Facilities services provider ISS saw organic growth of 4.9 per cent in the first nine months of 2020 and 8.7 per cent in the third quarter negatively affected by Covid-19 as second wave impacts began.
But despite continued uncertainty and growing second wave pandemic impacts, the group confirms the existing mid-range outlook for 2020 – organic growth of 6 to 8 per cent, marginally positive operating margin excluding restructurings and one-off costs and free cash flow of around DKK2 billion (£242.7 million).
The Denmark-based group says its fortunes are being supported by continued strong demand for projects and above-base work, especially deep cleaning and disinfections.
It saw key account organic growth of 1.8 per cent in the first nine months of 2020 and 9.3 per cent in Q3. During Covid-19, it adds, the strength of its value proposition has become even more apparent, and it continues to benefit from key account focus.
In late October ISS secured a five-year IFS contract with a large international manufacturing customer across the Americas corresponding to 1 per cent of group revenue.
The group now expects Covid-19-related restructuring costs of DKK 1.2 billion to 1.4 billion (around £145.6 million to £169.9 million). In addition, it expects one-off costs of DKK 1.8-2.1 billion (around 218.4 million-£254.8 million) covering provisions related to a large loss-making contract in Denmark and hits from delayed mobilisation and operational challenges on its Deutsche Telekom contract.
A comprehensive risk review of its balance sheet shows likely total restructuring and one-off costs of DKK 3.0-3.5 billion in FY 2020 (around £364 million to £424.7 million) (H1 2020: DKK 0.8bn (£97 million).
The group is due to hold an investor call to provide a strategy refresh on 16 December.
Jacob Aarup-Andersen, group CEO of ISS A/S, said: “We face an unprecedented and challenging environment with new Covid-19 infection waves and lockdowns in most of our geographies. Our focus remains on serving customers and society in a safe manner through this difficult time. As a global leader, we have a responsibility to help society break the chain of infection and we are using our knowledge of large-scale cleaning, disinfection and workplace experience to support our customers with products like Pure Space.
“Despite the tough global environment, we today confirm our guidance for the full year. We are not satisfied with our operational performance in the past year and are working hard to prepare the business for the coming years, including focusing on ensuring that all growth comes with the right profitability and cash flow. While the direction of our strategy is right, we are currently undergoing a strategy and operating model review and will share key conclusions in December. I am confident that we will emerge from the current headwinds as a stronger global leader in services, innovation and people.”
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