SGS Reiterates Guidance After Missing Profit Target

Goods inspection firm SGS SA (SGSN.VX) Thursday said first-half net profit rose a poorer-than-expected 5.9%, but reiterated its outlook for higher earnings and sales than last year.

The Geneva-based company's net profit rose to 270 million Swiss francs ($257.1 million), from CHF255 million, missing views, which averaged CHF275 million in a Dow Jones Newswires analyst poll.

In its outlook, SGS maintained its view of a "solid" 2010, with higher net profit and revenue than the CHF566 million and CHF4.71 billion, respectively, posted in 2009, when the company cut costs sharply to maintain profits.

SGS's revenue rose 0.9% to CHF2.35 billion from CHF2.33 billion year-ago, aided by the company's consumer testing, systems and services, minerals, and government institution services units, which each bolstered revenue organically more than 5%.

This offset a slip in revenue from SGS's agricultural, environmental, and industrial services units, which were hit by lower agricultural commodity flows, prolonged severe weather and Spain's economic woes.

SGS also added CHF30 million in first-half revenue through four acquisitions, including Intron Group in the Netherlands. SGS has acquired a slew of minor competitors while market participants had hoped it would search for a bigger deal.

SGS shares have gained 17% so far this year, amid a 16% rise in the Stoxx Europe 600 industrial index. SGS closed at CHF1,585 Wednesday, giving the company a market capitalization of $11.50 billion.

-By Katharina Bart, Dow Jones Newswires; +41 43 443 8043; katharina.bart@dowjones.com

SGS (PK) (USOTC:SGSOY)
Historical Stock Chart
From Jun 2024 to Jul 2024