Sika Ag · SIX:SIKA
Sika — FY2023 Earnings Presentation
53 slides from Sika's earnings presentation, Feb 16, 2024
Slide 1: Our Year 2023 – Building the Future
OUR YEAR 2023 – BUILDING THE FUTURE SIKA MEDIA AND INVESTOR PRESENTATION ZURICH, FEBRUARY 16, 2024
Slide 2: Agenda
1. HIGHLIGHTS 2023, THOMAS HASLER (CEO) 2. SUCCESSFUL MBCC ACQUISITION, THOMAS HASLER (CEO) 3. PROFITABLE GROWTH STRATEGY 2028, THOMAS HASLER (CEO) 4. MARKET PENETRATION GROWTH, THOMAS HASLER (CEO) 5. FINANCIAL RESULTS, ADRIAN WIDMER (CFO) 6. OUTLOOK, THOMAS HASLER (CEO), CHRISTOPH GANZ (EMEA), PHIL
Slide 3: Agenda
1. HIGHLIGHTS 2023, THOMAS HASLER (CEO) 2. SUCCESSFUL MBCC ACQUISITION, THOMAS HASLER (CEO) 3. PROFITABLE GROWTH STRATEGY 2028, THOMAS HASLER (CEO) 4. MARKET PENETRATION GROWTH, THOMAS HASLER (CEO) 5. FINANCIAL RESULTS, ADRIAN WIDMER (CFO) 6. OUTLOOK, THOMAS HASLER (CEO), CHRISTOPH GANZ (EMEA), PHIL
Slide 4: Highlights 2023: Record results for sales, cash flow and adjusted EBIT
HIGHLIGHTS 2023 RECORD RESULTS FOR SALES, CASH FLOW AND ADJUSTED EBIT ▪ Record results 2023 ▪ Record sales of CHF 11,238.6 million (+7.1%), increase in local currencies +14.5% ▪ EBIT reported at CHF 1,549.1 million (previous year: 1,579.7 million) with an adjusted EBIT margin of 15.0% (previous year
Slide 5: Sika with record sales in 2023
SIKA WITH RECORD SALES IN 2023 SALES GROWTH OF 14.5% IN LOCAL CURRENCIES +14.9 % +14.8 % +15.1 % +10.0 % +14.5 % 3.42 4.50 2.47 0.84 11.24 Global AMERICAS EMEA APAC Business GROUP 2022 2023 (in CHF billion, growth in LC) 5
Slide 6: Highlights 2023: Strong progress in sustainable performance
HIGHLIGHTS 2023 STRONG PROGRESS IN SUSTAINABLE PERFORMANCE +7.5% -4.4% -2.5% -12.2% waste recycling rate reduction of GHG waste per ton sold reduction in water emissions per ton consumption per sold (scope 1 and 2) ton sold +43.3% -23.9% community engagement projects lost time accidents compared to
Slide 7: Key investments in 2023
KEY INVESTMENTS IN 2023 INVESTMENTS IN THE FUTURE ACQUISITIONS NEW PLANTS New plant commissioned in Kharagpur Closing of MBCC acquisition (East India) May 2023 June 2023 New plant commissioned in Chattanooga Acquisition of Thiessen Team (USA) (Tennessee, USA) July 2023 July 2023 Expansion of two fac
Slide 8: Balanced business mix: vertical markets
HIGHLIGHTS 2023 – BALANCED BUSINESS MIX GLOBAL FOOTPRINT IN VERTICAL MARKETS 20% 30% RESIDENTIAL INFRASTRUCTURE 35% 15% COMMERCIAL AUTOMOTIVE & INDUSTRY 8
Slide 9: Balanced business mix: global footprint
HIGHLIGHTS 2023 – BALANCED BUSINESS MIX GLOBAL FOOTPRINT EMERGING MARKETS 41% 59% REFURBISHMENT MATURE MARKETS 45% 55% NEW BUILD 9
Slide 10: Strong topline development over the years
STRONG TOPLINE DEVELOPMENT OVER THE YEARS WITH OVER-PROPORTIONAL PROFITABILITY GROWTH Net sales +9.7% in CHF +14.5% EBIT 1.8 +12.2% in CHF CAGR 15.0% CAGR +15.8% +3.4% 1.6 10 14.2% +17.1% 15.0% 1.4 +16.3% +3.4% 8 14.4% 1.2 11.2 1.7 13.4% 13.0% 1.0 6 0.8 4 0.6 2018 2019 2020 2021 2022 2023 2018 2019
Slide 11: Sika gaining market share, outgrowing the peers
SIKA GAINING MARKET SHARE OVER THE YEARS OUTGROWING THE PEERS 19% 17.1% 15.8% 16% 2.0% 14.5% 14% 14% 2.7% 12% 3.4% 10% 9% 8% 15.1% 13.3% 6% 12.7% 13.1% 13.2% in LC 7.2% 4% 4% 2% acquisition 0% 1.2% -1% organic -3.8% -2% -3.5% -4% -3.9% peer growth (organic) -6% -6% in CHF bn 2020 2020 2021 2021 2022
