SGS is on track to achieve an ambitious goal

In the first half, the inspection and inspection group SGS implemented more and slightly improved its profitability. However, it is still far from the 2020 target for margins. Business with mining operators developed well in the first half of 2018.

The Sellers of Geneva increased their turnover by 8.5% between January and June, to 3.31 billion francs. Excluding the currency effect and the many small acquisitions, organic growth remains at 5.6%, the company said Wednesday. Analysts thus outperformed the group

Strong division "Minerals"

The mining sector is well developed for SGS. The difficult market environment of recent times has significantly improved and has led to an increase in sales in the division "Minerals" in local currency of nearly 14%, according to the announcement. With 11%, the "Government & Institutions" division also recorded double-digit growth. The impact on digitization services in Cameroon was positive

. The oil and gas sector, which had long suffered from declining demand, benefited from a market recovery and grew by 7.7% in the first half. SGS has signed new contracts for the US oil fields in this segment. In contrast, the division "Agriculture, Food and Life" started with a sales increase of 4.8% cautiously until 2018.

Problems in Brazil

The objective, the margin of Operating until 2020 in the 18 percent range SGS is approaching small steps. The adjusted EBIT margin, improved by one-off factors, such as one-time integration costs, improved by 0.4 percentage points to 14.6%, as forecast by analysts. Here too, development in the mining sector has had a positive effect, it is said. At the same time, measures to increase efficiency have been implemented in some sectors.

Meanwhile, problems have appeared on the Brazilian market. An internal audit found that in the past, sales were overvalued. Other clarifications are in progress and SGS has planned a provision of 47 million francs to be prepared for the unexpected. After deduction of minority interests, this expense slightly reduced the net result to CHF 274 million. Without special factors, it would have climbed to 342 million euros

Targets achievable by 2020

In perspective, SGS is still on track to achieve the goals that it has. it aims to reach by 2020. In addition to the 18% margin mentioned above, the Group wants to grow organically "solidly" annually – with rates in the mid-digit percentage range. In addition, SGS will make acquisitions in the existing business areas. In the current year, the increase in operating margin is also high on the list of priorities.

This year, SGS already diligently bought businesses, there were a total of seven. However, these are smaller acquisitions; they contributed only 11 million francs to the turnover in the first half of the year. During the strategy period from 2016 to 2020, SGS has set a goal of acquiring approximately $ 1 billion in sales-by-acquisitions.

(sda / gku)