Coor expects the turnover for the fourth to be approximately 2-3% lower compared to the previous year's fourth quarter and the group's margin is expected to land between 3.1%-3.3% (5.1%). Cashflow generation for the full year 2024 is expected to land on approximately 60%. This is due to that the fourth quarter has been characterised by operational challenges within both the Swedish and Danish businesses which together negatively affect the result. Coor is therefore complementing the ongoing action program with a simplified and unified organization that is planned to provide cost savings of approximately SEK 120 million. Our goal is still to reach our target margin level of 5.5% in 2026.
In the Swedish business, the fourth quarter was negatively impacted by lower profitability in cleaning deliveries. We note continued negative impact from the integration of Skaraborgs Städ that has led to temporarily higher personnel expense. The measures taken regarding Skaraborgs Städ after the third quarter have generated some improvement during the quarter and are expected to have full effect by the beginning of 2025. We are also seeing increased staff costs in other cleaning deliveries driven by inefficiencies in staff planning. We also note lower profitability in property deliveries linked to personnel expenses as well as costs in connection with a discontinued contract. In total, the Swedish business in the fourth quarter is expected to land on an EBITA margin between 7.0%-7.2%.
Also in the Danish business, operating profit is negatively affected by inefficient staff planning, which has resulted in increased staff expenses. In total, the Danish business in the fourth quarter is expected to land on an EBITA margin between 1.6%-1.8%. As part of the action plan for Denmark, a recruitment process for a new CEO is also underway to lead the organization and introduce further efficiency measures.
The Finnish and Norwegian business continue to deliver in line with expectations.
Cash conversion for the full year 2024 is expected to be around 60 per cent, driven by a continued high level of accrued income and lower staff and supplier-related liabilities at the end of the year. The company has initiated a number of activities aimed at restoring the level of cash conversion.
The action program launched in the third quarter of 2023 aimed to accelerate the development towards the company's long-term margin target of 5.5 percent. The programme focused on realising economies of scale and synergies through strengthened harmonisation of underlying processes and an increased focus on procurement to better utilise Nordic economies of scale. The action program related to purchasing processes has achieved the desired effect. However, the objectives set for the harmonisation of synergy effects have not been achieved.
Based on the above deviations from the original plan, Coor is now supplementing the ongoing action programme with a simplified and unified organisation, which aims to reduce personnel expenses in administration, both in the central organisation and in the country organisations expected to affect approximately 130 roles. The reorganization means a full-year saving of approximately SEK 120 million, which will be implemented in 2025. Our intention is that the new organisation will be implemented during the spring of 2025. Our goal is still to reach our target margin level of 5.5% in 2026.
"The quarter has been characterized by operational challenges in both the Swedish and Danish businesses. Our goal is still to reach our target margin level of 5.5% in 2026. Therefore, we are now taking decisive action by complementing the existing action programme with a reorganisation to create a simplified and more efficient group structure. Our focus in 2025 will be to ensure operational efficiency and improved profitability. Coor looks toward 2025 with confidence based on continued strong customer deliveries and relationships we have noted during the quarter," says acting President and CEO Peter Viinapuu.
Focus in 2025 will be to ensure operational efficiency and improved profitability in the Swedish and Danish businesses. During the spring, Coor will update the market on the development of the ongoing and supplementary action programme.
Coor will publish its year-end report for 2024 on 6 February 2025.
For more information please contact:
Peter Viinapuu, acting President and CEO, Coor
+46 766 411 006
Peter.viinapuu@coor.com
Andreas Engdahl, CFO and IR Director, Coor
+46 10 559 54 63
andreas.engdahl@coor.com
Magdalena Öhrn, Communications Director, Coor
+46 10 559 55 19
magdalena.ohrn@coor.com
This constitutes information that Coor Service Management Holding AB is required to publish under the EU's Market Abuse Regulation. The information was submitted for publication through the above contact persons on 14 January 2025 at 15:35 CET.
About Coor:
As the leading provider of facility management services, Coor aims to create the happiest, healthiest, and most prosperous workplace environments in the Nordic region. Coor offers specialist expertise in workplace services, property services and strategic advisory services. Coor creates value by executing, developing, and streamlining our customers' service activities. This enables our customers to do what they do best.
Coor's customer base includes many large and small companies and public-sector organisations across the Nordic region, including ABB, Aibel, Alleima, the Danish Building and Property Agency, DNV, DSB, Equinor, ICA, IKEA, Karolinska University Hospital in Solna, PKA - "Danish Police, Public Prosecution Authority and Prison and Probation Service", PostNord, Saab, SAS, Skanska, Swedbank, Telia Company, Vasakronan and Volvo Cars.
Coor was founded in 1998 and has been listed on Nasdaq Stockholm since 2015. Coor takes responsibility for the operations it conducts, in relation to its customers, employees and shareholders, as well as for its wider impact on society and the environment. Read more at www.coor.com
