Slide 1: Group Results: 2023 half year results presentation
Group Results 2023 half year results presentation
Slide 2: Disclaimer
Highlights Financial review Divisional 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
Slide 3: Half Year Results Presentation 24 July 2023 ©SGS Société Générale de Surveillance SA 2023.
Highlights Financial review Divisional review Outlook Q&A Appendix 1 2 Half Year Results Presentation 24 July 2023 ©SGS Société Générale de Surveillance SA 2023. All rights reserved.
Slide 4: Highlights
Highlights Financial review Divisional review Outlook Q&A Appendix Highlights 3 Half Year Results Presentation 24 July 2023 ©SGS Société Générale de Surveillance SA 2023. All rights reserved.
Slide 5: A strong acceleration in organic growth: H1 2023 highlights
Highlights Financial review Divisional review Outlook Q&A Appendix A strong acceleration in organic growth H1 2023 highlights Revenue Adjusted operating income* Cash flow from operating activities CHF 3.3 BN +8.5% CCY +8.1% Organic* +0.9% 1 2 CHF 462 MIO +11.3% CCY 1 CHF 369 MIO +40.3% 2023 3.3 2023
Slide 6: Key strategic milestones achieved in H1
Highlights Financial review Divisional review Outlook Q&A Appendix Key strategic milestones achieved in H1 ● 27% of lab revenue has been migrated to the new digital labs concept, on track to exceed our target of 30% in 2023 ● Digital Builders Organization gaining additional traction with four minimu
Slide 7: Our portfolio evolution continues and should accelerate
Highlights Financial review Divisional review Outlook Q&A Appendix Our portfolio evolution continues and should accelerate H1 2023 acquisitions 2023 disposals Leansis Seafood Testing Business Nutrasource Subsurface Automotive Asset (Acquisition of the remaining from Asmecruz Consultancy Assessment a
Slide 8: Financial review
Highlights Financial review Divisional review Outlook Q&A Appendix Financial review 7 Half Year Results Presentation 24 July 2023 ©SGS Société Générale de Surveillance SA 2023. All rights reserved.
Slide 9: A very strong performance in constant currency
Highlights Financial review Divisional review Outlook Q&A Appendix Highlights A very strong performance in constant currency H1 2023 financial highlights (CHF million) June 2023 June 2022 Change in % June 2022 CCY1 Change in CCY1 % Revenue 3 284 3 255 0.9 3 027 8.5 Operating income (EBIT) 423 423 0.
Slide 10: A material H1 FX headwind, especially at AOI
Highlights Financial review Divisional review Outlook Q&A Appendix Revenue A material H1 FX headwind, especially at AOI Currency impact on revenue (%) Currency impact on AOI (%) REV 2022 3 255 AOI 2022 458 CNY -1.5% CNY EUR -1.2% EUR TWD -0.4% TWD ARS -0.3% ARS USD -0.3% USD CAD -7.0% -0.3% CAD -9.4
Slide 11: Organic growth accelerated to 8.1%
Highlights Financial review Divisional review Outlook Q&A Appendix Revenue Organic growth accelerated to 8.1% H1 2023 revenue growth composition (CHF million) 0.9% 3 255 245 15 3 284 3 027 (3) (228) (7.0%) 8.1% 0.5% (0.1)% Revenue Currency Revenue June Organic Acquisitions Disposals Revenue June 202
Slide 12: Double-digit organic growth in Kn and NR, high single-digits in I&E and C&P
Highlights Financial review Divisional review Outlook Q&A Appendix Revenue Double-digit organic growth in Kn and NR, high single-digits in I&E and C&P H1 2023 revenue growth1 by division Growth CCY1 June 2023 6.7% 0.2% 19.2% C&P 6.9% 2.7% 1.9% 13.1% H&N 4.6% (0.3%) 7.3% 0.6% 32.8% I&E 7.6% 10.7% 24.
