Sika Ag · SIX:SIKA
Sika — Investor Presentation (January 2023)
34 slides from Sika's investor presentation, Jan 11, 2023
Slide 1: Sika Exceeds Sales of CHF 10 Billion for the First Time
SIKA EXCEEDS SALES OF CHF 10 BILLION FOR THE FIRST TIME STRONG GROWTH OF 15.8% IN LOCAL CURRENCIES SIKA INVESTOR PRESENTATION BAAR, JANUARY 11, 2023
Slide 2: Agenda
1. HIGHLIGHTS SALES 2022 2. SIKA’S GROWTH DRIVERS 3. SIKA’S WAY TO NET ZERO 4. UPDATE ON MBCC ACQUISITION 5. OUTLOOK
Slide 3: 1. Highlights Sales 2022
1. HIGHLIGHTS SALES 2022 ® BUILDING TRUST Bs
Slide 4: Highlights Sales 2022
SIKA EXCEEDS SALES OF CHF 10 BILLION FOR THE FIRST TIME HIGHLIGHTS SALES 2022 1. Sales and profit Sika posts sales of CHF 10.49 billion in 2022 Sales growth of 15.8% in local currencies (+13.4% in CHF) 2. Key investments Two acquisitions: Sable Marco (Canada) and United Gilsonite Laboratories
Slide 5: Sales Growth of 15.8% in Local Currencies
SIKA EXCEEDS SALES OF CHF 10 BILLION FOR THE FIRST TIME SALES GROWTH OF 15.8% IN LOCAL CURRENCIES 19% 17.1% 15.8% 2.0% 14% 2.5% 3.4% 9% 15.1% 13.3% 7.2% 4% in LC acquisition organic -3.8% -1% -6% 2020 2021 2022 in CHF bn 2020 2021 2022 Net sales 7.88 bn 9.25 bn 10.49 bn 5
Slide 6: Sales Growth by Region and Business
SIKA EXCEEDS SALES OF CHF 10 BILLION FOR THE FIRST TIME SALES GROWTH OF 15.8% IN LOCAL CURRENCIES +1.7% +31.6% +12.6% +20.6% Growth in CHF +8.3% +27.5% +14.8% +22.3% Growth in LC - 6.6% + 4.1% - 2.2% - 1.7% FX impact - 1.0% + 5.8% + 5.0% + 4.4% Acquisition 17% 83% Construction Industry EMEA Americas
Slide 7: Sales Growth by Region 2021 vs 2022
SIKA EXCEEDS SALES OF CHF 10 BILLION FOR THE FIRST TIME SALES GROWTH OF 15.8% IN LOCAL CURRENCIES + 8.3% + 15.8% + 27.5% + 14.8% + 22.3% 3.19 4.14 2.34 0.81 10.49 Americas EMEA Asia/Pacific Global Business Group 2021 2022 (in CHF billion, growth in LC) 7
Slide 8: Key Investments in 2022 – Continued Execution
SUCCESSFUL, RESILIENT STRATEGY KEY INVESTMENTS IN 2022 – CONTINUED EXECUTION Acquisitions and divestments New plants Opening of a new plant in the Ivory Coast Acquisition of Sable Marco, Canada (February 2022) (March 2022) Opening of a new plant in Tanzania Closing of transaction related to divestme
Slide 9: 2. Sika's Growth Drivers
2. SIKA’S GROWTH DRIVERS ® BUILDING TRUST Bs
Slide 10: 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% 10
Slide 11: Major Megatrends Supporting Growth
RESILIENT STRATEGY – MAJOR MEGATRENDS SUPPORTING GROWTH FURTHER ACCELERATION THROUGH DIGITALIZATION Urbanization Climate Change and Digitalization Scarcity of Resources Demographic Dynamic Technological Change Economy Progress 11
Slide 12: Resilient Growth Strategy 2023 Strategic Targets Confirmed
RESILIENT GROWTH STRATEGY 2023 STRATEGIC TARGETS CONFIRMED SUSTAINABILITY Market Penetration 6-8% annual growth 15-18% EBIT margin Until 2020: <15% Innovation Operational Efficiency 25% of sales with new >10% products Operating free cash flow per year as % of net sales Acquisitions 0.5% pts non-mate
Slide 13: Growth Driver – Construction Chemicals Market
GROWTH DRIVER – CONSTRUCTION CHEMICALS MARKET STRONG PENETRATION INCREASE Construction chemicals penetration (1991 = 100) 600 500 400 300 200 2.5 – 4.0x penetration increase 100 2x penetration increase 0 1990 2000 2010 2020 2030 2040 2050 Source: IHS, Freedonia 1) penetration = global construction c
Slide 14: Growth Driver – Repair and Refurbishment
GROWTH DRIVER – REPAIR AND REFURBISHMENT HIGHLY RESILIENT THROUGH THE CYCLES High resilience of refurbishment 55% of Group sales in construction In mature markets, 70% of sales in through economic cycles generated by refurbishment construction generated by refurbishment Corrective maintenance ca
Slide 15: Growth Driver – Emerging Markets
GROWTH DRIVER – EMERGING MARKETS CONTINUOUS STRONG GROWTH Enormous need for infrastructure, energy and power, real estate Expansion of supply chain footprint Acquisitions to leverage our market access Increased demand to meet international construction standards Need for qualified workforc
Slide 16: Growth Driver – Infrastructure Programs
