Slide 1: 2023 Results and Strategic Update
2023 Results and Strategic Update Frankie Ng CEO Géraldine Picaud CEO Designate 26 January 2024
Slide 2: 2023 Business Highlights
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix 2023 Business Highlights Frankie Ng CEO Inspector, Industries & Environment, Kazakhstan 2 2023 Results and Strategic Update | 26 January 2024 © SGS Société Générale de Surveillance SA. (2024) All rights reserved.
Slide 3: Strong organic sales growth, margin impacted by FX
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix 2023 highlights Strong organic sales growth, margin impacted by FX 8.1% 14.7% Strong organic1 Adjusted Operating sales growth Income margin1 on sales Agenda Consolidating leadership Strong growth driven by all business
Slide 4: Consolidating leadership
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix 2023 highlights Consolidating leadership Natural Connectivity Business Health Invest to consolidate Resources & Products Assurance & Nutrition No. 1 No. 1 (prev. Knowledge) Sales leadership No. 1 > CHF 1 billion ~90% 2
Slide 5: Strong growth driven by all business lines
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix 2023 highlights Strong growth driven by all business lines Industries Natural Connectivity & Environment Resources & Products Strong focus on sustainability Reinforced position in minerals Prime position in growing cyb
Slide 6: Industries & Environment: strong growth driven by energy, safety and reliability
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Testing & Inspection: Industries & Environment Strong growth driven by energy, safety and reliability % CCY1 CCY1 % (CHF million) 2023 2022 change 2022 change Sales 2 190 2 157 1.5 2 010 9.0 Organic2 sales growth % 9.5
Slide 7: Natural Resources: market-leading business performance
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Testing & Inspection: Natural Resources Market-leading business performance % CCY1 CCY1 % (CHF million) 2023 2022 change 2022 change Sales 1 583 1 583 0.0 1 444 9.6 Organic2 sales growth % 9.6 Adjusted Operating Income
Slide 8: Connectivity & Products: solid growth and market share gains
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Testing & Inspection: Connectivity & Products Solid growth and market share gains % CCY1 CCY1 % (CHF million) 2023 2022 change 2022 change Sales 1 246 1 311 -5.0 1 196 4.2 Organic2 sales growth % 4.7 Adjusted Operating
Slide 9: Health & Nutrition: organic sales growth in a challenging environment
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Testing & Inspection: Health & Nutrition Organic sales growth in a challenging environment % CCY1 CCY1 % (CHF million) 2023 2022 change 2022 change Sales 857 892 -3.9 832 3.0 Organic2 sales growth % 1.3 Adjusted Operat
Slide 10: Business Assurance: record performance in 2023
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Business Assurance (prev. Knowledge) Record performance in 2023 % CCY1 CCY1 % (CHF million) 2023 2022 change 2022 change Sales 746 699 6.7 647 15.3 Organic2 sales growth % 15.3 Adjusted Operating Income2 153 142 7.7 12
Slide 11: Driving additional returns through portfolio management
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Acquisitions and disposals Driving additional returns through portfolio management Acquisitions Disposals Leansis Maine Pointe Nutrasource Automotive Asset Powertrain Testing Crop Science (Acquisition of (Acquisition o
Slide 12: Leading the way in corporate sustainability
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Corporate sustainability Leading the way in corporate sustainability A decade featuring at the top Highest rating for the third Top 5% of over 100,000 companies First TIC company to receive of the DJSI World and consec
Slide 13: 2023 Financial Performance
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix 2023 Financial Performance Géraldine Picaud CEO Designate Laboratory technicians, Health & Nutrition, Spain 13 2023 Results and Strategic Update | 26 January 2024 © SGS Société Générale de Surveillance SA. (2024) All r
Slide 14: Full year 2023 achievements
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Financial KPIs1 Full year 2023 achievements Sales / Organic growth AOI / AOI margin on sales CHF 6 622 million CHF 971 million +8.1% 14.7% Free cash flow / Change vs 2022 Earnings Per Share CHF 604 million CHF 3.00 +25
Slide 15: Sales bridge: strong organic growth of 8.1%
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Sales bridge Strong organic growth of 8.1% -513 493 -0.3% (0.3%) (CHF million) 6 642 6 622 6 129 +8.1% organic1 growth Sales 2022 FX Sales 2022 at Sales 2023 constant currency 1 Please refer to Alternative Performance
