Coor sells efficiency
Coor’s customer-centric business model has once again stood strong through turbulent times. An investment in Coor is an investment in a market-leading service company with a strong track record of growth, increased profits, strong cash conversion and a historically high dividend yield, says Coor’s CFO, Klas Elmberg.
How does Coor create growth?
"Coor sells efficiency and does so by offering high-quality services. That’s why we have a high customer retention rate, and it also creates opportunities to win new business. A growing number of organisations are discovering outsourcing and the cost efficiency and simplicity that can be achieved by engaging a single, professional partner that handles everything. The IFM market is growing faster than the market for single services. We are seeing an inflow of IFM deals, an area where Coor is the Nordic market leader, from two sources – customers that are going from non-outsourced directly to IFM and customers that have previously outsourced individual services and are now moving to IFM. There is also plenty of opportunity for Coor to grow in the single services market, not least by exploiting our existing strong positions in many locations across the Nordic region, where we can grow by attracting new local customers while also leveraging local synergies."
Coor has been listed since 2015. What has Coor’s Journey as a listed company been like?
“It has been a great journey! Our company has become significantly larger and better known since the IPO. Our sales and our operating profit have increased by around 50 per cent. Over the past few years, Coor has consolidated its position as the leading facility management company in the Nordic region. A growing number of investors are discovering Coor and many value our clear Nordic strategy."
What lies behind Coor’s stable profitability?
“Strong business acumen, financial control and a focus on efficiency create a good foundation, and the close relationships we have with our customers enable us to grow our volumes in a natural way. The combination of local responsibility for profitability and leveraging of synergies has given us a strong foundation on which to stand. Coor also has a flexible cost base, which makes it easy to adapt costs to changing volumes."
What does Coor’s sustainability focus mean for the market?
“In the last few years, the issue of sustainability has become increasingly important for both investors and customers, which is a positive development. Coor is strong in this area and is doing lot of things in sustainability. Sustainability is one of the key focus areas on our strategic agenda."
What are Coor’s thoughts surrounding its dividens yield?
“Coor has a high cash conversion rate that gives us a surplus while our debt levels are reasonable. The surplus has been used for value-creating acquisitions and special dividends. Our dividend policy is to pay out 50 per cent of our adjusted net profit, but in the preceding two years, the payout ratio has been close to 100 per cent. For 2019, however, 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."
A growing number of investors are discovering us and many value our clear Nordic strategy.Klas Elmberg, CFO
How has covid-19 affected Coor's development in 2020?
“During the second quarter of 2020, the Nordic countries were largely closed down by their governments and authorities, and our customers followed suit at different speeds and to various extents. The effects of the spread of infection had a negative effect on Coor’s net sales, primarily in terms of variable contract volumes and mainly within food and beverages.
When many companies began to return to their workplaces, we saw a clearly positive development in variable volumes of cleaning and advisory services relating to ways in which work can be safely conducted in the workplace while the spread of infection continues."
"We work closely with our customers to prevent the spread of infection and manage the effects of the pandemic. 2020 will be a year marked by the global pandemic. It remains difficult to foresee the consequences of the COVID-19 pandemic and the decisions being made in society to limit the effects on both health and the economy. We see that customers’ needs for efficient service solutions will be there also in the future and with Coor’s customer centric business model we are well positioned to be the preferred partner to both the private and public sector.. We are seeing strong interest and favorable demand in the market as well as attractive business opportunities throughout the Nordic region. We believe our prospects to achieve growth, profitability and cash flow in line with our targets over time are good.”