Ladies and gentlemen, welcome to the Coor Service Management Q2 Report for 2022. For the first part of this call, participants will be in listen only mode, and afterwards there will be a question and answer session. Today, I'm pleased to present President and CEO AnnaCarin Grandin, and CFO and IR Director Klas Elmberg. Please go ahead with your meeting.
Thank you and good morning and welcome to this presentation of the Q2 report for Coor. I will start with a brief presentation of Coor and then continue to present our triple bottom line results, followed by a business and market update. I will then hand over to Klas to present some more details around our financial performance in Q2 before we sum up and have our Q&A. Coor is the Nordic market leader in integrated facility management. We provide our customers with a broad range of services through our customer-centric business model and a decentralized organization. We are building a truly sustainable company, and we are constantly taking new positive steps in that direction.
To ensure this, we drive and steer Coor from a triple bottom line perspective, meaning that we are taking a business, social, and environmental responsibility to future-proof our company and making a positive impact in the society and for the environment. The last proof of this is that our environmental targets are now approved by the Science Based Targets initiative. Coor's total turnover of SEK 11.3 billion LTM can be viewed in different dimensions. In the geographical perspective, Sweden is our largest country with 52% of total turnover. Norway and Denmark account for 21% each, and Finland at 6%. From a contract type perspective, we see that the split continues to be stable around 60% IFM contracts and 40% single service contracts. Slicing the turnover by service line, we see that cleaning is the largest service line with 37%.
Property is the second with 31%. Workplace includes several services like reception, conference services, and office supplies, and together that adds up to 18%. Food and beverage is now back to double- digits, accounting for 10%. This means that we have started to see a normalization of the volume, meaning that it's more similar to pre-COVID, especially when excluding the large acquisitions. Our top three customer segments are public customers by 29%, manufacturing by 24%, and energy by 17%. All in all, we see this as a well-balanced portfolio. Going into our business sustainability and the financial figures, we see another strong quarter from a growth perspective. Organic growth is 9% and acquired growth is 11%.
The organic growth comes from Denmark and Sweden, and in Denmark, it is mainly related to the new contracts with DSB and the Danish Building and Property Agency. In Sweden, it is mainly related to the IFM contract with PostNord and the security contract with Borealis. In all countries, we see a recovery of variable volumes within property-related projects and a decline of variable volumes with COVID-related cleaning. In the quarter, we see, as I mentioned earlier, a recovery of food and beverage. Acquired growth is fully related to Sweden and is driven by the acquisitions of Veolia Technical Management, Inspira, and Centrumstäd. The EBITA margin for Q2 is 5.8%, which is somewhat lower than the last quarters. This is driven by a normalization of the volume mix and the expected effects of starting up large contracts and integrate acquired companies.
We pay high attention monitoring effects of inflation. In Q2, the negative effect of inflation is still limited. Cash conversion is an LTM number, and it continues to be strong at 97%, well in line with our target of staying above 90%. Leverage is also an LTM number. With the 2.0, we are slightly above Q2 last year, but well in line with our targets of staying below 3. From an LTM perspective, both organic growth and acquired growth adds up to 8% each, and the LTM EBITA margin is at 6.1%. Moving on with our social and environmental sustainability, we see that we continue to improve our TRIR levels. As of Q2, the number is down to 8.0 compared to 9.1 last year.
Steady improvement, but still work to be done in order to reach the target being below 3.5. Gender balance continues to be stable at around 50/50. We continue our efforts to reduce our CO2 footprint. We see positive development in Scope 2 and 3, while we are struggling a bit with the CO2 reductions related to our vehicle fleet. This is partly due to the strong growth and some challenges in infrastructure. We also recognize that we need to do more from an internal perspective. However, with our environmental targets now approved by the Science Based Targets initiative, we know that we, with high ambitions, are on the right track. Over to our business and market updates. In Q2, we have made some important IFM contracts prolongations with Stockholm Exergi, Olav Thon Gruppen, and a large Danish technology company.
We have also prolonged the Nordic IFM contract with ABB, excluding the Finnish part. From a new win perspective, we have several small and mid-sized contract wins, but no really large cases in the quarter. However, as you have seen from the growth figures, we have several large wins in the previous quarters that are now being integrated. With strong organic and acquired growth, we obviously have a very strong focus on integrations in both Denmark and Sweden. Its pipeline for new organic business continues to be solid, and we are actively looking at new M&A opportunities. An area we study closely is post-COVID development of workplaces. We have performed a survey among 800 decision-makers and 500 employees in the Nordics, and I would like to share some findings.
