The ISS Group has reported first half 2013 revenue of AUD$7.9 billion (DKK 39.6 billion), driven by an organic growth of 3.5%. That translated to a first half net profit of AUD26 million (DKK 131 million) compared with a loss of AUD$59.2 million (DKK 297 million) for the same period in 2012.
Significantly, emerging markets – which account for more than half ISS’s employees – delivered 10% organic growth and represented 22% of total company revenue.
The emerging markets, which comprise Asia, Eastern Europe, Latin America, Israel, South Africa and Turkey, delivered an operating margin of 5.9% in the first six months of 2013.
“In Q2 we delivered solid results and increased organic growth, although we continue to experience overall challenging macroeconomic conditions,” stated ISS Group CEO Jeff Gravenhorst.
“In the second quarter our business grew organically by 4.3%. We are growing in both developed and emerging markets, partly driven by the successful implementation of large contracts like Barclays, Novartis, Citibank and H.J. Heinz.
“We continue executing our strategy, with divestments of several non-core businesses, including our pest control activities in 12 countries and our Nordic damage control activities. The divestments have led to further financial deleverage.”
ISS’s ‘outlook for 2013 is based on a mixed global macroeconomic outlook with continued strong growth in emerging markets combined with weak growth and difficult macroeconomic conditions in large parts of Europe, including the uncertainty surrounding current and future austerity measures.’
The company has had a solid start to 2013 following the wins of several large IFS contracts in 2012. Combined with the underlying business development, it expects to realise about 3% organic growth in 2013.
Divestment of the margin accretive pest control activities in 12 developed markets in May 2013 was followed by restructuring activities to align cost structures in the impacted countries. ISS expects a negative impact on the operating margin from these divestments of about 0.2 percentage point for the Group in 2013. As a result, the operating margin for 2013 is expected to be slightly lower than the level realised in 2012. Cash conversion is expected to be maintained above 90%.