ISS (ISS) Q4 2013 earnings summary

Executive summary

• 2013 organic growth was 4.3%, with Q4 strengthening to 5.0%; operating margin before other items was 5.5% and cash conversion was 102%.

• Strategy focused on profitable organic growth, resilient margins, strong cash flow, international IFS contracts and divestment of non-core activities.

Financial highlights

• Revenue was DKK 78,459m in 2013, down 1.3% YoY; Q4 revenue was DKK 19,674m, down 4.1%.

• Operating profit before other items was DKK 4,315m, down 2.2% YoY; Q4 was DKK 1,217m, down 1.5%.

• Organic growth accelerated to 4.3% for FY 2013 from 1.7% in 2012, and to 5.0% in Q4 from 1.9%.

Outlook and guidance

• 2014 organic revenue growth is expected at 3–4% at constant FX and before acquisitions and divestments; total revenue growth is expected to be ~-2%.

• FX is expected to reduce 2014 revenue growth by ~3 percentage points; 2013 and 2014 divestments and 2013 acquisitions are expected to reduce it by 2–3 points.

• 2014 operating margin is expected to exceed 5.5%; cash conversion is expected to exceed 90%.

• Outlook assumes low positive GDP growth, challenging conditions, possible improvement in parts of Europe and continued emerging-market growth, tempered by slowdowns in some economies, especially Asia.