Earnings release
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First quarter 2025 sales update
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SGS First Quarter 2025 Sales Update Record Q1 sales of CHF 1 681 million, up 6.6% Ad hoc announcement pursuant to article 53 LR Geneva, 24 April 2025 • Strong organic1 sales growth of 5.6% • Accelerating growth in Sustainability and Digital Trust • Eight bolt-on acquisitions year-to-date and strong pipeline • Successful scrip dividend, with 63.3% take-up rate • Outlook confirmed Géraldine Picaud, Chief Executive Officer, commented: “ We are proud to deliver record Q1 sales of CHF 1 681 million on the back of a strong performance in Sustainability and Digital Trust. As part of our growth strategy, we have completed eight successful bolt-on acquisitions to date. We remain focused on executing Strategy 27 in a disrupted economic environment. We will take action to sustain our market leadership and profitability in light of currency volatility and trade tariffs. I want to express my heartfelt thanks to the talented SGS teams for their hard work and dedication.” Sales review Group sales (CHF million) Q1 2024 Q1 2025 Sales 1 577 1 681 Total change 6.6% of which organic 1 5.6% of which scope 1 .3% of which FX -0.3% 1 Please refer to Alternative Performance Measures in the Appendix Group sales by division Organic1 growth (%) Sales (CHF million) Europe 1 .9% 491 Asia Pacific 6.1% 475 North America 3.9% 200 Latin America 15.7% 148 Eastern Europe, Middle East & Africa 10.4% 188 Testing & Inspection 5.8% 1 502 Business Assurance 3.5% 179 Total Group 5.6% 1 681 SGS | First quarter 2025 sales update
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Q1 2025 sales review Group sales reached a record CHF 1 681 million in Q1 2025, benefiting from a strong organic1 sales growth of 5.6%. Following the relaunch of M&A activity, net scope effect turned positive at 1.3%, the currency effect amounted to -0.3%, leading to a reported growth of 6.6%. In Testing & Inspection organic1 sales growth of 5.8% was supported by Health & Nutrition and Connectivity & Products. Business Assurance delivered 3.5% organic 1 sales growth. Since the implementation of IMPACT NOW, Sustainability services made a strong contribution to growth, with major contracts signed across its four pillars: Climate, Circularity, Nature, and ESG Assurance. IMPACT NOW consolidates SGS’s sustainability offerings, providing tailored solutions to assist clients in achieving their specific sustainability goals. Digital Trust also contributed significantly to growth in the first quarter, especially through advancements in AI management certification and cybersecurity services. Notably, all Brightsight laboratories in Europe earned the EU Cybersecurity Certification accreditation at the highest security assurance level. This significant milestone positions Brightsight as the best option when it comes to connecting cybersecurity regulations in Europe, the USA, and Asia. Mergers & Acquisitions activity The Group made eight bolt-on acquisitions since the beginning of the year to accelerate growth and profitability in key markets, especially in North America and Europe. They represent combined sales of approximately CHF 60 million on an annual basis. Four acquisitions were already announced during the first quarter of 2025: Aster Global Environmental Solutions and RTI Laboratories in the United States, Stella Operazioni Doganali in Italy and IMO in Australia. Today, SGS is pleased to announce the acquisition of four additional companies in high-growth, attractive segments: • Carpedia International specializes in process and change management, focusing on delivering measurable, sustainable improvements in performance and profitability for mid-market and large enterprises across various industries. • HidroMares Oceanografia is a key player in the field of environmental monitoring and maritime solutions, leveraging advanced technology to improve the safety, efficiency, and sustainability of port and offshore operations. • AWIA Umwelt GmbH specializes in environmental protection and remediation, offering innovative services in the fields of waste management, soil remediation, air quality monitoring, and water treatment. • Streamline Control is a leading company specializing in operational technology and digital transformation, particularly in the areas of Industrial Internet of Things and data analytics. Additionally, SGS closed the divestment of small non-core businesses including SICTA (Automobile technical inspections in Ivory Coast). 1 Please refer to Alternative Performance Measures in the Appendix Acquisitions Closing date Location Business line FTE Aster Global January 2025 USA Business Assurance 25 Stella Operazioni Doganali January 2025 Italy Connectivity & Products 30 RTI Laboratories February 2025 USA Industries & Environment 30 Carpedia International March 2025 Canada Business Assurance 100 HidroMares Oceanografia April 2025 Brazil Industries & Environment 64 IMO Group April 2025 Australia Natural Resources 40 AWIA Umwelt GmbH April 2025 Germany Industries & Environment 38 Streamline Control May 2025 (expected) Canada Industries & Environment 60 2 SGS | First quarter 2025 sales update
