COPENHAGEN (BLOOMBERG) - ISS of Denmark, the world's largest cleaning company, is planning to get rid of about 100,000 jobs - representing a fifth of its global workforce - as it exits 13 countries that were among its least profitable markets.
Shareholders will get at least a quarter of as much as 2.5 billion kroner (S$524 million) in anticipated net proceeds, chief executive officer Jeff Gravenhorst said by phone on Monday (Dec 10).
The Copenhagen-based company expects organic growth to accelerate to 4 to 6 per cent a year "in the medium term," from 1.5 to 3.5 per cent expected in 2018, according to a statement to the stock exchange.
The step is designed to get ISS out of its least profitable businesses, with the 13 countries targeted representing just 12 per cent of group revenue and 8 per cent of operating profits. It will also allow ISS to focus on a smaller group of larger clients.
ISS, which is one of Europe's biggest employers, is taking the drastic steps after its shares lost about 18 per cent this year, in part as hedge funds speculated against the company. Its management said on Monday that it plans to simplify the business through the announced cuts.
The new strategy also comes after signs that some analysts were starting to question ISS's prospects. Though most had been positive, Goldman last month told clients to start selling ISS shares.
Monday's announcement should now "appease investors", Nordnet investment economist Per Hansen said.
The shares are due to start trading at 9am local time in Copenhagen. The stock has lost 18 per cent this year, more than the 11 per cent decline in the Stoxx Europe 600 Index.