Coor as an investment
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.
Coor’s leading position in the IFM segment, which accounts for approximately 60 per cent of Coor’s business, is creating good prospects for continued growth, as the IFM segment is growing 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. 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, but due to the significant savings potential which Coor offers its customers, the company also remains an important partner in times of slower economic growth. 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.
Strong Cash Conversion
Due to its very limited need for capital expenditure and high focus on working capital, Coor’s cash conversion is strong, which means that a large portion of operating profit is converted into cash flow.
A High Dividend Yield
Available cash can be used for further acquisitions, repayment of debt or dividends. Acquisitions are expected to be of bolt-on character and therefor relatively minor and financed within the existing business and financing structure, keeping net debt is below the company’s target. This 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. In April 2020 the Annual General Meeting resolved not to pay a dividend this year on account of the uncertainty associated with the outbreak of the new coronavirus.
Long-term customer relationships
Coor has historically had a high success rate in terms of renewing and extending customer contracts and works continuously to maintain and develop its customer relationships. The goal is to have satisfied customers who want to renew their contracts The portfolio encompasses companies from all industries.