Coor: Cost savings taking a bit longer to realise - ABG

- Adj. EBITA of SEK 161m (0% vs ABGSC, -3% vs cons)
- Est's down 2-3% on lower effects of cost savings program in H2'24
- Few contract renegotiations remaining for 2024: lower op risk

Q2 details
Sales SEK 3,180m (-1% vs ABGSC 3,205m and -1% vs cons 3,220m), adj. EBITA SEK 161m (0% vs ABGSC 160m and -3% vs cons 166m), EBIT SEK 131m (1% vs ABGSC 129m and -5% vs cons 138m), Net profit SEK 60m (-19% vs ABGSC 74m and -24% vs cons 78m). Organic growth was -1% vs. ABGSC 0% and cons 1%. Free cash flow was -67m (-69m) for a LTM free cash flow of 334m. Solid report supported by stronger profitability in Norway (high variable volume related to maintenance in the oil and gas industry) offsetting slightly weaker profitability in Denmark.

Estimate changes
We do not expect any major estimate revisions on the back of a solid report. However, management guided for the full effects of the cost savings program to take a bit longer than expected (late Q4). As such, we expect consensus to cut 2024 EBIT by 2-3% but keep 2025 and 2026 relatively unchanged.

Final thoughts
With solid sales and profitability despite the Ericsson contract comps, and with the cost savings program starting to ramp up, we think the company is well positioned to increase margins in H2. Moreover, with relatively little contract renegotiations remaining for 2024, we also view the operational risk for the rest of 2024 as more limited. Share is trading at 10-8x adj. EBITA on '24e-'26e (8-12% FCF yields).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/coor/Equity-research/2024/7/coor---cost-savings-taking-a-bit-longer-to-realise/