Ladies and gentlemen, welcome to the SGS First Quarter 2024 Sales Update. My name is Ariel Bauer, and I'm in charge of investor relations, communications, and sustainability. Please note that this call is being recorded and will be available for replay on the SGS website. Throughout today's presentation, all participants will be in a listen-only mode. The presentation will be followed by a Q&A session. You can register for questions at any time by clicking on the Q&A button in the webcast and then pressing star one on the virtual keypad. If you are joining by phone, just press star one. I would now like to turn the conference over to Géraldine Picaud, CEO of SGS. Thank you, Ariel, and good morning, ladies and gentlemen. Thank you for joining this call. I am very happy to have this session with you today to talk about our Q1 update. As you know, we have decided to report now our sales on a quarterly basis as we feel this is important to give more frequent updates. In terms of sales, organic growth has reached 7.1% at the top of our guidance. Beyond the financial performance, it's been quite an intensive quarter, with some key steps achieved in the implementation of the Strategy 2027. We have implemented new management incentives. The M&A pipeline is fueled, and I'm proud to announce that we signed the acquisition of ArcLight Wireless recently. This deal, which I will comment in a few minutes, is in direct line with our objectives to invest in digital services and to expand our footprint in the U.S. Furthermore, I am confident we will be in a position to announce other acquisitions in the coming months. We have launched the restructuring plan I announced in January, which will, of course, require some time to produce visible effects. The scrip dividend we have proposed at the AGM recorded a good success with 65% take-up. We see this result as a support to our strategy by our shareholders, as it allows a cash saving close to CHF 400 million, which will be allocated to investment. Last but not least, the Executive Committee is now appointed and fully efficient. Let's move to slide 4, where you can see the Executive Committee. The appointment of our new ExCo marks the beginning of an exciting new chapter for SGS. The team, as you can see, is composed of 12 members. It includes managers from the group and individuals from other horizons, bringing complementary expertise. Group operations are under the responsibility of 6 leaders, fully in charge and accountable for their business. For Testing and Inspection, two executive members are responsible for developing global client contracts. After our ExCo meetings of the first quarter, I am fully convinced that we have the right size and the right profiles to reach the efficiency and agility we need. I'm taking this opportunity to extend a warm welcome to the 3 very experienced leaders who are joining our group on this occasion. Marta Vlatchkova as Chief Financial Officer, Martin Oesch as Group Legal Counsel, and Rafael Navazo as Head of Latin America. SGS will be stronger, thanks to their expertise. Let's now move to our first bulletin of the year, ArcLight. Let me give you a few words about ArcLight Wireless. ArcLight is one of the leading approved service providers of the main national network carriers in the U.S. It complements our existing portfolio of services in connectivity and further increase our diversification in the wireless testing segment. I also take this opportunity to warmly welcome our 75 employees. Let's now review the Q1 sales in more details, and I invite you to go to slide number 7. Our sales reached CHF 1,577 million in Q1, slightly below last year in Swiss francs. This is a result of the strong like-for-like growth of 7.1%, more than offset by the translation effect. This foreign exchange impact is due to the Swiss francs we use as a reporting currency, which has been particularly strong this quarter compared to euro, for example. So now if we move on to the detailed currency, you can have a better clarity into this currency effect and how it impacts our sales in this chart here that provide the breakdown of the full currency translation impact of -8.6%. The main contributor, as you can see, is China, closely followed by the euro and Turkish lira. Let's now look at the business drivers. This chart here shows the breakdown of our sales and growth by operations. Testing and Inspection grew by 7.1%, with all regions contributing positively, but at different levels. While LATAM and Eastern Europe, Middle East, Africa, recorded double-digit organic growth, North America and Asia Pac grew close to 7%, and Europe slightly above 3%. Business Assurance performed well at 7.6%, and I will come to it in detail shortly. Industries and Environment delivered, as you can see, a high organic sales growth of 8.7%, led by environment, safety, and advisory. Environmental testing achieved double-digit organic growth, driven by strong momentum in North America and Europe, notably in PFAS. PFAS are not new. Since 2004, SGS has been a pioneer in the detection of these harmful compounds, known as forever chemicals, in food, water, soil, and other materials. We are witnessing today a significant acceleration in activity driven by regulation. In North America, we already doubled the number of our PFAS labs compared to last year, and we expect to double this number again by year-end. Given the very strong growth rates in this activity, the return on this investment is excellent. Technical assessments and advisory also delivered double-digit organic growth, mainly led by new projects in Latin America. Let's move to Natural Resources. Natural Resources benefited from strong and healthy market trends and delivered organic sales growth of 8.6%. High single-digit organic growth in trade and inspection