* SGS sees annual sales growth of 6-9 pct over next 3 yrs
* To pay dividend of 65 Sfr, up 12 percent
* FY net income up 13 pct to 600 mln Sfr vs f'cast 611 mln
* Sales 5.8 bln Sfr vs 5.9 bln forecast
* Shares up 5.3 pct, hit three-month high
(Rewrites first paragraph, adds detail, analyst comment,
By Alice Baghdjian
ZURICH, Jan 21 Swiss testing and inspection firm
SGS has underscored its financial strength with a 12
percent dividend hike and a forecast of annual revenue growth of
up to 9 percent through the next three years, sending its shares
to a three-month high.
Testing and inspection companies like SGS are benefiting
from increasing regulation in many sectors, though they were
hit by the sluggish European economy and a downturn in the
mining industry that has curbed demand for minerals testing.
SGS, whose activities range from food safety to testing
London's black cabs, had warned in July it may fall short of
growth forecasts set out in 2010, so its latest projection was
seen as a demonstration of its underlying qualities.
"Minerals (testing) in the second half was not so
catastrophic as expected by the market ... SGS remains the
absolute sector star performer in consumer testing services,"
said analyst Jean-Philippe Bertschy at banking group Vontobel,
who has a "buy" rating on the stock.
"SGS remains a cash machine, on track to achieve a return on
invested capital of 30 percent in the next years," Bertschy
SGS, the world's biggest in a sector that also includes
Britain's Intertek and France-based Bureau Veritas
, set a target for sales growth excluding acquisitions
of between 6 and 9 percent per year, more modest than its
previous forecast of 11.3 percent per year to reach 8 billion
Swiss francs by 2014.
But analyst Chris Burger at brokerage Helvea said the old
target had been unrealistic, whereas the new goal was in line
with rival Bureau Veritas's 6 to 8 percent forecast.
SGS also said it would pay a dividend of 65 francs per share
for 2013, up from 58 the year before, which Vontobel's Bertschy
said showed the firm's confidence in future cash flow.
The lastest outlook from SGS comes after Intertek told
investors in November that first-half headwinds had continued in
the latter part of the year, but that these should ease in 2014.
SGS, which has more than 80,000 employees, said it would
continue looking for growth opportunities in emerging markets
while keeping a tight control over costs and efficiency in
mature markets such as Europe.
The company said it would continue to deliver top-line and
bottom-line growth in 2014, although it acknowledged economic
recovery in Europe would be limited and the mining exploration
sector was unlikely to regain momentum in the next 12 months.
SGS also said full-year sales rose to 5.8 billion francs,
just falling short of an average 5.9 billion forecast in a
Reuters poll. Net income rose 13 percent to 600 million francs,
just short of forecasts for 611 million.
By 0951 GMT SGS shares had jumped 5.3 percent to 2,139
francs, making them the best performers in the Swiss blue-chip
index. The stock rose as high as 2,171 francs, its
highest since early October
Intertek shares were up 3.1 percent and Bureau Veritas
shares added 1.5 percent.
($1 = 0.9094 Swiss francs)
(Editing by Elizabeth Piper and David Holmes)