Slide 13: Double-digit organic growth in Asia Pacific and Americas
Highlights Financial review Divisional review Outlook Q&A Appendix Revenue Double-digit organic growth in Asia Pacific and Americas H1 2023 revenue growth1 by region Growth CCY1 June 2023 (0.1%) 5.2% 0.6% 44.9% Europe/Africa Middle East 5.7% (0.3%) 10.4% 1.0% 20.7% Americas 11.1% 10.7% 34.4% Asia Pa
Slide 14: Organic FTE growth well below organic revenue growth
Highlights Financial review Divisional review Outlook Q&A Appendix Revenue Organic FTE growth well below organic revenue growth FTE1 end of period FTE1 average by region 96 372 239 3 766 98 485 95 889 68 1 404 436 97 797 (1 892) Increase: 2 113 2.2% Increase: 1 908 2.0% June 2022 Acqui. Dispos./ Rem
Slide 15: Double-digit AOI growth in constant currency
Highlights Financial review Divisional review Outlook Q&A Appendix Adjusted operating income Double-digit AOI growth in constant currency H1 2023 adjusted operating income* (CHF million) 0.9% 458 45 2 462 415 (43) 14.1% (9.4%) 13.7% 10.8% 0.5% 14.1% Adj. op. inc. Currency Adj. op. inc. Organic Acqui
Slide 16: Digital strategy to drive growth and productivity
Highlights Financial review Divisional review Outlook Q&A Appendix Adjusted operating income Digital strategy to drive growth and productivity 1 2 3 4 Four business Drive material productivity Deliver a differentiated Capture incremental Internal operations & priorities improvements customer experie
Slide 17: Digital Builders Organization
Highlights Financial review Divisional review Outlook Q&A Appendix Adjusted operating income Digital Builders Organization Key MVPs summary Name Division Description Business benefits Phase ● Reduction of manual admin tasks for auditors SGS Mobile and tablet app for internal and external certificati
Slide 18: Good margin expansion in NR, I&E and Kn
Highlights Financial review Divisional review Outlook Q&A Appendix Adjusted operating income Good margin expansion in NR, I&E and Kn H1 2023 adjusted operating income margin1,* 25% 22.9% 20.6% 20% 19.0% 18.6% 14.3% 14.1% 13.7% 15% 12.1% 12.2% 10.2% 9.5% 10% 8.5% 5% 0% C&P H&N I&E NR Kn Total Group J
Slide 19: Working capital increase supporting the strong revenue growth
Highlights Financial review Divisional review Outlook Q&A Appendix Cash flow Working capital increase supporting the strong revenue growth Operating net working capital as a % of revenue* Total net working capital cash flow impact 2.5% 0 200 2.5 0 1.8% -50 150 170 2.0 -100 1.5 100 115 -150 1.0 -200
Slide 20: Cash flow from operating activities increased year on year by 40%
Highlights Financial review Divisional review Outlook Q&A Appendix Cash flow Cash flow from operating activities increased year on year by 40% Cash flow (CHF million) CF from Operating Activities CF used in Investing Activities CF used in Financing Activities 369 (139) (761) 399 291 (124) 9 (197) 1
Slide 21: Investing in our operations
Highlights Financial review Divisional review Outlook Q&A Appendix Cash flow Investing in our operations Capex as a % of revenue Capital expenditure by business (CHF million) 4% 200 4.8% 4.8% 5 Kn 4.1% 160 4.4% 4 13% H&N 150 156 143 120 3 32% I&E 108 80 2 CHF 143 MIO 40 1 27% 0 0 C&P H1 2020 H1 2021
Slide 22: H1 2023 financial summary
Highlights Financial review Divisional review Outlook Q&A Appendix Financial summary H1 2023 financial summary ● Revenue increased by 8.5%¹ of which 8.1% organic* ● Increase in adjusted operating income* of 11.3%¹ ● Increase in adjusted operating income margin* by 0.4 pp¹,² in constant currency to 1
Slide 23: Divisional review
Highlights Financial review Divisional review Outlook Q&A Appendix Divisional review 22 Half Year Results Presentation 24 July 2023 ©SGS Société Générale de Surveillance SA 2023. All rights reserved.
