Now I will hand the conference over to CEO and President Ola Klingenborg and CFO and IR Director Andreas Engdahl. Please go ahead.
Hello everyone, welcome to the Q2 report. My name is Ola Klingenborg and I'm joined by Andreas Engdahl, the CFO of Coor. Getting into some of the substance, this is the agenda for today. First, a short update from me on the things that are going on right now in the business. We'll walk you through the financials together with Andreas and make a small summary and Q&A at the end. I think some of the important things are already highlighted from the report, already highlighted on this page where we have an organic growth this quarter of 3%, which is a step up, I think. We also have the margins that are developing in the right direction and the cash flow that is now back at 88% cash conversion. I think those are some of the most important highlights from the month.
We think that this is kind of a step in the right direction and a continuation of what we saw in the previous quarter. Moving on to the CEO update, we continue to extend some of our important contracts and there's a lot of activity in the market at the moment. Some of our core contracts are of course Volvo Cars in Sweden where we have a big delivery that we've been doing for many, many years, and that has now been prolonged. Also, a new property contract with Region Gävleborg, which I think is particularly interesting since it was 100% focused on quality in the tender conditions. That's really a testament to our ability to deliver with high quality. Also, Norway, strong development, we'll get back to that. In the Danish market, a lot of tenders going on in the coming 18 months or so.
We've won some contracts and most interesting here maybe is that we lost Velux, which is a delivery that we had there for quite some time. A lot of activity in the market, we'll get back to that on the next page. The announced organizational changes to the central staff have now been fully completed and are in full effect from the end of this quarter. What we're working perhaps most on is improving our work with operational efficiency. That is not a silver bullet, but a lot of different projects and initiatives going on to secure our ability to deliver on our contract in the most efficient way possible. A lot of work going on there.
When it comes to kind of a more forward-looking view, we intend to hold a capital markets day early next year to update a little bit more on how we see our growth path going forward, but also what markets to focus on, etc. That's a very short summary of all the work that's been done this quarter. You can see a lot of the results in the numbers that we'll walk through shortly. I thought I'd just take a more close look perhaps at the contract portfolio. Perhaps starting here on the right, we see a spread of maturity in our contracts, which I think is quite interesting to view from an investor perspective, which says that 60% of our contracts are small and medium contracts that are usually kind of with an open end where we keep delivering.
Those have to be renewed on a regular basis, of course. It's still not a big change when one of those shifts, that's rather kind of a run of the business. We have quite a few contracts expiring from 2027 and beyond. The maturity of those contracts that are ending this year or next is only a small part of our business. I think that's a testament to the stability, I think, of our contract portfolio at the moment. Looking at new contracts now won in the first half of the year, we have about SEK 300 million that we won. There's about SEK 100 million that we have ended this year. Velux ends, I think, this month. If we would include that, the net would be maybe SEK 45 million and not SEK 193 million. It's a balanced and portfolio-moving section. That's a stability for the company.
I thought that was something that really worth highlighting. I guess you're all eager to go into the numbers. I'll hand over to Andreas to take you through the quarterly report numbers.
Thank you, Ola. We start with an overview of the business KPIs. In the second quarter, there's an organic growth of 3%, as Ola mentioned earlier. That comes from high variable volumes in Norway that I will come back to. The EBITDA margin for Q2 is 5.2%. That is an improvement comparing both with the previous quarter as well as last year. Cash conversion, that is an LTM number, ended at 88%. Also, that's a stable improvement compared to the 81% in the previous quarter and the 57% in the quarter before that. I will come back to that number as well later on in the presentation. Leverage, also that's an LTM number, at 2.9, a slight increase from the previous quarter driven by dividends being paid out in the quarter. On the P&L, net sales ended at SEK 3.2 billion. That is 1% up compared to last year.
Organic growth, as I mentioned, 3% and FX - 2%. Adjusted EBITDA amounted to SEK 165 million, which gives us an EBITDA margin in the quarter of 5.2%. Items affecting comparability during the quarter amounted to SEK 22 million, and that comes from redundancy costs related to the changes in the organization and management changes implemented during the second quarter. Net income is SEK 65 million and adjusted net income when adding back amortizations amounts to SEK 80 million. On the full year numbers, we see that net sales is close to SEK 12.4 billion. Full year organic growth is - 0.5% and FX - 1.3%. The full year adjusted EBITDA level is SEK 534 million, which gives us an EBITDA margin of 4.3%. Adjusted net income for the full year is SEK 178 million. Looking at Q2 country by country, and we start with Sweden.
