(Corrects reference to date of sales-target revision in 4th paragraph in story that ran yesterday)
June 12 (Bloomberg) -- SGS SA fell the most in almost three months after Chief Executive Officer Chris Kirk said the world’s largest product inspector won’t reach its full-year revenue target as currency effects weigh on sales.
Shares slumped as much as 2.6 percent to 2,179 francs, the biggest intraday decline since March 17, and were trading down 1.6 percent at 4:20 p.m. in Zurich. About 20,500 shares traded hands, more than 150 percent the average daily volume of the past three months.
SGS’s full-year sales will be below the previously anticipated target of 6.9 billion francs ($7.7 billion), according to comments by Kirk made to AWP newswire and confirmed by company spokesman Jean-Luc Buman.
“The world did change quite a lot in the period from 2010 to 2014,” Buman said in an e-mailed statement, referring to 2010 when SGS announced a revenue target of 8 billion francs. Two years later the company revised the sales target to 6.9 billion francs.
The Geneva-based company will also miss a 19.5 percent operating-margin goal, Kirk said, according to the AWP story.
“Just in the first five months of this year we lost a little more than 150 million francs in revenue due to the strong Swiss franc,” Kirk told AWP, adding that this “is the equivalent of about 7 percent of group revenue.”
Even so, the CEO said that SGS is sticking to its organic growth target of 6 to 9 percent and announced a dividend of at least 65 francs for the next three years.
“The commitment to dividend payments is kind of surprising,” said Daniel Buerki, an analyst at Zuercher Kantonalbank with a market-perform rating on the stock. “Nobody was scared by the revenue target revision.”
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