SGS GROUP RESULTS2018 HALF YEAR RESULTS PRESENTATION
2© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
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 factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These statements speak only as of the date of this document. Except as required by any applicable law or regulation, SGS expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in SGS Group’s expectations with regard thereto or any change in events or conditions on which any such statements are based.
FINANCIAL REVIEW
HIGHLIGHTS
OUTLOOK
BUSINESS REVIEW
Q&A
APPENDIX
4© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
2018 20172018 2017 2018 20172018 2017
STRONG REVENUE GROWTH AND MARGIN PROGRESSION
1. Constant currency basis. – 2. Before amortisation of acquired intangibles and other non-recurring items. 3. Cash flow from operating activities net of capital expenditure.
CHF 296 MIO 1.0%
PROFIT FOR THE PERIOD
296 293
14.6%CHF 481 MIO9.2% 1
ADJUSTED OPERATING INCOME MARGIN2
14.6%
14.2%1
CHF 176 MIO(16.2)%
FREE CASH FLOW3
176
210
6.5%¹CHF 3.3 BNFX 2.0%
REVENUE GROWTH
6.5%
4.9%
H1 2018 HIGHLIGHTS
5© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
ACQUISITIONS EXPAND EXPERTISE AND FOOTPRINT
Business line: AFLCountry: USA
Business line: AFLCountry: GERMANY
Business line: AFLCountry: BELGIUM
Business line: INDCountry: USA
LABORATOIRE DE CONTRÔLE ET D’ANALYSE
Business line: CRSCountry: GERMANY
SIT SKIN INVESTIGATION AND TECHNOLOGY HAMBURG GMBH
POLYMER SOLUTIONS INCORPORATED
Business line: AFLCountry: BELGIUM
OLEOTEST NV
TRAITGENETICS GMBH
Business line: TRPCountry: SPAIN
ADVANCED METROLOGY SOLUTIONS S.L.
VANGUARD SCIENCES INC.
H1 2018 ACQUISITIONS
HIGHLIGHTS
OUTLOOK
BUSINESS REVIEW
Q&A
APPENDIX
FINANCIAL REVIEW
7© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
STRONG REVENUE GROWTH AND INCREASED ADJUSTED OPERATING INCOME MARGIN
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA1 JUNE 2017
REVENUE 3 306 3 104 3 047Change in % 6.5 8.5
ADJUSTED OPERATING INCOME2 481 441 428Change in % 9.2 12.4
ADJUSTED OPERATING INCOME MARGIN2 IN % 14.6 14.2 14.1
OPERATING INCOME (EBIT) 411 422 410Change in % (2.6) 0.2
OPERATING INCOME (EBIT) MARGIN IN % 12.4 13.6 13.5
PROFIT FOR THE PERIOD 296 303 293Change in % (2.3) 1.0
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF SGS SA 274 285 276Change in % (3.9) (0.7)