Slide 12: Agenda
1. HIGHLIGHTS 2023, THOMAS HASLER (CEO) 2. SUCCESSFUL MBCC ACQUISITION, THOMAS HASLER (CEO) 3. PROFITABLE GROWTH STRATEGY 2028, THOMAS HASLER (CEO) 4. MARKET PENETRATION GROWTH, THOMAS HASLER (CEO) 5. FINANCIAL RESULTS, ADRIAN WIDMER (CFO) 6. OUTLOOK, THOMAS HASLER (CEO), CHRISTOPH GANZ (EMEA), PHIL
Slide 13: Successful integration of MBCC acquisition
SUCCESSFUL INTEGRATION OF MBCC ACQUISITION STRONGER TOGETHER AS ONE SIKA 6,000 additional employees CHF 2.1 bn ONE additional sales SIKA STRONG product portfolio 13
Slide 14: Synergy target raised to CHF 180–200 million p.a. by 2026
SUCCESSFUL INTEGRATION OF MBCC ACQUISITION SYNERGY TARGET RAISED TO CHF 180–200 MILLION P.A. BY 2026 180 to 200 140 to 160 80 to 100 41 2023 2024 2025 2026 (in CHF million) 14
Slide 15: Strong team spirit in the execution phase
SUCCESSFUL INTEGRATION OF MBCC ACQUISITION STRONG TEAM SPIRIT IN THE EXECUTION PHASE ▪ Regular steering and alignment meetings to continue ▪ 3rd pulse check survey continues to show high engagement 15
Slide 16: Agenda
1. HIGHLIGHTS 2023, THOMAS HASLER (CEO) 2. SUCCESSFUL MBCC ACQUISITION, THOMAS HASLER (CEO) 3. PROFITABLE GROWTH STRATEGY 2028, THOMAS HASLER (CEO) 4. MARKET PENETRATION GROWTH, THOMAS HASLER (CEO) 5. FINANCIAL RESULTS, ADRIAN WIDMER (CFO) 6. OUTLOOK, THOMAS HASLER (CEO), CHRISTOPH GANZ (EMEA), PHIL
Slide 17: Strategy 2028 – Beyond the expected
STRATEGY 2028 – BEYOND THE EXPECTED PROFITABLE GROWTH TO CONTINUE 23.0% 20.0% EBITDA 18.2% EBITDA 16.4% 11.2 bn On track for 7.1 bn continued growth and 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 value creation 17 Note: Historical Sales represent actual CHF values, growth figures in LC
Slide 18: Market share in construction chemicals and industry
MARKET SHARE IN CONSTRUCTION CHEMICALS AND INDUSTRY TOTAL ADDRESSABLE MARKET 2023: CHF 110 BILLION 11% Top 30 Competitive competitors landscape 45% (incl. Sika) remains very account for fragmented despite ongoing 55% M&A activity of market share 18
Slide 19: Sika's growth strategy 2028: pillars
SIKA’S GROWTH STRATEGY 2028 THE PILLARS OF THE STRATEGY 6-9% 20% annual growth in LC GHG emission reduction MARKET PENETRATION Scope 1 & 2 (absolute reduction vs. 2022 base line) INNOVATION & 20-23% EBITDA* Scope 3 reduction in line with net-zero pledge SUSTAINABILITY >80% ACQUISITIONS >10% Operatin
Slide 20: Market penetration and its levers
MARKET PENETRATION AND ITS LEVERS THE ART OF INCREASING MARKET SHARE Leveraging Cross- Multi-channel Go where Key High potential strong position selling approach the money is geographies markets 20
Slide 21: Agenda
1. HIGHLIGHTS 2023, THOMAS HASLER (CEO) 2. SUCCESSFUL MBCC ACQUISITION, THOMAS HASLER (CEO) 3. PROFITABLE GROWTH STRATEGY 2028, THOMAS HASLER (CEO) 4. MARKET PENETRATION GROWTH, THOMAS HASLER (CEO) 5. FINANCIAL RESULTS, ADRIAN WIDMER (CFO) 6. OUTLOOK, THOMAS HASLER (CEO), CHRISTOPH GANZ (EMEA), PHIL
Slide 22: Our five key geographic markets
STRATEGY 2028 OUR FIVE KEY GEOGRAPHIC MARKETS EUROPE USA JAPAN CHINA INDIA Our five key geographic markets cover 75% of total addressable market 22
