Slide 1: SGS 2021 Full Year Results Presentation
SGS 2021 Full Year Results Presentation
Slide 2: Disclaimer
Highlights Financial Review Business Review Outlook Q&A Appendix 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 a
Slide 3: Building a thriving future at SGS
Highlights Financial Review Business Review Outlook Q&A Appendix Building a thriving future at SGS 2 Full year results presentation 27 January 2022 © SGS SA 2022 all rights reserved
Slide 4: Covid-19 protocols remain in place
Highlights Financial Review Business Review Outlook Q&A Appendix Covid-19 protocols remain in place Employee safety is our paramount priority ● The global situation has improved, but remains uncertain and challenging in parts of our network ● Additional measures adopted by Operational Integrity are
Slide 5: A strong operational performance in 2021
Highlights Financial Review Business Review Outlook Q&A Appendix A strong operational performance in 2021 2021 highlights Revenue Adjusted Operating Income* Profit for the Period CHF 6.4 BN CHF 1 055 MIO CHF 655 MIO 14.2% CCY 8.9% Organic* 1 16.8% CCY 1 29.7% 2021 | 6.4 2021 | 1 055 2021 | 655 2020
Slide 6: Strategic progress
Highlights Financial Review Business Review Outlook Q&A Appendix Strategic progress Becoming a more sustainable, data-driven company ● We continue to build on our culture of sustainability delivering value to society: launch of SA2030, further aligning capital allocation and management incentivizati
Slide 7: 20% of revenue through digital services
Highlights Financial Review Business Review Outlook Q&A Appendix 20% of revenue through digital services Category Example of progress in 2021 Service execution delivered through digital ● Roll-out Digital Labs 10% completed middle and back-office (ie digital lab, ● Launch of SGS Emerging Technology
Slide 8: We continue to invest in our strategic priority areas
Highlights Financial Review Business Review Outlook Q&A Appendix We continue to invest in our strategic priority areas 2021 Acquisitions Quay Pharmaceuticals Analytical & International Service Groupe IDEA TESTS Brightsight Limited Development Laboratory (ISL) Services (ADS) Division: Division: Divis
Slide 9: We continue to invest in our strategic priority areas
Highlights Financial Review Business Review Outlook Q&A Appendix We continue to invest in our strategic priority areas 2021 Acquisitions Sulphur Experts Inc. Autoscope/CTOK BZH GmbH Deutsches Metair Lab The Lab (Asia) Ltd. Beratungszentrum (ACQUISITION OF 49% für Hygiene MINORITY STAKE) (MAJORITY ST
Slide 10: A strong operational performance in 2021
Highlights Financial Review Business Review Outlook Q&A Appendix A strong operational performance in 2021 9 Full year results presentation 27 January 2022 © SGS SA 2022 all rights reserved
Slide 11: A strong performance in 2021
Highlights Financial Review Business Review Outlook Q&A Appendix Highlights A strong performance in 2021 2021 Financial highlights Change in December 2020 Change in CCY1 (CHF million) December 2021 December 2020 % CCY1 % Revenue 6 405 5 604 14.3 5 607 14.2 Operating income (EBIT) 977 795 22.9 799 22
Slide 12: A strong recovery in organic growth
Highlights Financial Review Business Review Outlook Q&A Appendix Revenue A strong recovery in organic growth 2021 Revenue composition (CHF million) 8.9% 5.3% 0.0% 0.1% 14.3% 498 302 3 6 405 498 5 604 (2) Constant currency* 14.2% Revenue Organic Acquisitions Disposals Currency Revenue December 2020 i
Slide 13: H&N, C&P and Kn continue to lead organic growth
Highlights Financial Review Business Review Outlook Q&A Appendix Revenue H&N, C&P and Kn continue to lead organic growth 2021 Revenue growth1 by division Growth CCY1 Organic growth 2021 vs. 2019 7.7% 1.1% 20.0% C&P 8.8% 6% 15.9% 14.2% 13.4% H&N 30.1% 16% 7.5% 10.5% 33.4% I&E 18.0% (5%) (0.1%) 6.0% 0
Slide 14: Strong growth across our global network
Highlights Financial Review Business Review Outlook Q&A Appendix Revenue Strong growth across our global network 2021 Revenue growth1 by region Growth CCY1 Organic growth 2021 vs. 2019 (0.1%) 7.5% 10.5% Europe/Africa 46.1% Middle East 17.9% (1%) 13.5% 18.9% Americas 13.5% (2%) 8.2% 1.9% 35.0% Asia P
Slide 15: Controlled average headcount increase of 5%
