Slide 1: 2021 Half Year Results Presentation
2021 Half year results presentation SGS GROUP RESULTS
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Slide 3: 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 4: Strong operating performance delivered across our global network
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX STRONG OPERATING PERFORMANCE DELIVERED ACROSS OUR GLOBAL NETWORK
Slide 5: Maintaining Covid-19 readiness
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Maintaining Covid-19 readiness Employee safety remains our paramount priority ■ The global situation is improving, but remains challenging in parts of the network ■ Additional measures adopted by Operational Integrity remain in place (
Slide 6: A strong start to 2021: H1 2021 highlights
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX A strong start to 2021 H1 2021 highlights REVENUE ADJUSTED OPERATING INCOME* CHF 3.1 BN + 16.8%¹ +17.9%² +12.4% organic* CHF 457 MIO +40.6%2 2021 | 3.1 2021 | 457 2020²| 2.6 2020²| 325 FREE CASH FLOW* BASIC EARNINGS PER SHARE CHF 93 MI
Slide 7: Continued investment in our strategic priority areas
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Continued investment in our strategic priority areas H1 2021 Acquisitions Analytical & Development Services (ADS) International Service Laboratory (ISL) BZH GmbH Deutsches Beratungszentrum für Hygiene (MAJORITY STAKE) Division: Divisio
Slide 8: Strategic progress
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Strategic progress Becoming a more sustainable, data-driven company ■ A number of sustainability milestones achieved in H1 ■ Brightsight materially accelerates our ambition to become the global TIC leader in cybersecurity ■ Digicomply
Slide 9: Our operating performance was supported by our strong financial discipline
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX OUR OPERATING PERFORMANCE WAS SUPPORTED BY OUR STRONG FINANCIAL DISCIPLINE
Slide 10: A very strong operating performance
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX HIGHLIGHTS A very strong operating performance H1 2021 financial highlights Change June 2020 Change in (CHF million) June 2021 June 2020 in % CCY1 CCY 1 % REVENUE 3 094 2 650 16.8 2 625 17.9 OPERATING INCOME (EBIT) 430 302 42.4 299 43.
Slide 11: Double-digit organic growth
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX REVENUE Double-digit organic growth H1 2021 Revenue growth composition (CHF million) 12.4% 5.6% (0.1%) (1.1%) 16.8% 325 325 146 3 094 2 650 (2) (25) Constant currency* 17.9% Revenue Organic Acquisitions Disposals Currency Revenue June
Slide 12: H&N, C&P and Kn continued to lead organic growth
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX REVENUE H&N, C&P and Kn continued to lead organic growth H1 2021 Revenue growth¹ by division Growth1 H1 2021 13.3% 0.5% 20.0% C&P 13.8% 20.9% 14.4% 13.4% H&N 35.3% 10.0% 11.2% 33.4% I&E 21.2% (0.3%) 5.8% 0.4% 23.1% NR 5.9% 26.2% 10.1%
Slide 13: Strong growth across our global network
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX REVENUE Strong growth across our global network H1 2021 Revenue growth1 by region Growth1 H1 2021 (0.2%) 10.8% 10.5% 46.9% EUROPE/ AFRICA/ 21.1% MIDDLE EAST 13.1% 18.7% AMERICAS 13.1% 14.1% 2.2% 34.4% ASIA/PACIFIC 16.3% (0.1%) 12.4% 5.