Organic growth negative 0.8% in the quarter. We see effects from new contracts that are offset by the ended property part of the contract with Saab. We also see somewhat lower demand for variable volume compared with last year. Adjusted EBITDA SEK 153 million and margin at 9.1%. That is an improvement from previous quarter's margin of 8.7%. As Ola mentioned before, there is a continued focus on activities to achieving a positive margin trend in the operations. If we then move over to Denmark, organic growth of - 3% in the quarter, primarily explained by a couple of ended mid-sized public contracts as well as lower variable volumes within property projects. Adjusted EBITDA at SEK 27 million and margin at 4%. The margin decreased from 4.8% in the previous quarter, partly due to a positive retroactive non-recurring effect in the first quarter.
Our long-term efforts to improve the management and governance of the operations are continuing. There is a focus on strengthening leadership skills and creating a clear division of responsibilities within the operations. After summer here, Peter Hasbak will take over as CEO of the Danish operations and will be a valuable addition to this ongoing work. In Norway, we see organic growth of 23%. That comes from unusually high variable volumes related to maintenance stops in the energy sector. While maintenance stops occur annually, the scope and timing in the year varies from year to year. Around half of the organic growth we see in this quarter comes from above normal levels. Adjusted EBITDA for the quarter amounted to SEK 37 million and margin was 5.4%. The strong improvement compared to both the previous quarter and last year is driven by the high variable volumes.
Last among the countries, Finland, organic growth of - 1% in the quarter from a couple of smaller contracts that were ended. Adjusted EBITDA and margins are in line with last year. Moving on to cash flow and balance sheet. During last year, we saw an increase of working capital as a result of changes in the contract portfolio. We also had year-end balance sheet effects and to a certain extent due to inefficiencies in ways of working. A number of measures have been taken to reduce the level of working capital in 2025. In the first six months, working capital has been reduced by SEK 113 million compared with a buildup of working capital of SEK 142 million in the same period last year. With that, our net working capital position has been restored to a negative 7.5% as a percentage of LTM net sales.
As a result of improved net working capital, our key metric, LTM cash conversion, also improves in the quarter to 88%. That is an improvement of 31% compared with the full year 2024. With that, we are essentially back in line with the company target of staying above 90%. Finally, leverage that is on the bottom right of the slide increased to 2.9x after paying out dividends in the quarter. With that, I hand it back over to you, Ola, to sum it up.
Thank you, Andreas. Summarizing all that we've heard now, we continue to extend some important contracts. There's a lot of activity going on in the market, and we're paddling through that in a successful way, I think. The organizational change that has been on the agenda here for the first half year is now completed. We are working a lot with improving systems and support to enable us to have a higher operational efficiency throughout our operations. The net working capital is now restored. I think that's what to bring along from this quarter and into the next. That's what we're working on at the moment. Having said that, we now go over to the Q&A section of the presentation.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Simon Johnson from ABG. Please go ahead.
Good morning, guys. I have a few questions about Norway specifically. You have very good momentum right now, especially in the variable volumes, of course. You have also started to sign some contracts with the public sector. Can you talk a bit about what you think the long-term opportunities for that are looking a few years out? Could you reach sort of a similar share as you have in Sweden and Denmark, you think, as a starter?
I think if we talk about Norway, I think they're doing a lot of right things simultaneously at the moment. They have a new manager since one and a half years, and I think she's doing a fantastic job with both kind of working with the sales culture, working with operational efficiency questions, working through some of the contract portfolio that has been less profitable in the past, etc. I think there's a lot of explanations for the strength of the Norwegian results. Now, particularly in terms of the public sector, it's obviously, I mean, a huge opportunity given that the Norwegian market is largely untapped there. Just recently, we've had some other contracts where we are in a very good position to win. I think it's a big opportunity.
I think the exact market size of that remains to be seen, but obviously, it's a big opportunity if all the municipalities and regions in Norway start to outsource in the same way as in Denmark and Sweden. We don't have an exact number.
Thank you. As a follow-up on that, how do you think that could impact margins? Let's say you continue to have good momentum with the public sector, continue to grow in Norway. Do you think the segment and the country could be coming back to becoming accretive to group margins again? I mean, it's reached 6% or 7% historically when you had the big Equinor contract. Maybe that's a stretch, but do you still think it could become accretive to group?
I think that generally speaking, if we look at all our markets, the public sector contracts generally have a little bit lower margin. We also see a trend where there are many that are going for quite strong quality conditions in the tender conditions. That is something that's really, really helpful for us. That's where we want to play. Of course, it would be possible to have that type of margins in a new contract. We have to be careful. We have to ensure profitable growth and not only growth. We see some positive signs, I think, in terms of that in the Norwegian market. As we know, the public sector is moving perhaps slower than the private sector. The kind of speed at which this is happening, it's a little bit difficult to predict. A large potential if it does happen.