BASIC EPS (CHF) 36.01 37.78 36.58
ADJUSTED BASIC EPS (CHF)2 45.01 40.13 38.88
1. Constant currency basis. – 2. Before amortisation of acquired intangibles and non-recurring items.
H1 2018 FINANCIAL HIGHLIGHTS
BALANCE SHEET
ADJUSTED OPERATING INCOME
CASH FLOW
FINANCIAL SUMMARY
HIGHLIGHTS
OUTLOOK
BUSINESS REVIEW
Q&A
APPENDIX
FINANCIAL REVIEW
REVENUE
9© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
LEADING TIC MARKET ORGANIC REVENUE GROWTH
REVENUE JUNE 2017
CHF MIO
H1 2017
ORGANIC
3.4%
ACQUISITIONS
1.5%
DISPOSALS
0.0%
CURRENCY IMPACT
0.1%
REVENUE JUNE 2018
5.0%
3 047
27175 -57 3 306
0.0% 2.0% 8.5% 5.6% 0.9%
Constant currency growth 6.5%
H1 2018 REVENUE GROWTH COMPOSITION
10© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
AFL
MIN
OGC
CRS
CBE
IND
EHS
TRP
GIS
TOTAL GROUP
Organic Acquisitions
2.7%
5.6%
13.8%
4.8%
0.8%
6.2%
7.7%
2.1%
0.9%
1.3%
0.3%
1.2%
2.1%9.0%
0.9% 2.9%
6.1%
POSITIVE ORGANIC REVENUE GROWTH ACROSS THE WHOLE PORTFOLIO
1. Constant currency basis.
H1 2018
GROWTH1
8.2%4.8%
H1 2017
3.1%13.8%
1.3%7.7%
12.0%6.1%
3.9%7.4%
(1.3)%3.8%
0.7%6.1%
15.0%1.1%
1.8%11.1%
4.9%6.5%
H1 2018 REVENUE GROWTH BY BUSINESS
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HALF YEAR RESULTS PRESENTATION 18 JULY 2018
Organic Acquisitions
ORGANIC REVENUE GROWTH DRIVEN BY AMERICAS AND ASIA/PACIFIC
1. Constant currency basis.
3.9%
5.6%
8.0%
0.9%
0.9%
1.3%5.9%
0.4%
H1 2018
GROWTH
4.8% 4.0%
H1 2017
7.2% 2.7%
8.4% 8.1%
6.5% 4.9%
EUROPE/AFRICA/MIDDLE EAST
AMERICAS
ASIA/PACIFIC
TOTAL GROUP
H1 REVENUE GROWTH1 BY REGION
12© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
CONTROLLED HEADCOUNT INCREASE
1.Full Time Equivalent Employees.
JUNE 2017
JUNE 2017
FTE
ORGANIC EUR./AFR./MID. EAST
3.2%
ACQUISI- TIONS
AMERICAS
0.6%
DISPOS. /RESTR.
ASIA/PACIFIC
(0.2)%
JUNE 2018
JUNE 2018
3.6%
92 912
526 2 976
(155) 96 259
92 065
1 768
1 149
1 248 96 230
FTE
REVENUE
3.0%
4.8%
8.0%
7.2%
3.9%
8.4%
4.5%
6.5%
FTE1 END OF PERIOD FTE1 AVERAGE BY REGION
Increase: 3 347 Increase: 4 165 3.6% 4.5%
BALANCE SHEET
CASH FLOW
FINANCIAL SUMMARY
HIGHLIGHTS
OUTLOOK
BUSINESS REVIEW
Q&A
APPENDIX
FINANCIAL REVIEW
REVENUE
ADJUSTED OPERATING INCOME
14© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
ORGANIC ADJUSTED OPERATING INCOME GROWTH
1. Before amortisation of acquired intangibles and other non-recurring items.
ADJ. OP. INC. JUNE 2017
CHF MIO
H1 2017
ORGANIC
4.2%
ACQUISITIONS
0.7%
DISPOSALS
0.0%
CURRENCY IMPACT
(0.6)%
ADJ. OP. INC. JUNE 2018
4.3%
428
535 -13 481
0.0% 3.2% 12.4% 8.1% 1.1%
Constant currency growth 9.2%
H1 2018 ADJUSTED OPERATING INCOME1 GROWTH
15© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
30%
25%
20%
15%
10%
5%
0%AFL MIN OGC CRS CBE IND EHS TRP GIS TOTAL
GROUP June 20172 June 2018
MARGIN IMPROVEMENT MAINLY DRIVEN BY GIS, MIN AND EHS
1. Before amortisation of acquired intangibles and other non-recurring items. – 2. Constant currency basis.
15.0%13.7% 13.7%
15.2%
10.2%8.9%
25.2% 24.9%
17.2% 17.6%
7.2% 7.4%8.2%
10.3%
18.4%
15.3%
11.3%
29.4%
14.2% 14.6%
H1 2018 ADJUSTED OPERATING INCOME1 MARGIN
CASH FLOW
FINANCIAL SUMMARY
HIGHLIGHTS
OUTLOOK
BUSINESS REVIEW
Q&A
APPENDIX
FINANCIAL REVIEW
REVENUE
ADJUSTED OPERATING INCOME
BALANCE SHEET
17© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
H1 2018 CONSOLIDATED BALANCE SHEET
(CHF million) JUNE 2018 DEC 2017
Property, Plant and Equipment 992 1 002Goodwill 1 251 1 238Intangible assets 219 222Other Long-term assets 381 341NON-CURRENT ASSETS 2 843 2 803
Unbilled revenues and Work in Progress 298 293Trade receivable 972 1 068Other current assets 474 386Cash and marketable securities 943 1 393CURRENT ASSETS 2 687 3 140
TOTAL 5 530 5 943
NET (DEBT) (1 146) (698)
(CHF million) JUNE 2018 DEC 2017
Share capital 8 8Reserves 1 564 1 911SHAREHOLDERS’ EQUITY 1 572 1 919
NON-CONTROLLING INTERESTS 94 86
Loans and obligations under finance leases 1 713 2 090Provisions and other non-current liabilities 240 267NON-CURRENT LIABILITIES 1 953 2 357
Loans and obligations under finance leases 376 1Trade and other payables 643 677Contract liabilities 126 97Other current liabilities 766 806CURRENT LIABILITIES 1 911 1 581
