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ISS Global (Baa3/BBB) 1H Results

CONSUMER CYCLICALS
Credit BulletsBulletHomepagemarkets-real-timeCredit

Not a credit mover with FY guidance left largely unch. As we said with Securitas, consumer services used to screen value but now trades in-line with staples (flat to Tesco and not far off Carlsberg). Both are having firm year and are not being pressured by macro (at least yet). Add on firm capital allocation policies that have given both upgrades recently, hard to ask them to give any width for now.

  • Q2 organic growth of +5.8% leaving 1H +5.9%. Prices +6.5% (half of which from Türkiye), volumes +1%, net contract wins -1% (mostly from exited contracts from last year) and other contributed -1%.
  • 1H EBIT margin was 4% (+40bps). FCF was -DKK1.1b unch on last year and is on seasonal WC.
  • Reported net debt level is DKK 13.2b (€1.8b) or net 2.4x levered on NTM (c€750m) EBITDA. Co targets net 2-2.5x.
  • Buyback has been boosted by DKK250m to DKK750m (€100m) for 2H . It has done DKK500m (€67m) this half. S&P already expected a buyback boost to DKK1.5b in FY25 when it upgraded in May to BBB.
  • FY growth expected to be +5-6% (prev. 4-6%), EBIT margin >5% and FCF>DKK1.8b (>€240m).
  • Other items; its noting a 7yr contract win with UK department of work and Pensions with expected annual revenue of DKK1.2b. (€160m) or 1.5% of group revenue. Also secured 5-yr extension on contract with Barclays (2.5%). It has noted re. Deutsche Telekom arbitration process progressing according to plan. Reminder it expects FCF to be temporary hit by DKK600m this year on withheld payments but expected that to reverse back in next year.
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Not a credit mover with FY guidance left largely unch. As we said with Securitas, consumer services used to screen value but now trades in-line with staples (flat to Tesco and not far off Carlsberg). Both are having firm year and are not being pressured by macro (at least yet). Add on firm capital allocation policies that have given both upgrades recently, hard to ask them to give any width for now.

  • Q2 organic growth of +5.8% leaving 1H +5.9%. Prices +6.5% (half of which from Türkiye), volumes +1%, net contract wins -1% (mostly from exited contracts from last year) and other contributed -1%.
  • 1H EBIT margin was 4% (+40bps). FCF was -DKK1.1b unch on last year and is on seasonal WC.
  • Reported net debt level is DKK 13.2b (€1.8b) or net 2.4x levered on NTM (c€750m) EBITDA. Co targets net 2-2.5x.
  • Buyback has been boosted by DKK250m to DKK750m (€100m) for 2H . It has done DKK500m (€67m) this half. S&P already expected a buyback boost to DKK1.5b in FY25 when it upgraded in May to BBB.
  • FY growth expected to be +5-6% (prev. 4-6%), EBIT margin >5% and FCF>DKK1.8b (>€240m).
  • Other items; its noting a 7yr contract win with UK department of work and Pensions with expected annual revenue of DKK1.2b. (€160m) or 1.5% of group revenue. Also secured 5-yr extension on contract with Barclays (2.5%). It has noted re. Deutsche Telekom arbitration process progressing according to plan. Reminder it expects FCF to be temporary hit by DKK600m this year on withheld payments but expected that to reverse back in next year.