Slide 24: A strong recovery, especially in Connectivity
Highlights Financial review Divisional review Outlook Q&A Appendix A strong recovery, especially in Connectivity Connectivity & Products (C&P) Change June 2022 Change in Overview (CHF million) June 2023 June 2022 in % CCY¹ CCY¹ % ● Organic growth of 6.7%, driven by North East Asia as Revenue 631 642
Slide 25: Strong momentum in Food; acceleration in Health Science expected in H2
Highlights Financial review Divisional review Outlook Q&A Appendix Strong momentum in Food; acceleration in Health Science expected in H2 Health & Nutrition (H&N) Change June 2022 Change in Overview (CHF million) June 2023 June 2022 in % CCY¹ CCY¹ % ● Organic growth of 2.7% achieved due to strong gr
Slide 26: Positive trajectory and portfolio focus to deliver sustainable growth
Highlights Financial review Divisional review Outlook Q&A Appendix Positive trajectory and portfolio focus to deliver sustainable growth Industries & Environment (I&E) Change June 2022 Change in Overview (CHF million) June 2023 June 2022 in % CCY¹ CCY¹ % ● Organic growth of 7.3% driven by strong vol
Slide 27: Strong commodity market conditions expected to continue
Highlights Financial review Divisional review Outlook Q&A Appendix Strong commodity market conditions expected to continue Natural Resources (NR) Change June 2022 Change in Overview (CHF million) June 2023 June 2022 in % CCY¹ CCY¹ % ● Organic growth at 10.7% driven by global demand for Revenue 789 7
Slide 28: Solid market fundamentals to continue
Highlights Financial review Divisional review Outlook Q&A Appendix Solid market fundamentals to continue Knowledge (Kn) Change June 2022 Change in Overview (CHF million) June 2023 June 2022 in % CCY¹ CCY¹ % ● Organic growth of 14.4% driven by volume and price Revenue 357 335 6.6 312 14.4 increases w
Slide 29: Outlook
Highlights Financial review Divisional review Outlook Q&A Appendix Outlook 2023 28 Half Year Results Presentation 24 July 2023 ©SGS Société Générale de Surveillance SA 2023. All rights reserved.
Slide 30: Outlook 2023
Highlights Financial review Divisional review Outlook Q&A Appendix 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 * Refer to Alternative Performan
Slide 31: Mid-term targets 2020-2023
Highlights Financial review Divisional review Outlook Q&A Appendix Mid-term targets 2020-2023 People Planet Performance Ensuring diversity Reducing our CO2 emissions High single-digit constant currency revenue Nurture diversity and inclusion based on merit by ensuring equal Support the transition to
Slide 32: Q&A
Highlights Financial review Divisional review Outlook Q&A Appendix Q&A To register for questions press* and 1 on your telephone 31 Half Year Results Presentation 24 July 2023 ©SGS Société Générale de Surveillance SA 2023. All rights reserved.
Slide 33: Appendix
Highlights Financial review Divisional review Outlook Q&A Appendix Appendix 32 Half Year Results Presentation 24 July 2023 ©SGS Société Générale de Surveillance SA 2023. All rights reserved.
Slide 34: Our progress so far: 2023 objectives and our performance
Highlights Financial review Divisional review Outlook Q&A Appendix Our progress so far: 2023 objectives and our performance Kn NR C&P H&N I&E Invest to consolidate No. 1 No. 1 No. 1 > CHF 1 BN E No. 1 leadership position 2023 2025 Digitalizing >50% applicable >50% FAIR* Become most digital company A
Slide 35: Business portfolio
Highlights Financial review Divisional review Outlook Q&A Appendix Business portfolio (Growth/rel. MS/return-profile – December 22) ● Increased exposure to msd/higher single +++ +++ digit growth of 70% vs 49% (2018) + Higher +++ 21% + 2% 2% ● Increased exposure to leading market = position of 46% vs
Slide 36: Long-term shareholder value creation
Highlights Financial review Divisional review Outlook Q&A Appendix Long-term shareholder value creation H1 Revenue CHF BN H1 Adjusted Operating Income* CHF MIO H1 Free Cash Flow* CHF MIO 2023 | 3.3 2023 | 462 2023 | 130 2022 | 3.3 2022 | 458 2022 | 11 2021 | 3.1 2021 | 457 2021 | 93 2020 | 2.6 2020