was driven by pricing power and project wins in all commodities. Strong momentum for services supporting the energy transition continues to fuel growth. This is the case, for instance, with new projects in battery metals in North America, which led to solid results in our Metallurgy and Consulting sub-segment. Let's move to Connectivity & Product. It generated solid organic sales growth of 6.8%, driven by Soft lines and connectivity. In Soft lines, lower inventory levels and new opportunities in sustainability have fueled double-digit organic growth. Connectivity continues to benefit from strong momentum, especially in Asia Pac and North America, thanks to increasing regulations. Our leading expertise in cybersecurity, notably at Brightsight, also supported growth in connectivity. If we now switch to our Health & Nutrition segment, here we continued to grow in constant currency, albeit modestly. Organic sales growth was driven by high single-digit growth in food, with very strong performance in Europe and Latin America, supported by regulations and our network expansion. Sales also benefited from double-digit growth in cosmetics and hygiene in Asia Pacific. Let's now move to Business Assurance. Our Business Assurance delivered organic sales growth of 7.6%, driven by strong sustainability trends. Double-digit organic growth in management systems certification was supported by a strong activity in strategic segments such as Medical Devices, Digital Trust, and Food Assurance, notably in North America, Europe, and Asia Pac. Quality, health and safety, and environment certification also contributed to growth. High single-digit organic growth in sustainability was actually driven by strong performance in North America and in Europe in ESG assurance and social audits. Let's now move to the outlook. To conclude this presentation, I would like to confirm our guidance. We see the rest of the year continuing on the good market trends we have experienced in Q1. We are confident that the actions we have launched will support the commitments we have taken on margin, free cash flow, and M&A. With that, I will now hand over to the operator. We will now begin the question-and-answer session. You can register for questions at any time by clicking on the Q&A button in the webcast and then pressing star one on the virtual keypad. If you are joining by phone, just press star one. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star two. We kindly ask participants to limit themselves to two questions. The first question is from Sylvia Barker from JP Morgan. Please go ahead. Thank you. Hi, morning. Thanks for taking the questions. First question, on the wireless business within the consumer, so within the connectivity and products business. So could you update us on that specific piece, given that was weaker last year, and that was one of the reasons why that margin was a bit lower, specifically on that piece? And then second question: within business assurance, it seems that consulting was maybe a little bit weaker, and obviously, that can be quite lumpy. Can you just remind us how big that is, and what's the margin on consulting versus the rest of the division? Thank you. Yes, good morning, Sylvia. Thanks for your questions. So, on the wireless, I think I have to precise a bit here. The, you know, the traditional wireless market, you're right, is suffering, and that's really related to the 5G devices, since they're not many 5G mobile devices being produced, currently, right? So here, we have a bit of a challenging time on this very tiny sub-segment we have in connectivity. That's fair to say, but our acquisition is not on this part at all. Our strategy on ArcLight acquisition are really targeting a growing market of network testing, and this group, again, is one of the leading approved service providers of the main national network carriers in the U.S. So it really complements SGS services, where we do testing on products, but again, not only on mobile phones, where this is where you see the challenging times, but all wireless-related device, smart sense technology. And actually, all these kind of products, you know, IoT and so on, they, these products, they need compatibility with the national carriers in the U.S., and this is where the ArcLight comes. So very good business. Then you had a question on business assurance. Business assurance, look, fair to say, the consulting part, which is not the major part of our business assurance, yeah, around, it's around 20%, to give you a number, but below 20%, actually, the consulting part, is, having project that have been, pace been pushed to next year. And you have a very strong comparable base. Basically, that explains the performance. But I can tell you, when it comes to our management system certification, we have a very good growth, double-digit growth, and we're doing very well, and I think we're gonna do well in the core business of BA throughout the year. Perfect. Thanks very much. Maybe just on the margin on consulting, is that comparable to the rest of the division, or is that different? No, it's comparable. Okay, perfect. Thank you. Okay, thank you. The next question is from Arthur Truslove from Citi. Please go ahead. Good morning, everyone. Arthur from Citi. First question, so obviously, on the connectivity and product side, trends have picked up. Are you able to talk about how much of the improvement in Soft lines and indeed, connectivity is using kind of underutilized capacity? If that makes sense. And then second question from me, yeah, obviously, it's early days, but I just wanted to confirm that the restructuring program in terms of stripping out CHF 100 million of cost, is that still all going to plan? Is anything ahead of schedule? Is anything behind schedule? Thank you. Okay. Thank