Highlights Financial Review Business Review Outlook Q&A Appendix Revenue Controlled average headcount increase of 5% FTE1 End of period FTE1 Average by region 722 4 445 96 216 2 889 214 1 096 93 297 91 698 89 098 (649) Increase: 4 518 4.9% Increase: 4 199 4.7% 2020 Acqui. Restr. Remaining 2021 2020
Slide 16: Strong adjusted operating income progress
Highlights Financial Review Business Review Outlook Q&A Appendix Adjusted Operating Income Strong adjusted operating income progress 2021 Adjusted operating income* (CHF million) 13.3% 3.6% (0.1%) 0.4% 17.2% 120 33 3 1 055 900 (1) 16.5% 16.1% Constant currency* 16.8% Adj. op. inc. Organic Acquisitio
Slide 17: The integration of SGS Analytics is on track
Highlights Financial Review Business Review Outlook Q&A Appendix Adjusted Operating Income The integration of SGS Analytics is on track Formerly A&S Synlab – the integration is expected to unlock cost synergies of CHF 20 million 2021 2022 2023 H1 H2 H1 H2 H1 H2 Integration Management Team Mgt. Team
Slide 18: Level Up IT, Operations and Finance
Highlights Financial Review Business Review Outlook Q&A Appendix Adjusted Operating Income Level Up IT, Operations and Finance Level Up Finance Level Up IT/Operations 2021 ● Financial Shared Services Center (FSSC) on-boarding (incl. ● Knowledge: Global roll-out of a standardized, fully Accomplishmen
Slide 19: A strong margin achieved in H2
Highlights Financial Review Business Review Outlook Q&A Appendix Second Half 2021 A strong margin achieved in H2 Revenue growth evolution AOI* margin evolution CCY¹ 20% 20% 19.4 17.9 18.1 18% 18% 17.4 16.5 16.1 16.0 16% 16% 14.8 14.2 14.5 14% 14% 12.4 12.4 12% 11.0 12% 10% 8.9 10% 8% 8% 5.8 6% 6% 4%
Slide 20: Improving volumes and financial discipline drives margin performance
Highlights Financial Review Business Review Outlook Q&A Appendix Financial Discipline Improving volumes and financial discipline drives margin performance 2021 Adjusted operating income margin1,* 30% 24.5 24.5 25% 21.1 20% 18.9 17.3 15.9 16.5 16.1 15.6 14.3 15% 11.3 10.1 10% 5% C&P H&N I&E NR Kn Tot
Slide 21: Aligning capital allocation to strategic priorities
Highlights Financial Review Business Review Outlook Q&A Appendix Financial Discipline Aligning capital allocation to strategic priorities Financial discipline ● Free cash flow fell due to material capex investment and a higher net working capital requirement to support the recovery in activity ● Cap
Slide 22: A strong net working capital performance
Highlights Financial Review Business Review Outlook Q&A Appendix Cash Flow A strong net working capital performance Operating net working capital in % of revenue* 105 2% ● Continuous improvement of Days Sales 75 Outstanding (DSO) 55 41 1% 19 ● Sustainable Days Payable Outstanding (DPO) 25 0.6% 0 0%
Slide 23: Accelerated capex and bolt-on M&A investment
Highlights Financial Review Business Review Outlook Q&A Appendix Cash Flow Accelerated capex and bolt-on M&A investment Cash flow (CHF million) CF from Operating Activities CF used in Investing Activities CF used in Financing Activities 1 169 (520) (904) 828 655 (270) (44) 25 (331) 548 (214) 1 766 (
Slide 24: Accelerating investment in our strategic priority areas
Highlights Financial Review Business Review Outlook Q&A Appendix Cash Flow Accelerating investment in our strategic priority areas Capex in % of revenue Capital expenditure by business (CHF million) 2% 400 5.2% Kn 4.6% 5.0% 350 4.5% 4.4% 336 18% H&N 300 304 4.0% 290 250 259 29% 3.0% I&E 200 CHF 336
Slide 25: Financial summary
Highlights Financial Review Business Review Outlook Q&A Appendix Financial Summary Financial summary ● Revenue increased by 14.2%1 of which 8.9% organic* ● Increase in adjusted operating income* of 16.8%1 ● Increase in adjusted operating income margin* to 16.5% (+0.4 pp1,2) ● Profit for the period i
Slide 26: Divisional performance
Highlights Financial Review Business Review Outlook Q&A Appendix Divisional performance 25 Full year results presentation 27 January 2022 © SGS SA 2022 all rights reserved
Slide 27: Benefiting from our long-term investment in Connectivity
Highlights Financial Review Business Review Outlook Q&A Appendix Benefiting from our long-term investment in Connectivity Connectivity & Products (C&P) Change in 2020 Change in Overview (CHF million) 2021 20202 % CCY1 CCY1 % ● Organic growth of 7.7% driven by pandemic Revenue 1 288 1 175 9.6 1 184 8
Slide 28: Structurally growing end-markets
