The majority of SGS businesses are performing in line with the SGS 2020 Plan, while certain businesses have been impacted by changing business mix and market conditions. SGS now expects progress towards an 18% adjusted operating income margin to be delayed and is targeting margins of above 17% in 2020, based on mid-single digit organic growth, while maintaining a strong level of cash conversion. Since the start of the 2020 Plan, SGS has acquired CHF 300 million of revenue. The Group will be targeting accelerating mergers and acquisitions (M&A) that bring value while remaining disciplined on returns.
SGS also reiterates its full-year 2018 guidance of solid organic growth, a higher adjusted operating income margin and robust cash flow.
“We’ve made solid progress in repositioning some divisions to respond to the recent commodity downturn, strengthened our core business and made some management changes,” said Frankie Ng, CEO of SGS. “These adjustments, together with the encouraging results of our innovation and efficiency initiatives, give us more confidence than ever about the promising opportunity that exists at SGS.”
SGS remains focused on cementing its position as the leading and most sustainable global company in the testing, inspection and certification (TIC) industry, delivering best-in-class returns for the long term.
Frankie Ng added: “At SGS, we have a strong focus on returns and long-term shareholder value creation. We expect dividend distributions to be at least stable or growing in line with the improvement in net earnings. I would like to thank all SGS employees for their ongoing support and efforts towards achieving our 2020 Plan.”
Guidance at a glance
Guidance for 2018 is maintained
- Solid organic growth
- Higher adjusted operating income margin
- Robust cash flow
2020 margin and M&A targets revised
- Mid-single digit organic growth target is maintained
- CHF 300 million of acquired revenue so far. We are targeting accelerating M&A and remain disciplined on returns
- Adjusted operating income margin of above 17% by the end of the period
- Strong cash conversion
- Best-in-class returns on invested capital
- Dividend distributions in line with the improvement in net earnings
The presentations of the CEO and CFO will be broadcast live and the financial materials presented during Investor Days will be available on https://www.sgs.com/en/our-company/investor-relations/sgs-investor-days.
The Investor Days agenda is available at https://www.sgs.com/en/events/2018/11/investor-days.
For further information, please contact:
Investors: Toby Reeks
t: +41 79 641 83 02
Media: Daniel Rufenacht
Corporate Communications and Sustainability
t: +41 79 642 39 46
t: +41 78 656 94 59
SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. With more than 95,000 employees, SGS operates a network of over 2,400 offices and laboratories around the world.