Sika Ag · SIX:SIKA
Sika — Investor Presentation (October 2018)
42 slides from Sika's investor presentation, October 2018
Slide 1: Growth of 13.9% - New Records in Sales and Profit, First Half 2018
GROWTH OF 13.9% - NEW RECORDS IN SALES AND PROFIT FIRST HALF 2018 SIKA INVESTOR PRESENTATION OCTOBER 2018
Slide 2: Highlights First Half 2018
HIGHLIGHTS FIRST HALF 2018 ® BUILDING TRUST Bs
Slide 3: Growth of 13.9% - New Records in Sales and Profit
GROWTH OF 13.9% - NEW RECORDS IN SALES AND PROFIT 1. New records in sales and profit +13.9% sales growth in local currencies (15.9% in CHF) to CHF 3,470.1 million +10.6% higher EBIT to CHF 444.6 million Without one-off costs (related to resolution of dispute with SGO) over-proportional EBIT in
Slide 4: Sika Ends Dispute with SGO and Secures Independence
SIKA ENDS DISPUTE WITH SGO AND SECURES INDEPENDENCE Approval of all proposals at EGM of June 11 Transfer of control premium to all shareholders Transaction EPS accretive to all shareholders Implementation of efficient capital structure Modern governance model Acceleration of Sika’s growt
Slide 5: Key Figures First Half 2018
KEY FIGURES FIRST HALF 2018 RECORD RESULTS – STRONG MOMENTUM CONTINUES in CHF mn 2017 2018 Δ% Net sales 2,994.9 3,470.1 +15.9% Gross results as % of net sales 55.1 53.6 EBITDA 488.2 544.8 +11.6% EBIT 402.1 444.6 +10.6% Net profit 285.7 318.2 +11.4% Operating free cash flow 63.0 11.5 ROCE in % 28.0 2
Slide 6: First Half Sales Growth
FIRST HALF SALES GROWTH 13.9% SALES GROWTH IN THE FIRST HALF 2018 16% 13.9% 14% 12% 10% 7.1% 7.6% 8.1% 8% 6% 1.6% 2.4% in LC acquisition 4% 6.0% 5.7% 6.8% organic 2% 0% 1HY 2016 1HY 2017 1HY 2018 in CHF mn 1HY 2016 1HY 2017 1HY 2018 Net sales 2,806.2 2,994.9 3,470.1 6
Slide 7: Sales First Half 2018 - Growth in All Regions
SALES FIRST HALF 2018 GROWTH IN ALL REGIONS +19.7% +9.5% +5.7% +32.0% Growth in CHF +13.6% +13.6% +5.0% +28.5% Growth in LC 6.1% -4.1% +0.7% +3.5% FX impact +7.5% +5.1% +0.0% +20.7% Acquisition 24% 76% Construction Industry 7 EMEA Americas Asia/Pacific Global Business
Slide 8: Strong Growth Momentum Continues in 2018
STRONG GROWTH MOMENTUM CONTINUES IN 2018 13.9% SALES GROWTH (15.9% IN CHF) + 13.6% + 5.0% + 28.5% + 13.6% 559 464 889 Asia/Pacific 1,558 Global Business Americas EMEA 6M 2017 6M 2018 (in CHF mn, growth in LC) 8
Slide 9: Six-Year Overview - Half-Year Figures
SIX-YEAR OVERVIEW – HALF-YEAR FIGURES CONTINUOUSLY IMPROVING PROFIT 9
Slide 10: Successful Strategy Execution
SUCCESSFUL STRATEGY EXECUTION
Slide 11: Sika's Growth Model Delivers Key Investments Since 2015
SIKA’S GROWTH MODEL DELIVERS KEY INVESTMENTS SINCE 2015 - Successful Target Market concept Market Penetration - Megatrends driving growth - 217 new patents filed Innovation - 20 Global Technology Centers Emerging Markets - 32 new plants opened - 11 new national subsidiaries Acquisitions
Slide 12: Sika's Growth Model Delivers Continued Growth in Sales and Profit
SIKA’S GROWTH MODEL DELIVERS CONTINUED GROWTH IN SALES AND PROFIT (FULL YEAR) NET SALES NET SALES EBIT 110 0 16. 0% in CHF mn in CHF mn 14.3% 700 0 16. 0% 100 0 13.8% % growth in local currencies as % of net sales 14. 0% 12.3% 14. 0% 650 0 900 5.3% 9.4% 13.0% 6.2% 5.5% 9.0% 11.4% 12. 0% 800 12. 0% 6
Slide 13: Market Penetration
MARKET PENETRATION ® BUILDING TRUST Bs
Slide 14: Sika's Market Potential
