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 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 agreements coming into the market in any particular period as well as by major unexpected events such as the pandemic.
Coor has a strong position in the Nordic market, where the company is a front runner in terms of innovation and digitisation. Under Coor’s business model, a large part of the company’s revenue is relatively stable in the form of subscrip- tions, which account for over 70 per cent of total revenue.
The company’s services are also 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. The company also has a relatively flexible cost base, as was shown during the pandemic. This means that fluctuations in sales 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, repay- ment of debt or dividends. Any acquisitions are expected to be relatively minor, however, and 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.
Continued opportunities for value-creating acquisitions
In 2021, Coor made three acquisitions, one in Norway and two in 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 compa- ny’s offering in the FM market. The acquisitions need to be made at reasonable valuations and create synergies through our integration activities.