Slide 23: Key geographic market – USA
KEY GEOGRAPHIC MARKET – USA RESHORING, SAMSUNG SEMICONDUCTOR PLANT, TEXAS, USA 557,000 m plant 2 the first of ten phases of expansion 228,000 m 2 electrostatic discharge flooring Synergetic approach and a strong cross-selling Sika delivered strategy high-performance Waterproofing solutions solutions
Slide 24: Key geographic market – Japan
KEY GEOGRAPHIC MARKET – JAPAN DYNAMIC AND PROFITABLE GROWTH A fertile market for high-performance solutions Strict regulations in earthquake zones create opportunities for high- tech building materials in densely populated areas Ongoing urban densification requires major investments in engineering a
Slide 25: Key geographic market – India
KEY GEOGRAPHIC MARKET – INDIA DYNAMIC AND PROFITABLE GROWTH Construction market size Investments in CHF 600 billion transportation to expand at 6% and CAGR infrastructure throughout 2026 Sika leading the transition from High potential in site-mixed to the retail pre-mixed business mortars 25
Slide 26: Strong execution and benefits of megatrends
STRONG EXECUTION AND BENEFITS OF MEGATRENDS SIKA STRONGLY POSITIONED IN 2023 AND BEYOND URBANIZATION CLIMATE CHANGE AND SUSTAINABILITY Our growth ambition 6-9 % DIGITALIZATION INCREASING REGULATIONS Sika’s average annual growth rate DEMOGRAPHIC CHANGE in local currencies TECHNOLOGICAL PROGRESS RESOU
Slide 27: Population growth – Mumbai-Ahmedabad high-speed rail
POPULATION GROWTH – INCREASING URBAN CONNECTIVITY MUMBAI-AHMEDABAD HIGH-SPEED RAIL, INDIA 508 km India’s first high-speed railway link from Mumbai to Ahmedabad Sika-MBCC’s dedicated project and technical service team supporting in key locations Sika’s concrete admixtures for 13 million m concrete 3
Slide 28: Population growth – Koysha hydropower plant
POPULATION GROWTH – HYDROPOWER KOYSHA HYDROPOWER PLANT, ETHIOPIA 180 meter high water dam generating 6,460 MWh of electricity, offsetting one million tons (Mt) of CO2 annually Sika’s concrete admixtures for 7 million m concrete 3 Locally produced admixures and mortar products creating a simplified s
Slide 29: Urbanization – Azabudai Hills, Tokyo
URBANIZATION – INFRASTRUCTURE DENSIFICATION AZABUDAI HILLS – REDEFINING TOKYO'S LANDSCAPE Accommodating 20,000 employees 3,500 residents 30 million visitors a year Enhanced concrete workability with Sika’s superplasticizers for high altitudes pumping Sika’s admixtures for state-of-the-art earthquake
Slide 30: Urbanization – Battersea Power Station
URBANIZATION – REPAIR AND REFURBISHMENT WATERPROOFING AN ICON: BATTERSEA POWER STATION, LONDON 30,000 m 3 of watertight concrete for the basement 375 tons of flowable repair mortar for the ground floor slabs 125 tons of repair mortar to seal the enormous columns and beams 30
Slide 31: Resource scarcity – Saving sand
RESOURCE SCARCITY – BUILDING A SUSTAINABLE FUTURE SAVING SAND Lower grade, recycled, or manufactured sand without compromising quality Sika’s reCO2ver® the sand to be reused in the production of concrete and mortars Worldwide R&D in the field of sand saving Sika China’s goal: to substitute 50% of it