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Successful scrip dividend The company’s Annual General Meeting held on 26 March 2025 offered its shareholders the possibility to receive the 2024 dividend in cash or in new SGS shares. As announced on 17 April 2025, 63.30% of the dividend for the financial year 2024 was elected to be paid in the form of new SGS shares, with the remaining 36.70% to be paid out in cash. The delivery of the new shares and the payment of the total CHF 222 million cash dividend is planned to take place on 24 April 2025. This represents a clear endorsement of Strategy 27 and allows SGS to reward the loyalty of its shareholders while redirecting close to CHF 400 million of cash towards high-impact growth opportunities. Outlook 2025 Despite the currency volatility and the trade tariffs implemented so far, we confirm the Group’s targets for 2025: • 5% to 7% organic1 sales growth • 1% to 2% bolt-on contribution to annual sales growth • At least 30 basis points improvement in adjusted operating income 1 margin on sales, in reported terms • Strong free cash flow1 generation Conference call A live webcast for analysts and investors will be held on 24 April 2025 at 10:00am CET. Details of the webcast can be found below: https://event.choruscall.com/mediaframe/webcast.html?webcastid=4PaZmGRa A recording of the webcast will be available later in the day on sgs.com. 1 Please refer to Alternative Performance Measures in the Appendix 3 SGS | First quarter 2025 sales update
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Testing & Inspection: Industries & Environment (CHF million) Q1 2024 Q1 2025 Sales2 515 546 Total change 6.0% of which organic1 5.1% of which scope 1.7% of which FX -0.8% 1 Please refer to Alternative Performance Measures in the Appendix 2 Minor reclassifications of Q1 2024 sales have been performed to be fully comparable with current business line allocation, please refer to the Appendix. Industries & Environment delivered solid organic growth of 5.1%, led by Environment and Safety: • Environment continued to benefit from double-digit organic growth in PFAS testing, partly offset by soft start in routine testing • High single-digit organic growth in Safety services was supported by increased demand in the Americas and Asia Pacific • Projects & Advisory grew moderately, as new wins in EEMEA were partly offset by end of projects in Latin America • Industrial Testing benefited from high single-digit organic growth in construction materials, partly offset by the completion of some low-margin contracts Testing & Inspection: Natural Resources (CHF million) Q1 2024 Q1 2025 Sales2 395 406 Total change 2.8% of which organic1 3.8% of which scope -0.3% of which FX -0.7% Natural Resources delivered resilient organic growth of 3.8%: • Minerals delivered mid-single-digit organic growth, with strong trade services partially offset by project delays in North America • Testing in critical raw materials and metals for battery testing continued to benefit from strong demand • Oil, Gas and Chemicals grew moderately on the back of lower trading volumes related to current economic uncertainties • Agriculture was stable, as recovery in agriculture input solutions was offset by softness in trade services due to the poor crop season in Europe First quarter 2025 sales by end-market 4 SGS | First quarter 2025 sales update
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Testing & Inspection: Connectivity & Products (CHF million) Q1 2024 Q1 2025 Sales2 305 332 Total change 8.9% of which organic1 6.9% of which scope 1.6% of which FX 0.4% 1 Please refer to Alternative Performance Measures in the Appendix 2 Minor reclassifications of Q1 2024 sales have been performed to be fully comparable with current business line allocation, please refer to the Appendix. Connectivity & Products delivered strong organic growth of 6.9%, driven by Sustainability and Digital Trust: • The acceleration in Connectivity was driven by strong organic growth and solid performance of recently acquired businesses in North America • High