27 February 2019 | Herpreet Kaur Grewal
Support services company ISS has given details of organic growth of 7.1 per cent and an operating margin of 4.2 per cent in its financial results for 2019.
There was also 8.1 per cent of organic growth in the second half of 2019 (H1 2019: 6 per cent), driven by 11 per cent organic growth from key accounts on the back of strong commercial momentum - including the launch of Deutsche Telekom and a generally high level of wins, extensions and expansions.
Growth was further supported by an increasing customer retention rate.
The operating margin of 4.2 per cent in 2019 (2018: 5 per cent) and 4.6 per cent in H2 2019 (H2 2018: 6.1 per cent) was negatively affected by the company's reorganisation in France, two large loss-making contracts, and a DKK150 million (£17 million) provision to cover identified risks.
The operating margin on Deutsche Telekom (launched 1 July 2019) was in line with expectations in H2 2019.
ISS said that key contract developments since the third quarter results include the win of Hong Kong Airport Authority, extension and expansion of works at Lewisham and Greenwich NHS Trust (UK), and an IT and telephone service provider (Spain). No contract losses were mentioned.
Jeff Gravenhorst, group CEO, ISS A/S, said: "2019 was a mixed year. On one hand, we continued to see the benefits from our strategic focus towards key accounts - both in terms of historically strong organic growth and improving underlying free cash flow. We won, extended and expanded many key accounts and launched the largest contract in the history of ISS with Deutsche Telekom.
"However, we also faced a few significant local headwinds. It stands as a reminder that our transformation isn't over yet. The strategy is right and we are gradually getting closer to the finishing line. Today, we are a more focused business with a clear value proposition for our customers and we are becoming a structurally higher growth business. While the coronavirus and the recent malware attack on ISS provides some uncertainty, we expect solid organic growth together with improving margins and stronger free cash flow in 2020."