Denmark based ISS posted its best results to date yesterday and says it is on course to turn itself from the world's largest cleaning company into what it calls The Service Enterprise. Commenting on progress towards the ambitious financial goals charted in its five year plan, aim2002, ISS says, "We are seeking to enhance our competence and foster innovation in all parts of our business. Such schemes as Britain's Private Finance Initiative, also call for highly sophisticated, well-resourced service providers capable of making long-term commitments."
Financial highlights include organic growth of 7%, a 43% increase in turnover to DKKm 19,802 and operating profit up 39% to DKKm 1,021.
The company says overall performance in Western Europe (Germany, France, UK, Ireland, the Netherlands, Belgium, and Luxembourg) was positive, with solid organic growth in most countries. However, profitability was restrained by adverse changes in social legislation, primarily in Germany.
In the United Kingdom and Ireland, combined turnover increased by 23.9% to DKK 2,561, representing organic growth of 15.9%, with acquisitions accounting for 6.4%. Operating profit rose 19%, resulting in an operating margin of 6.7% compared to 6.9% in 1998. Both turnover and margin were the highest of any of the main markets in which ISS operates. The company has almost 30,000 employees in the UK and Ireland.
The relatively lower growth rate in the operating profit was due to increased investments in information technology, human resources and Private Finance Initiative (PFI) contracts, which are expected to produce stronger growth in future years.
Looking at the wider picture, ISS says that its Property Service operation, including full facility management (FM) provision, has expanded strongly in most markets. "Large customers in the private and public sectors are increasingly focusing on their core activities by outsourcing the management and operation of their premises to specialised service providers.
This trend is seen to favour large multi-service providers with the capability to supply a full range of services from general cleaning to full technical and electrical maintenance, or even total FM. Demand for such services comes mainly from large institutions, especially in insurance, banking and real estate.
Richard Byatt
