ISS, the global provider of facility services, has announced its financial results for the fourth quarter and full year 2017. Organic revenue growth is at 2.4% for the year and 3.6% in Q4 (Q3 2017: 2.3%). Total revenue increased by 2% for the year and by 1% in Q4 (Q3 2017: 2%) driven by organic growth and a positive net impact from acquisitions and divestments partly offset by a negative impact from foreign exchange effects.
Operating margin is at 5.7% for the year (2016: 5.8%) and 6.4% in Q4 (Q4 2016: 6.7%), while the net impact of acquisitions and divestments as well as currency translation effects on margin was negative by 0.1% point for the full year and 0.2% for Q4.
Cash conversion over the last 12 months is 104% (Q3 2017: 99% and Q4 2016: 98%). Net profit (adjusted) decreased to DKK 2,424 million (2016: DKK 2,873 million) driven by currency and one-off, non-cash items related to the re-measurement of a business classified as held for sale in Northern Europe as well as the revaluation of deferred tax assets following the US tax reform.
Net profit and free cash flow
Net profit was DKK 2,007 million (2016: DKK 2,220 million). Free cash flow stands at DKK 2,699 million (2016: DKK 2,910 million). The decline was driven by higher restructuring and investments in intangible assets and property, plant and equipment.
The proposed dividend for 2017 is DKK 7.70 (2016: DKK 7.70) per share of DKK 1 in line with the total nominal ordinary dividends for 2016 of DKK 1,430 million.
Revenue from global key accounts increased by 10% in local currency in 2017 (2016: 19%) and represents 12% of overall ISS Group revenue (2016: 11%).
During the year, the business completed eight divestments and three key competency enhancing acquisitions, among them Evantec (a technical and building services company based in Germany).
Progress in delivering ‘The ISS Way’
Speaking about these latest financials, Jeff Gravenhorst (Group CEO at ISS) said: “ISS delivered a resilient performance in 2017. Our organic growth was 2.4% and we finished the year strongly thanks to healthy project activity in Q4. Excluding the impact from currency, acquisitions and divestments, our margin was flat on 2016. Our cash conversion was excellent and we’re proposing an ordinary dividend of DKK 7.70 per share. We made further progress in delivering ‘The ISS Way’ strategy and sharpening our focus on key account customers. This progress included the acquisition of Guckenheimer which strengthened our platform in the North American market. In 2017, we also saw notable commercial success with new key account customer wins including Deutsche Telekom and Shire, a five-year extension of our partnership with Barclays and an extension until 2021 of our long-standing partnership with Hewlett Packard Enterprises. Overall, our progress is pleasing. We look forward to 2018 with confidence.”
In 2018, the business fully expects an organic revenue growth rate of 1.5%-3.5% and an operating margin around the 5.6% mark (excluding any impacts from acquisitions and divestments as well as currency translation effects) plus cash conversion above 90%.