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UPDATE 2-Testing firm SGS on track for 2020 goals, eyes China, Brexit
July 17, 2017 / 11:35 AM / 2 months ago

UPDATE 2-Testing firm SGS on track for 2020 goals, eyes China, Brexit

(Adds press conference with CEO)

By Tom Miles and John Miller

GENEVA/ZURICH, July 17 (Reuters) - Swiss testing firm SGS said on Monday it was on track to meet its 2020 objectives for sales and revenues despite headwinds in energy markets, after reporting a 7.8 percent rise in first-half net profit as expected.

Chief Executive Frankie Ng said the firm, which tests and certifies everything from French driving licence exams to mineral samples in Indonesia, saw opportunities in China, Internet-related gadgets and a post-Brexit Britain.

The firm said it was committed to its 2020 objectives that include average mid single-digit organic sales growth and adding 1 billion francs ($1.04 billion) in revenue from acquisitions.

Ng said SGS was working with Chinese state-owned firms that stand to benefit from China’s “One Belt, One Road” plan, which includes infrastructure development to boost trade ties.

“We are really working hard to make sure we are part of this game in the medium term,” he said. “In a year, year and a half, we will have a much clearer position on where we stand, but it’s clearly an opportunity for us.”

SGS also sees opportunities in Britain’s exit from the European Union if talks failed to end up with an agreement on standards and a new British inspections regime was required.

“If everything goes in a really bad way, everything has to be retested, which is quite (interesting) for us,” Ng said.

SGS also aims to benefit in the medium-term from the expansion of the “Internet of Things”, as gadgets such as watches and household appliances connect to each other over the Internet. “All that needs to be tested,” Ng said.

Net profit attributable to shareholders was 276 million Swiss francs, SGS said in a statement, compared with the average forecast of 274 million francs by analysts in a Reuters poll.

Sales rose 4.9 percent on a pro-forma basis to 3.05 billion francs, also in line with the poll.

SGS and its peers Bureau Veritas and Intertek are benefitting from an increased trend towards certification in all areas, but have recently faced headwinds from falling oil prices, an important business area.

SGS confirmed its mid-term outlook for an adjusted operating income margin of at least 18 percent by 2020.

$1 = 0.9629 Swiss francs Reporting by John Miller; Editing by Biju Dwarakanath and Edmund Blair

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