single-digit organic growth in Softlines was fueled by continued strong demand for Sustainability services • High single-digit organic growth in Hardlines was supported by strong demand from automotive and home improvement retailers • Mid-single-digit organic growth in Government services was driven by product conformity assessment and customs services Testing & Inspection: Health & Nutrition (CHF million) Q1 2024 Q1 2025 Sales2 192 218 Total change 13.5% of which organic1 10.4% of which scope 2.6% of which FX 0.5% Health & Nutrition delivered double-digit organic growth of 10.4%, driven by all segments: • Double-digit organic growth in Food was mainly driven by emerging contaminants testing, advisory and compliance • In particular, Nutraceutical and Dietary supplement certification reported strong growth • Pharma delivered high single-digit organic growth, as a result of strong activity in drug development and recovery in clinical research • Excellent organic growth in Cosmetics & Personal Care was supported by all regions 5 SGS | First quarter 2025 sales update
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Certification: Business Assurance (CHF million) Q1 2024 Q1 2025 Sales 170 179 Total change 5.3% of which organic1 3.5% of which scope 1.8% of which FX 0.0% Organic growth in Business Assurance was supported by ESG: • Certification achieved mid-single-digit organic growth in Certification, in a post-recertification year for Quality, Health, Safety, and Environment (QHSE). Growth was supported by medical devices and Digital Trust • Double-digit organic growth in ESG was driven by non-financial reporting assurance, social audits and greenhouse gas emissions verification • Consulting remained soft, with several projects delays in North America in the supply chain segment • Recent acquisitions made a strong contribution to growth 1 Please refer to Alternative Performance Measures in the Appendix 6 SGS | First quarter 2025 sales update
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Appendix Alternative Performance Measures For the period ended 31 March 2025 The following document presents and defines the Group’s alternative performance measures (APMs), not defined by IFRS which are used to evaluate financial and operational performance. Where relevant, a reconciliation to the information included in our IFRS consolidated financial statements is presented. Management deems these performance measures as a useful source of information when taking decisions and managing the operations. These alternative performance measures are disclosed in the integrated report, the half year report, the quarter reports and other external communications to investors, and are available following this link: https://www.sgs.com/en/investors/reports Organic sales growth Organic sales growth is used by management to evaluate the evolution of existing operations, excluding the changes in scope (impacts of business acquisitions and divestments) and currency fluctuations. This provides a ‘like-for-like’ comparison with the previous period in constant scope and constant currency, enabling deeper understanding of the business dynamics which contribute to the evolution of sales from one period to another. • Scope: the results from acquisitions are excluded for the 12 months following the date of a business combination, while results generated by a divested unit are excluded for the 12 months prior to the divestiture • Currency fluctuations: sales at constant currency are calculated by translating current year numbers at prior year average exchange rates (except for currencies with a devaluation of above 50% between the two comparable periods, for which the current year average rate is applied to the prior year baseline) Organic sales are then divided by the prior period sales to derive the organic growth percentage. A numerical reconciliation of this APM is included below: (CHF million) Sales Q1 2024 1 577 Growth in value and in % Organic 88 5.6% Scope 21 1.3% Acquisitions 22 1 .4% Disposals -1 -0.1% Sales Q1 2025 at constant currency 1 686 6.9% Currency impact -5 -0.3% Sales Q1 2025 1 681 6.6% Constant currency The constant currency calculation is used in order to assess the period over period evolution of financial indicators without the currency impact. SGS calculates constant currency measures by translating the current year numbers at prior year average exchange rates (except for currencies with a devaluation of above 50% between the two comparable periods, for which the current year average rate is applied to the prior year baseline). Adjusted operating income The adjusted operating income is provided to assess the