140+Years of Adding Value to Society
Enabling a better, safer and more interconnected world2021 Annual Reports
Our key success factor remains the dedication and dynamism of our colleagues. It is through their hard work and commitment to supporting our customers that SGS has delivered another strong operational performance.
Letter to Stakeholders
Implementing the next phase of our strategic evolution in 2021 is increasing the cooperation and agility across our global network. This is helping us leverage our expertise and competence, specifically in our key focus areas, and is making SGS more digital and sustainable.
Dear Stakeholders,
We were excited to start the implementation of our new strategic plan at the beginning of this year, and we have already made significant progress in deploying it across our network.
The strategic plan puts a renewed emphasis on market leadership through: digital innovation, ‘thinking sustainably’, including further integrating our non-financial and financial objectives. It also aligns SGS more explicitly to the five key TIC growth megatrends of: Connectivity, Nutrition, Health & Wellness, Sustainability & Climate, Infrastructure, and Consumer Empowerment.
We also launched our Corporate Sustainability Ambitions 2030, including our most challenging targets yet for 2023 and 2030. These are directly linked to our strategic evolution span our entire value chain, and are factored into our capital allocation and management remuneration.
Our people, our colleagues remain our key success factor and their energy and passion makes us unique. It is through their hard work and commitment to supporting our customers, that SGS has delivered another strong operational performance in 2021. At the same time, they continue to deal with personal and professional Covid-related challenges, and regrettably, for some, tragedies in their personal lives.
We are making significant investment in our employees and platform to reinforce our leadership positions in the TIC industry and build a thriving future for SGS. As we continue to execute our strategy, we are evolving into an even more sustainable, digital and data-driven company, fully capable of supporting our commitment to enabling a better, safer and more interconnected world for all our stakeholders.
Read more in our reports:
2021 Integrated Report
2021 Corporate Sustainability report
96,000+Employees Around the World
2,600+Offices and Laboratories
2021 Performance Highlights
Our strong 2021 performance has confirmed our strategic focus. Combined with the investment in our platform we are building a thriving future for SGS.
Revenue
CHF
6.4bn
6.4bn
+14.2%1
8.9% Organic*
8.9% Organic*
| 2021: 6.4 | |
|---|---|
| 20201: 5.6 |
1 Constant currency (CCY)*
*Alternative performance measures (see full report)
*Alternative performance measures (see full report)
Adjusted operating income*
CHF
1 055mio
1 055mio
+16.8% CCY1
| 2021: 1 055 | |
|---|---|
| 20201: 903 |
1 Constant currency (CCY)*
*Alternative performance measures (see full report)
*Alternative performance measures (see full report)
Profit for the period
CHF
655mio
655mio
+29.7%
| 2021: 655 | |
|---|---|
| 2020: 505 |
Adjusted operating income margin*
16.5%
+0.4pp1,3
| 2021: 16.5 | |
|---|---|
| 20201: 16.1 |
1 Constant currency (CCY)*
2 Percentage points
*Alternative performance measures (see full report)
2 Percentage points
*Alternative performance measures (see full report)
Our value to society
CHF
5 496 mio*
5 496 mio*
Ensuring we make better decisions, for our business and society.
*From our direct operations and our supply chain activities in 2020
Leadership in ESG ratings
Supporting local communities
CHF
1.45 mio
1.45 mio
Invested in empowerment, environmental and educational projects.
Committed to our
business ambitions for
1.5 degreesand to
Net-ZeroOur Five Divisions Aligned to Key TIC Megatrends
Our five divisions are closely aligned to the key TIC megatrends to better service our customers and to anticipate future demand.