GROWTH DRIVER – INFRASTRUCTURE PROGRAMS CHF 10 TRILLION PLANNED STIMULI EU working towards US infrastructure climate neutrality investments running approx. CHF China invests in technology 400 into the billions and infrastructure approx. CHF 850 billion approx. CHF billion 8,000 billion Extensive i
Slide 17: Growth Driver – Global Automotive Production
GROWTH DRIVER – GLOBAL AUTOMOTIVE PRODUCTION RECOVERY EXPECTED IN THE NEXT YEARS in mn units 100 95 Strong recovery expected 90 Backlog in demand Supply chain “normalization” 85 High e-vehicle demand 80 75 Global automotive production 70 Forecast (as of Nov 2022) 2018 2019 2020 2021 2022 2023
Slide 18: Growth Driver – Our People
GROWTH DRIVER – OUR PEOPLE UNIQUE CORPORATE CULTURE Courage for Innovation Customer First Empowerment and Respect Manage for Results Sustainability and Integrity 18
Slide 19: 3. Our Way to Net Zero
3. OUR WAY TO NET ZERO ® BUILDING TRUST Bs
Slide 20: Sustainability and Our Way to Net Zero
SUSTAINABILITY AND OUR WAY TO NET ZERO CONTINUE TO GROW AND REDUCE GREENHOUSE GAS MAKING A POSITIVE IMPACT OUR COMITTMENT 40% of global CO2 emissions attributable to We continue our growth strategy and engage our construction and building sector innovative developments to decouple growth from gr
Slide 21: Sika's Net Zero Roadmap
SIKA’S NET ZERO ROADMAP OUR KEY LEVERS Education and capacity building to improve material efficiency and circularity Accelerated use Continued of alternative focus on low carbon operational supplies efficiencies Partnerships Development with key of new innovative suppliers who solutions for support
Slide 22: 4. Update on MBCC Acquisition
4. UPDATE ON MBCC ACQUISITION
Slide 23: MBCC Acquisition: Complementary in Many Ways
UPDATE ON MBCC ACQUISITION COMPLEMENTARY IN MANY WAYS Solutions Channel Geography Supply Chain 23
Slide 24: Even Stronger Product Range Together
UPDATE ON MBCC ACQUISITION WE WILL HAVE AN EVEN STRONGER PRODUCT RANGE TOGETHER Underground Construction Offshore Wind Installation High-performance industrial floors Floor Covering Applications Sikaplan® Sikafloor® Sikafloor® Sika Power® High performance epoxy sealing and PVC membrane for waterproo
Slide 25: Unconditional Approvals in Most Jurisdictions
UPDATE ON MBCC ACQUISITION UNCONDITIONAL APPROVALS IN MOST JURISDICTIONS Brazil China Japan Colombia Unconditional approvals received in most Saudi-Arabia Thailand South Africa Turkey jurisdictions Mexico 25
Slide 26: Divestments Required in Admixture Business
UPDATE ON MBCC ACQUISITION DIVESTMENTS REQUIRED IN ADMIXTURE BUSINESS USA Canada Process ongoing divestment of admixture Europe UK business Scope: up to CHF 850 million New Zealand Australia 26
Slide 27: Divestments Required in Admixture Business
UPDATE ON MBCC ACQUISITION DIVESTMENTS REQUIRED IN ADMIXTURE BUSINESS Remaining business CHF 2.15 billion* To be divested CHF 850 million* Countries with MBCC subsidiaries that will be fully integrated Countries with MBCC subsidiaries where admixture business will be divested *Based on full year 202
Slide 28: Financing and Leverage Considerations
FINANCING AND LEVERAGE CONSIDERATIONS 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 CHF 90 millio
Slide 29: 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 30: Confirmation of Strategic Fit
UPDATE ON MBCC ACQUISITION CONFIRMATION OF STRATEGIC FIT Synergies: CHF 160-180 million 2023 Leverage expected at ≈2.5x Funding structure of MBCC acquisition unchanged Favorable FX impact Closing targeted in first half of 2023 30
Slide 31: 5. Outlook
5. OUTLOOK ® BUILDING TRUST Bs
Slide 32: Record EBIT and EBIT Margin of 15% Anticipated for 2022
RECORD EBIT AND EBIT MARGIN OF 15% ANTICIPATED FOR 2022 CONTINUATION OF SUCCESSFUL GROWTH STRATEGY Record EBIT and EBIT margin of 15% anticipated for the 2022 fiscal year Confirmation of 2023 strategic targets for sustainable, profitable growth 32
Slide 33: Thank You for Your Attention
a 24 srtess 3 il THANK YOU FOR YOUR ATTENTION ® BUILDING TRUST Bs
Slide 34: 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