2023-05-04

Trading update for 1 January - 31 March 2023

Strong start to the year and upgrade of 2023 outlook for organic growth
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Highlights

Organic growth

Organic growth was 11.3% in Q1 2023 (Q1 2022: 5.4%), mainly driven by the implementation of price increases across the Group and underlying volume growth. Price increases in Turkey contributed with approximately 3%-points to the organic growth in Q1 2023.

Tight management of inflation

The tight management of cost inflation was maintained. The margin was in general kept unaffected as negative effects were mitigated through price increases and operational efficiencies. Minimum wages and collective agreements are typically adjusted during Q1; therefore, prices were increased accordingly.

Operating margin

The underlying operating margin developed positively across the Group, primarily driven by continued operational improvements on the Deutsche Telekom contract and in the UK, as well as positive effects from realising the planned OneISS efficiencies. In France, however, improvements are yet to be seen.

Commercial momentum

Commercial momentum remained solid with increased activity levels and further improved customer retention.

Cleaning can drive customer satisfaction

A survey among office-based customers highlighted the importance of cleaning to drive customer satisfaction. As the world’s largest cleaning company, ISS has efficient service products with strong value propositions to meet customer needs.

Update on search for new CEO

On 16 March 2023, Group CEO Jacob Aarup-Andersen submitted his resignation. The Board of Directors has initiated a process to find his successor with both internal and external candidates being evaluated. Jacob Aarup-Andersen will stay with ISS until a successor has been found, and the strategic direction and operational execution is unchanged.

Outlook

The outlook for organic growth is upgraded to 6 – 8% (4 – 6%). The upgrade is driven by successful implementation of price increases to offset the cost impact from inflation and higher underlying volume growth. Outlook for operating margin of 4.25 – 4.75% and free cash flow of around DKK 2 billion is confirmed.

Working capital and free cashflow

As a consequence of higher-than-expected organic growth, and thereby higher nominal revenue in H1 2023, receivables will increase temporarily. Together with reversal of customer prepayments received in Q4 2022, changes in working capital and free cash flow are therefore expected to be negative in the first half of the year.

Outlook

6-8%

ORGANIC GROWTH (PREVIOUSLY 4-6%)

4.25 – 4.75%

OPERATING MARGIN

Around DKK 2 BN

FREE CASH FLOW

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“

We had a strong start to the year delivering double digit organic growth in the first quarter. This is a result of our continued strategic focus on creating sustainable growth across our business after we completed the financial turnaround last year.

Jacob Aarup-Andersen, Group CEO, ISS A/S

Jacob Aarup-Andersen Group CEO, ISS A/S, says:

“We had a strong start to the year delivering double digit organic growth in the first quarter. This is a result of our continued strategic focus on creating sustainable growth across our business after we completed the financial turnaround last year. As expected, high inflation and wage increases impacted the quarter, but we have managed this tightly and implemented the necessary steps to offset any negative effects. This also means that we continue to see a positive development in our underlying margins. We are commercially wellpositioned with a continued solid customer retention rate, and the execution of the next phase of the OneISS strategy continues as planned, not least due to the dedicated efforts from our more than 350,000 placemakers around the world.”

Interim report for 1 January - 30 June 2021
Revenue overview Q1 2023 Q1 2022 Q2 2022 Q3 2022 Q4 2022
DKK million
Revenue 19,930  18,075  18,868  19,311  20,284 
Organic growth, % 11,3%  5.4%  8.0%  8.1%  9.4% 
Acquisitions & Divestments, % 0.3%  (2.0)%  (1.9)%  (1.7)%  (1.2)% 
Currency & other adjustments, % (1.3)%  0.2%  2.1%  2.6%  (0.0)%
Revenue growth, % 10.3%  3.6%  8.2%  9.0%  8.2% 
CONTACTS & DOWNLOADS

Need more information?

MEDIA ENQUIRIES

Kenni Leth
Head of Global PR & Media Relations
+45 51714368
press@group.issworld.com

INVESTOR ENQUIRIES

Jacob Schmidt Johansen
Head of Group Investor Relations
+45 21693591
 
Kristian Tankred
Senior Investor Relations Manager
+45 30673525

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Q1 2023 Trading Update

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