Sunday , June 13 2021

Giant cleaning that employs 15 thousand people in the country is withdrawn from Chile



One of the world's largest private employers, the Danish IIS, plans to cut about 100,000 jobs worldwide when it completes its exit from 13 countries that are among its least profitable markets.

One of them is Chile, where it has been present since 2004. Today, the office has more than 15,000 employees, from Arica to Punta Arenas. The company based in Huechuraba provides cleaning, catering, property maintenance and security services.

The announcement, made internationally by the company and reproduced by Bloomberg, generated uncertainty at the local level regarding the fate of its operations in Chile. Despite the radical nature of its exit from Chile, sources close to ISS Chile pointed out that the objective is that there should be no mass layoffs in Chile in the short term.

The company's plan contemplates the search for a strategic partner that will be in charge of the operation on national soil, after which in 2020 the departure of the Danes is completed. A kind of right the key, with 15 thousand workers included.

ISS in the world

The measure represents approximately one-fifth of the company's global workforce. Shareholders will get at least a quarter of up to 2,500 million kronor ($ 383 million) in anticipated net income, Chief Executive Jeff Gravenhorst said on Monday by telephone.

The countries that ISS plans to abandon are mainly in emerging markets, including Asia and Eastern Europe. At the same time, the company wants to do more business with so-called key accounts, such as global banks.

While stocks fell to 3.3 percent after investors learned of plans on Monday, analysts said the new ISS strategy was good news for the company's long-term outlook.

"The market tends to be a bit myopic these days," said Sydbank analyst Mikkel Emil Jensen. What ISS is doing is "investing more in stable long-term margins rather than higher margins." That includes spending money here and now on "things like robots" to keep up with the latest technology in the industry, he said.

The ISS is leaving countries that represent only 12% of the group's income and 8% of operating profits. The plan means the company will no longer do business in Thailand, the Philippines, Malaysia, Brunei, Brazil, Chile, Israel, Estonia, Czech Republic, Hungary, Slovakia, Slovenia and Romania. After leaving these markets, the ISS workforce will be reduced to about 390,000 people, he said.

CEO Gravenhorst said that ISS wants to focus on securing a larger share of the global $ 400 billion market for key accounts with larger corporate customers. This business represents 46% of the company's organic growth, with ISS currently around 2% of the main account market, he said.

"The fact that they plan to get rid of 50 percent of customers while only losing 12 percent of revenue and 8 percent of profits shows they are getting rid of a group of customers with limited growth potential." said Jensen of Sydbank. "It's a bit difficult for me to understand that stocks are low."

Copenhagen-based ISS expects organic growth to accelerate from 4 to 6 percent per year in the medium term, from 1.5 to 3.5 percent expected in 2018, it said in a statement.

ISS, which is one of Europe's largest employers, is taking drastic measures after its shares lost 18% this year, in part because of hedge fund speculation against the company. The new strategy also comes after signs that some analysts were beginning to question the prospects of ISS. While most were positive, Goldman told clients last month to start selling shares of ISS.

Read the Bloomberg note in English here.

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