Slide 32: Resource scarcity – Skills shortage
RESOURCE SCARCITY – SKILLS SHORTAGE QUICK AND EASY-TO-APPLY SOLUTIONS AND TECHNOLOGIES Easy-to-apply products and technologies enable projects to be completed more simply, efficiently, and quickly Products designed with health and safety focus reduce physical effort for application 32
Slide 33: E-mobility and battery storage
TECHNOLOGICAL PROCESS – E-MOBILITY AND BATTERY STORAGE IMPROVING EFFICIENCY AND INNOVATING THE FUTURE 200 million cars will be electric by 2028 Sika has full range of technologies ▪ Thermal conductive adhesive and gap filler ▪ Reinforcement and protection ▪ Lightweighting CHF 250 million grow ambiti
Slide 34: Growth driver digitalization and automation
GROWTH DRIVER DIGITALIZATION AND AUTOMATION HELPING CUSTOMERS INCREASE QUALITY AND EFFICIENCY Digital products and solutions boosting customer satisfaction and loyalty, and driving sustainable growth ▪ Apps (raw material analysis, concrete mix-design, etc.) ▪ IoT systems (sensors for concrete struct
Slide 35: People & culture – driving engagement and innovation
PEOPLE & CULTURE – DRIVING ENGAGEMENT AND INNOVATION HIGHLY ENGAGED AND EMPOWERED EMPLOYEES With its performance- oriented culture, Sika unleashes the full potential of global diversity 35
Slide 36: Growth driver – Construction chemicals market penetration
GROWTH DRIVER – CONSTRUCTION CHEMICALS MARKET STRONG PENETRATION INCREASE Construction chemicals penetration (1991 = 100) 600 500 400 Fantastic 300 growth 200 opportunities 100 2x penetration increase 2.5–4.0x penetration increase 0 1990 2000 2010 2020 2030 2040 2050 Source: IHS, Freedonia 36 1) pen
Slide 37: Agenda
1. HIGHLIGHTS 2023, THOMAS HASLER (CEO) 2. SUCCESSFUL MBCC ACQUISITION, THOMAS HASLER (CEO) 3. PROFITABLE GROWTH STRATEGY 2028, THOMAS HASLER (CEO) 4. MARKET PENETRATION GROWTH, THOMAS HASLER (CEO) 5. FINANCIAL RESULTS, ADRIAN WIDMER (CFO) 6. OUTLOOK, THOMAS HASLER (CEO), CHRISTOPH GANZ (EMEA), PHIL
Slide 38: Financial highlights 2023
FINANCIAL HIGHLIGHTS 2023 ▪ Net sales: CHF 11,238.6 million, +7.1% in CHF (+14.5% in LC) ▪ Record underlying profitability: ▪ Significant material margin expansion to 53.6% (from 49.4% in PY) ▪ Record EBITDA: CHF 2,044.7 million (+4.1%) ▪ Record EBIT without M&A one-time cost at CHF 1,680.6 million
Slide 39: Sales 2023
SALES 2023 14.5% GROWTH IN LOCAL CURRENCIES in CHF mn 2022 2023 -7.4% Net sales 10,491.8 11,238.6 +13.3% +1.2% Organic growth +129.1 11,239 10,492 Acquisition effect +1,394.2 Currency effect -776.5 2022 Org. Acq. FX 2023 39
Slide 40: Sales development 2021–2023
SALES DEVELOPMENT 2021 – 2023 DOUBLE DIGIT GROWTH EVERY YEAR 17.1% 15.8% 16% 2.0% 14.5% 2.7% 11% 41% 59% 15.1% 13.3% 6% 13.1% in LC Mature Market acquisition Emerging Market organic 1.2% 1% 2021 2022 2023 -4% in CHF mn 12M 2021 12M 2022 12M 2023 Sales 9,252.3 10,491.8 11,238.6 40
Slide 41: Income statement
INCOME STATEMENT STRONG RECOVERY OF MATERIAL MARGIN in CHF mn 2022 NS 2023 NS Growth Net sales 10,491.8 100% 11,238.6 100% +7.1% Gross result 5,179.8 49.4% 6,024.8 53.6% +16.3% Personnel costs -1,710.5 -16.3% -2,006.8 -17.8% +17.3% Other OPEX -1,505.1 -14.4% -1,973.3 -17.6% +31.1% EBITDA 1,964.2 18.