you, and good morning. Look, on the CNP, on the CNP, we are really seeing that, we're always optimizing, basically, all our available capabilities. That's the first rule we having, and, you know, as everyone in the industry, we've seen, we've seen product launches resuming on the Soft lines. And we do think that, you know, the growth is gonna continue going forward, when it comes to, to Soft line, as there is, there is higher demand for sustainability services in consumers. So, that's to answer your, your first question. And remember that we have a big network, and we're using our entire network, across the group, obviously, to optimize where the demand is going and capture it. So on the cost reduction, I would say the plan has started. First phase has mainly consisted in suppressing functions allocated to non-strategic programs. And now we have our ExCo members also focusing on it. So we are in motion, and we are working as per plan. Thank you. Thank you very much. The next question is from Annelies Vermeule n, from Morgan Stanley. Please go ahead. Hi, good morning. Geraldine, two questions, please. So firstly, on the additional CHF 400 million of cash from the take-up of the scrip dividend, I think in your opening remarks, you said, allocated to investment. Now that you know that amount, could you give any more color on where that will be allocated? Is it M&A or is it investments in, you know, digital or technology or anything else within the business? And I appreciate your guidance is unchanged today, but are there any changes to the components of your guidance as a result of that, given, you know, when you set the guidance in January, I'm assuming you didn't know what the, the take-up of the scrip was, was going to be? That's the first one. Then secondly, just on business assurance, you've called out high single digit growth and sustainability and in the U.S. and in Europe. I assume in Europe, that is, you know, increased demand for ESG-related reporting requirements coming into force. But what is driving that in the U.S.? Are you seeing a step up in demand for these kind of services from U.S.-based corporates? Thank you. Yes, thank you. So I'll take—yes, so I will start with your first question around the CHF 400 million cash saving. We're very happy with the take-up. It gives us, you know, some firepower to effectively focus on M&A, which is clearly our first priority. And we continue, obviously, to invest where it makes sense to capture the mega trends I explained during the strategy presentation. But, you know, it's, it's obviously going to be M&A, our first priority. On business assurance, you're right, we have enjoyed a good growth when it comes to Europe. It's fairly true, and that's driven by the ESG, as you mentioned. On, as when it comes to the North America, the growth has been good as well. It's been mainly driven by training and the Medical Devices, where we see a good growth coming from this industry. That's great. Thank you very much. You're welcome, Annelies. Thank you. The next question is from Himanshu Agarwal from Bank of America. Please go ahead. Hi, thanks for taking my questions. I just have the first one on the organic growth in Q1, 7.1%, which was better than we expected, and given there are no significant comps impact in rest of the year, how should we think about the development going forward? Okay. Well, look, we are going to continue to guide on, on the same thing that I've guided when I presented the, the strategy, back in, end of January. So, 5%-7% organic growth for the year is our objective, and I don't want to change that guidance at this stage. So it's a strong start, and we're very happy about it. And, but I don't know, it's, it's—I don't make, any, any more precise, prediction at this stage. But do you see any incremental headwinds in rest of the year that should basically derail this strong start to the year of 7%? No. Globally, no. No, I don't see anything at this stage. No. Okay, thank you. And then secondly, if you could just comment on, in the 7%, what is price versus volume? Yeah, you know, it's always a bit difficult because you have a volume mix that is very, very important. But I would say that we've, you know, passed on a good chunk of the inflation. So basically, I would say 1/3 price and 2/3 volumes, back of the envelope. Okay. Yep, okay. Thank you. You're welcome. Thank you. The next question is from Rory McKenzie from UBS. Please go ahead. Good morning, it's Rory here. First question, sorry for focusing on the technical headwinds, but given the FX you laid out on slide 8, can you give any sense as to what margin headwinds that could translate into for the start of this year? Now, obviously, through last year, a similar FX headwinds saw about a 50-60 bits impact on margins. So what does this suggest this year is shaping up to be? And then secondly, can you give us more detail on the new incentive programs you've rolled out in the group? Appreciate you've done it quite, quite quickly. But what are the key KPIs for the divisional teams? How has it changed? And does that include any M&A origination targets? Thank you. Yeah, thank you, Rory, and good morning. So to come to your first questions about the margins and impact of Forex on our margins, I think... Look, we have launched actions, as I said, to protect our margins, and obviously, such actions will not bear fruits immediately. But look, we see obviously no reason for any deterioration at constant currency, obviously. So we need to execute our strategy 2027 in order to execute on our guidance. Currencies, you know, to complement a bit on currencies. Currencies, it's true to say, have largely depreciated, and it's-- you noted it yourself, they have depreciated against the Swiss francs, strong Swiss francs, starting H2 last