SGS (SGSN) Q3 2024 TU earnings summary

Executive summary

• Achieved 7.3% organic sales growth in Q3 2024 and 7.8% for the nine-month period, with reported sales up 3.8% in Q3 and 2.3% for nine months, despite a -3.5% currency impact.

• Launched IMPACT NOW sustainability platform and a global PFAS testing campaign, quadrupling PFAS capacity in North America.

• Nine bolt-on acquisitions signed year-to-date, totaling ~CHF 70 million in annual sales, with four completed in Q3, expanding presence in key markets.

• Strong performance across all divisions, especially in sustainability services and PFAS testing.

• Management changes include new Chief Human Resources Officer and CIO joining the Executive Committee.

Financial highlights

• Q3 2024 sales reached CHF 1,699 million, up 3.8% year-over-year; nine-month sales at CHF 5,034 million, up 2.3%.

• Organic growth was the main driver, with scope and FX having negative impacts; currency impact was -3.5% in Q3 and -5.1% for nine months.

• Price and volume contributed equally to Q3 growth.

• Adjusted operating income margin improvement and strong free cash flow generation targeted for 2024.

• CHF 9 million in restructuring savings achieved in Q2; restructuring plan on track.

Outlook and guidance

• 2024 outlook confirmed: mid- to high single-digit organic growth, improved adjusted operating income margin, and strong free cash flow.

• Full M&A program and active pipeline for further acquisitions.

• Mid-term Strategy 27 targets 5–7% annual organic sales growth, at least 1.5 percentage point margin improvement, and cash conversion above 50% by 2027.

• Confident in delivering Strategy 27 targets.