SGS: 2Q shows a good performance in growth and FCF

Research evidence excerpt

SGS: 2Q shows a good performance in growth and FCF

NSTEIN FLASHMAIL

24 July 2026

Will Kirkness

+44 20 7676 8355

European Business Services will.kirkness@bernsteinsg.com

SGS SA Filippo Giardini

+44 20 7762 4723

Rating filippo.giardini@bernsteinsg.com

Outperform

Price Target

SGSN.SW 103.00 CHF

A solid set of interims with 2Q organic growth accelerating to 5.9% from 5.3% in 1Q and EBITA margins +40bps constant currency and

+20bps as reported. Growth accelerated in Consumer, Health and Natural Resources with margins up in all divisions aside from Industry.

Bolt-on M&A has continued and FCF was strong. The outlook is unchanged but consensus EPS could move up very modestly to reflect

organic at close to 6% vs 2H cons. at 5.3% and deal conversion. Call at 10am CET.

Outlook: The outlook statement continues to point “5% to 7% organic sales growth” and “5% to 7% additional sales from acquisitions,

including ATS” with adjusted operating margin equal to or more than 16% in reported terms. Based on FY26 consensus organic growth

of 5.3% and EBITA margins +20bps yoy to 16.1%, consensus EPS could nudge up very modestly for growth. Strategy 27 still points

to 5-7% organic annually and at least 150bps margin uplift vs 2023. There is a CMD on 17-18 Nov to reflect the fact that Strategy 27

will likely be achieved a year early based on margin performance and America, Digital Trust and sustainability sales all close to target on

a pro-forma basis.

Read across: The ongoing good growth in Consumer bodes well for Intertek (O) and BV (O).

Detail: 1) Adj 1H26 EPS was inline with consensus at CHF1.86 (cons CHF1.85, BERNe CHF1.86) with EBITA of CHF 555m 1% ahead of

cons CHF549m (BERNe CHF553m) driven by growth. Further down the P&L interest costs modestly higher but tax 1ppt lower. 2) Group