Post on 21-Apr-2017
2 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
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.
4 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 HIGHLIGHTS
(1) Constant currency basis – (2) Before amortisation of acquisition intangibles, restructuring, transaction and
integration-related costs – (3) Cash flow from operating activities net of capital expenditures
5 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 ACQUISITIONS
(1) Minority equity stake
6 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
SUBSEQUENT EVENTS
(1) Final negotiations. Subject to closing conditions
7 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
88 400 EMPLOYEES(1) AND 1 800 OFFICES & LABORATORIES AROUND
THE GLOBE ENABLING REACH AND LOCAL SUPPORT
(1) End of period
9 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 FINANCIAL HIGHLIGHTS
(1) Before amortisation of acquisition intangibles, restructuring, transaction and
integration-related costs – (2) Constant currency basis
10 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 REVENUE GROWTH COMPOSITION
11 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 BUSINESS PORTFOLIO
12 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 REVENUE GROWTH(1) BY BUSINESS
(1) Constant currency basis
13 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 REVENUE GROWTH(1) BY REGION
(1) Constant currency basis
14 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
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EVOLUTION OF HEADCOUNTS
(1) As of 30 June 2016.
16 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 ADJUSTED OPERATING INCOME(1) GROWTH
(1) Before amortisation of acquisition intangibles, restructuring, transaction and
integration-related costs
17 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 ADJUSTED OPERATING INCOME(1) PORTFOLIO
(1) Before amortisation of acquisition intangibles, restructuring, transaction and
integration-related costs
18 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 ADJUSTED OPERATING MARGIN(1) BY
BUSINESS
(1) Before transaction and integration related costs, amortisation of acquisition intangibles and restructuring – (2) Constant currency basis – (3) Restated figures due to the change in business structure
20 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 CONSOLIDATED BALANCE SHEET
(1) Restated figures (cf note 3 of the 2016 half year report)
22 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 CONDENSED CASH FLOW
(1) Before cash flows related to pension funds special contribution – (2) Cash flow from operating activities net of
capital expenditures
23 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 CAPITAL EXPENDITURE
25 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
H1 2016 FOREIGN CURRENCY REVENUES
26 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
FOREIGN CURRENCY AVERAGE RATE CHANGE
H1 2016 VERSUS H1 2015 RATE
27 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
FINANCIAL SUMMARY
27
Revenue growth of 7.0% of which 3.4% organic
Increase in adjusted operating income(1) by 2.3% and
adjusted operating income margin(1) at 14.2%
Net income increased by 23.7%, up to
CHF 277 million
Investment of CHF 223 million in Capex and
Acquisitions
Free cash flow(2) increased by CHF 69 million to
CHF 242 million (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs – (2) Operating cash flow net of capital expenditures
29 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis (3) Restated figures due to the change in business structure
AGRICULTURE, FOOD & LIFE (AFL)
PERFORMANCE
Strong growth from Food and Life activities
Solid growth from Trade-related services
Seed & Crop impacted by slowdown in
agricultural input market
Food growth continues to be fuelled by
consumer safety concerns and investments in
testing capabilities
Stable Trade growth expected and agricultural
input market continues to be challenging
Life Lab growth in high single digits
Focus on solution enhancements and improve
efficiency
OVERVIEW
OUTLOOK
30 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis
MINERALS (MIN)
PERFORMANCE OVERVIEW
OUTLOOK
Onsite laboratories continue to grow
Geochem laboratories sample volumes
increase by 16% vs. prior year
Energy performs well, particularly in Russia
and South Africa
Trade Services remain flat
Metallurgy activities impacted by reduced
exploration spend
H2 expected to be flat
Interest in onsite gold laboratories strong
Optimise mine and plant services and
integration of Bateman Engineering services
Lean efficiency programmes to continue
31 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis (3) Restated figures due to the change in business structure
OIL, GAS & CHEMICALS (OGC)
PERFORMANCE OVERVIEW
OUTLOOK
Flat growth in Trade related activity
Single-digit growth in Non-Inspection related
testing
Low single-digit growth in Plant and Terminal
Operations
Solid results in Fuel Integrity Programmes
activities and Oil Condition Monitoring
Project shutdowns and delays impact
Upstream services
Soft growth in Upstream services for the
Production segment from new contracts
Trade Related and Plant and Terminal
Operations to deliver low single-digit growth
