Our 'B' issuer rating for Cabonline Group Holding AB (publ) (Cabonline) is unchanged following the publication of its fourth quarter results.
Results much as expected
Cabonline reported in line with our expectations with revenues for Q419 of SEK 1,789m, and SEK 6,490m for the fiscal year of 2019 (NCR 2019 estimate: SEK 6,335m, 2018 actuals: SEK 6,217m). Revenue growth was largely driven by acquisitions of Taxi 4x27 in Denmark and Taxi Västerås in Sweden, whilst organic growth for the year was negative 2.9%, and negative 1.1% for the quarter.
The company still sees issues with recruitment of independent drivers in both Sweden and Finland, as well as a decrease in revenues in Sweden and Norway due to loss of drivers. Finland shows positive revenue growth, albeit lower revenue per car due to the large share of competing taxis since the regulation change.
Reported adjusted EBITDA of SEK 307m for 2019 (NCR 2019 estimate: SEK 286m, 2018 actuals: SEK 330m) was affected by negative EBITDA contribution from Finland due to a lower utility grade in the self-owned part of the fleet. These effects were, however, somewhat offset by positive development in the Swedish business-to-public segment.
Transformational developments according to plan
The company has increased its focus on cost efficiency through restructuring, consolidation as well as an IT-platform upgrade. Cabonline estimates a cost of SEK 150m related to these changes. In Finland, Cabonline's transformation is progressing according to plan, continuing to reduce the share of self-owned cars as well as having fully impaired goodwill as of end 2019. As the company progresses further, we expect positive contributions from the Finnish operations. A new chief financial officer, Anneli Lindblom, joined Cabonline on 21 Feb. 2020.
Credit metrics commensurate with our rating
Following the issuance of the SEK 1.8bn senior secured bond in December 2019, the company has increased their overall leverage and reported a net debt to adjusted EBITDA of 5.5x (12-month rolling as of 31 Dec. 2019), an increase from 4.8x as of 31 Dec. 2018. The figure corresponds to an NCR adjusted net debt to EBITDA of 6.2x (we adjust net debt by 50% cash). Reported FFO/debt of 11.2% and FOCF/debt of 6.9%, correspond to NCR adjusted FFO/debt of 10.2% and FOCF/debt of 6.2% and were largely in line with expectations. The credit metrics are fully commensurate with our 'B' long-term rating for Cabonline. We do not make adjustments to our estimates at this stage.
This commentary does not reflect a rating action.
Analyst contact details:
Mille Fjeldstad, +47 99 03 89 16, mille.fjeldstad@nordiccreditrating.com
Sean Cotten, +46 735 600 337, sean.cotten@nordiccreditrating.com