In its latest trading update for the period 1 January – 30 September 2021, global facilities services firm, ISS, reports a financial turnaround that is “on track”.
The group’s interim results show organic growth was 0.7% in the first nine months of 2021 and 2.6% in Q3 2021. Organic growth improved through the third quarter, predominantly in September, as customers started to return to office in some geographies. Portfolio revenue showed initial signs of recovery, which more than offset a smaller decline in projects and above-base work due to lapsed ad-hoc Covid-19 related services.
Execution of the OneISS strategy which was launched in December 2020 has “progressed as planned” according to the group, with ISS being further streamlined and standardised for enhanced future execution. It also added that the turnaround initiatives driving recovery of the underperforming contracts and countries and the restructurings initiated in response to Covid-19 were also continuing to progress as expected.
Twelve divestments were signed or completed in the first nine months of 2021 corresponding to total net proceeds of approximately DKK 1.4 billion.
As a result of the of the continued progress of the underperforming contracts and countries and progress of the Covid-19 restructuring initiatives, ISS has upgraded its 2021 outlook for operating margin and free cash flow. Operating margin is now expected to be around 2.5% compared to previously “above 2%”, and free cash flow is now expected to be around DKK 1.5 billion compared to previously “above DKK 1 billion”.
Commenting on the latest financial results, Jacob Aarup-Andersen Group CEO, ISS A/S, said: “In the third quarter, we continued our work to create a healthier and fundamentally stronger ISS. I am very pleased with our ability to execute on our OneISS strategy while simultaneously navigating a challenging environment with volatile activity levels as well as high wage inflation and scarcity of qualified employees in certain regions.
“We are seeing customers gradually returning to the office, albeit at varying pace across geographies. We expect a continued measured pace of return in the coming period as infection levels remain high in many countries creating a sense of caution.
“Our turnaround initiatives are clearly paying off and the success of our execution allows us to upgrade our outlook on operating margin and free cash flow. Progress on these two financial metrics is key to create a healthy foundation and reach our turnaround targets for 2022. I want to thank all employees for achieving this important milestone and for staying agile and passionate in their support to our customers.”
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