SGS (SGSN) Investor Day 2024 Day 2(CEO Plenary) summary

Strategic growth drivers and market focus

• Strategy 27 targets sustainable, profitable growth, focusing on sustainability, digital trust, and supply chain trends, with a shift to region- and business-focused growth.

• Four megatrends drive growth: sustainability, digitalization (AI), nearshoring, and rising middle class in emerging markets, alongside increasing regulation and public awareness.

• Sustainability and digital trust are expected to deliver at least CHF 600 million and CHF 200 million in incremental sales by 2027, respectively.

• North America prioritized for expansion, aiming to double sales in the region to at least CHF 1.4 billion by 2027.

• Focus on specialized testing, energy transition, digital trust, and ESG assurance as key growth areas.

Financial guidance and targets

• Organic growth targeted at 5%-7% annually, with total growth of 6%-9% including acquisitions, and bolt-on M&A contributing 1–2% annually.

• Adjusted operating income margin to improve by at least 1.5 percentage points, reaching over 16.2% by 2027.

• Free cash flow conversion to exceed 50%, translating to at least CHF 800 million by 2027.

• Sustainability and digital trust to represent over 15% of total sales by 2027.

• Free cash flow will fully cover bolt-on acquisitions and dividends, maintaining a strong investment grade and attractive shareholder remuneration.

Organizational transformation and efficiency

• New incentive schemes and performance culture implemented to unlock agility and empower leaders, with organizational simplification and a leaner operating model underway.

• CHF 100 million cost reduction plan underway, with over CHF 40 million savings already visible in 2024 and an additional CHF 50 million procurement savings targeted by end of 2025.

• Overlapping functions eliminated, especially at corporate level, to increase efficiency.

• Executive committee restructured for market accountability and streamlined decision-making.

• Enhanced agility and performance focus, with deep dives into North America, Asia Pacific, M&A, and laboratory network strategies.