-looking statements like that, but generally speaking, we think that it's an encouraging productivity development in the Norwegian business.

19:43 Alright. Can you explain a little bit more on the specifics, what's behind that and the specific reasons or changes?

19:55 In the Norwegian business? Yeah. Well, as I said, I think if we double click on that, we see improvements in productivity, we see improvements in scheduling, we see improvements in how the business is run, how we manage the contract portfolio. So I think this is a business where there is not one big fix. It's usually... many, many small decisions every day that drives productivity. And Stine and the team in Norway have been very successful at pushing all of these day-to-day kind of continuous productivity efforts that have improved the margins of the Norwegian business.

20:46 With that to say, I think we are doing a similar good job in the Swedish business. which resulted in our all-time high EBITDA in the Swedish business. So we're doing those improvements across, you could say, but it's particularly noticeable in the Norwegian business.

21:03 All right, interesting. Thanks for that. Just a final from me here on the cash flow. It's regarding the arbitration fee that was booked here in Q3. Was it paid in Q3 as well, or how was the cash flow effect on that, given that the free cash flow was down compared to last year?

21:28 Yeah, that is correct. It was paid in Q3 as well.

21:34 Okay, perfect. That's all from me. Thank you. The next question comes from Karl Johan Bonnevir from DNB Carnegie. Please go ahead.

21:50 Yes, good morning, Ola and Patrick. Good answers already on Norway. Could I elaborate a little more on Denmark? Do you see the progress in the stabilization going for you? And what is next as you now seem to be turning more to a sales focus when I read the comments as well?

22:10 Well, Denmark is, there are several moving parts at the same time. First of all, we did, as we mentioned quite a few times, we lost a couple of big contracts and we're still working through that and making sure that we're able to offset that both on the fixed cost, but also in the business. At the same time, we're doing a similar kind of productivity improvement effort that we are doing in Norway. And we're seeing that the Danish business is operating in many of our contracts at the better margin. At the same time, there are many contracts, both ours and our competitors, out in the market currently for tender. So we also have a significant effort put into our sales team in Denmark to both try to win new business and defend our existing business. So the Danish business and the team there is really...

23:18 have a very full agenda of things to do and we're staying close to it. So many moving parts in the Danish business. But from my perspective, I think we see a stabilization of the underlying business and an improvement of the underlying business, which is also reflected in the fact that we more or less were able to keep The same margin and the same profitability, despite having lost 15% of the revenue. And I think that's a testament to a strong work in the Danish team. And I was just there myself the other week, and we see a quite positive energy in the team, despite a heavy workload and many things going on.

24:12 And when you look at the year-on-year headwind from the contract losses going into Q4, I guess those were starting to get out of your operations in Q4 last year. So how big is the headwind going into Q4 compared to Q3?

24:27 I think we continue to see headwinds in both Q4 and the beginning of next year as well in the comps. So hopefully after that, we'll also get a clearer picture of both our growth efforts in Denmark, the full effect of the contract losses, etc. So we'll see a continuation of these type of numbers in the coming quarters is our prediction.

25:00 So similar headwind in Q4, I think Q3.

25:04 So we're not making predictions like that exactly, as you know. But the math can be done quite easily, I think.

25:17 Yeah, I mean, I think our focus is of course coming in with winning new tenders and new goods with the customers, of course. And that is something that we have been talking about for a long time and we are aware of it. So we are putting a lot of effort, as Ola said, to increase the sales force and also hopefully will bring in some new customers and tenders upcoming quarters, which doesn't mean that the revenue will come immediately when we have a new customer on board. It will take a while until that actually turns into a revenue in the P&L, as you know.

26:10 Exactly. And on the theme of adding sales resources, both centrally and in the geographies, as you talked about, could you elaborate a little more on that? And maybe what is your historic kind of traction when you add resources? How quickly do you become productive and add to the sales that comes in and the revenues then in the next part of it?

26:36 Good question. As I mentioned before, we are adding sales resources both on central level, group level and on local level. And we're trying to make sure that that is kind of financed through efficiency gains in the business. So that we are able to offset the margin effect of those increased resources. Coming to the second part of your question, I think if we look at the local sales resources, we generally see a more speedy kind of market effect of that because it's usually smaller deals with shorter lead times. And then if we look at group level, it's usually longer cycles, longer contracts, longer tender periods.

27:24 Periods, etc. So it depends a little bit on where you where you see it, where you see the resources coming in, how long the payback is. But but usually there is, as Paul said, a time delay first for the sales guys to come in, then for them to actually make deals and then for those deals to come into production and into the P&L. So there is a time lag, which is also the reason why there is no time to lose. But rather, we try to be as aggressive as possible now and without affecting the margins.

28:02 And just to elaborate a little bit on that, we of course also have an existing sales force. So they are working a lot with doing tenders and deals, so to say. So we should not forget about that.

28:23 You mentioned the busy contracting situation in Denmark. How does it look for you in the other markets?

