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Swiss test firm SGS gets early 2021 revenue lift as COVID-19 recovery continues

By Reuters

ZURICH – Swiss testing and analysis firm SGS said its revenue from January to April grew 15% including both organic growth and acquisitions compared to the year-ago period, as the company recovered from the COVID-19 pandemic’s hit early last year.

Some 10% of the growth was organic, the company said in a statement, while 5% was from acquisitions that SGS makes on a regular basis as it expands its global footprint. Organic sales returned to levels of 2019, before the pandemic set in.

The company also set a new 2020-2023 revenue growth target, calling for sales to rise at a high-single-digit compound annual growth rate in constant currencies.

SGS said it was leaving its 2021 outlook unchanged, expecting solid organic growth normalizing for COVID-19 effects, an improved adjusted operating income margin, strong cash conversion and at least maintaining its dividend.

“We are pleased with our constant currency Adjusted Operating Income performance, which, as expected, is materially ahead of the prior year,” SGS said. “Profitability has also increased compared to the comparable period in 2019 reflecting the structural optimization measures taken.”

An analyst said SGS’s results, delivered as it holds its annual investor day, show a robust start to 2021 and that new goals — the company is also calling for adjusted operating income to grow at over 10% from 2020-2023 in constant currency — reflected confidence in mid-term prospects.

“The new midterm goals are convincing,” said Zuercher Kantonalbank analyst Daniel Buerki, who rates the stock overweight. “The start to the year was dynamic and stronger than SGS’s two direct rivals, Bureau Veritas and Intertek. The stock today should react positively.”