Capex intensity
Higher
Net working capital intensity
Lower
Return profile
+++
M&A appetite
High in Connectivity
Strategic objectives 2023 and beyond
- Consolidate our leading market position
- Leverage market growth supported by the proliferation of 5G technology and loT devices
- Continue to build cybersecurity expertise as an integral part of our ‘total solution’
- Focus on automotive and semiconductor industries as key opportunities
- Continue to lead the expansion of the domestic Chinese market
- New data services to generate first revenue by 2022
Progress during the year
- Acquired Brightsight, which materially accelerates our global strategy to become the global TIC leader in cybersecurity
- Connectivity & Products expanded its reach into the automotive sector with growth accelerated with the sector recovery
- Expanded our lab capacity in 5G technology, loT device and semiconductor global network in China, Taiwan, Korea, Japan, Singapore, Vietnam, India and Germany
- Launch of several new digital services including Truum, an e-commerce data verification service with large retail customers and the use of robotic processes to simulate consumer behavior for product performances
Capex intensity
Higher
Net working capital intensity
Average
Return profile
+
M&A appetite
High
Strategic objectives 2023 and beyond
- Achieve CHF 1 billion of divisional revenue by 2023
- Health Science to become the largest business unit of Health & Nutrition, with investment focusing on Biopharma and health services
- Consolidate our leadership position in Cosmetics supported by increasing regulatory requirements
- Consolidate our market leadership position in Food in Asia and expand our global network and portfolio in the Americas and Europe
- Enhance AI-enabled regulatory and compliance solutions in key Health & Nutrition sectors
Progress during the year
- Following the acquisitions of Quay Pharmaceuticals Limited and International Service Laboratory, and very strong double-digit organic growth Health Science is now the largest business in H&N
- We have increased our leadership position in Cosmetics & Hygiene with double-digit organic growth, including two new clinical testing centers in Asia and one new laboratory in the Middle East, and the acquisition of Groupe IDEA TESTS in France
- Expanded our global Food laboratory network, with two new labs Latin America in 2021 and three more planned for 2022 and a new food technology center in India
- Digicomply, our best-in-class regulatory and compliance intelligence platform, is now used by six of the top ten food companies, and we added a module to analyze emerging risks
Capex intensity
Average
Net working capital intensity
Average
Return profile
=
M&A appetite
High in Environment and Health & Safety
Strategic objectives 2023 and beyond
- Reach a market leadership position in Environment Health & Safety in 2025
- Reassess portfolio focusing on TIC megatrends and complement our expertise related to energy transition through M&A in renewables and specialty fields
- Increase footprint and competences in sustainability services through organic growth and acquisitions
- Leverage the acquisition of SGS Analytics to transition to a hub and spoke laboratory model
- Leverage digital and data to enhance our existing and create new services
Progress during the year
- Realigned organisational structure, with dedicated resource focused on environment, renewable energy and infrastructure, and invested in our renewable, hydrogen and nuclear competence including investing in wind in six Latin American countries
- The integration of SGS Analytics has accelerated our transition to a hub and spoke laboratory model and is on track for generating synergies of CHF 20 million
- Expanded our environmental laboratory footprint significantly, both organically and through the acquisition of SGS Analytics, in the Nordics, Sweden and Denmark
- Leveraged technology to enhance our service portfolio, for example through the launch of SGS AirSense, which monitors air quality in schools, warehouses and other buildings and is supported by a significant customer pipeline
Capex intensity
Lower
Net working capital intensity
Average
Return profile
+++
M&A appetite
Low
Strategic objectives 2023 and beyond
- Consolidate our leading market position
- Trade activities to remain core, with a supportive outlook for mining and agriculture and oil & gas currently under pressure
- Develop new sustainability services for mid-term transformation of portfolio
- Optimize field and lab resources to generate network synergies
- More than 50% of trade back-office activities to operate on digital platforms (i.e. blockchain) by 2023 to enhance security and efficiency
Progress during the year
- Expanded our leading on-site laboratory position from a leading position in minerals in Latam and the Caspian region, and through new contract wins in oil & gas in the Caspian region
- Implemented a blockchain-based digital authentication tool for trade certificates in the agriculture sector
- The acquisition of Sulphur Experts Inc. expanded our testing and sustainability services capability in the Oil & Gas market
- Piloting new sustainability services for battery metals recycling and carbon capture in metallurgy with leading industrial players
Capex intensity
Lower
Net working capital intensity
Lower
Return profile
+++
M&A appetite
In selective areas
Strategic objectives 2023 and beyond
- Consolidate our leading market position
- Certification remains core with new schemes driving demand
- Business enhancement to represent >50% of divisional revenue by 2023, including expanding our technical consulting network in Europe and Asia
- ESG and sustainability services to increasingly become a material part of the portfolio
- Focus on digital solutions in Supplier Risk Management, with 20% revenue delivered by digital services and remote by 2023
Progress during the year
- Double-digit growth in certification in part driven by growth in information security, food, and medical devices supported by Medical Device Regulation designation achieved in Belgium
- Successfully replicated our technical consultancy services into five European countries and will launch the next phase in Asia in H1 2022
- The launch of ESG Assurance solutions in Q2 2021 generated a significant number of new contracts
- Up to 80% of our training services and a high percentage of our certification audits were executed digitally. Significant investment is being made in new digital solutions for 2022 (e.g. integrated customer portal)
Measuring Our Value to Society
We recognize that our long-term success depends not just on our ability to generate profit, but on our ability to deliver sustainable value to all our stakeholders across the whole value chain. We are one of the few companies robustly and transparently measuring total value creation for society in economic terms.
Our Sustainability Priorities
Creating Value for Our Customers
Find out more about how we added value to society in 2021.