Highlights Financial Review Business Review Outlook Q&A Appendix Structurally growing end-markets Health & Nutrition (H&N) Change in 2020 Change in Overview (CHF million) 2021 20202 % CCY1 CCY1 % ● Organic growth of 15.9% with a strong contribution Revenue 861 658 30.9 662 30.1 from SBUs and regions
Slide 29: An improving end-market
Highlights Financial Review Business Review Outlook Q&A Appendix An improving end-market Industries & Environment (I&E) Change in 2020 Change in Overview (CHF million) 2021 20202 % CCY1 CCY1 % ● Organic growth of 7.5% driven by strong volumes Revenue 2 120 1 798 17.9 1 796 18.0 across Europe, Asia a
Slide 30: Minerals strong, O&G recovering, Agri due to improve
Highlights Financial Review Business Review Outlook Q&A Appendix Minerals strong, O&G recovering, Agri due to improve Natural Resources (NR) Change in 2020 Change in Overview (CHF million) 2021 20202 % CCY1 CCY1 % ● Organic growth at 6.0% driven by a buoyant Revenue 1 473 1 397 5.4 1 387 6.2 mineral
Slide 31: A very strong recovery
Highlights Financial Review Business Review Outlook Q&A Appendix A very strong recovery Knowledge (Kn) Change in 2020 Change in Overview (CHF million) 2021 20202 % CCY1 CCY1 % ● Organic growth of 14.7% driven by a double-digit Revenue 663 576 15.1 578 14.7 increase in all SBUs and regions Adjusted o
Slide 32: Outlook
Highlights Financial Review Business Review Outlook Q&A Appendix Outlook 31 Full year results presentation 27 January 2022 © SGS SA 2022 all rights reserved
Slide 33: Outlook 2022
Highlights Financial Review Business Review Outlook Q&A Appendix Outlook 2022 ● Mid-single-digit organic growth ● Improving adjusted operating income benefiting from operational leverage ● Strong cash conversion ● Maintain best-in-class organic return on invested capital* ● Accelerate investment int
Slide 34: Mid-term targets 2020-2023
Highlights Financial Review Business Review Outlook Q&A Appendix Mid-term targets 2020-2023 Planet Performance People Reducing our CO2 emissions High single-digit constant currency Ensuring diversity Support the transition to a low-carbon world by meeting revenue Compound Annual Growth Rate Nurture
Slide 35: Q&A
Highlights Financial Review Business Review Outlook Q&A Appendix Q&A 34 Full year results presentation 27 January 2022 © SGS SA 2022 all rights reserved
Slide 36: To register for questions press * and 1
Highlights Financial Review Business Review Outlook Q&A Appendix To register for questions press* and 1 on your telephone 35 Full year results presentation 27 January 2022 © SGS SA 2022 all rights reserved
Slide 37: Appendix
Highlights Financial Review Business Review Outlook Q&A Appendix Appendix 36 Full year results presentation 27 January 2022 © SGS SA 2022 all rights reserved
Slide 38: Acronyms and other abbreviations
Highlights Financial Review Business Review Outlook Q&A Appendix Acronyms and other abbreviations CRE Corporate Real Estate EPM Enterprise Performance Management ESG Environmental, Social and Governance EVA Economic Value Added IoT Internet of Things ITSM IT Service Management LIMS Laboratory Inform
Slide 39: Long-term shareholder value creation
Highlights Financial Review Business Review Outlook Q&A Appendix Long-term shareholder value creation Revenue CHF BN Adjusted Operating Income* CHF MIO Free Cash Flow* CHF MIO 2021 | 6.4 2021 | 1 055 2021 | 635 2020 | 5.6 2020 | 900 2020 | 758 2019 | 6.6 2019 | 1 063 2019 | 673 2018 | 6.7 2018 | 1 0
Slide 40: A solid performance in H2
Highlights Financial Review Business Review Outlook Q&A Appendix A solid performance in H2 H2 2021 revenue composition (CHF million) 5.8% 5.2% 1.1% 12.1% 156 28 3 311 2 954 173 Constant currency* 11.0% Revenue Organic Acquisitions Currency Revenue H2 2020 impact H2 2021 * Alternative Performance Mea
Slide 41: Reflecting the strength of the portfolio
Highlights Financial Review Business Review Outlook Q&A Appendix Reflecting the strength of the portfolio H2 2021 revenue growth by business Growth1 2021 3.0% 1.5% C&P 4.5% 11.5% 14.1% H&N 25.6% 5.2% 10.0% I&E 15.2% 6.2% 0.3% NR 6.5% 6.1% Kn 6.1% 5.8% 5.2% Total Group 11.0% Organic Acquisitions 1. C
Slide 42: A strong margin in H2
Highlights Financial Review Business Review Outlook Q&A Appendix A strong margin in H2 H2 2021 adjusted operating margin1,* by business 30% 27.1% 26.0% 25.2% 25% 22.3% 20% 19.0% 19.7% 19.4% 17.6% 18.1% 15.9% 15% 13.0% 13.3% 10% 5% C&P H&N I&E NR Kn Total Group 2021 2020 1. Constant currency (CCY)*.
