Delivering Strategy 27 at full speed
Building on our strong legacy and trusted brand, SGS is bringing Strategy 27 to life, unlocking a prosperous and sustainable future.
Looking back on my first year as CEO, I am proud of the remarkable strengths that SGS brings to the table. As a global leader with a 145-year legacy, SGS remains resilient, leveraging our extensive network, scientific expertise and proven adaptability. Our operations span 2,500 laboratories and operating facilities across 115 countries, making us a truly global partner.
Our broad reach, combined with our scientific knowledge, enables us to operate effectively even in uncertain economic climates. The testing, inspection, and certification (TIC) industry, characterized by its stability and scope, affords SGS a level of resilience that is invaluable. As a result, we are more than prepared to navigate complex economic conditions – we are strategically positioned to thrive within them.
Strategy 27: Accelerating growth, building trust
In 2024, we launched our ambitious Strategy 27 to accelerate growth, enhance our performance and agility, and strengthen our financial profile. These drivers enable SGS to harness key industry megatrends, including digital transformation, the sustainability transition, supply chain migration and the evolving regulatory landscape, positioning us at the forefront of the TIC industry.
Our strategy includes reinforcing our role in high-growth regions such as North America, where we aim to double sales by 2027, and expanding further across Europe and Asia Pacific. These efforts, coupled with strong pricing power and the industry’s largest portfolio of accreditations, make us well equipped to meet our clients’ evolving needs and support them through nearshoring, supply chain adaptations and sustainability imperatives.
Execution mode: on track to deliver Strategy 27
We are fully engaged in executing Strategy 27. With our energized teams operating in full alignment, we are on track to deliver the strategy’s objectives and maximize the value we offer to all stakeholders.
An outstanding start: our achievements so far
1. Growth
Growth is our priority. To achieve our targets, we have been actively expanding our portfolio and geographic reach, integrating innovation into our services and relaunching our M&A activities with a disciplined approach. This year alone, we have completed 11 acquisitions across high-potential segments, adding a total annual contribution of over CHF 71 million to our revenue base. By focusing on bolt-on acquisitions with clear strategic fit, we enhance our capabilities while maintaining the agility that SGS is known for.
Our growth efforts are driven by critical areas such as sustainability and digital trust. SGS is at the forefront of sustainability services, with new offerings under our IMPACT NOW for Sustainability, which provides tailored solutions for climate, nature, circularity and ESG assurance. The demand for our sustainability services is growing rapidly, and we anticipate generating CHF 600 million in incremental sales by 2027 from sustainability services.
Digital trust represents another vital growth area, with SGS emerging as a global leader in high-assurance cybersecurity and AI certification. Our team of over 500 experts operates from 10 accredited cyberlabs worldwide, supporting our clients in safeguarding critical infrastructure and advancing in AI and post-quantum cryptography standards. We expect digital trust services to contribute CHF 200 million in additional revenue by 2027.
2. People, performance and agility
Our people are the foundation of our success and we are dedicated to fostering a performance-driven and accountable culture. Our new organization has introduced a more agile management structure, enhancing both efficiency and local decision-making capabilities. This year, we launched a new incentive program aligned with our group-wide financial targets and reinforced our commitment to talent development and empowerment.
To enhance our agility and responsiveness, we have implemented a CHF 150 million cost-saving program focused on streamlining operations, optimizing procurement and reducing overlaps. As of 2024, we have already achieved CHF 50 million in cost savings and expect to reach the new run rate by the end of 2025. This initiative improves our operational efficiency, while reinforcing our capacity to deliver sustained value to our clients and shareholders.
3. Strong financial and ESG profile
Our financial strength underpins our ability to pursue Strategy 27 confidently. With projected organic growth of 5-7% annually and an additional 1-2% annual growth from bolt-on acquisitions, we are on a path to deliver sustainable, mid- to high- single digit growth. In line with our capital allocation principles, we are committed to disciplined capex spending, bolt-on acquisitions and robust free cash flow generation. By 2027, we aim to exceed 50% cash conversion and to achieve an improvement in adjusted operating income margin of at least 150 basis points.
Equally important is our long-term comittment to ESG. Our corporate sustainability targets by 2027 include material progress towards a 28% reduction in Scope 3 emissions. Furthermore, we are advancing diversity, equity and inclusion by ensuring that women hold at least one-third of leadership positions by 2027. We are honored to be recognized for our efforts, and were ranked 6th Most Sustainable Company in the World by TIME.
Moving forward
Looking ahead, we are committed to reaching our Strategy 27 ambitions and fulfilling our purpose as a trusted partner for clients worldwide. We will continue to pursue growth, strengthen our position in high-potential markets, and maintain a focus on sustainability and digital transformation.
The strength of the SGS brand remains one of our greatest assets. With our trusted brand promise, “When you need to be sure,” we continue to build on our reputation for quality, reliability and innovation. As the world faces increasing challenges in areas such as environmental sustainability, digital security and food safety, SGS stands ready to provide the solutions that make a difference.
A heartfelt thank you
None of this would be possible without the dedication, hard work and commitment of our 99,500 employees worldwide. Your collective efforts are driving our success, and I am deeply grateful for your unwavering commitment. As part of the SGS family, we are all united by a shared purpose to bring quality, safety, security, progress and trust for the good of people and the planet.
As we look to the future, I am confident that SGS is well-positioned to capture new opportunities and deliver on our ambitious goals. With the passion, expertise and resilience of our people, I have no doubt that we will achieve our vision.
Thank you for your continued trust and support.
Géraldine Picaud
Chief Executive Officer