SIKA’S MARKET POTENTIAL LARGE AND GROWING MARKET SEGMENTS TOTAL MARKET SIZE 2017 2020 > CHF 70 BILLION CHF 80 BILLION INDUSTRY CONCRETE INDUSTRY CONCRETE WATER- FLOORING WATER- PROOFING FLOORING PROOFING ROOFING ROOFING SEALING & SEALING & BONDING BONDING REFURBISHMENT REFURBISHMENT 14
Slide 15: Megatrends Drive Our Growth
MEGATRENDS DRIVE OUR GROWTH URBANIZATION, NEW VEHICLE DESIGN AND SUSTAINABILITY New modular Increasing world vehicle population with Increased safety, fire, manufacturing urbanization and water, earthquake and concepts need fast, megacities quality requirements high strength bonding systems Rising d
Slide 16: Market Penetration - Focus on Attractive Markets
MARKET PENETRATION - FOCUS ON ATTRACTIVE MARKETS: CROSS-SELLING, LIFE-CYCLE MANAGEMENT, A STRONG BRAND Concrete Waterproofing Roofing Flooring & Coating Sealing & Bonding Refurbishment Industry 16
Slide 17: Sika's Market Potential
GROWTH MODEL WITH EARLY MARKET PENETRATION FROM NEW BUILD TO REFURBISHMENT SIKA HAS SOLUTIONS FOR ALL MARKETS Long-term market potential Sika Repair and Sika’s market potential refurbishment Higher building standards Infrastructure Emerging markets Developing markets Mature markets 17
Slide 18: Sika's 101 Subsidiaries
SIKA’S 101 SUBSIDIARIES HONDURAS - 2018 18
Slide 19: Innovation
INNOVATION ® BUILDING TRUST Bs
Slide 20: Innovation Strong Track Record
INNOVATION STRONG TRACK RECORD More than 217 900 283 20 patents were employees are invention Technology filed since dedicated to disclosures Centers 2015 Research and Since 2015 worldwide Development 20
Slide 21: From Patents to World Class Products
FROM PATENTS TO WORLD CLASS PRODUCTS INNOVATION INCREASES SALES AND PROFIT +20% ANNUAL ORGANIC 217 SALES GROWTH = INCREASE 1,243 NEW PRODUCTS 30% NEW PATENTS ANNUAL EBIT LAUNCHED SINCE SINCE 2015 2015 CONTRIBUTION 21
Slide 22: Accelerated Build-up of Emerging Markets
ACCELERATED BUILD-UP OF EMERGING MARKETS
Slide 23: Emerging Markets Build-up Since 2015
EMERGING MARKETS BUILD-UP SINCE 2015 CAPTURING GROWTH POTENTIAL IN NEW MARKETS 32 5 11 36% new acquisitions new of sales in plants national emerging markets opened subsidiaries 23
Slide 24: Acquisitions
ACQUISITIONS ® BUILDING TRUST Bs
Slide 25: Acquisitions Since 2015
ACQUISITIONS SINCE 2015 GROWTH PLATFORMS FOR THE FUTURE In all In all 18 745 7 4 acquisitions million CHF Target regions additional Markets turnover 25
Slide 26: Sika Will Act as Market Consolidator
SIKA WILL ACT AS MARKET CONSOLIDATOR FRAGMENTATION OFFERS ACQUISITION OPPORTUNITIES CONSTRUCTION CHEMICAL MARKET 2017 > CHF 60 BILLION Sika Top 10 companies with a combined market share of 40% Other 26
Slide 27: Key Investments in 2018: Index Acquisition
KEY INVESTMENTS IN 2018 ACQUISITIONS AS GROWTH PLATFORM Acquisition of Index Construction Systems and Products, Italy Leading manufacturer of roofing and waterproofing systems with annual sales of CHF 115 million Acquisition leads to strong number one position in Italian roofing market New sit
Slide 28: Key Investments in 2018: Polypag Acquisition
KEY INVESTMENTS IN 2018 ACQUISITIONS AS GROWTH PLATFORM Acquisition of Polypag, Switzerland Leading Swiss-based manufacturer and developer of polyurethane foam systems with annual sales of CHF 40 million Foams based on polyurethane are construction materials used whenever something is insulated,
Slide 29: Faist ChemTec Acquisition with Full Effect in 2018
