SGS 2023 Half Year Results

Ad Hoc AnnouncementsAd hoc announcement pursuant to Art. 53 LRJul 24, 2023

Strong organic growth momentum in H1

“We are very pleased with our robust performance in H1. This reflects the strength of our business model and efficient execution by our global network which has delivered significant cash flow generation. Strong momentum is expected to continue into H2.

"The expansion in our focus areas of Connectivity, Knowledge and Health & Nutrition is accelerating our growth, while investing in our ‘platform for growth’ is securing our long-term returns. Global supply chains are evolving, which requires more risk evaluation, more regulation and significant public and private investment. All of these factors support the long-term growth prospects of SGS,” said Frankie Ng, CEO of SGS.

Outlook 2023

Mid to high single-digit organic growth*
Improved adjusted operating income* and margin* at constant currency
Leading TIC underlying ROIC*
Strong free cash flow*
Stable dividend

Our sustainability performance

47.4% revenue now generated by sustainability solutions, under our internal sustainability solutions framework
TIC industry leader of the DJSI, AAA rating from the MSCI, a low risk rating from Sustainalytics and prime distinction rating from ISS
40% more energy efficiency projects

Financial review

Total revenue of CHF 3.3 billion was up 0.9%, equivalent to 8.5% at constant currency*, leading to an upgrade of our FY 2023 organic growth guidance.

Organic revenue* growth was 8.1% driven by double-digit growth in Natural Resources and Knowledge, and strong growth in Connectivity & Products and Industries & Environment. From a regional perspective, double-digit growth was achieved in Asia and Americas, while growth in Europe was strong despite challenging market conditions.

Adjusted operating income* increased by 11.3% to CHF 462 million in constant currency*, a 40bps margin improvement to 14.1%.

Operating income of CHF 423 million was stable compared to prior year and up 10.7% in constant currency*.

Profit attributable to equity holders, significantly impacted by FX, achieved CHF 272 million compared to CHF 276 million in prior year.

Basic earnings per share of CHF 1.47 in line with prior year¹. On an adjusted* basis, earnings per share increased by 1.9% to CHF 1.64.

Cash flow from operating activities increased by 40.3% to CHF 369 million.

The analyst presentation will be available for download from 10:00 CET, and the webcast will take place at 14:00 CET.

1. On 28 March 2023, the Annual General Assembly approved a 25-1 stock split that went into effect on 12 April 2023. This split increased the number of shares issued, from 7 495 032 to 187 375 800, and reduced the nominal value per share, from CHF 1 to CHF 0.04. As a result, for comparability purpose, the Group recalculated the weighted average number of shares as well as the basic and diluted earnings per share (EPS) as of June 2022 – refer to note 8 and Alternative Performance Measures*.

* Refer to Alternative Performance Measures – Appendix to the ‘2023 half year results’.

About SGS

We are SGS – the world’s leading testing, inspection and certification company. We are recognized as the global benchmark for sustainability, quality and integrity. Our 98,000 employees operate a network of 2,650 offices and laboratories, working together to enable a better, safer and more interconnected world.