Slide 37: H1 2023 revenue portfolio
Highlights Financial review Divisional review Outlook Q&A Appendix H1 2023 revenue portfolio Change1 Change1 10.9% Kn 0.6% (0.3%) 19.2% C&P 24.0% NR 0.4% 13.1% (0.5%) H&N 32.8% I&E (0.2%) 1. Constant currency (CCY)*. * Refer to Alternative Performance Measures (APM) – Appendix to the ‘2023 half year
Slide 38: H1 2023 adjusted operating income portfolio
Highlights Financial review Divisional review Outlook Q&A Appendix H1 2023 adjusted operating income* portfolio Change1 Change1 14.7% 28.1% Kn 0.7% (4.4%) C&P 24.5% NR 3.5% (3.1%) 8.9% 23.8% H&N I&E 3.3% 1. Constant currency (CCY)*. * Refer to Alternative Performance Measures (APM) – Appendix to the
Slide 39: H1 2023 condensed consolidated balance sheet
Highlights Financial review Divisional review Outlook Q&A Appendix H1 2023 condensed consolidated balance sheet Assets Equity and liabilities (CHF million) June 2023 December 2022 (CHF million) June 2023 December 2022 Property, plant and equipment 873 907 Equity holder of SGS SA 286 682 Right-of-use
Slide 40: Cash flow: H1 2023 condensed cash flow statement
Highlights Financial review Divisional review Outlook Q&A Appendix Cash flow H1 2023 condensed cash flow statement (CHF million) June 2023 June 2022 (CHF million) June 2023 June 2022 Profit for the period 291 294 Cash flow from operating activities 369 263 Non-cash and non-operating items 399 405 Pu
Slide 41: EUR, CNY and USD represent 50% of 2023 revenue
Highlights Financial review Divisional review Outlook Q&A Appendix EUR, CNY and USD represent 50% of 2023 revenue H1 2023 foreign currency revenues 25.5% EUR 29.4% OTHER 15.8% 2.0% CNY KRW 2.1% RUB 9.4% 2.4% USD AUD 2.6% CLP 2.8% GBP 4.1% TWD 3.9% CAD 40 Half Year Results Presentation 24 July 2023 ©
Slide 42: Key currency movements in H1 2023
Highlights Financial review Divisional review Outlook Q&A Appendix Key currency movements in H1 2023 Foreign currency average rate change H1 2023 versus H1 2022 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% -2% -2% (1.1%) -4% -4% (3.3%) (4.5%) -6% -6% (6.4%) -8% -8% (8.0%) (8.9%) (8.3%) -10% -10% (9.6%) (9.
Slide 43: Testing business model
Highlights Financial review Divisional review Outlook Q&A Appendix Testing business model Customer 1 Customer need 2 Process planning 3 Sampling 4 Sample registration Job scope agreed with efine the correct D Collected by SGS Digital registration of customer encompassing methodology (including digit
Slide 44: Inspection business model
Highlights Financial review Divisional review Outlook Q&A Appendix Inspection business model Customer 2 Process planning Define the correct 1 Customer need methodology including Job scope agreed with customer. safety and ESG considerations Inspection of quantity or compliance to measurement or a bui
Slide 45: Certification business model
Highlights Financial review Divisional review Outlook Q&A Appendix Certification business model Customer 1 Customer need 2 Process planning 3 Stage 1 4 Stage 2 Agree with customer Audit/assessment dates, Preparedness Audit on which standard to sites and processes to review Evaluation of compliance b
Slide 46: Acronyms and other abbreviations
Highlights Financial review Divisional review Outlook Q&A Appendix Acronyms and other abbreviations AOI Adjusted Operating Income PCA Product conformity assessments CCY Constant Currency ROIC Return On Invested Capital CRE Corporate Real Estate TIC Testing, Inspection and Certification DLC Digital L
Slide 47: Investor relations information and events dates
Highlights Financial review Divisional review Outlook Q&A Appendix Investor relations information and events dates 2023 Full Year Results Investor Relations Media Relations Common Stock Symbols Friday, January 26, 2024 Toby Reeks Magali Dauwalder Bloomberg: Registered Share: SGSN.SW SGS SA SGS SA Re
Slide 48: ©SGS Société Générale de Surveillance SA 2023. All rights reserved. SGS is a registered
©SGS Société Générale de Surveillance SA 2023. All rights reserved. SGS is a registered trademark of SGS Société Générale de Surveillance SA.