A vast majority of companies still see that a physical office will play an instrumental role in the future, for instance, in order to sustain and build company culture. We also see strong employee expectation on the rise being put on employers, both regarding office improvements, services, but also work location flexibility. Looking ahead, we see three big themes that many companies now go after, where Coor will be an important partner in terms of rethinking the offices. Boosting office attractiveness is becoming important as office presence will be dependent on employees volunteering heading to the office. Offices need to bring an individual value and experience out of the ordinary. Secondly, a focus on culture and community. We will see more community space and social features where employees come together around company values.
Lastly, creating a new level of work experience that the home cannot offer, where we see an increased demand for workplace services. To summarize, Coor is well-positioned for the future, and our combined service offering is a key ingredient for many of our customers to create an attractive and future-proof office. With that, I let Klas continue with the details of the financials.
Thank you very much, AnnaCarin. As you heard from AnnaCarin, the growth rate continues to be strong also in Q2. Net sales, if we look at the top line, is increasing by more than SEK 500 million, i n the quarter compared to Q2 last year. That takes the total net sales very close to the SEK 3 billion mark. In addition to the 9% organic growth and the 11% acquired growth that we just heard about, we have a small positive FX effect of around 2%. The adjusted EBITDA amounted to SEK 172 million in the quarter, and that gives us an EBITDA margin in the quarter of 5.8%. Net income, SEK 79 million, and adjusted net income, when you add back the amortization, amounts to SEK 123 million.
On the LTM numbers, we see that the net sales is close to SEK 11.3 billion. That is an all-time high level for Coor on an LTM period, and that's approximately SEK 1 billion above the pre-COVID level of SEK 10.3 billion in 2019. Organic growth from an LTM perspective is 8%, acquired growth also 8%, and the FX effect, 1%. The adjusted EBITDA level for the LTM period is SEK 683 million, and that gives us the LTM margin of 6.1%. Adjusted net income for the LTM period is SEK 483 million. On the country-by-country view, we can see the strong organic growth that AnnaCarin mentioned in Denmark. Denmark is growing by 28% organically, and Sweden 11% organically. In Sweden, we also see the high acquired growth.
In total, that impacts the Swedish numbers by 21%. That means that the two largest countries in Q2 is both growing with approximately 30% each. This is, of course, something that requires a lot of focus. It requires time and resources, not only in the country organization, but also from the group perspective to secure this integration period. Norway continues to keep up fairly good in terms of top line, offsetting the ended office contract with Equinor through high project volumes in the oil and gas industry. This is something that we have seen for a number of quarters, but as I think we've mentioned before, we don't expect this to continue going forward, and we actually started to see a decrease in these project volumes during the second half of Q2.
In Finland, the new wins and the return of variable volume cannot fully offset the ended Finnish part of the ABB contract. From an EBITA and margin perspective, Sweden continues to deliver a strong margin, but not at the very high level that we saw in Q2 last year. In Sweden, as well as the other countries, we now see the effects of what we have talked about in the previous calls, the normalization of the volume mix. That normalization will put some pressure on the margins compared to the COVID period. For example, we see a higher share of F&B volumes now than we did during the pandemic, and we also see that the extra COVID cleaning that gave us quite positive effects during COVID are now more or less gone in all the countries.
Looking into Norway, we of course have the negative impact of the lost Equinor office contract, also impacting Q2. Margins in Norway in Q2 is more or less in line with the Q1 figures from 2022 as well. Denmark is also down in terms of margins compared to last year. That is driven by the large integrations and the extra COVID cleaning that we had last year in the same period. From a margin perspective, Denmark is actually up compared to Q1 this year. Finland continues to be challenging for us in terms of both resources and also the negative impact from the lost ABB contracts. Looking down at the contract portfolio, we see that there is a negative net change in the first half year of 2022.
This is mainly driven by the end of contract with AB Volvo, and that accounts for approximately 1/2 of the SEK 561 million that you see in the graph. Excluding the AB Volvo part, the net change is more or less zero. Customer concentration looks very similar to what you have seen in the past. If we look at the top ten contracts, I think we got a question in the last call if there were any contracts that needed to be prolonged in the near future. We said then that we were very actively working with Volvo Cars, and we're still working with that one, but we're now in the final exclusive stage of that process. We are very optimistic that that can be finalized quite soon.