Slide 43: Adjusted operating income improvement in H2 2021
Highlights Financial Review Business Review Outlook Q&A Appendix Adjusted operating income improvement in H2 2021 H2 2021 financial highlights 2020 H2 (CHF million) 2021 H2 2020 H2 Change in % CCY1 Change in CCY1 % Revenue 3 311 2 954 12.1 2 982 11.0 Operating income (EBIT) 547 493 11.0 500 9.4 Oper
Slide 44: A well-balanced portfolio
Highlights Financial Review Business Review Outlook Q&A Appendix A well-balanced portfolio 2021 revenue portfolio Change1 Change1 10.4% Kn 0.0% 20.1% (1.0%) C&P 23.0% NR (1.7%) 13.4% 1.6% H&N 33.1% I&E 1.1% 1. Constant currency (CCY)*. * Alternative Performance Measures (APM), refer to the ‘2021 Ful
Slide 45: A well-balanced portfolio
Highlights Financial Review Business Review Outlook Q&A Appendix A well-balanced portfolio 2021 adjusted operating income* portfolio Change1 Change1 13.3% Kn 1.2% 30.0% (2.1%) C&P 19.9% NR (4.5%) 22.7% I&E 2.7% 14.1% 2.7% H&N 1. Constant currency (CCY)*. * Alternative Performance Measures (APM), ref
Slide 46: 2021 Consolidated balance sheet
Highlights Financial Review Business Review Outlook Q&A Appendix 2021 Consolidated balance sheet Assets Equity and liabilities (CHF million) December 2021 December 2020 (CHF million) December 2021 December 2020 Property, plant and equipment 925 872 Equity holder of SGS SA 1 117 1 060 Right-of-use as
Slide 47: A strong cash flow generation
Highlights Financial Review Business Review Outlook Q&A Appendix A strong cash flow generation 2021 Condensed cash flow statement (CHF million) December 2021 December 2020 (CHF million) December 2021 December 2020 Profit for the period 655 505 Cash flow from operating activities 1 169 1 186 Non-cash
Slide 48: EUR, CNY and USD represent 51% of 2021 revenue
Highlights Financial Review Business Review Outlook Q&A Appendix EUR, CNY and USD represent 51% of 2021 revenue 2021 foreign currency revenues 26.6% EUR 29.3% OTHER 16.0% 1.9% CNY CLP 2.0% RUB 9.0% 2.1% KRW USD 2.4% AUD 3.0% GBP 4.3% TWD 3.4% CAD 47 Full year results presentation 27 January 2022 © S
Slide 49: Key currency movements in 2021
Highlights Financial Review Business Review Outlook Q&A Appendix Key currency movements in 2021 Foreign currency average rate change 2021 versus 2020 rate 8 8% 6.1% 6 6% 4.2% 4.1% 4.4% 4 4% 2.6% 1.8% 2% 2 1.0% 0.4% 0% 0 -2% -2 (2.7%) -4% -4 (5.1%) -6% -6 -8% -8 EUR CNY USD TWD CAD GBP AUD KRW RUB CL
Slide 50: Investor relations information and events dates
Highlights Financial Review Business Review Outlook Q&A Appendix Investor relations information and events dates Investor Days SGS SA Corporate Office Media Relations Common Stock Symbols November 2022 1 Place des Alpes Magali Dauwalder Bloomberg: Registered Share: SGSN.SW P.O. Box 2152 SGS SA Reute
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Slide 52: Thank you
Thank you SGS is a registered trademark of SGS Société Générale de Surveillance SA