Slide 1: Record Results in 2017 - Sika Media and Investor Presentation
RECORD RESULTS IN 2017 SIKA MEDIA AND INVESTOR PRESENTATION FEBRUARY 23, 2018
Slide 2: Table of Contents
TABLE OF CONTENTS 1. HIGHLIGHTS PAUL SCHULER, CEO 2. FINANCIAL RESULTS ADRIAN WIDMER, CFO 3. STRATEGY PAUL SCHULER, CEO 4. OUTLOOK PAUL SCHULER, CEO IVO SCHÄDLER, EMEA CHRISTOPH GANZ, AMERICAS MIKE CAMPION, ASIA/PACIFIC THOMAS HASLER, INDUSTRY & AUTOMOTIVE 5. QUESTIONS & ANSWERS 2
Slide 3: 1. Highlights
1. HIGHLIGHTS PAUL SCHULER, CEO
Slide 4: Highlights 2017
HIGHLIGHTS 2017 1. Record results +9.0% sales growth in local currencies to CHF 6,248.3 million CHF 896.3 million EBIT (+12.7%) CHF 649.0 million net profit (+14.5%) 29.8% ROCE (2016: 28.7 %) 2. Key investments 3 new national subsidiaries 9 new factories 7 acquisitions 3. Strategy St
Slide 5: Key Figures: Record Results
KEY FIGURES RECORD RESULTS in CHF mn 2016 2017 Δ% Net sales 5,747.7 6.248.3 + 8.7% EBIT 795.3 896.3 + 12.7% Net profit 566.6 649.0 + 14.5% ROCE 28.7% 29.8% 5
Slide 6: Growth Momentum Continues in 2017
GROWTH MOMENTUM CONTINUES IN 2017 9.0% SALES GROWTH (8.7% IN CHF) + 7.5% + 18.4% 1,094 + 5.2% North America 1,133 + 3.3% 2,875 Asia/Pacific 590 EMEA Latin America 12M 2016 12M 2017 (in CHF mn, growth in LC) 6
Slide 7: Key Investments in 2017: Expansion in Emerging Markets
KEY INVESTMENTS IN 2017 EXPANSION IN EMERGING MARKETS Opening of Sika plants: 5th plant in Mexico (Coatzacoalcos, March 2017) New and expanded site in Kazakhstan (Almaty, May 2017) 1st plant in Tanzania (Dar es Salaam, June 2017) 5th plant in Russia (Lobnya, July 2017) New and expanded sit
Slide 8: Key Investments in 2017: Expansion in Emerging Markets
KEY INVESTMENTS IN 2017 EXPANSION IN EMERGING MARKETS New subsidiaries: Senegal (April 2017) El Salvador (September 2017) Bangladesh (December 2017) Now present in 100 countries with own national subsidiaries 8
Slide 9: Sika's Subsidiaries
SIKA’S 100 SUBSIDIARIES austin 1534 uRucuay 1858 # Ie arin PORTUGAL 1550, ara-2007 I+] Usa 6 DENMARK 1960 SLA 771 ARGENTINA 1038 e a Menico 1968 TURKEY 350 PAKISTAN 200 tT TAIWAN 1991 it yoroaN -201 E ALceRia- 1997 care 1993 vmag-2012 i iRau-1977 [| I PRIUPPOUES 1992 MozaMsique-2018 i ll f Swene 195
Slide 10: Continuing High Operating Speed 2017/2018: Acquisitions
CONTINUING HIGH OPERATING SPEED 2017/2018 ACQUISITIONS Company Country Target Market Bitbau Dörr Austria Waterproofing ABC Sealants Turkey Sealing & Bonding KVK Czech Republic Roofing, Waterproofing, Refurbishment Butterfield USA Concrete Faist ChemTec Global Industry, Automotive Grupo Industrial Al
Slide 11: Acquisition of Faist ChemTec
KEY INVESTMENTS IN 2017 ACQUISITIONS AS GROWTH PLATFORM Acquisition of Faist ChemTec, Global Leading manufacturer of high-performance engineered, structure- borne acoustic solutions for automotive industry Faist ChemTec’s innovations are driven by megatrends, such as increased need for comfort a
Slide 12: Acquisition of Emseal Joint Systems