LIABILITIES 3 864 3 938
TOTAL 5 530 5 943
ASSETS EQUITY AND LIABILITIES
FINANCIAL SUMMARY
HIGHLIGHTS
OUTLOOK
BUSINESS REVIEW
Q&A
APPENDIX
FINANCIAL REVIEW
REVENUE
ADJUSTED OPERATING INCOME
BALANCE SHEET
CASH FLOW
19© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
SOLID CASH FLOW GENERATION
1. Cash flow from operating activities net of capital expenditure.
(CHF million) JUNE 2018 JUNE 2017
PROFIT FOR THE PERIOD 296 293 Non-cash and non-operating items 284 274 Increase in working capital (124) (119)Taxes paid (140) (119)CASH FLOW FROM OPERATING ACTIVITIES 316 329 Net purchase of fixed assets (140) (119)Net acquisition of businesses (41) (12)(Increase)/Decrease in marketable securities and other (1) 5 CASH FLOW USED BY INVESTING ACTIVITIES (182) (126)Dividends paid to equity holders of SGS SA (573) (528)Dividends paid to non-controlling interests (4) (8)Transaction with non-controlling interests (4) 1 Net cash received on treasury shares 52 5 Proceed of corporate bonds - 375 Interest paid (45) (46)(Decrease)/Increase in borrowings (2) 4 CASH FLOW USED BY FINANCING ACTIVITIES (576) (197)Currency translation (7) (29)DECREASE IN CASH AND CASH EQUIVALENTS (449) (23)
FREE CASH FLOW1 176 210
H1 2018 CONDENSED CASH FLOW
20© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
Capital Expenditure
Depreciation and amortisation
CONTROLLED LEVEL OF CAPEX AT 4.4% OF REVENUE
H1 2018 CAPITAL EXPENDITURE BY BUSINESS H1 2018 CAPITAL EXPENDITURE BY REGION
14.8%AFL 44.5%
Europe/Africa/Middle East
12.7%MIN
16.4%OGC
17.2%CRS
5.0%GIS
20.8%Americas
34.7%Asia/Pacific
13.6%TRP
8.0%EHS
10.7%IND
1.6%CBE
CHF 144 MIO
CHF 144 MIO
ANNUAL CAPITAL EXPENDITURE CHF MIO350
300
2502014 2017 20182015 2016
HIGHLIGHTS
OUTLOOK
Q&A
APPENDIX
FINANCIAL REVIEW
REVENUE
ADJUSTED OPERATING INCOME
BALANCE SHEET
CASH FLOW
FINANCIAL SUMMARY
BUSINESS REVIEW
22© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
1. Constant currency basis. – 2. Before amortisation of acquired intangibles and other non-recurring items. 3. Cash flow from operating activities net of capital expenditure.