Slide 16: Business lines performance
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Business lines performance Strong growth driven by all business lines 2023 sales 2023 sales growth % Group constant currency 33% Industries & Environment -0.8% 9.5% 0.3% 9.0% Natural 24% 9.6% 9.6% Testing & Resources I
Slide 17: Regional performance
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Regional performance All regions growing above their GDP growth 2023 sales growth constant currency Europe 2 350 5.1% 4.9% Asia Pacific 2 279 8.3% 8.3% North America 816 9.6% 9.8% Latin America 590 12.8% 13.0% Africa &
Slide 18: AOI margin of 14.7%
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Adjusted Operating Income1 (AOI) bridge AOI margin of 14.7% (CHF million) -109 57 -5.1% 1 023 914 971 +6.3% organic1 growth 15.4% 14.9% 14.7% AOI 2022 FX AOI 2022 at AOI 2023 constant currency 1 Please refer to Alterna
Slide 19: Full P&L: Earnings Per Share at CHF 3.00
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Full P&L Earnings Per Share at CHF 3.00 CHF million 2023 2022 Change Sales 6 622 6 642 -20 Adjusted Operating Income1 971 1 023 -52 Amortization and impairment -91 -55 -36 Other restructuring and non-recurring items -2
Slide 20: Free cash flow generation improved to CHF 604 million
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Free cash flow review Free cash flow generation improved to CHF 604 million CHF million 2023 2022 Change Sales 6 622 6 642 -20 EBITDA 1 402 1 419 -17 Non-cash and non-operating items 19 23 -4 Change in net working capi
Slide 21: Industry-leading ROIC to support additional value generation
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Return on Invested Capital1 Industry-leading ROIC to support additional value generation 24% 22% 22% 21% 2020 2021 2022 2023 1 Please refer to Alternative Performance Measures 21 2023 Results and Strategic Update | 26
Slide 22: Géraldine Picaud, CEO Designate
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Géraldine Picaud CEO Designate Technical Division Manager, Health & Nutrition, France 22 2023 Results and Strategic Update | 26 January 2024 © SGS Société Générale de Surveillance SA. (2024) All rights reserved.
Slide 23: Four megatrends driving market demand
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Attractive TIC industry Four megatrends driving market demand Powerful Innovation in Near-shoring of Increasing sustainability digital capabilities supply chains regulation & transition & new technologies public awaren
Slide 24: Addressable market growth consistently exceeding GDP
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Attractive TIC industry Addressable market growth consistently exceeding GDP Sources: TIC council, ISO association reports 24 2023 Results and Strategic Update | 26 January 2024 © SGS Société Générale de Surveillance S
Slide 25: Demand driven by regional market dynamics
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Attractive TIC industry Demand driven by regional market dynamics Key growth drivers Key growth drivers Digital/Tech Food Key growth drivers Life science/Pharma Digital/Tech Consumer products Construction North Europe
Slide 26: SGS is the point of reference when you need to be sure
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Unique positioning within the TIC industry SGS is the point of reference when you need to be sure Gold standard solutions provider in the industry, with 145 years of established history and experience Largest number of
Slide 27: Strategic priorities to create value based on three levers
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Strategy 2027: Accelerating growth, building trust Strategic priorities to create value based on three levers Performance Strong Growth & agility financial profile Accountability, performance 1 Sustainability transitio
Slide 28: Capturing outstanding growth opportunities from sustainability
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Sustainability transition Capturing outstanding growth opportunities from sustainability Carbon: proven expertise in GHG emissions, from verification to gap assessments to advisory (for example, the Carbon Border Adjus
Slide 29: Demonstrated leadership in digital trust services
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Digital acceleration Demonstrated leadership in digital trust services 500+ Digital Trust experts and auditors across 40+ countries Leadership in cybersecurity evaluations & microchip testing Security evaluations to su
