Sika Ag · SIX:SIKA
Sika — Investor Day (2022)
19 slides from Sika's investor day presentation, 2022
Slide 1: Update on Margin Delivery and MBCC Transaction
UPDATE ON MARGIN DELIVERY AND MBCC TRANSACTION ADRIAN WIDMER, CFO SIKA CAPITAL MARKETS DAY 2022
Slide 2: Driving Towards an EBIT Margin of 15%-18%
DRIVING TOWARDS AN EBIT MARGIN OF 15%-18% IMPROVING MARGIN THROUGH CONSISTENT STRATEGY EXECUTION EBIT15%-18% EBIT 15-18% NS NS EBIT 13.0% NS 1,055 EBIT 2019 Growth / Material Margin Operational M&A EBIT 2023 Leverage Management Efficiency 2
Slide 3: Continued Improvement in Spite of Raw Material Headwinds
CONTINUED IMPROVEMENT INSPITE OF RAW MATERIAL HEADWINDS EBIT MARGIN BRIDGE 1HY 2022 +1.5% -3.7% +0.2% 2.7% +0.5% -0.6% 15.4% 16.0% 1HY 2021 Growth / Material Operational M&A Initial One timers 1HY 2022 Leverage Margin Efficiency Synergies Dilution M&A 3
Slide 4: Driving Towards an EBIT Margin of 15%-18%: Overproportional EBIT Growth in 2022 Expected
DRIVING TOWARDS AN EBIT MARGIN OF 15%-18% OVERPROPORTIONAL EBIT GROWTH IN 2022 EXPECTED Further raw material cost mitigation through pricing and other measures EBIT EBIT>15% NS >15% NS Continued focus of operational EBIT 15.0% NS efficiency and synergy realization Sustainability initiatives wi
Slide 5: Sustainable Growth Beyond Market Growth
SUSTAINABLE GROWTH BEYOND MARKET GROWTH MULTIPLE LAYERS OF GROWTH Sustainable volume growth Growing markets Market (Market growth Penetration Y1 Y2 Y3 Y4 Y5 and Megatrends) Market Growth Structural Growth (Megatrends) Market Penetration Acquisition M&A Net Sales 10Y CAGR, at constant FX +9.8% 5
Slide 6: Material Margin Management: Narrowing Material Margin Gap vs. PY
MATERIAL MARGIN MANAGEMENT NARROWING MATERIAL MARGIN GAP VS. PY Strong pricing traction (c. 15% YoY) >15% Base effect leading to lower Material Margin in % Innovation, structural procurement 1,391 programs and formulation efficiency with ongoing positive impact EBIT 2021 Growth / Mat
Slide 7: Material Margin Management
MATERIAL MARGIN MANAGEMENT Sales Price Increase Price management with good traction Recovering impact of time lag Surcharges to compensate cost increases Raw Material Cost Increase Cost increase flattening & improving availability High volatility remains Diverging regional development Fu
Slide 8: Material Margin Management: Innovation and Continuous Improvement Projects
MATERIAL MARGIN MANAGEMENT INNOVATION AND CONTINUOUS IMPROVEMENT PROJECTS PRODUCT INNOVATION SUSTAINABLE FORMULATION IMPROVEMENTS CEMENT SUBSTITUTES ALTERNATIVE SAND Cement major raw material CO2 Nature Sand consumption is large +3-5% CO2 REDUCTION contributor and rising year by year better margins
Slide 9: Operational Efficiency with Continued Strong Impact
OPERATIONAL EFFICIENCY WITH CONTINUED STRONG IMPACT 0.5% PTS IMPACT ANNUALLY Several hundred structural improvement projects across value >15% chain, on all levels Positive impact of 0.5% pts. annually 1,391 Sustainability initiatives positively impacting operating cost EBIT 2021 Gro
Slide 10: Operational Efficiency with Strong Impact (I)
OPERATIONAL EFFICIENCY WITH STRONG IMPACT (I) 0.5% PTS IMPACT ANNUALLY Digitalization Renewable Energy Robotics Self-produced solar energy in Switzerland (Duedingen) 1 Colloborative robots assist human beings Switzerland Pail line efficiency Automation 2 Robot palletizer lifting heavy canist
Slide 11: Operational Efficiency with Strong Impact (II)
OPERATIONAL EFFICIENCY WITH STRONG IMPACT (II) 0.5% PTS IMPACT ANNUALLY PROCESS OPTIMIZATION USA: MARION UK: EVERBUILD Fully automated packaging process replacing manual external Improved silicones production by eliminating manual handling process transfer of raw materials to the existing mixing
Slide 12: Synergies from Acquisitions to Overcompensate Dilution Effect in 2022
SYNERGIES FROM ACQUISITIONS TO OVERCOMPENSATE DILUTION EFFECT IN 2022 M&A as growth platform, lifting margin profile over time >15% Incremental Parex impact to reach MCHF 100 of synergies in 2022 as 1,391 targeted EBIT 2021 Growth / Material Operational M&A One Timer / EBIT 2022 Newl
Slide 13: Parex Integration and Synergy Capture
PAREX INTEGRATION AND SYNERGY CAPTURE ON TRACK TO MEET TARGETED SYNERGIES OF MCHF 100 Monthly run-rate synergies have reached an average above MCHF 8 - on track to reach target of MCHF 100 Formulation Optimization synergies ahead of plan, to for 2022 be leveraged for wider Sika portfolio SG&A Averag
Slide 14: Update MBCC – Impact of Divestments
UPDATE MBCC – IMPACT OF DIVESTMENTS
Slide 15: Update on MBCC Acquisition
UPDATE ON MBCC ACQUISITION Unconditional approval received in most jurisdictions In North America, Europe and Australia/New Zealand Admixture business to be divested to competent buyer Up to MCHF 850 in Net Sales to be divested, BCHF 2.15 Net Sales remaining Expected synergies and funding st
Slide 16: No Change in Expected Synergies Because of Divestments
NO CHANGE IN EXPECTED SYNERGIES BECAUSE OF DIVESTMENTS RUN-RATE SYNERGIES OF MCHF 160-180 Additional revenue synergies expected to be realized Expected run-rate Revenue through customer proximity and enhanced supply chain synergies of Synergies to Strong cross-selling opportunities of products
Slide 17: Financing and Leverage Considerations (I)
FINANCING AND LEVERAGE CONSIDERATIONS (I) FINANCIAL TERMS OF TRANSACTION REMAIN VERY ATTRACTIVE Financing through cash and debt instruments Fully committed bridge loan facility Long-term funding over combination of cash-on-hand, bank loans and bonds Expected annual interest cost of MCHF 90
Slide 18: Financing and Leverage Considerations: Historical and Expected Leverage Development
FINANCING AND LEVERAGE CONSIDERATIONS HISTORICAL AND EXPECTED LEVERAGE DEVELOPMENT ≈2.5x 2023 Leverage expected at ≈2.5x With early Convertible Bond 2.6x conversion at around 0.5 turns lower 2.1x 1.6x Fast deleveraging – similar ≈1.2x deleveraging profile as with Parex 2019 2020 2021 2022FC 20
Slide 19: Building Trust
® BUILDING TRUST Bs