SGS SA, the world’s largest product inspector, cut its dividend after full-year profit missed analysts’ estimates as it revamped businesses in Europe.
SGS plans to pay shareholders 58 Swiss francs a share via a 30 franc ordinary dividend and a bonus of 28 francs, the Geneva-based company said in a statement today. The total is 11 percent lower than the 65-franc payout last year.
The reduction of the dividend is “disappointing,” Patrick Hasenboehler, an analyst at Bank Sarasin & Cie AG in Zurich said in a note to clients. SGS’s valuation “is no bargain, but justified by the structural growth and the convincing financial track record with a high return on capital,” he said. Hasenboehler has a neutral recommendation on the stock.
SGS is a gauge of the broader economy as it sells services for industries including agriculture, petrochemicals, health, carmaking and consumer products. The company “expects to deliver solid top- and bottom-line growth in 2013, notwithstanding continuing weak” conditions in Europe, it said.
The company’s shares fell as much as 1.9 percent, the biggest intraday drop since Oct. 26, and were 1.1 percent down at 2,073 francs as of 9:47 a.m. in Zurich.
SGS said the operating profit margin dipped slightly from a year earlier it presses ahead with investments and acquisitions to reach a target of 8 billion francs ($8.57 billion) of sales by 2014.
Net income rose 4.1 percent to 556 million francs, missing the 578 million-franc average of nine analyst estimates compiled by Bloomberg. SGS said it had one-time restructuring costs of 47 million francs, mostly to align its operations to market conditions in Europe. Excluding those charges, and currency fluctuations, profit rose almost 11 percent, the company said.