Non-Inspection related testing is expected to
benefit from strong project pipeline
32 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis (3) Restated figures due to the change in business structure
CONSUMER & RETAIL (CRS)
PERFORMANCE OVERVIEW
OUTLOOK
Strong results from Eastern Europe and
Middle East
Softlines and Hardlines experienced robust
growth recovery
Cosmetics, Personal Care and Household
(CPCH) remained strong in H1
Electrical & Electronics (E&E) performed well
despite challenges in Wireless Testing
Growth to continue in Softlines and Hardlines
Better E&E performance from Safety, EMC
and RSTS activities
Investment in capacities in new sourcing
countries
Focus on acquisitions to strengthen position in
key segments (CPCH, E&E)
33 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis (3) Restated figures due to the change in business structure
CERTIFICATION & BUSINESS ENHANCEMENT (CBE)
PERFORMANCE OVERVIEW
OUTLOOK
Overall strong results with solid organic growth
Strong growth in medical device activities with
introduction of unannounced audits
Single-digit growth in Management System
Certification driven by new 2015 standards
Strong growth in Training activities from ISO
9001:2015 and Technical Training in China
Double-digit growth in Performance
assessment with several contract wins
Growth expected to remain healthy in the high
single digits driven by all major activities
Global Service Centre in Asia to open to
consolidate 4 countries by end of 2016
bringing further efficiency
34 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis (3) Restated figures due to the change in business structure
INDUSTRIAL SERVICES (IND)
PERFORMANCE OVERVIEW
OUTLOOK
Canada delivered solid results following
restructuring
In Eastern Asia, lab activity slowdown from
reduced investments
Strong organic growth in Middle East and
South America
Diversification strategy in South America led to
increased revenue
Fully integrated 2015 acquisitions expected to
perform well
Market condition expected to remain difficult
during H2
Sample volumes to increase in laboratories in
all regions
Digital technology to support new services in
construction supervision market
35 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis (3) Restated figures due to the change in business structure
ENVIRONMENT, HEALTH & SAFETY (EHS)
PERFORMANCE OVERVIEW
OUTLOOK
Growth continues across most activities
Growth and improved margin from European
projects
Accutest Laboratories strengthens presence
and global service portfolio in USA
Double-digit growth in South America, Asia
and Africa
Margin pressure continued in Australia
Healthy growth from development of existing
labs and Health & Safety network
Growth in Auditing services for hospitality and
real estate sector
Optimisation of Accutest and growth in US
marine sector to improve margins
New opportunities for drones in field services
36 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis (3) Restated figures due to the change in business structure
TRANSPORTATION (TRP)
PERFORMANCE OVERVIEW
OUTLOOK
Solid performance globally in Regulated
services
Strong performance in commercial inspection
activities
Retail network solutions fully operational and
performing well
Recent acquisitions performing in line
Tightening of exhaust emissions regulations
will drive growth in emission testing
Technology shift to Connectivity and
Digitalisation will support solid supply chain
solutions growth
Positive outlook for regulated services in Africa
and South America
Focus on acquisitions in the Aerospace sector
37 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
(1) Before transaction and integration-related costs, amortisation of acquisition intangibles and restructuring (2) Constant currency basis
GOVERNMENTS AND INSTITUTIONS (GIS)
PERFORMANCE OVERVIEW
OUTLOOK
Solid organic growth
Increased market share for PCA, plus new
contract in Gabon and renewal in Uganda
Single Window driven by Mozambique and
Madagascar with increased import volume
Cameroon, first country to implement D-Tect
New PCA Cameroon to start in August
New SOLAS Mandates in discussion
Mozambique financial situation may lower
growth, compensated by an increased scope
Launch of Medical Testing (Deafness) in
Cameroon in July. High visibility
Risk: Political instability in Haiti
39 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
2016 GUIDANCE(1)
(1) At stable market conditions
40 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
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SGS OUTLOOK 2016 – 2020
Mid single-digit organic growth on average with improvement over the period supported 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(1) of at least 18% by end of the period supported by the new focused structure, efficiency improvement initiatives and improved pricing
Strong cash conversion
Solid returns on invested capital
Solid dividend distributions, in line with improvement in net earnings
(1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related
costs
45 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
ACRONYMS AND OTHER ABBREVIATIONS
46 HALF-YEAR RESULTS PRESENTATION © SGS SA 2016 ALL RIGHTS RESERVED
18 JULY 2016
INVESTOR RELATIONS INFORMATION