·Revenue growth1 of 6.5% of which 5.6% organic
· Increase in Adjusted Operating Income1,2 by 9.2% and stronger Adjusted Operating Income Margin at 14.6%
·Profit for the period increased by 1.0%, up to CHF 296 million
· Investment of CHF 181 million in Capex and Acquisitions
·Free cash flow3 of CHF 176 million
FINANCIAL SUMMARY
HIGHLIGHTS
OUTLOOK
Q&A
APPENDIX
FINANCIAL REVIEW
BUSINESS REVIEW
24© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Strong growth in Food and Life tempered by a slower start to the year in Agriculture where market conditions remain challenging · High Food testing volume in Asia and strong food certification growth in Europe and Americas · Growth in Life supported by recent laboratory investments and a strong pipeline for Clinical Research · Acquisition of four companies enhancing the portfolio across all strategic business segments
OUTLOOK · Market fundamentals for Food and Life remain strong · Trade inspection activities expected to improve with the new crop in second half · Continue diversification of the Seed & Crop portfolio into fast-growing segments · Digital offerings continue to expand and gain wider market acceptance
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 516.2 492.5 478.3 Change in % 4.8 7.9ADJUSTED OPERATING INCOME¹ 70.5 73.8 71.5 Change in % (4.5) (1.4)MARGIN %¹ 13.7 15.0 14.9
SOLID GROWTH IN FOOD AND LIFEAGRICULTURE, FOOD AND LIFE (AFL)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
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HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Excellent double-digit organic growth with market recovery across all activities · Trade inspection remained robust, with increased demand for bulk commodities · Geochemistry outsourcing demand continued with six new projects awarded in first half · Metallurgical Testing delivered exceptional growth with increased pilot plant activity and test work
OUTLOOK · Market trends expected to continue subject to a stable global trade macro environment · Sustained growth in the laboratory network · Continued focus on the strategic integrated services capability: Process Engineering, Mine and Plant Services and Geological studies · Further margin improvement from targeted operational efficiency projects
DOUBLE-DIGIT ORGANIC GROWTHMINERALS (MIN)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 369.8 324.9 323.2 Change in % 13.8 14.4ADJUSTED OPERATING INCOME¹ 56.2 44.6 44.7 Change in % 26.0 25.7MARGIN %¹ 15.2 13.7 13.8
26© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Overall solid growth · Low single-digit growth in Trade mainly in Europe, Africa and the Middle East and strong growth in Asia · Solid double-digit growth in Plant and Terminal Operations (PTO) from contract wins in North America · Moderate growth in Upstream mainly in the production segment in the Middle East · Flat Non-Inspection-related testing
OUTLOOK · Trade to benefit from moderate volatility with balanced supply and demand · PTO to continue strong growth · Upstream services to benefit from new volumes · Solid project pipeline for Non-Inspection-related testing to drive growth · Rest of the portfolio to continue to deliver solid performance
PLANT AND TERMINAL OPERATIONS DRIVES GROWTHOIL, GAS AND CHEMICALS (OGC)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 605.2 562.0 556.4 Change in % 7.7 8.8ADJUSTED OPERATING INCOME¹ 53.7 57.6 55.8 Change in % (6.8) (3.8)MARGIN %¹ 8.9 10.2 10.0
27© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Solid growth in Asia Pacific, Europe and Africa · Cosmetic, Personal Care and Household continued to outperform · Electrical and Electronics (E&E) achieved robust growth across activities · Hardlines benefitted from capacity expansion, focus on growing Hardgoods segments helped to mitigate soft toys market
OUTLOOK · Expand productivity improvement programmes and replicate automation tools · Strong growth in the E&E, especially Electro Magnetic Compatibility and Electrical Safety activities · New global customers to strengthen Softlines and Hardlines during peak season · USA/China trade war represents major risk for Technology products industry · Pursue acquisitions in our key segments
ROBUST GROWTH IN ELECTRICAL & ELECTRONICSCONSUMER AND RETAIL (CRS)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 502.9 473.8 463.7 Change in % 6.1 8.5ADJUSTED OPERATING INCOME¹ 125.3 119.5 116.4 Change in % 4.9 7.6MARGIN %¹ 24.9 25.2 25.1
28© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Solid organic growth driven by Management System Certification and transition to the new 2015 ISO standards · Improved margin in most regions benefitting from increased activity level in Certification · Introduction of new Performance Assessments global cloud-based solution
OUTLOOK · Growth to remain healthy driven by Certification and conversion audits · Opening of third Global Business Service centre in Colombia to centralise back-office operations and drive efficiency · Further development of e-learning catalogue and development of leadership soft skills training services in Asia