All right. Thank you. That's all for me.
The next question comes from Raymond Kei from Nordea. Please go ahead.
Hi. Good morning. A couple of questions from me, and I'll start with Norway as well. Regarding the exceptionally high maintenance volume that you saw here in Q2, when did that take place approximately during the quarter? Do you see any of that trickle into Q3?
Hi, Raymond. Primarily the second half of the quarter. There might be some trickling over here in Q3, but limited, I would say, because that maintenance stop is actually coming to an end here in the coming days.
Got it. On Denmark and the Velux contract that you lost, when does that contract end? Just so we can understand when it sort of falls out of your numbers.
It ends towards the end of Q3. You will see the impact of that from Q4 onwards.
Got it. Finally, just on Sweden and Denmark, you saw lower variable volumes behind the negative organic growth there. Could you help us understand if that's something that we should expect to change shortly? Is this sort of the theme maybe going into H2 as well? Thanks.
I mean, sorry, go ahead, Ola.
No, I think a general comment on that is that it is a little bit challenging to predict because we have certain of our segments that are affected, of course, by the economic environment and have a little bit slower kind of projects. It takes a longer time for them to start up new projects, and it's longer decision times and it's smaller projects. On the other hand, we work with the defense industry, energy, and so on. There is really a lot of things going on, and we see a lot of volumes coming in. It's a little bit difficult to see how this kind of balances out. That's more of a general comment. Go ahead, Andreas. Sorry to interrupt you there.
No, I mean, you're perfectly right on sort of the... It's very hard to predict. Looking at the trend right now, they are somewhat lower than the previous year. It's not a massive decrease, but still, it's there. We'll see how that sort of plays out here in the second half of the year.
Great. Just one final one. The restructuring costs that you had in this quarter, SEK 21 million. Are we correct to understand that this should fall or be lower going forward?
Yeah, that is correct because now we have concluded the restructuring related to the reorganization that we announced earlier this year. That is correct. It will decrease.
Okay, perfect. That's all for me. Thank you very much.
The next question comes from Karl-Johan Bonnevier from DNB Carnegie. Please go ahead.
Yes, good morning, Ola and Andreas. First of all, congratulations to a good continued turnaround of the company after last year's struggles. Just to conclude on Norway, Andreas, could you remember and enlighten us how is the comparison in Q3 to last year? I can't remember that you mentioned variable volumes being particularly high in that quarter. Is it a fair base to compare with?
Yeah, exactly. We had quite high volumes both in Q2 and Q3 last year. I think looking ahead in Q3, it's a fair comparison, I think. Not on sort of the unusually high levels that we have seen in Q2, but it should be sort of on balance with last year, I believe.
Excellent. On the cost savings program and realizing the SEK 120 million, I see you mentioned that you've taken down costs on the central level of about SEK 8 million in the quarter. Could you just enlighten us how you see the full effect of the SEK 120 million coming through on the central level or on the country level? Is it half-half, or how should we see it?
It's roughly half-half. That is correct.
When you look at now, say, having implemented the... I mean, maybe it's too early to say, but obviously taking out that amount of employees, have you seen any detrimental effects on your business being taking out 130 employees?
I think it's a good question, but I think we've seen an increased focus, actually, on the core questions that we need to work on: operational efficiency, some of our IT challenges, etc. So far, we've actually seen an ability for an increased focus. I think we should also remember that we're kind of more now back to more normal HQ cost levels that I think you've been used to seeing in Coor, you know, over the historic time. I think it's back to normal levels. You should think about it more like that than that it's a decrease.
Ola, on that camp, you have already given a lot of comments about how you see the strength in the Norwegian operation and maybe the volatility still underlying in the Danish operation. If you look at the general stability of the operation, how would you say envisage the different countries at this stage?
I think, as I mentioned, I think Norway is on a good path where we see a stability and a predictability in the work that they're doing. Sweden is perhaps somewhere a little bit less kind of predictable and stable than Norway. Denmark is probably at this time the least predictable, where we see some changes from month to month that we work with getting under control. I think this is the primary task for the new Danish manager to really get an even tighter control of the costs and the operations in the Danish business. I would probably rank them something like that. This is also the result of the historic growth pattern where we've grown a lot and taken a lot of new contracts. Kind of how are you able to... How have you been able to manage the integration of that rapid growth?
