SGS posts significant year-end profits

The world's largest inspections group, Société Générale de Surveillance (SGS), saw net profit jump 56 per cent last year to SFr107 million.

The announcement came as a breath of fresh air amid a generally downbeat Swiss market.

The Geneva-based company attributed its success to new cost-cutting drives implemented by Sergio Marchionne, who took over as CEO in February 2002.

Over the year, Marchionne culled half the company’s board, postponed major acquisitions, launched a SFr250 million share buyback and scaled back its declining government contracts division.

The moves helped make SGS’s shares the best performer on the Swiss blue chip index during 2002.

As a result, the company managed a strong recovery from a SFr75 million loss posted in 2001.

Sales at SGS rose to SFr2.39 billion from SFr2.33 billion in 2001.

Meanwhile, operating margins for the group as a whole improved from 6.2 per cent to nine per cent over the year, with all of its businesses, apart from government contracts, delivering more than ten per cent sales growth.

Healthy outlook

The company remained optimistic that its performance would continue to improve over 2003, and its share value has already risen 3.6 per cent so far this year.

It also stuck to its ambitious target of achieving SFr3.2 billion in revenues and an operating profit of SFr400 million in 2004.

SGS specialises in inspection, verification and monitoring services for agriculture, minerals, petroleum and consumer products. It also provides certification services to governments and international institutions.

swissinfo with agencies

Key facts:

SGS is the world’s largest inspections company.
The company posted a year-end profit of SFr107 million for 2002, up by 56 per cent from 2001.
SGS’s sales rose to SFr2.39 billion, up from SFr2.33 billion.
It expects further profitability in 2003 and 2004.