Slide 30: Rebalancing strong footprint and increasing proximity
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Near-shoring of supply chains Rebalancing strong footprint and increasing proximity Asia North America Leading position in Asia Attractive opportunities to grow in North America Strong demand from increased consumption
Slide 31: Promoting a high-performance culture
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Accountability, performance and cash flow culture Promoting a high-performance culture Enhance P&L responsibility and accountability in the network New incentives based on Group performance targets including cash gener
Slide 32: Leaner leadership to accelerate decision-making
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix New organization Leaner leadership to accelerate decision-making Change in organization: Testing & Inspection managed locally, organized under five regions and supported by lean central resources for global contracts a
Slide 33: Optimize agility and returns
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Corporate simplification Optimize agility and returns Focus at the local level Eliminate duplicate responsibilities (double reporting lines) between regions and business lines Continuous internal process optimization e
Slide 34: Financial targets: accelerating growth, building trust
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Financial targets Accelerating growth, building trust Adjusted Free cash flow Sales Operating Income After leases and interests margin on sales 5% - 7% Significant improvement > 50% organic growth at least 1.5 percenta
Slide 35: Capital allocation: key principles to finance Strategy 2027
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Capital allocation Key principles to finance Strategy 2027 Accelerating growth, building trust Resources Use of funds Solid multi-year cash flow Growth through accretive and synergetic acquisitions Financing through de
Slide 36: Ambitious 2027 sustainability targets
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix New corporate sustainability KPIs Ambitious 2027 sustainability targets Environment Social Governance Environmental Diversity, equity Education Responsible leadership and inclusion business Material progress towards At
Slide 37: Outlook
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Outlook Géraldine Picaud CEO Designate Inspector, Industries & Environment, Belgium 37 2023 Results and Strategic Update | 26 January 2024 © SGS Société Générale de Surveillance SA. (2024) All rights reserved.
Slide 38: Outlook 2024
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Outlook 2024 Mid to high single-digit organic1 growth Relaunched M&A program Improvement in Adjusted Operating Income margin1 on sales Strong free cash flow1 generation Laboratory managers, Health & Nutrition, Germany
Slide 39: Q&A
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Q&A 39 2023 Results and Strategic Update | 26 January 2024 © SGS Société Générale de Surveillance SA. (2024) All rights reserved.
Slide 40: Appendix
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Appendix 40 2023 Results and Strategic Update | 26 January 2024 © SGS Société Générale de Surveillance SA. (2024) All rights reserved.
Slide 41: Financial calendar
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Financial calendar Annual General Q1 sales H1 2024 Meeting update results 26 March 2024 26 April 2024 24 July 2024 Geneva Q3 sales Capital Markets FY 2024 update Day results 25 October 2024 November 2024 11 February 20
Slide 42: FX impact: CHF strengthening against all major currencies
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix FX impact CHF strengthening against all major currencies Currency impact on sales (%) Currency impact on AOI1 (%) (CHF million) (CHF million) Sales 2022 6 642 AOI 2022 1 023 CNY -1.7% CNY EUR -0.8% EUR USD -0.6% USD RU
Slide 43: Foreign currency average rates
Business highlights Financial performance Strategy 2027 Outlook 2024 Q&A Appendix Foreign currency average rates Year-on-year change EUR CNY USD TWD CAD GBP CLP AUD KRW RUB -2.1% -3.3% -5.8% -5.4% -7.1% -10.0% -9.3% -9.9% -10.6% -25.3% EUR CNY USD TWD CAD GBP CLP AUD KRW RUB 2023 0.9717 0.1270 0.898
Slide 44: Disclaimer
Disclaimer Certain matters discussed in this presentation may constitute forward-looking statements that are neither historical facts nor guarantees of future performance. Because these statements involve risks and uncertainties that are beyond control or estimation of SGS, there are important facto
Slide 45: sgs.com
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