The countries are there on a little bit varying level.
When you look at that stability into the perception of what kind of market opportunities you see out there, is it easier to let the Norwegian organization for the moment go for growth opportunities than maybe the Swedish and the Danish?
I think it's my management philosophy that you always have to kind of earn the right to invest. To do that, if you are managing a good operation and you know your control of what you're doing, then you have a better opportunity to absorb new growth. Of course, that is one of the factors that is playing into this. If there is also a good opportunity coming up, we'll just have to make sure that we support that, even if it's in a market that is currently a little bit less successful than the Norwegian one.
Excellent. One final maybe for you, Andreas, looking at, I guess, the annual gearing cycle normally peaks in Q2 with a dividend payment and the kind of normal kind of working capital headwind you have in the quarter from a seasonality perspective. I've noticed that you earlier talked about starting the share buyback program directly after the AGM. I haven't seen anything happening in Q2. How do you see that going forward? What kind of considerations have made you postpone slightly?
No, you're absolutely correct. It's been somewhat postponed here with handling the reorganization internally and so on, but something we will look into and prepare for the board after summer and take a look at it.
The outlook of, I think it was SEK 50 million you detailed for coming after March next year, that's still a valid number.
It's still the number we're looking at, correct.
Excellent. Thank you very much, and all the best out there.
The next question comes from Rauli Juva from Inderes. Please go ahead.
Yeah, hi, it's Rauli from Inderes. I would still have two more questions related to the Norway development. First of all, you mentioned that the larger scope of the shutdown contributed to about half of the growth. What was the main drivers behind the other half, which is still double-digit as such?
It's coming from both new contracts that have been started up and also more in sort of a normal fluctuation of the maintenance stops. Even taking away the unusually high ones, the maintenance stops this year are somewhat higher than last year in Q2.
Okay.
I would say in sort of...
Secondly, if we...
No, sorry, go ahead.
No, go ahead.
No, I would say even though higher, but still sort of in normal fluctuations that we see year on year.
Yeah, that's clear. Secondly, your Norwegian sales were up around SEK 100 million and the EBITDA was up some or exactly SEK 10 million. 10% of the sales growth, is that kind of a fair level for you as a kind of operative leverage when you see higher volumes? How would you describe that?
Sorry, take that again. I didn't fully catch your...
Just looking at the Norwegian numbers, you had a SEK 100 million increase in sales and a SEK 10 million increase in the EBITDA line. I was wondering if that ratio is kind of a typical drop of the sales increase to earnings when you see volumes.
It's hard to sort of have that as a general view because it depends on where that growth is coming. Is it coming in building density that then you can sort of grow with healthy margins? If it comes with a more sort of scattered geographical spread, the margin profile might look different. It's hard to say in general that growth comes with a certain margin.
All right. Any more questions? All right.
The next question comes from Oliver Ussitalo from Aktiespararna . Please go ahead.
Hello, guys. Good morning. I suppose we will finish up with a few questions from my end. I think you mentioned in the report that there are some large deals coming along in Denmark. Considering the recent status of your Danish operation, do you feel that you have resources to be a competitive player in these upcoming bids? Do you think we can see some... Is this the low point for the Danish market?
It's a really good question. I think since there was a movement in many different kind of parts of the market, the answer varies a little bit. I mean, we still remain one of the top players in the Danish market. We have some challenge with the operational efficiency in terms of how to generate profit. I think it doesn't mean that we're not competitive. I wouldn't say that. Also, even if we've now done some resource optimization on the central level, we still have a large team there that works internationally to support in the big tenders. That's not something that is done in the... in cooperation with the international team that kind of supports in the big cases. In the small cases, I'm sure that the Danish business is quite capable to manage it.
It's always a stronger situation, of course, when you are performing well and when you have a predictable and stable business. We are definitely working to make the Danish situation even better and more stable for us. Do you have anything else on that, Andreas?
Nope.
Thank you. Just one follow-up question on the Norwegian market as well. The margin is also strong here. You said that half of the growth is considered like above normal level. How much has the margin been affected? Would you say that you've been able to expand your margin year over year, even without this above normal growth?
Yeah, I mean, also taking away the volume and the variable volume here, there is a continued focus on operational efficiency in Norway as well. As Ola mentioned before, I believe Steen in Norway is doing a very good job on handling that as well. There would have been some margin expansion even without the volume here in the quarter.
Okay, great. Thank you so much. I think that's it from my end.
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All right. Any further questions?
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Thank you very much for joining the Q2 call. We wish you all a good day. Thank you very much.