ISS (One-pager): Compounding capital return with targeted organic growth strategy
Summary
- ISS reported annual revenue of DKK 84.7bn for 2025, with organic growth of 4.3%, driven by price increases and improved volume trends, though Q4 growth of 4.1% was below consensus expectations.
- The operating margin for 2025 was 5.0%, excluding hyperinflation effects, and nominal operating profit before other items was DKK 4.2bn, despite foreign exchange headwinds.
- Free cash flow increased to DKK 2.7bn, supported by disciplined working capital management and lower capital expenditure, reflecting an asset-light business model.
- ISS announced a new DKK 2.5bn share buyback programme for the coming year, with total shareholder returns for 2026 projected at approximately DKK 3.1bn, representing around 8.7% of the current market capitalisation.
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ISS delivered a solid set of annual results for 2025, with revenue of DKK 84.7bn (2024: DKK 83.8bn) and organic growth of 4.3%, driven primarily by price increases across the group and improving volume trends toward year-end. The Q4 2025 was, however, a little under consensus, where organic growth of 4.1% landed below consensus expectations. The operating margin for the full year landed at 5.0% excluding hyperinflation effects (2024: 5.0%), in line with the company's financial target, while nominal operating profit before other items rose to DKK 4.2bn (2024: DKK 4.2bn) despite significant foreign exchange headwinds of around 4 percentage points on reported revenue. Free cash flow increased markedly to DKK 2.7bn (2024: DKK 2.0bn), supported by disciplined working capital management and lower capital expenditure relative to revenue, reflecting the asset-light business model.
Like-for-Like growth accelerated by 2 percentage points sequentially in Q4 2025, as growth shifted from purely price-driven growth toward a more balanced contribution from volume and net new contract wins. Commercial momentum remained strong with 10 significant new contract wins during the year, including partnerships with COWI, Velux, and the Australian Department of Defence, alongside multiple extensions and expansions of existing key accounts with good revenue visibility heading into the new year.
On capital allocation, ISS completed a DKK 3.0bn share buyback programme in February 2026 and has announced a new DKK 2.5bn programme for the coming twelve months. Together with the proposed dividend of DKK 3.2 per share for FY 2025 (a 20% payout ratio of adjusted net profit), total shareholder returns for 2026 amount to approximately DKK 3.1bn, representing around 8.7% of the current market capitalisation. However, is currently indicated at a lower level for 2026, based on the current buyback programme of DKK 2.5bn vs DKK 3.0bn for 2025.
Looking ahead, ISS guides for organic growth above 5%, an operating margin above 5%, and reported free cash flow above DKK 2.5bn in 2026. Two catalysts could drive further re-rating: sustained margin delivery demonstrating a path toward Compass Group-level profitability, and resolution of the Deutsche Telekom arbitration case expected in H1 2026, which could lift free cash flow above DKK 3.1bn. Last year, ISS closed its valuation gap to peers; the next question becomes whether it can take meaningful steps to also close the gap to sector leader Compass Group.
Disclaimer: HC Andersen Capital receives payment from ISS for a digitalIR/corporate visibility subscription agreement. / Philip Coombes 08:46 25 February 2026, updated 11:26 25 February 2026
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