SGS stock edges up after Q1 revenue growth

Published 24/04/2025, 09:30
SGS stock edges up after Q1 revenue growth

Investing.com -- Shares of SGS (SWX:SIX:SGSN) edged up 1.4% following the announcement of its first-quarter revenue growth, which exceeded market expectations.

The company reported a 6.6% increase in revenue year-over-year (YoY), with organic growth slightly ahead of consensus estimates and a smaller than anticipated impact from foreign exchange headwinds.

The standout performance came from the Connectivity & Products division, which saw organic growth of 6.9% YoY in the first quarter, following a 10.5% increase in the fourth quarter of the previous year. This growth may indicate an acceleration of activity in anticipation of new tariff implementations.

However, the Natural Resources segment experienced a slowdown, with growth decelerating to 3.8% in the first quarter from 6.2% in the prior quarter, affected by the Oil, Gas & Chemicals (OG&C) sector, which grew moderately due to lower trading volumes amidst current economic uncertainties.

Regionally, Europe reported modest organic growth of 1.9%, while high inflation markets in Latin America and Eastern Europe, Middle East, and Africa (EEMEA) saw significant organic growth of 15.7% and 10.4%, respectively. SGS highlighted ’Sustainability’ and ’Digital Trust’ sectors as key thematic areas of strong performance.

The company also reaffirmed its fiscal year 2025 outlook, which anticipates organic growth of 5-7%, a 1-2% contribution to revenue growth from bolt-on mergers and acquisitions, an improvement of at least 30 basis points in the reported Adjusted Operating Income (AOI) margin, and robust free cash flow generation.

Despite the positive quarterly results, RBC analysts expressed caution, noting the potential risks posed by increasing macroeconomic and geopolitical uncertainties.

The analyst statement from RBC reads, "We see rising macro and geopolitical risks across many of the TIC industry’s key markets that could jeopardise what we see as a ’Goldilocks’ scenario baked into the sub-sector’s current consensus.

With M&A optionality across the industry tough to call predictably and restructuring charges par for the course, we see further risks to SGS forecasts and to its premium valuation multiple on a 12-month view. We currently prefer other names in the TIC space, and wider Business Services sector."

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.