SGS launched its 2027 strategy: Accelerating growth and building trust

SGS Group, a global leader in testing, inspection and certification, has presented its Integrated Report for 2023. The report contains significant information about the company’s financial and non-financial results. The format of this year’s report has been updated and improved to help stakeholders better understand the company’s strategy, performance, governance and impact on the planet.

In 2023, SGS experienced organic sales growth and significant cash flow growth. SGS has been able to overcome the global challenges of rising costs and geopolitical instability with the help of its employees, focusing on productivity, geographic and service diversity and innovation.

SGS offers specialist testing, inspection and certification services in 116 countries, services it delivers through five business lines. Connectivity and Products, Health and Nutrition, Industries and Environment and Natural Resources – testing and inspection sectors, and Business Assurance (formerly Knowledge) represents the certification business.

In 2023, SGS recorded sales of CHF 6,622 million (€6,944 million), supported by strong organic growth of 8.1%, driven by all business lines. This included double-digit growth in Business Assurance for certifications and high single-digit growth in Natural Resources and Industries and Environment.

Adjusted operating income amounted to CHF 971 million (€1,018 million), representing organic growth of 6.3%. Adjusted operating income margin on sales was 14.7. Cash flow from operating activities reached CHF 1,123 million (€1,177 million), leading to a net cash flow of CHF 604 million (€633 million), up 25.6%. This was mainly driven by lower net working capital requirements and capital expenditure.

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“In 2023, SGS had superior organic growth and significant free cash flow growth due to the broadening of its portfolio. All of our business lines and regions contributed to this performance, with particularly strong growth in sustainability, cybersecurity, ESG assurance and consulting services. This is a strong platform to build on,” said Frankie Ng, SGS Group CEO who will end his tenure at the helm of the company in March.

Europe accounted for 36% of SGS’s total sales last year, and the Asia Pacific region accounted for 34%. North America represented 12%, Africa and the Middle East 9%, and Latin America also 9%.

In terms of sustainability, in 2023 SGS Group reached a 14% reduction in CO2 emissions compared to 2019 (according to Scope 1 and Scope 2), the percentage of women in management positions reached 31.9%, and the number of hours volunteered by the company’s employees was 32,590.

The strategy for 2027

SGS has announced its Strategy 2027: accelerating growth and trust in partner relationships. This new strategy is created to drive profitable growth, streamline the organization and deliver attractive returns to stakeholders.

The SGS strategy is based on three factors:

• Growth: The Group will capitalize on the strong annual momentum of the testing, inspection and certification industry and invest in segments and regions where there are greater opportunities.
• Performance and Agility: SGS will implement a cost-based operating model and a performance-based culture, promoting accountability. A new 12-member Executive Committee will be appointed.
• Strong financial profile: SGS will grow externally through incremental and synergistic acquisitions while maintaining a strong balance sheet. Shareholder remuneration will remain attractive.

Ms. Géraldine Picaud, recently appointed CEO of SGS Group, said: “I look forward to leading such a large company and driving positive change in this dynamic industry. In line with our 2027 Strategy, we will invest in segments and regions where there are greater opportunities, simplify our organization and improve our financial profile to create value for all stakeholders.”

In Romania, since 1922

SGS started its activity in Romania in 1922, in the Danube port of Brăila, at that time it was the second port in the world grain trade, after Chicago. The company operated in Romania until 1947, Jacques Salmanowitz – Société Anonyme Roumaine de Surveillance. In 1992, activity was resumed in Romania by establishing SGS Romania with headquarters in Bucharest. Today, SGS is the leading national private provider of inspection, certification, verification and testing services, providing confidence to people, organizations and governments.

Through its nine business divisions, SGS provides services to the main economic sectors: agriculture and food, oil, gas and chemicals, minerals, transport, environment and occupational safety, industry, construction, energy and utilities. SGS Romania has offices and laboratories throughout the country – Brăila, Constanța, Craiova, Cluj-Napoca, Drobeta Tr. Severin, Galați, Iaşi, Pitesti, Ploiesti, Slatina, Tg. Jiu, Timisoara and others.