Slide 14: Disciplined workforce management
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX REVENUE Disciplined workforce management FTE1 End of period FTE1 Average by region 2 826 4 204 92 750 89 226 2 507 915 92 143 86 828 (1 006) (505) (102) Increase: 5 922 6.8% Increase: 2 917 3.3% June Acqui. Dispos./ Cost. Remaining Jun
Slide 15: Very strong AOI growth
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX ADJUSTED OPERATING INCOME Very strong AOI growth H1 2021 Adjusted operating income* (CHF million) 37.2% 3.7% (0.3%) (2.1%) 38.5% 121 12 457 (1) (5) 330 14.8% 12.5% Constant currency* 40.6% Adj. op. inc. Organic Acquisitions Disposals C
Slide 16: The integration of SGS Analytics progressing according to schedule
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX ADJUSTED OPERATING INCOME The integration of SGS Analytics progressing according to schedule (former A&S division of Synlab) integration is expected to unlock cost synergies of CHF 20 million 2021 2022 2023 H1 H2 H1 H2 H1 H2 Integratio
Slide 17: Level up initiative
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX ADJUSTED OPERATING INCOME Level up initiative BUILDERS ORGANIZATION OUR FRAMEWORK OUR PROGRESS Objectives and Key Results (OKR) ■ FSSC on-boarding (incl. PRODUCT PRODUCT PRODUCT PRODUCT A B C D is a method to manage goals and Group sta
Slide 18: Overall improved divisional margin performance
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX ADJUSTED OPERATING INCOME Overall improved divisional margin performance H1 2021 Adjusted operating income margin1,* 30 25 23.0% 21.4% 19.8% 20 15.5% 14.8% 14.1% 15 12.6% 12.4% 10.8% 10.5% 9.6% 10 6.5% 5 0 C&P H&N I&E NR Kn Total Group
Slide 19: H1 2021 Consolidated balance sheet
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX BAL ANCE SHEET H1 2021 Consolidated balance sheet Assets Equity and liabilities (CHF million) June 2021 December 2020 (CHF million) June 2021 December 2020 Property, plant and equipment 914 872 Equity holder of SGS SA 861 1 060 Right-o
Slide 20: H1 2021 Condensed cash flow
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX CASH FLOW H1 2021 Condensed cash flow (CHF million) June 2021 June 2020 (CHF million) June 2021 June 2020 PROFIT FOR THE PERIOD 290 177 CASH FLOW FROM OPERATING ACTIVITIES 342 413 Non-cash and non-operating items 404 361 Purchase of pr
Slide 21: Working capital normalizing following H1 2020
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX CASH FLOW Working capital normalizing following H1 2020 Negative Operating Net Working Capital Operating net working capital* in % of LTM revenue in Half Year 2021 driven by: ■ EVA performance management 250 233 5% ■ Centralized cash c
Slide 22: Accelerating our investment in strategic priority areas
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX CASH FLOW Accelerating our investment in strategic priority areas Capex in % of revenue Capital expenditure by business (CHF million) 2% Kn 4.8% 200 5% 4.4% 175 4.1 % 17% H&N 4% 150 3.9% 150 125 144 29% 130 3% I&E 100 108 75 2% 50 CHF
Slide 23: H1 2021 Financial summary
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX FINANCIAL SUMMARY H1 2021 Financial summary ■ Revenue increased by 17.9%1 of which 12.4% organic* ■ Increase in Adjusted Operating Income* of 40.6%1 ■ Increase in Adjusted Operating Income Margin* to 14.8% (+2.4 pp1,2) ■ Profit for the
Slide 24: Business Review
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX BUSINESS REVIEW
Slide 25: Connectivity & Products (C&P)
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Leveraging our long-term strategic investment Connectivity & Products (C&P) June 2020 Change in Overview (CHF million) June 2021 June 20202 Change in % CCY1 CCY %1 ■ Organic growth of 13.3% supported by post-pandemic REVENUE 618 547 13
Slide 26: Health & Nutrition (H&N)
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX A very strong performance across the global portfolio Health & Nutrition (H&N) June 2020 Change in Overview (CHF million) June 2021 June 20202 Change in % CCY1 CCY %1 ■ Organic growth at 20.9% with double-digit growth in all SBUs REVEN
Slide 27: Industries & Environment (I&E)
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Growth accelerated through H1 Industries & Environment (I&E) June 2020 Change in Overview (CHF million) June 2021 June 20202 Change in % CCY1 CCY %1 ■ Organic growth of 10.0% driven by a strong rebound across REVENUE 1 033 859 20.3 852
Slide 28: Natural Resources (NR)
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Strong momentum in Minerals partially offset by O&G and AGRI Natural Resources (NR) June 2020 Change in Overview (CHF million) June 2021 June 20202 Change in % CCY1 CCY %1 ■ Natural Resources grew by 5.8% organically REVENUE 716 689 3.