ACCELERATED GROWTH AND IMPROVED MARGINCERTIFICATION AND BUSINESS ENHANCEMENT (CBE)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 177.7 165.5 160.7 Change in % 7.4 10.6ADJUSTED OPERATING INCOME¹ 31.3 28.5 27.5 Change in % 9.8 13.8MARGIN %¹ 17.6 17.2 17.1
29© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Organic growth in Oil and Gas, Infrastructure and Manufacturing markets · Positive developments in Laboratory Testing and Supervision and Consulting services · Improved margin from stronger laboratory utilisation, especially in Asia
OUTLOOK · Oil price rise has not yet materialised into new capital expenditure projects · Infrastructure projects in Peru and Mexico to exceed expectations · Continuous focus on improving low margin activities
STABLE MARKET CONDITIONS IN OIL & GAS INDUSTRIAL (IND)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 461.6 444.6 435.2 Change in % 3.8 6.1ADJUSTED OPERATING INCOME¹ 34.0 31.9 30.9 Change in % 6.6 10.0MARGIN %¹ 7.4 7.2 7.1
30© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Strong start to year with good growth and margin improvement across the network · Increased volume and profitability in North America · Continued strong performance in Laboratory and Health & Safety services, particularly in Europe and Asia
OUTLOOK · Improved market conditions for Health & Safety and Marine services · Demand for Laboratory services to remain strong due to increasing regulations · Focus on digital initiatives and centralisation of data management to realise efficiencies · Use of eDNA testing for biodiversity modelling
STRONG GROWTH AND MARGIN IMPROVEMENT ENVIRONMENT, HEALTH AND SAFETY (EHS)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 252.2 237.8 230.8 Change in % 6.1 9.3ADJUSTED OPERATING INCOME¹ 26.0 19.6 18.6 Change in % 32.7 39.8MARGIN %¹ 10.3 8.2 8.1
31© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Double-digit growth in Testing services thanks to strong global demand · Stable revenues for Regulated services despite slow start in Chile and a challenging environment in Argentina · Strong demand for certification services linked to new International Automotive Task Force standard · Reduced margin from end of contracts in the USA and slow start of new contracts
OUTLOOK · Expected margin improvement in the second semester following operational consolidation in some regions · Focus remains on diversification of Automotive and Rail services and the development of a broader Aerospace portfolio; leveraging the acquisition of Advanced Metrology Solutions S.L. in Spain
TESTING DEMAND OFFSET BY REGULATORY SERVICESTRANSPORTATION (TRP)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 279.5 276.4 271.8 Change in % 1.1 2.8ADJUSTED OPERATING INCOME¹ 42.9 50.9 48.9 Change in % (15.7) (12.3)MARGIN %¹ 15.3 18.4 18.0
32© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
OVERVIEW · Non-intrusive export inspections in Cameroon resulted in strong growth of Scanning activities · TransitNet development team focused on increasing market share and expansion · New contract signed for Omnis and Advance Cargo Information portal · QiiQ, the universal remote image analysis solution rolled out worldwide
OUTLOOK · Blockchain technology to be used in securing cross border trade data · Solid opportunities in D-Tect and cyber security · Strengthening Product Conformity Assessments performance · Full impact of efficiency improvement initiatives (automation/robotisation of back-office tasks, exporter portal) implemented
TRANSITNET STRATEGY EXPANSION GOVERNMENTS AND INSTITUTIONS (GIS)
1. Before amortisation of acquired intangibles and non-recurring items. – 2. Constant currency basis.
(CHF million) JUNE 2018JUNE 2017
PRO-FORMA2 JUNE 2017
REVENUE 141.1 127.0 126.9 Change in % 11.1 11.2ADJUSTED OPERATING INCOME¹ 41.5 14.4 14.1 Change in % 188.2 194.3MARGIN %¹ 29.4 11.3 11.1
HIGHLIGHTS
OUTLOOK
Q&A
APPENDIX
FINANCIAL REVIEW
BUSINESS REVIEW
34© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
SOLID ORGANIC REVENUE GROWTH
HIGHER ADJUSTED OPERATING INCOME MARGIN
ROBUST CASH FLOW
GUIDANCE 20181
1. At stable market conditions.
35© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
·Mid single-digit organic growth with improvement over the 2016-20 period underpinned by the new focused structure and new strategic initiatives
·Accelerating M&A activities with acquired revenue over the period in the range of CHF 1 billion
·Adjusted Operating Income Margin of at least 18% by the end of the period
·Strong cash conversion
·Solid returns on invested capital
·Dividend distributions, in line with improvement in net earnings
OUTLOOK 2020
HIGHLIGHTS
OUTLOOK
Q&A
APPENDIX
FINANCIAL REVIEW
BUSINESS REVIEW
HIGHLIGHTS
OUTLOOK
Q&A
APPENDIX
FINANCIAL REVIEW
BUSINESS REVIEW
38© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
ACRONYMS AND OTHER ABBREVIATIONS
TRANSITNET SGS customisable web platform adapted for transit operations
Omnis Platform for identification and real-time tracking of location, movement and condition of high-value assets