underlying financial and operational performance of the Group excluding the influence of items not directly attributable to operational performance. Adjusted operating income represents the operating income excluding: • Amortization and impairment expenses on intangibles arising as a result of acquisitions • Impairment expenses on goodwill • Restructuring costs including impairment charges arising from the execution of restructuring plans • Gains and losses from business disposals • Acquisition- and divestment-related expenses including integration costs • Other non-recurring items, e.g. non-operational items such as certain regulatory, compliance and legal costs and certain asset write-downs/impairments 7 SGS | First quarter 2025 sales update
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Free cash flow The free cash flow is deemed an important measure by management as it shows the ability to generate cash after the investment in assets necessary to support the existing operating activities. The Group defines free cash flow as: Net cash flow from operating activities, Less net purchase of property, plant and equipment and of other intangible assets, Less lease payments, Less interests paid, net of interests received. Cash conversion Cash conversion ratio provides management with a measurement of the Group’s ability to convert operational results in cash. The ratio is calculated by comparing the free cash flow to the EBITDA (operating income before depreciation, amortization and impairment) minus lease payments. 2024 sales by quarter Minor reclassifications of 2024 sales have been performed to be fully comparable with current business line allocation. Comparable with 2025 business allocation (CHF million) Q1 Q2 Q3 Q4 2024 Industries & Environment 515 586 545 568 2 214 Natural Resources 395 424 413 422 1 654 Connectivity & Products 305 341 339 344 1 329 Health & Nutrition 192 211 211 222 836 Business Assurance 170 196 191 204 761 Total 1 577 1 758 1 699 1 760 6 794 Published in 2024 (CHF million) Q1 Q2 Q3 Q4 2024 Industries & Environment 526 598 557 580 2 261 Natural Resources 386 413 403 410 1 612 Connectivity & Products 294 329 327 332 1 282 Health & Nutrition 201 222 221 234 878 Business Assurance 170 196 191 204 761 Total 1 577 1 758 1 699 1 760 6 794 About SGS SGS is the world’s leading Testing, Inspection and Certification company. We operate a network of over 2,500 laboratories and business facilities across 115 countries, supported by a team of 99,500 dedicated professionals. With over 145 years of service excellence, we combine the precision and accuracy that define Swiss companies to help organizations achieve the highest standards of quality, compliance and sustainability. Our brand promise – when you need to be sure – underscores our commitment to trust, integrity and reliability, enabling businesses to thrive with confidence. We proudly deliver our expert services through the SGS name and trusted specialized brands, including Brightsight, Bluesign, Maine Pointe and Nutrasource. SGS is publicly traded on the SIX Swiss Exchange under the ticker symbol SGSN (ISIN CH1256740924, Reuters SGSN.S, Bloomberg SGSN:SW). 8 SGS | First quarter 2025 sales update
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Disclaimer This material is provided for information purposes only and is not intended to confer any legal rights to you. This document does not constitute an invitation to invest in SGS shares. Any decisions you make in reliance on this information are solely your responsibility. 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. Shareholder Information Upcoming investor events 25 July 2025 Half year 2025 results 23 October 2025 Q3 2025 sales update 11 February 2026 Full year 2025 results 26 March 2026 Annual General Meeting 23 April 2026 Q1 2026 sales update Stock listing information Stock exchange trading SIX Swiss Exchange Stock exchange listing SGSN Common stock symbols Bloomberg: Registered Share: SGSN.SW Reuters: Registered Share: SGSN.S Telekurs: Registered Share: SGSN ISIN: Registered Share: CH1256740924 Swiss security number: 249745 Investor and media contacts Ariel Bauer Head of Communications, Investor Relations and Sustainability Tel: +41 79 863 49 23 Livia Baratta Director, Investor Relations Tel: +41 79 586 48 53 Email: sgs.investor.relations@sgs.com Headquarters information SGS SA 1 place des Alpes P.O. Box 2152 CH – 1211 Geneva 1 www.sgs.com SGS | First quarter 2025 sales update
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© SGS Société Générale de Surveillance SA. (2025) 707499 SGS Headquarters 1 Place des Alpes P.O. Box 2152 1211 Geneva 1 Switzerland sgs.com