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ISS Group has released a trading update for 1 January-30 September 2021, reporting an upgrade of its financial outlook.
Organic growth at the Copenhagen-based FM services company’s was 0.7 per cent in the first nine months of 2021 and 2.6 per cent in Q3 2021, but improved during the third quarter, especially in September, as clients saw a return to offices in some countries, which impacted activity levels positively.
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.
The group said execution of its OneISS strategy was progressing as planned with further streamlining and standardisation “for enhanced future execution”.
It said the turnaround initiatives instituted to drive recovery of the underperforming contracts and countries and the restructurings initiated in response to Covid-19 were moving ahead as planned.
The group completed 12 divestments completed in the first nine months of 2021 corresponding to total net proceeds of about DKK 1.4 billion (£161 million).
The statement added that the outlook for organic growth is confirmed and still expected to be positive. The outlook is upgraded for operating margin and free cash flow as a result of the continued progress of the underperforming contracts and countries and progress of Covid-19 restructuring initiatives:
The group operating margin is now expected to be around 2.5 per cent compared with previous estimates of "above 2 per cent", and free cash flow is now expected to be around DKK 1.5 billion compared with the previous suggested figure of “above DKK 1 billion".
Jacob Aarup-Andersen, Group CEO of 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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