FAIST CHEMTEC ACQUISITION WITH FULL EFFECT IN 2018 ACQUISITIONS AS GROWTH PLATFORM Acquisition of Faist ChemTec, Global Leading manufacturer of high-performance engineered, structure-borne acoustic solutions for automotive and appliances industry Faist ChemTec’s innovations are driven by megatre
Slide 30: Sika and Faist - Full Acoustic Package
SIKA AND FAIST – ABILITY TO OFFER THE FULL ACOUSTIC PACKAGE NOISE, VIBRATION AND HARSHNESS (NVH) IN THE BODY SHOP 3 1 Air-borne noise reduction SikaBaffle® 2 Structure-borne noise 2 damping 1 SikaDamp® 2 1 3 Structural reinforcing Air-borne Structure-borne Reinforcing SikaReinforcer® Sika +++++ ++ +
Slide 31: Megatrend - Electric Vehicles
MEGATREND – ELECTRIC VEHICLES ESTABLISHED SIKA APPLICATIONS AND NEW OPPORTUNITIES POTENTIAL OF 20% MORE SIKA SOLUTIONS IN ELECTRIC VEHICLES E-platforms require lightweight construction Unique body structures require refined reinforcement solutions to ensure crash performance Comprehensive acou
Slide 32: Megatrend - Electric Vehicles: Sika Offers the Solutions
MEGATREND – ELECTRIC VEHICLES SIKA OFFERS THE SOLUTIONS CHALLENGE The success of electric cars depends on powerful batteries. More powerful batteries generate more heat and present a risk of overheating. Conventional adhesives have an insulating effect and retain heat. SOLUTION The Sika-developed te
Slide 33: Megatrend - Electric Vehicles: Sika Offers the Solutions
MEGATREND – ELECTRIC VEHICLES SIKA OFFERS THE SOLUTIONS CHALLENGE In electric buses the battery is a particular concern given the possible risk of a heat build-up. Therefore fire safety requirements are stringent. SOLUTION Applying the fire protection coating Sika® Unitherm® Platinum to the battery
Slide 34: Values and Principles
VALUES AND PRINCIPLES ® BUILDING TRUST Bs
Slide 35: Sika's Values and Principles
SIKA’S VALUES AND PRINCIPLES STRONG CORPORATE CULTURE Customer first Courage for innovation Sustainability & integrity Empowerment and respect Manage for results 35
Slide 36: Targets 2020
TARGETS 2020 ® BUILDING TRUST Bs
Slide 37: Sika's Growth Strategy 2020 Confirmed
SIKA’S GROWTH STRATEGY 2020 CONFIRMED TO BE REVIEWED AND UPDATED IN 2019 MARKET PENETRATION 6 - 8% ANNUAL GROWTH 30 NEW PLANTS INNOVATION 105 NATIONAL SUBSIDIARIES EMERGING MARKETS 14 - 16% EBIT MARGIN PER YEAR ACQUISITIONS > 10% OPERATING FREE CASH FLOW PER YEAR VALUES > 25% ROCE PER YEAR 37
Slide 38: Outlook 2018
OUTLOOK 2018 ® BUILDING TRUST Bs
Slide 39: Higher Raw Material Costs
HIGHER RAW MATERIAL COSTS PRESSURE ON MARGINS COUNTERED WITH HIGHER SALES PRICES 56.0% 1.06 Gross 55.0% 1.04 Margin 54.0% 1.02 Raw 53.0% 1 Material 52.0% 0.98 Prices 51.0% 0.96 Sales Price Increases 50.0% 0.94 2016 2017 2018* Increasing raw material prices in several phases since end of 2016 Con
Slide 40: Strong Outlook for 2018
STRONG OUTLOOK FOR 2018 CONTINUATION OF SUCCESSFUL GROWTH STRATEGY Sales increase of more than 10% expected with a sales target of CHF 7 billion in 2018 Volatile and rising raw material prices will continue to be a challenge In spite of costs related to the resolution and high raw material pri
Slide 41: Thank You for Your Attention
THANK YOU FOR YOUR ATTENTION BUILDING TRUST
Slide 42: Forward-Looking Statement
FORWARD-LOOKING STATEMENT This presentation contains certain forward-looking statements. These forward-looking statements may be identified by words such as ‘expects’, ‘believes’, ‘estimates’, ‘anticipates’, ‘projects’, ‘intends’, ‘should’, ‘seeks’, ‘future’ or similar expressions or by discussion o