SGS profits from surge in oil price

SGS provides testing services across a range of industries (SGS) SGS

Geneva-based inspection services firm SGS has posted a 23 per cent rise in net profit last year to SFr279 million ($238.5 million).

This content was published on January 14, 2005 - 08:49

SGS, the world’s leading testing and verification firm by sales, said on Friday that higher oil prices had boosted revenue.

The firm, which tests consignments of goods for a range of industries, also said it would name a new chief executive “in the coming weeks”. Former CEO Werner Pluss stood down in September for health reasons and was replaced on an interim basis by Johan Allegaert.

Sales in 2004 were up 18 per cent at SFr2.89 billion, SGS reported.The Mineral Services, Consumer Testings Services, Industrial Services and Trade Assurance Services units all recorded strong growth, with sales up more than 15 per cent.

The most striking improvement was in the Life Science Services division, SGS said, which increased sales by 80 per cent over 2003.

Operating profit rose to SFr391 million from SFr300 million in 2003.

Analysts said higher oil prices had benefited the firm because its revenue is linked to the value of the goods inspected.


SGS reaffirmed its 2005 target of earnings per share of SFr45 and said it would propose a dividend for 2004 of SFr12 per share, SFr3 up on last year.

The 2004 profit announcement comes on the back of a 41 per cent rise in annual profit in 2003.

The company’s recent success has been attributed to former CEO Sergio Marchionne, who left the firm last year to take on the top job at Fiat. Marchionne joined SGS in 2002 to reverse the firm’s ailing fortunes.

Analysts say the new chief executive will have to prove he can build on the achievements of Marchionne. His successor stepped down in September after just four months in the job.

Despite the positive results, shares in SGS fell more than three per cent in early trading on Friday to stand at SFr790.50 in an apparent sign of investor irritation with the delay in appointing a new CEO.

swissinfo with agencies

Key facts

SGS is the world's biggest inspection, verification and certification firm in terms of sales.
It employs 37,000 people in 140 countries.
2004: SFr279 million net profit and sales of SFr2.89 billion.
2003: SFr224 million net profit and sales of SFr2.45 billion.

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