Accelerating growth momentum and upgrade of 2022 outlook
Company Announcement
Copenhagen, 10 August 2022
No. 15/2022
Interim report for 1 January – 30 June 2022
Accelerating growth momentum and upgrade of 2022 outlook
Highlights
- Organic growth was 8.0% in Q2 2022 (Q1 2022: 5.4%) and 6.7% in H1 2022 (H1 2021: (0.2)%). Total revenue of DKK 18.9 billion in Q2 was 3% above pre-pandemic revenue in Q2 2019 adjusted for M&A and FX.
- The growth was driven by continued return-to-office trends, customers’ increased investments in the attractiveness of the workplaces and implemented price increases. In Q2 2022, portfolio revenue grew organically by 11%.
- Operating margin before other items was 2.9% in H1 2022 (H1 2021: 1.6%). The improvement was primarily due to the execution of the turnaround initiatives in the underperforming contracts and countries.
- The rising inflation was managed tightly through price increases and cost control with a margin neutral effect.
- Free cash flow in H1 2022 was DKK 0.6 billion (H1 2021: DKK 1.6 billion). As expected, free cash flow was negatively affected by DKK 0.4 billion of one-off payments of provisions accounted for in 2020.
- The progress towards the turnaround targets continued to be driven by the execution of the OneISS strategy. Two out of four hotspots have achieved their turnaround targets, and financial leverage was reduced to 3.0x pro forma adjusted EBITDA (LTM).
- With the divestment of Portugal, the divestment programme is now considered completed. The target of accumulated net proceeds of DKK 2 billion has been achieved.
- IAS 29 (hyperinflation accounting) was implemented in Q2 2022 for Turkey with effect from 1 January 2022. The impact on the Group’s key financial KPIs (organic growth, operating margin and free cash flow) was immaterial. The implementation has no influence on ISS’s underlying cash flow generation.
- ISS will host a Capital Markets Day on 7 November 2022 in London, where the next phase of the OneISS strategy and new financial targets will be presented.
- Based on the performance in H1 2022, outlook is upgraded for all financial KPIs. Organic growth is now expected to be above 5%, operating margin is expected to be above 3.75% and free cash flow is expected to be above DKK 1.5 billion. All metrics are before any effects of IAS 29.
Jacob Aarup-Andersen Group CEO, ISS A/S, says:
“The results in the first half of 2022 mark another important milestone in our financial turnaround. I am pleased to see how this has been executed in volatile markets, while also establishing a new operating model for future performance. This is a testament to all the hard work from every ISS colleague during this important period. As we are emerging well from the pandemic, the foundation of ISS has substantially improved - we have completed the divestment programme, recovered financial performance and reduced financial leverage faster than targeted. This leaves us well positioned to gain further momentum in the marketplace, manage inflation and support our customers in a continued dynamic business environment”.
For media enquiries
Kenni Leth, Head of Global PR & Media Relations, +45 5171 4368
For investor enquiries
Jacob Johansen, Head of Group Investor Relations, +45 2169 3591
Kristian Tankred, Senior Investor Relations Manager, +45 3067 3525
About ISS
ISS is a leading workplace experience and facility management company. In partnership with customers, ISS drives the engagement and well-being of people, minimises the impact on the environment, and protects and maintains property. ISS brings all of this to life through a unique combination of data, insight and service excellence at offices, factories, airports, hospitals and other locations across the globe. ISS has more than 350,000 employees around the globe, who we call “placemakers”. In 2021, ISS Group’s global revenue amounted to DKK 71 billion. For more information on the ISS Group, visit www.issworld.com
ISS A/S, ISIN DK0060542181, ISIN US4651472056, ISS Global A/S, ISIN XS2013618421, ISIN XS1145526825, ISIN XS1673102734, ISS Finance B.V., ISIN XS2199343513
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