ISS has reported strong organic growth for the first six months of 2019, with its Asia-Pacific operations recording 8 per cent revenue increase.
Total revenue for the group increased by 5 per cent in the first half, and 5 per cent in the second quarter, driven by organic growth and positive currency effects. It was partly offset by negative net impact from acquisitions and divestments of 1.5 per cent.
Organic revenue growth of 6 per cent in the first half and 5.8 per cent for the second quarter, the global provider of facility services said the growth was driven by wins and expansions of key account contracts, following strong commercial momentum and continued solid non-portfolio demand in the first half of 2019.
Revenue from key accounts grew organically by 7.9 per cent in the first half and 7.7 per cent in the second quarter, and represented 61 per cent of group revenue.
Group CEO, Jeff Gravenhorst, said the company continued its consistent and strong commercial momentum with the extension of large key account contracts like Danske Bank and an international manufacturing company.
On 1 July 2019, ISS launched its Integrated Facility Services partnership with Deutsche Telekom at approximately 9000 buildings across Germany, making it the largest partnership in the history of ISS.
“Our focus on key accounts is paying off and we are on track to deliver industry leading organic growth of 6.5 per cent -7.5 per cent in 2019. As expected, margins were slightly lower in the first half of the year, reflecting the contract start-ups and expansions as well as the launch of the announced transformational investments (2019-2020),” Gravenhorst said.
As a result of the stronger than expected organic growth for the first six months of 2019, the company said its outlook for 2019 for organic growth is 6.5 per cent – 7.5 per cent.
Region performances
Continental Europe increased revenue by 4 per cent in the first six months of 2019. Organic growth amounted to 8 per cent, while acquisitions and divestments, net decreased revenue by 3 per cent and currency effects impacted revenue negatively by 1 per cent.
The business reported strong growth across the region, but especially in Turkey, Iberia, Germany and the Netherlands, who all delivered double digit growth.
In Northern Europe, revenue increased 3 per cent in the first six months of 2019. Organic growth was 5 per cent, while divestments reduced revenue by 2 per cent and currency effects were neutral. Almost all countries in Northern Europe contributed with positive organic growth.
Growth was primarily supported by contract launches in the UK and Denmark as well as high demand for non-portfolio services in Norway and Finland.
The Americas revenue increased 9 per cent in the first six months of 2019. Organic growth was 2 per cent and currency effects increased revenue by 7 per cent.
According to the service provider North America delivered positive organic growth driven by key account contract expansions and launches in Food Services and the aviation segment.
This was partly offset by the planned exits from small specialised services contracts. Mexico also delivered positive organic growth due to key account contract launches.
Asia-Pacific revenue increased to 8 per cent in the first six months of 2019. Organic growth was 5 per cent and currency effects were 3 per cent.
Almost all countries in the region delivered positive organic growth. ISS said growth was mostly supported by contract wins in Australia in the second half of 2018, as well as global key account contract launches in China.
Divestment programme update
Gravenhorst said the company is also making good progress on its divestment programme, with three of the 15 countries presented as discontinued operations being divested by the end of July.
The global facilities services company first announced its plan to axe 100,000 jobs and exit 15 emerging markets in December 2018, including Thailand, Philippines, Malaysia, Brunei, Brazil, Chile, Israel, Estonia, Czech Republic, Hungary, Slovakia, Slovenia and Romania.
These countries represent 12 per cent of the group’s revenue and 8 per cent of its operating profits.
The process is expected to be completed by 2020, with the number of customers to be to reduce by 50 per cent (from 125,300 to around 62,700). The number of employees is expected to reduce by 20 per cent (from 490,000 to around 390,000).
ISS has sold its second international business in as many months, offloading its operations in Israel to two different buyers. It follows the sale of its activities in Estonia.
ISS currently has employees and activities in more than 70 countries across Europe, Asia, North America, Latin America and Pacific, serving thousands of both public and private sector customers.
ISS has more than 12,000 employees across Australia and New Zealand. Last month ISS Australia was approved by national training regulator Australian Skills Quality Authority (ASQA) as a registered training organisation (RTO).
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