year. It's fair to say that they remain more or less, and I don't have a crystal ball, let's be clear, but they remain more or less steady since the beginning of the year, which makes us believe that, you know, the negative impact could be more limited on a full year basis this year. When it comes to the incentive programs, look, it's very simple, and we intend to disclose everything in the remuneration report when we publish our annual report next year, in 2025. The incentive programs that we put the organization on are exactly the same KPIs that we have used for our guidance. So there are organic growth, there's margins, and there's cash. So very simple. That's on the short-term incentive. On the long-term incentive, we have as well the sustainability KPIs and the health and safety ones. So all numerical, quite simple, clear, transparent, external, internal. Thank you. Great. Thank you. Thank you, Rory. Thank you. The next question is from Allen Wells, from Jefferies. Please go ahead. Hey, good morning, Geraldine. Two from me, please. Firstly, just on the environment side in INE, you called out PFAS as a tailwind there. Could you maybe just give us a little bit of indication of the size of your PFAS exposure, either as like a percentage of the division or in absolute revenues? Then maybe just talk a little bit about SGS's market position here. I mean, is it a leader? How regional is that? What's the competitive landscape like? That'd be just really interesting. And then secondly, just to follow up on Rory's question on FX. I completely get the limited full year impact, but in terms of the half year, should we expect a similar 50 basis points impact from FX at the half year level? Thank you. Okay, thank you. Thank you very much, Alan, for your question, and good morning to you. So your first question in, on environmental testing, which is, the PFAS, mostly, mostly PFAS, sales here for us. It's a, it's a wonderful business. Basically, it's growing double digit, and there continues to be an increase and a continuous increase in PFAS focus, which is having a very positive effect on our environmental business, in the U.S. You know, our plans are really to expand our PFAS capabilities to continue to gain momentum, and, I think there was a press release lately, just, also mentioning, you know, all our, accreditation, the new accreditations. 'Cause we are really, continuing to gain momentum. I think by H1 2024, we'll have six of our main, what we call H&S labs, accredited for PFAS, which is double compared to last year. So we're really a leader in U.S. in terms of development. We're really working closer with the main environmental organization, and we have strong investments, here. As I mentioned, six accredited labs. That puts us into a leadership position. So, yeah, it's a business I really like. It is. When you look at our INE, division presented, still small in terms of, portion of sales, but again, this is growing very fast in double digits. I think that was your only question, right, Alan? What was the second one? And then just on FX on the first half. Oh, the FX. Sorry, yeah, the FX. Well, look, yeah, it's hurting. It's there. Again, the only thing we can do is launch actions and execute as fast as possible, so as to limit and protect our margins. But I think it's fair to say that in H1, we're gonna have an impact that's, you know, probably above 0.5 percentage points. I would say 0.5-0.7 percentage points is what I can see as a negative impact on our margins for H1. But again, we're confident that this is gonna be fully offset and more by the year-end. Great. Thank you. The next question is from Victoria Chung, from Goldman Sachs. Please go ahead. Hi, good morning. I'm asking on behalf of Suhasini, of Goldman Sachs. We have one more question left. It's on the trading day impact on growth in 1Q. Given some companies saw less trading days in March, we are wondering if you saw a headwind to growth, then if you can give some color on what the impact of that was. Thank you. Sure. Thank you, Victoria, and good morning. Look, each quarter you will have such a topic, and if you make the math on an annual basis, I, I think it will never be material enough to distort our guidance when it comes to our organic growth annual guidance. So, you know, yeah, we can have an impact of 1.2% in a given quarter. What does it represent on an annual basis? It's 4.3%, which is not significant. So I personally prefer simple and clear communication rather than one focused on arithmetical detail. Even if it is a reality, I don't think that's very relevant. Okay, understand. Thank you. Thank you. For any further questions, please click on the Q&A button in the webcast and then press star one on the virtual keypad. If you are joining by phone, just press star one. The next question is from James Rose, from Barclays. Please go ahead. Hello, and good morning. A question on consumer, please. Are you seeing a recovery in China within that business? And can you update us on the trends in the domestic versus the export markets? Thank you. Yes, good morning. Look, we see good launch, good launches of product resuming on the Soft lines and on the Hard lines. So we see, you know, product launches on brands and retailers, inspections. So again, yes, we do see a high demand continuing, a strong, strong growth fueled by the sustainability services in consumer. So we are confident on the growth going forward. And that is valid for domestic as well as for exports, basically both. Okay, thank you. Thank you. Thank you very much. There are no more questions at this time. Well, then, thank you very much for participating in our first Q1 sales update. I'm looking forward to meet again and talk to you soon. Have a good weekend. Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.