ISS has announced its trading update for the first nine months of 2020.

The facility management company reported organic growth of 4.9 per cent in the first nine months of 2020 and 8.7 per cent in Q3 2020, negatively impacted by COVID-19, where the company started to see second wave impacts, but was supported by continued strong demand for projects and above-base work, especially deep cleaning and disinfections.

Revenue from key accounts (66 per cent of group revenue) reported negative organic growth of 1.8 per cent in the first nine months of 2020 and (9.3) per cent in Q3 2020.

Projects and above-base work grew organically by 12 per cent, especially due to strong demand for deep-cleaning and disinfection.

As a result of COVID-19, all regions delivered negative organic growth in the first nine months of 2020, albeit only marginally in Continental Europe and Asia & Pacific.

“We face an unprecedented and challenging environment with new COVID-19 infection waves and lockdowns in most of our geographies,” Jacob Aarup-Andersen, Group CEO, ISS A/S, said.

“Our focus remains on serving customers and society in a safe manner through this difficult time. As a global leader, we have a responsibility to help society break the chain of infection and we are using our knowledge of large-scale cleaning, disinfection and workplace experience to support our customers with products like Pure Space. I thank all my colleagues – our frontline heroes – who serve our customers every single day, going above and beyond.

“Despite the tough global environment, we today confirm our guidance for the full year. We are not satisfied with our operational performance in the past year and are working hard to prepare the business for the coming years, including focusing on ensuring that all growth comes with the right profitability and cash flow.

“While the direction of our strategy is right, we are currently undergoing a strategy and operating model review and will share key conclusions in December. I am confident that we will emerge from the current headwinds as a stronger global leader in services, innovation and people,” Aarup-Andersen said.

Asia and Pacific

Revenue decreased 4 per cent to DKK 9,772 million in the first nine months of 2020 compared with the same period last year.

Organic growth was 1 per cent (H1 2020: 0 per cent), acquisitions and divestments, net decreased revenue by 1 per cent and currency effects reduced revenue by 2 per cent. Lockdowns due to COVID-19 was the cause of negative organic growth in India, Hong Kong and Singapore.

This was partly offset by Australia and China delivering positive organic growth. In Australia, growth was driven by solid commercial momentum with key accounts as well as demand for projects and above-base work, including deep cleaning and disinfection due to COVID-19.

In China, growth was driven by strong demand for projects and above-base work. Projects and above-base work increased around 30 per cent organically as a result of strong demand for deep-cleaning and disinfection.

In Q3, revenue decreased 10 per cent to DKK 3,110 million representing an organic growth of 5 per cent (Q2 2020: 2 per cent, acquisitions and divestments, net reducing revenue by 1 per cent and negative currency effects of 4 per cent.

Most countries experienced negative organic growth, mainly as a result of increasing lockdowns due to COVID-19, most significantly in India. This was partly offset by positive organic growth in China and continued high demand for deep cleaning and disinfection in Australia.

Outlook

Despite continued high uncertainty and increasing COVID-19 second wave impacts, ISS confirms the existing mid-range outlook for 2020: Organic growth of 6 – 8  per, marginally positive operating margin excluding restructurings and one-off costs and free cash flow of around DKK (2) billion On 16 December 2020, ISS will host an investor call to provide a strategy refresh