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ISS' operating margin 'negatively impacted'

Graph © Shutterstock
ISS' operating margin 'negatively impacted' © Shutterstock
07 November 2019 | Herpreet Kaur Grewal 


ISS has reported that its revenue has increased by 6.3 per cent in the first nine months of 2019, according to its financial results. 


Organic growth of 6.8 per cent took place in this same period. 

Organic growth expectations for 2019 remain unchanged at 6.5 per cent - 7.5 per cent, and the company states that it is on track to deliver organic growth of more than 4 per cent in 2020.

Operating margin is, however, negatively impacted by delayed operational improvements in France. 

The outlook for operating margin for 2019 is adjusted to above 4.2 per cent (previously 5.0 per cent - 5.1 per cent). In 2020, the operating margin is expected to be around 5.0 per cent.

Jeff Gravenhorst, group CEO of ISS, said: “Our organic growth of 6.8 per cent in the first nine months of 2019 was underpinned by our strengthening key account focus. However, the need to reduce our 2019 outlook for both operating margin and cash flow is clearly disappointing. Our execution has proven unsatisfactory in a few areas leading to an operational shortfall, hereby triggering some negative one-off items impacting 2019. 

"Our strategic choices are right, but our level of ambition and our desired pace of change, in hindsight, have proven too ambitious. We have overstretched ourselves. This will change. We will take an additional 12 months to complete our investment programme and we will launch an efficiency plan. This will reduce both risk and cost. Whilst margin and cash flow expectations for 2019 are now significantly reduced, we expect a strong recovery in 2020. Our medium-term outlook is delayed by 12 months, but otherwise unchanged.”