In This Article:
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Net Sales: Reached a record CHF6.8 billion, supported by 7.5% organic growth.
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Adjusted Operating Income: CHF140 million, translating into a 15.3% margin on sales, 60 basis points above 2023.
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Earnings Per Share (EPS): CHF3.10, a growth of 3.3% despite restructuring expenses.
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Free Cash Flow: CHF748 million, up by 24% compared to 2023.
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Organic Sales Growth: 7.5%, equivalent to CHF494 million.
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Forex Impact: Negative translation impact of 4.8% on sales.
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Operating Income Margin: Improved by 60 basis points to 15.3%.
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Return on Invested Capital (ROIC): 24%, 2 percentage points higher than 2023.
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Net Debt Leverage: Improved from 2 times in 2023 to 1.8 times in 2024.
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Dividend Proposal: CHF3.20 per share, with an option for cash or shares.
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Acquisitions: 14 bolt-on acquisitions in 2024, with 3 more announced in 2025.
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Incremental Sales from Sustainability: CHF100 million recorded.
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Organic Sales Growth by Region: LATAM expanded by more than 17%, Eastern Europe, Middle East, and Africa grew by 14.1%.
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Operational Efficiency Savings: CHF50 million savings in 2024, with a target of CHF150 million by end of 2025.
Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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SGS AG (SGSOF) achieved record sales of CHF6.8 billion in 2024, supported by strong organic growth of 7.5%.
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The company executed 14 bolt-on acquisitions in 2024, enhancing its portfolio and bringing complementary expertise.
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SGS AG (SGSOF) reported an outstanding free cash flow of CHF748 million, up by 24% compared to 2023.
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The company maintained a strong ESG profile, being ranked as the first professional services company in the Dow Jones sustainability indices.
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SGS AG (SGSOF) achieved a 24% return on invested capital, driven by increased profitability and value-accretive acquisitions.
Negative Points
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The company faced a negative forex translation impact of 4.8% on sales and 7.1% on adjusted operating income.
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There was a slowdown in training and unfavorable comparables in consulting, impacting business assurance growth.
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SGS AG (SGSOF) incurred CHF82 million in restructuring costs for the execution of its linear operating model savings plan.
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The company experienced a slowdown in the European agriculture sector due to the new crop season.
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Margins in the connectivity and products division were slightly down, indicating tension between reinvestment and operating leverage.
Q & A Highlights
Q: With the incoming US administration's stance against sustainability and ESG, do you see any risk to growth in your business, particularly in business assurance? Also, regarding M&A, could we see you doing a larger deal beyond the 1% to 2% from bolt-ons? A: We see opportunities in the US, especially with increased PFAS testing. Environmental growth was 30% in the US in 2024. Regarding M&A, we are open to larger deals if they align with Strategy 27 and provide shareholder returns. The market is fragmented, and we will evaluate opportunities carefully.