Why you should be a Coor shareholder
An investment in Coor is an investment in a leading service company with stable growth, good profitability, healthy cash generation and a historically high dividend yield.
"We stand strong in a changing world"
2022 has been a year marked by great uncertainty in the world, but Coor is stable and secure. Coor performed well, with robust organic growth, stable cash flow and a focus on sustainability, efficiencies and innovation, according to Andreas Engdahl, Coor’s CFO.
How would you sum up 2022?
“The year has been marked by global unrest. We emerged from a pandemic into a completely different kind of uncertainty marked by war and a faltering economy. But it was also a year of strong growth for Coor; we are growing organically at a rapid pace, especially in Denmark.
We have had a strong focus on sustainability, both social and environmental, and have continued our intensive efforts to create improvements and innovate.
We paid a good dividend to our investors and have maintained a high dividend yield. I have strong faith in Coor despite the situation in the world. We are a company that generally stands strong when the world is undergoing change. The foundation for this, as always, is our strong customer relationships.
We are a reliable partner when our customers need to make changes in their deliveries. The other aspect is that in an economic downturn many companies need to create more efficiencies and efficiency is precisely what we are so good at! I also know from experience that many new outsourcing opportunities
tend to appear in times of economic weakness.”
How is inflation affecting Coor?
“The vast majority of our contracts have indexation clauses, which means that we are able to pass on cost increases to the customer. In 2022, we saw that in a high inflation environment there may be a delay until we are able to respond to cost increases. We are working actively to address this delay. The indexation clauses coupled with our ongoing efforts to create efficiencies and innovate mean that we are well equipped to handle inflation effectively.”
Coor is stable despite the uncertain environment. What do you put that down to?
“We have historically had a very strong cash flow with good cash conversion. We stand secure in these times thanks to our business model with a large share of fixed subscriptions. Changing circumstances should not affect our ability to generate cash flow.”
What is Coor’s attitude to the dividend yield?
“Coor places great value on a high dividend yield. Coor’s dividend policy is to distribute 50 per cent of our adjusted net profit. Excess liquidity is allocated to extraordinary dividends or value-adding acquisitions, and that’s how it will continue to be.”
How do you see the future for Coor?
“I see a bright future. Coor has an attractive offering in a growing market and we have a history of staying strong in
"Coor place great value on a high dividend yield".
Andreas Engdahl, CFO & IR-director of Coor
Coor’s leading position in the IFM segment, which accounts for around 60 per cent of the company’s business, is creating good prospects for continued growth, as the IFM market is growing significantly faster than GDP and the FM market as a whole. In the short term, growth may vary somewhat, as it is affected by the volume of major IFM contracts coming into
the market in any particular period as well as by major unexpected events such as an economic recession or rising inflation.
Coor has a strong position in the Nordic market, where the company is a front runner in terms of innovation and digitalisation. Under Coor’s business model, a large part of the company’s revenue is relatively stable in the form of subscriptions, which account for over 70 per cent of total revenue.
The company’s services are in demand regardless of the economic climate. In a strong economy, the volume of FM services in the company’s existing contracts increases, and historically, periods of weaker economic growth have led to new outsourcing deals reaching the market.
As Coor’s business is largely about delivering efficiencies, the company has a strong focus on efficiency improvements and cost savings. The combination of strong local management in customer contracts and increased use of synergies within the Group provides a good foundation for maintaining stable profitability.
The company also has considerable flexibility in its cost base, which means that changes in sales volumes normally have a limited impact on the operating margin.
Strong cash conversion
Due to its very limited need for capital expenditure and working capital, Coor’s cash conversion is strong, which means that a large portion of its operating profit is converted into cash flow.
A high dividend yield
Available cash can be used for further acquisitions, repayment of debt or dividends. Net debt is below the company’s target, which means that Coor should be able to offer a high and stable dividend yield to its shareholders over time. The objective of the Board and management is not to accumulate cash in the company but to return any surplus to the shareholders.
Continued opportunities for value-adding acquisitions
In 2022, Coor completed a takeover in Sweden as the company acquired Centrumstäd, a cleaning company in the south of Sweden. Although Coor’s primary focus is on organic growth, the company has both the financial capacity and the ability to integrate further acquisitions going forward. Coor works continuously to identify well-managed Nordic companies that can complement and strengthen the company’s offering in the FM market. The acquisitions need to be made at reasonable valuations and create synergies through our integration activities.