Half Year 2026 ISS A/S Earnings Call Transcript
Key Points
- ISS AS (WBO:ISS) delivered strong organic growth of 8.9% in Q2 2026, with a like-for-like contribution of 2% for the third consecutive quarter, indicating improved growth quality.
- The company improved its operating margin to 4.6% in H1 2026, driven by operational improvements and the Deutsche Telekom settlement, which is expected to add 10-15 basis points annually.
- Free cash flow turned positive at DKK600 million in H1, benefiting from the DTAG settlement payment and improved working capital management.
- Commercial momentum strengthened with a retention rate of 95% and 10 positive contract changes year-to-date, including key wins like DWP, COWI, and Velux.
- The Deutsche Telekom contract was extended by 6 years to 2035, providing long-term visibility and a stronger partnership foundation.
- The acquisition of Toma was completed and integrated successfully, adding over 4,000 employees and strengthening the Nordic position.
- Capital returns to shareholders are robust, with a dividend and share buyback program yielding 8%, and a share count reduction of over 8% in 2026.
- Organic growth in the Americas was negatively impacted by net new wins, primarily due to smaller contract exits in Chile, and the US growth was flat.
- The Americas margin was pressured by targeted commercial investments in the US and restructuring costs in Chile, with no immediate recovery expected in H2.
- Northern Europe experienced negative volume and net new contributions in Q2 due to contract losses and scope reductions, though Q3 is expected to improve.
- Asia Pacific margins were impacted by legal costs related to the Hong Kong Wang Fuk Court fire, though these are not expected to repeat at the same magnitude in H2.
- The company's guidance for organic growth of above 6% was not raised despite strong Q2, citing tough comparables in Q4 and uncertainty in above-base activity.
- The DTAG settlement's one-off revenue is not a full drop-through to profit, as costs will offset it over the year, limiting the immediate earnings impact.
Ladies and gentlemen, welcome to the ISS H1 2026 Interim Report. I'm Sergen, the Chorus Call operator. (Operator Instructions) And the conference is being recorded. (Operator Instructions) The conference must not be recorded for publication or broadcast.
At this time, it's my pleasure to hand over to Michael Vitfell-Rasmussen, Group Head of Investor Relations. Please go ahead, sir.
/--
Thank you, and good morning, everyone, and welcome to this conference call. We appreciate you joining us here today to discuss our H1 2026 interim report, which we released earlier this morning. As said, I'm Michael Vitfell-Rasmussen, heading up Investor Relations here at ISS. Joining me today in the room is our CEO, Kasper Fangel; our CFO, Mads Holm; and Anne Sophie Riis from the IR team.
Before we begin, please take a quick view at the disclaimer in the back, and then I will hand over to Kasper to start the presentation. Please move
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