SGS with surprising change of CEO and new medium-term targets
Published: Friday, Jan 26th 2024, 07:11
Updated At: Saturday, Jan 27th 2024, 00:59
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The goods testing group SGS has surprised everyone with a change of CEO. The company also wants to restructure itself in order to achieve more profitable growth by 2027. Meanwhile, the annual figures were rather below expectations.
A woman will be at the helm of SGS in the future - Géraldine Picaud is to be appointed CEO at the upcoming Annual General Meeting on March 26, 2024, the Geneva-based company announced on Friday. She will succeed Frankie Ng, who wishes to step down from his position at his own request.
Picaud only joined SGS on December 1, 2023 to lead the areas of finance, digital and strategic transformation, mergers and acquisitions, IT and procurement. She was previously Head of Finance at the cement group Holcim. She brings with her a wealth of experience in senior management positions. Calvin Grieder, Chairman of the Board of Directors, expressed the Board's confidence in the transition. She brings the right mix of "strategic vision and operational skills" to SGS, he said
Stable sales, lower profit
SGS also announced its annual figures for 2023. Sales fell by 0.3 percent to 6.62 billion Swiss francs. Adjusted for acquisitions and currency effects, SGS grew by 8.1 percent in the reporting year (previous year: 5.8%).
Meanwhile, the result suffered from the general rise in costs and inflation: the operating result adjusted for special factors fell by 5.1 percent to 971 million francs and the corresponding margin fell by 0.7 percentage points to 14.7 percent. This left an unadjusted profit attributable to shareholders of CHF 553 million after CHF 588 million in the previous year. The decline of 6.0 percent was driven in particular by the strong Swiss franc.
The dividend is to amount to CHF 3.20 per share and will therefore remain stable, taking into account the share split. Shareholders would have the choice of receiving the dividend in cash or in the form of shares.
With the exception of organic growth and the dividend, SGS missed analysts' targets across the board.
Mid to high single-digit organic growth is targeted for 2024. The M&A program will also be relaunched. The adjusted EBIT margin should improve and free cash flow should be strong.
Focus on growth
In addition to the change in management and the annual figures, the Group has also set itself new medium-term goals. The strategy until 2027 is intended to streamline the Group structure, save costs and generate "attractive returns" for shareholders. It is based on the drivers of growth, performance and agility as well as a strong financial profile, according to SGS.
Specifically, annual organic growth of 5% to 7% is to be achieved by 2027. The adjusted operating profit margin is to be improved by at least 1.5 percentage points by 2027 and cash conversion is to exceed 50%.
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