Slide 42: EBIT bridge 2023
EBIT BRIDGE 2023 STRONG UNDERLYING PROFITABILITY IMPROVEMENT EBIT EBIT FY 2022 EBIT EBIT EBIT FY 2022 (w/o M&A FY 2023 FY 2023 FY 2023 (as reported) cost / w/o MBCC (w/o M&A (as reported) Divestment) cost) 42
Slide 43: Consolidated balance sheet
CONSOLIDATED BALANCE SHEET in CHF mn 31.12.2022 31.12.2023 Δ% Cash and cash equivalents 1,873.3 643.9 -65.6% Other current assets 3,148.0 3,557.4 +13.0% Current assets 5,021.3 4,201.3 -16.3% Non-current assets 6,297.9 10,849.4 +72.3% Total assets 11,319.2 15,050.7 +33.0% Current liabilities 1,841.5
Slide 44: Operating free cash flow development
OPERATING FREE CASH FLOW DEVELOPMENT CONTINUED STRONG CASH CONVERSION 2022 2023 82 -269 496 -273 1,645 1,336 1,373 865 Net profit Depr./Amort. Change NWC Tax / other CF operating CapEx OFCF before tax activities (PY w/o divestment gain) 44
Slide 45: Net debt/EBITDA development
NET DEBT/EBITDA DEVELOPMENT (AS REPORTED) STRONG DELEVERAGING PROFILE ▪ MBCC acquisition in Q2 2023 4.1 resulting in a net debt/EBITDA 3.4 ratio of 4.1x 2.5 2.7 ▪ Strong cash generation in 2023 2.6 1.9 and CB conversion – significant 1.4 leverage reduction 1.0 ▪ Net debt reduced to CHF 5.2 bn 2018 2
Slide 46: Dividend: CHF 3.30 per share proposed
DIVIDEND BOARD OF DIRECTORS PROPOSES CHF 3.30 DIVIDEND PER SHARE Dividend payment of CHF 3.30 per share (+3.1% vs. previous year) in CHF mn 2022 2023 Group profit (after minorities) 1,162.5 1,062.0 Dividend payment total 492.3 529.6 Dividend out of retained earnings 492.3 264.8 Dividend out of capit
Slide 47: Agenda
1. HIGHLIGHTS 2023, THOMAS HASLER (CEO) 2. SUCCESSFUL MBCC ACQUISITION, THOMAS HASLER (CEO) 3. PROFITABLE GROWTH STRATEGY 2028, THOMAS HASLER (CEO) 4. MARKET PENETRATION GROWTH, THOMAS HASLER (CEO) 5. FINANCIAL RESULTS, ADRIAN WIDMER (CFO) 6. OUTLOOK, THOMAS HASLER (CEO), CHRISTOPH GANZ (EMEA), PHIL
Slide 48: Outlook Region EMEA
OUTLOOK REGION EMEA ▪ Clear focus on “go where the money is” – targeting opportunities for growth and developing a vertical market approach in our regional and local organizations ▪ Great potential in Sika’s solutions for infrastructure, refurbishment of existing projects in mature markets, and deve
Slide 49: Outlook Region Americas
OUTLOOK REGION AMERICAS ▪ Business investment growth intact as the surge in manufacturing facility investment driven by the CHIPS Act and Inflation Reduction Act subsidies help ▪ Residential grows as housing shortage tempers the impact of reduced affordability ▪ Our Vertical Markets Approach insures
Slide 50: Outlook Region Asia/Pacific
OUTLOOK REGION ASIA/PACIFIC ▪ Sika Asia/Pacific is excellently positioned to build on its growth trajectory and continue the success story ▪ Integration of MBCC on track, mainly adding to large infrastructure projects and concrete admixture business – plus commercial projects in flooring/food & beve
Slide 51: Outlook 2024: Confirmation of 2028 strategic targets
OUTLOOK 2024 CONFIRMATION OF 2028 STRATEGIC TARGETS ▪ For 2024 Sika expects sales growth in local currencies of 6-9% Expected sales ▪ Over-proportional increase in EBITDA growth in LC of ▪ Confirmation of 2028 strategic targets for sustainable, profitable growth 6-9% 51
Slide 52: Questions and Answers
1. HIGHLIGHTS 2023, THOMAS HASLER (CEO) 2. SUCCESSFUL MBCC ACQUISITION, THOMAS HASLER (CEO) 3. PROFITABLE GROWTH STRATEGY 2028, THOMAS HASLER (CEO) 4. MARKET PENETRATION GROWTH, THOMAS HASLER (CEO) 5. FINANCIAL RESULTS, ADRIAN WIDMER (CFO) 6. OUTLOOK, THOMAS HASLER (CEO), CHRISTOPH GANZ (EMEA), PHIL
Slide 53: Thank you for your attention
THANK YOU FOR YOUR ATTENTION Bs BUILDING TRUST