Going into the cash flow, and from an LTM perspective, we see that we had an incoming cash balance of SEK 57 million. Operations have continued to contribute in a very strong way with SEK 835 million. Financing flows, that reflects the interest, loans, and leasing adds up to SEK 732 million. Taxes paid is - SEK 88 million, and cash out from M&A is SEK 620 million. The dividend you see here is the ordinary dividend that we paid out in May this year, but also the extraordinary dividend from October last year, and that amounts to SEK 455 million in total. That gives us an outgoing cash balance that equals SEK 462 million. Some details then from the balance sheet and the cash conversion.
Cash conversion, as AnnaCarin mentioned, continues to be very strong at 97%. We don't see any changes in payment patterns from customers, so it's very stable. Net working capital is negative by SEK 783 million or -7% of net sales. That means that we're also now seeing a more normal level of the negative net working capital. It has been even more negative throughout the pandemic, but the -7% is more normal and something that we expect to keep going forward. Net debt, approximately SEK 1.8 billion, and leverage, as you have heard, at 2.0. With that, AnnaCarin, I let you summarize Q2.
Thank you, Klas. Before we go into a Q&A, I would like to sum up our second quarter. Q2 has been characterized by strong growth and strong cash flow in combination with normalized profitability. This is something we have talked about and expected, and is now materializing. Given our strong financial position, we see continued opportunities to carry out value-adding acquisitions in the Nordic region. I would like to extend my warm thanks to my colleagues at Coor, who together have contributed to the strong performance. With that, we open up for questions.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad. The first question comes from the line of Karl-Johan Bonnevier from DNB Markets. Please go ahead.
Yes, good morning. Congratulations to a solid performance, given all the moving things for you out there for the moment. One thing that's striking when I look at the slide you showed on the contract portfolio changes is that seems like there is an increasing number of contracts that is both, say, coming in and going out. Do you see a trend in the market for the moment that, say, customer retention is becoming more difficult after COVID or any changes to it that could explain that the gross numbers, so to say, are quite high?
No, not that we see a change in the market, KJ. I think what we see here is, as AnnaCarin comments, that we have won several small and mid-sized contracts in the period, and we have also ended a few small contracts as well, but nothing that, you know, really changes the market dynamics and so on. Looking at the pipeline going forward, it's been solid. I mean, there are also large contracts to compete for, going forward.
I understand your comments on COVID-19 related volumes. When you look at, say, Q2 as a standalone quarter, do you see that basically it's totally gone now when in these numbers?
Yes. I would say it's basically totally gone in terms of the extraordinary cleaning that we have talked about for a number of quarters that has, you know, provided us with the very positive effects and things like that. That is gone in all the countries, I would say.
When you look at the variable volumes, the take-up of that, and how that is coming back, how close are we to, say, the normal pattern before COVID-19 with variable volumes and the impact of that in Q2?
I would say quite close, and we're not, you know, fully back in terms of, you know, full return of variable volumes. I think we have seen quite a big impact already now, meaning that we don't expect, you know, dramatic extra return of variable volumes going forward.
Finally, when you look at the ramping of these big contracts you are doing in Denmark, looking at profitability seems to be going quite well. Is that the general feeling that you have had a good startup?
I think that we're still at a very early stage, especially when you think about the Danish Building and Property Agency. I think it's a bit too early to conclude that, you know, everything is, you know, perfect. I think we will see challenges as we always do in integration periods and things like that. I guess the jury is still out, but we're working very hard in the integrations.
Excellent. Thank you very much. Klas, good luck with your new challenges.
Thank you very much, Karl-Johan.
Once again, if you would like to ask a question, please press zero one on your telephone keypad. Once again, it's zero one on your telephone keypad to ask a question. There are currently no further questions. I'll hand the conference back to you, speakers.
Thank you. With us today we have Andreas Engdahl, and as you might have read, Andreas is appointed as Acting CFO from the 1st of August. There will be a solid handover between Klas and Andreas, and until Klas will leave during autumn for a new assignment outside the company. I just would like to let Andreas present himself, shortly.
Thank you. Hello, everyone. I'm actually a long-timer at Coor, has been with the company for 18 years, recently as Vice President at Group Finance. I'm very happy for the opportunity. I'm looking forward to get back after summer to take on this role and to secure a good handover from Klas.
Thank you, Andreas. I'm very happy to have you by my side. Thank you all for listening in to this call, and we wish you a wonderful summer.