D-tect Innovative universal image analysis solution
39© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
1. Offices and laboratories end of period. – 2. Full-time equivalent employees end of period.
GLOBAL EXPERTISE WITH LOCAL EXECUTION
AMERICAS
ASIA PACIFIC
2018
2018
2017
2017
24 200
33 000
22 500
32 000
2018
2018
2017
2017
520
530
450
400
Locations1
Employees2
EUROPE, AFRICA AND MIDDLE EAST2018 2017
39 100 38 400
2018 2017
1 4501 150
TOTAL
3.6%2 500 96 300
H1 2018 LOCATIONS AND EMPLOYEES
40© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
1. Constant currency basis.
WELL-BALANCED REVENUE
H1 2018 REVENUE PORTFOLIO
Change1 Change1
4.3%GIS
0.2% (0.3)% 15.6%AFL
0.7% 11.2%MIN
0.2% 18.3%OGC
0.0% 15.2%CRS
8.4%TRP
(0.5)%
7.6%EHS
(0.1)%
14.0%IND
(0.3)%
5.4%CBE
0.1%
41© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
1. Before amortisation of acquired intangibles and other non-recurring items. – 2. Constant currency basis.
H1 2018 ADJUSTED OPERATING INCOME1 PORTFOLIO
Change1 Change1
8.6%GIS
5.3% (2.1)% 14.6%AFL
1.6% 11.7%MIN
(1.9)% 11.2%OGC
(1.1)% 26.0%CRS
8.9%TRP
(2.7)%
5.4%EHS
1.0%
7.1%IND
(0.1)%
6.5%CBE
0.0%
WELL-BALANCED CONTRIBUTION
42© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
EUR, USD AND CNY REPRESENT55% OF H1 2018 REVENUE
H1 2018 FOREIGN CURRENCY REVENUES
14.2%USD
3.3%CAD
13.9%CNY
2.6%GBP
3.7%TWD
2.6%CLP
2.6%AUD
26.9%EUR
25.8%OTHER
2.2%RUB
2.2%BRL
43© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
10%
5%
0%
(5)%
(10)%
EUR AND CNY STRENGTHENED IN H1 2018
EUR USD CNY TWD CAD CLP GBP BRL AUD RUB2018 1.1703 0.9668 0.1518 0.0327 0.7571 0.0016 1.3303 0.2834 0.7457 0.01632017 1.0764 0.9953 0.1447 0.0324 0.7456 0.0015 1.2519 0.3131 0.7501 0.0172CHANGE 8.7% (2.9)% 4.9% 0.9% 1.5% 4.9% 6.3% (9.5)% (0.6)% (5.1) %
FOREIGN CURRENCY AVERAGE RATE CHANGE H1 2018 VERSUS H1 2017 RATE
8.7%
(2.9)%
4.9%
0.9% 1.5%
4.9%6.3%
(0.6)%
(9.5)%
(5.1) %
44© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
INVESTOR DAYS – BORDEAUX, FRANCEThursday and Friday8 and 9 November 2018
2018 FULL YEAR RESULTSTuesday, 22 January 2019
ANNUAL GENERAL MEETING OF SHAREHOLDERSFriday 22 March 2019Geneva, Switzerland
UPCOMING INVESTOR RELATIONS EVENT DATES
45© SGS SA 2018 ALL RIGHTS RESERVED
HALF YEAR RESULTS PRESENTATION 18 JULY 2018
SGS SA CORPORATE OFFICE1 place des Alpes P.O. Box 2152 CH – 1211 Geneva 1 t +41 (0)22 739 91 11 f +41 (0)22 739 98 86 e [email protected] www.sgs.com
INVESTOR RELATIONSToby Reeks SGS SA 1 place des Alpes P.O. Box 2152 CH – 1211 Geneva 1 t +41 (0)22 739 99 87 m +41 (0)79 641 83 02 www.sgs.com
STOCK EXCHANGE TRADINGSIX Swiss Exchange
MEDIA RELATIONSDaniel Rufenacht SGS SA 1 place des Alpes P.O. Box 2152 CH – 1211 Geneva 1 t +41 (0)22 739 94 01 m +41 (0)78 656 94 59 www.sgs.com
COMMON STOCK SYMBOLSBloomberg: Registered Share: SGSN.VX Reuters: Registered Share: SGSN.VX Telekurs: Registered Share: SGSN ISIN: Registered Share: CH0002497458 Swiss security number: 249745
STOCK EXCHANGE LISTINGSIX Swiss Exchange, SGSN
INVESTOR RELATIONS INFORMATION
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