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ISS announces profitable growth for the first half of 2014

Money_dollars_coins_istock_FMJ_jan12Facilities Service Group ISS has announced profitable growth and improved margin in its Interim Results for the first six months of 2014.

Reporting a revenue growth of 2.4 percent during the first half of the year, this figure is down on the same time last year which recorded revenue growth at 3.6 per cent.

Operating margin however has seen an increase from 4.6 per cent in the first half of 2013 to 4.8 per cent in 2014, due to recent strategic initiatives within customer segmentation and central procurement which are currently progressing well and inline with company plans.

Revenue generated from Integrated Facility Services contracts totalled DKK 10.8 billion (£1.16 billion) representing 29 per cent of overall revenue, up 3 per cent on last year. Significant contract wins included BASF, Swisscom and a European based international bank.

Emerging markets now represent 23 per cent of the Group’s total revenue, an increase of 1 per cent on 2013, and delivered no change in organic growth which remained at the same level as last year at 10 per cent. Western Europe delivered flat organic growth against a backdrop of difficult market conditions.

Moving forward, the Group now expects organic revenue growth in 2014 to be around the level realised for the first six months of 2014 (from 3-4 per cent previously), and its expectations for operating margin to be above 5.5 per cent remains unchanged.

Commenting on the results, Jeff Gravenhorst, Group CEO, ISS A/S, said:

“Our first half results show we continue to build a strong global platform in the USD 1 trillion facility services market, enabling our worldwide clients to focus on their core businesses. We expect that ISS will continue to benefit from the increased outsourcing trends by global clients, especially in emerging markets where we saw double digit growth in the first half of the year. Our recent strategic initiatives such as customer segmentation and central procurement are progressing well and have had a positive impact on our margin. Together, this gives us confidence in the continued delivery of resilient organic growth, strong and improving operating margins with excellent cash conversion.

“While organic growth for Q2 was impacted by weaker economic conditions in Europe, we continue to grow in both emerging and developed markets. We are satisfied with our increasing margin in Q2, our strong cash conversion and our significantly improved net result for the first half of 2014. We have further optimised our business through successful divestments of non-core activities allowing us to focus on the activities we are best at.

“When we set guidance for 2014, we did so against a backdrop of an improving macroeconomic outlook in Europe. The recent economic data has shown significant weakening in Europe. This has had an effect on some of our customers’ decision-making and leads us to change our organic growth expectations for the full year to be around the level of the first half of 2014. Our operating margin and cash conversion targets are unchanged.”

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