Slide 29: Knowledge (Kn)
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX An excellent performance in Certification Knowledge (Kn) June 2020 Change in Overview (CHF million) June 2021 June 20202 Change in % CCY1 CCY %1 ■ Knowledge organic growth at 26.2% with excellent REVENUE 313 249 25.7 248 26.2 performan
Slide 30: Outlook
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX OUTLOOK
Slide 31: Guidance 2021
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Guidance 2021 ■ Solid organic* growth normalizing for the impact of Covid-19 ■ Improving the adjusted operating income margin* ■ Strong cash conversion ■ Maintaining best-in-class organic return on invested capital* ■ Accelerating inve
Slide 32: 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 Ensuring Diversity Support the transition to a low-carbon world by currency revenue CAGR Nurture diversity and inclusion based o
Slide 33: Q&A
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Q&A
Slide 34: Questions: how to register by telephone
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX TO REGISTER FOR QUESTIONS PRESS * AND 1 ON YOUR TELEPHONE
Slide 35: Appendix
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX APPENDIX
Slide 36: Acronyms and other abbreviations
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Acronyms and other abbreviations CAGR Compound Annual Growth Rate PCA Product Conformity Assessment CAPEX Capital Expenditure PPE Personal Protective Equipment ESG Environmental, Social and Governance OGC Oil, Gas and Chemicals EVA Eco
Slide 37: Long-term shareholder value creation
HIGHLIGHTS FINANCIAL REVIEW BUSINESS 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 2021 | 3.1 2021 | 457 2021 | 93 2020 | 2.6 2020 | 330 2020 | 220 2019 | 3.3 2019 | 489 2019 | 216 2018 | 3.3 2018 |
Slide 38: A well-balanced portfolio: revenue
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX A well-balanced portfolio H1 2021 revenue portfolio Change1 Change1 10.1% Kn 0.8% 33.4% 0.9% I&E 13.4% H&N 1.7% 20.0% C&P (0.7%) 23.1% (2.7%) NR 1. Constant currency (CCY) – Definition in APM 36 Half year results presentation 19 July 2
Slide 39: A well-balanced portfolio: adjusted operating income
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX A well-balanced portfolio H1 2021 adjusted operating income* portfolio Change1 Change1 13.5% Kn 5.5% 31.1% (4.6%) C&P 14.0% H&N 3.8% 21.7% I&E 4.8% 19.7% (9.5%) NR * Alternative Performance Measures (APM), refer to the ‘2021 Half Year
Slide 40: EUR, USD and CNY represent 52% of 2021 revenue
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX EUR, USD and CNY represent 52% of 2021 revenue H1 2021 foreign currency revenues 27.5% 15.4% EUR CNY 8.8% USD 29.2% 2.1% OTHER KRW 3.4% CAD 1.9% 2.4% RUB AUD 4.3% TWD 3.0% 2.0% GBP CLP 38 Half year results presentation 19 July 2021 © S
Slide 41: Main currencies' variation against CHF in H1 2021
HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX Main currencies’ variation against CHF in H1 2021 Foreign currency average rate change H1 2021 versus H1 2020 rate 10.1% 10% 6.0% 2.8% 2.6% 3.4% 5% 2.1% 1.4% 0.6% 0% -5% (6.0)% -10% -15% (12.6)% -20% EUR CNY USD TWD CAD GBP AUD KRW CLP
Slide 42: 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 STOCK EXCHANGE TRADING November 2022 1 place des Alpes SIX Swiss Exchange P.O. Box 2152 2021 FULL YEAR RESULTS CH – 1211 Geneva 1 COMMON STOCK SYMBOL
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Slide 44: www.sgs.com
www.sgs.com SGS is a registered trademark of SGS Société Générale de Surveillance SA