28:31 I mean, I think that, as we said, it's a quite active market. There's a lot of tenders, both ours and the competitors out on the market. So our sales force are being kept very busy. Let's put it like that. And, of course, being the market leader, we, of course, have a lot of defending to do as well of ourselves. of our current contracts and so we there's a lot of market activity in basically all of our markets so that is I mean I think that's the short of it

29:16 Excellent and when you look at the different markets and the competitive positions do you feel that keeping retention levels high is a bigger challenge in certain of the geographies given that or is it a similar picture across the different markets?

29:34 We haven't released numbers like that really before but generally speaking we have a quite We have a high retention rate and we're aiming to be in the 90% of our retention rate, the way we measure it. And I think we so far have been able to stay at those levels. Obviously, as you can see, we've had some challenges in the retention work in Denmark. But that also, these are long, long processes. So the contract losses that we're feeling now is something that we lost a year before that, and retention work was a year before that again.

30:19 So these are very long processes. So we have to be always there, always working with our customers, always making sure that they are satisfied and that we can prolong contracts.

30:35 And when you look at the sales resource kind of addition, I saw you mention it particularly in Finland, but I guess Sweden giving the strong progress you have in the operation for the moment, that must be the next catalyst for getting Sweden up to the next level, or is there something more you can do on the efficiency side that hasn't come through yet?

30:59 I think the good news for Core is that there is opportunity on both of these sides. So there is more productivity work to be done for sure. And we're looking at that. But at the same time, we're facing cost increases from our suppliers and price pressure in the market. So we need to continue to push productivity to be competitive. But as you mentioned, now that we are approaching our financial targets on the margin, we're not there yet, but we're working to get there. I think organic growth and getting more scale is obviously a high priority for us. If you look in Norway, for example, where we have a very positive momentum on productivity and margins, we would really benefit from having a scale that is more similar to the Swedish scale. I think that would really boost the margins to the next level in the Norwegian business, for example.

32:06 Excellent. Final me on the new contracting business. When I try to track it, it seems to have been a little slower during this year than during last year. And obviously, that's partly depending on what kind of renewals you have in your own portfolio. But do you feel that processes out there are taking longer for the moment? Or is there something in the market that might explain why your contracting also has been a little slower this year?

32:33 Well, I think, as I said, I think there's a lot of activity. The processes are a little bit longer. There is for sure, you know, tough competition as there always is for every big contract. And we have had some wins and some losses. So it's a tough market out there and we are facing some really strong competitors, both local and international. So It is a tough job that has to be done every day from our teams, both the customer teams and the sales teams. So it's not like a giant shift in the market, I would say, but it's tough competition.

33:22 Excellent. Thank you very much, Jose, and all the best out there.

33:25 Thank you, Carl-Johan. As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Oliver Usatillo from Akshi Sperana. Please go ahead.

33:44 Good morning, guys. I just had two short questions from my end. First of all, in terms of the Danish market, on the margin here, we see with slight improvements quarter to quarter here, which kind of breaks the normal seasonality where you start Q1 at high levels and then it gradually decreases to Q4. Where do you see margins going into Q4? I mean, due to the improvement that you've been done in this Danish operation, do you think you can maintain a higher margin Q4? Q4 compared to Q3 or should we expect the normal seasonality patterns to continue here?

34:36 I think as we said we are not doing any outlook so to say but of course our ambition as we communicated a couple of times is to size the Danish business to for the time being a lower revenue And that doesn't change, of course, that that will still hold. So our, our ambition is, of course, to grow the top line with with a right sized cost base.

35:11 And I think you're rightly observing that there are some trends, if we're looking at the margin levels and so on, that seems to indicate that we see some light in the tunnel in some of those regards. You remarked on one of those measures. But we haven't... you know push that too hard because there's so many moving parts in in Denmark so we don't dare to say that we turn the corner but but we are but we but we see some positive signs all right great thanks thanks for that and my next question was regarding the variable volumes here in the Swedish market perhaps especially going into q4 I mean variable volumes being quite

36:02 quite substantial in Q4, I suppose. And what are you seeing here compared to last year?

36:11 I think we have had a continued and very targeted effort to improve our sales efforts in the day-to-day work of our businesses. And that has resulted in larger variable volumes across our Swedish business. So we're hoping and thinking that that will continue. But variable volumes are always also dependent on what's happening in the general economy and the sentiments in the different markets where we operate. So it is dependent also partly on the market, but I think We are doing a lot better work, generally speaking, in our businesses to do upselling and cross-selling than we have been doing in the past.

37:07 There's a lot more to do, but I think we're doing a good job there in terms of improvements over the last year. So we're hoping that that will continue, of course, but it's not something that we will put in an outlook.

37:25 Yeah, right. I think so. Thanks for that. That's it for my end and I jump back in the queue. There are no more phone questions at this time. So I hand the conference back to the speakers for any closing comments.

37:44 So thank you very much for listening in to this year's Q3 call and we'll all hopefully meet again in one quarter. Thank you very much.