KEY INVESTMENTS IN 2017 ACQUISITIONS AS GROWTH PLATFORM Acquisition of Emseal Joint Systems, USA US-based market leader in development and manufacturing of structural expansion joint products for new construction and refurbishment Extensive cross-selling opportunities for other Sika technologies
Slide 13: Acquisition of Index Construction Systems and Products
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 14: 2. Financial Results 2017
2. FINANCIAL RESULTS 2017 ADRIAN WIDMER, CFO
Slide 15: Financial Highlights 2017
FINANCIAL HIGHLIGHTS 2017 New and all time records in: Net Sales: CHF 6,248.3 million (+9.0% in LC, 8.7% in CHF) EBIT: CHF 896.3 million (+12.7%) reaching 14.3% of net sales, +CHF 101 million in absolute terms Net Profit: CHF 649.0 million (+14.5%) Tax rate further improved to 24.7% Cont
Slide 16: Revenues 2017: 9.0% Growth in Local Currencies
REVENUES 2017 9.0% GROWTH IN LOCAL CURRENCIES in CHF mn 2016 2017 Net sales 5,747.7 6,248.3 2.7% -0.3% Organic growth +360.5 6.3% 6,248 Acquisition effect +153.1 5,748 Currency effect -13.0 2016 2017 16
Slide 17: Revenues 2017: Execution on All Pillars of the Strategy
REVENUES 2017 EXECUTION ON ALL PILLARS OF THE STRATEGY 153 -13 172 189 6,248.3 5,747.7 2016 Organic Growth Organic Growth Acquisitions Translation Impact 2017 Mature Market Emerging Market 17
Slide 18: Sales Growth 2015 to 2017
SALES GROWTH 2015 TO 2017 STRONG ORGANIC GROWTH 9.0% 2.7% 6.2% 5.5% in LC 2.2% 0.9% acquisition organic 6.3% 4.0% 4.6% 2015 2016 2017 in CHF mn Sales 5,489.2 5,747.7 6,248.3 18
Slide 19: Sales Growth by Quarter
SALES GROWTH BY QUARTER DYNAMIC GROWTH MOMENTUM 12% 12.3% 10.7% 10% 3.5% 2.2% 8% 7.4% 6.0% 6% 2.4% in LC 4.0% 3.4% 8.5% 2.6% 8.8% acquisition 4% 0.4% organic 0.4% 5.0% 3.6% 3.4% 2% 3.0% 0% Q3 PY Q4 PY Q1 CY Q2 CY Q3 CY Q4 CY in CHF mn Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Quarterly 1,525.6 1,415.9 1,3
Slide 20: Income Statement
INCOME STATEMENT ANOTHER YEAR OF STRONG PROFIT GROWTH in CHF mn 2016 NS 2017 NS Growth Net sales 5,747.7 100% 6,248.3 100% 8.7% Gross result 3,181.1 55.3% 3,399.1 54.4% 6.9% Personnel costs -1,159.1 -20.1% -1,212.1 -19.4% 4.6% Other OPEX -1,056.3 -18.4% -1,118.5 -17.9% 5.9% Depreciation and amortiza
Slide 21: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET STRONG BALANCE SHEET AND IMPROVED EQUITY RATIO OF 58.9% in CHF mn 31.12.2016 31.12.2017 Δ% Cash and cash equivalents 1,155.0 1,037.9 -10.1 Other current assets 1,742.0 2,046.5 17.5 Current assets 2,897.0 3,084.4 6.5 Non-current assets 2,202.2 2,707.8 23.0 Total assets 5,09
Slide 22: Cash Flow Statement
CASH FLOW STATEMENT in CHF mn 2016 2017 Cash flow from operating activities 735.7 651.9 CapEx/sale of assets/acquisitions -172.7 -478.2 Free cash flow 563.0 173.7 Acquisitions/financial assets 23.5 323.1 Operating free cash flow 586.5 496.8 Free cash flow 563.0 173.7 Cash flow from financing activit
Slide 23: Investments: Efficient Capital Management
INVESTMENTS 9 new Factories 5th plant in Mexico EFFICIENT CAPITAL MANAGEMENT New and expanded plant in Kazakhstan 1st plant in Tanzania 204 5th plant in Russia New and expanded site in 159 160 40 Pakistan Fixed assets through 5 2nd plant in Angola M&A 17 New fiber plant in Germany 85
Slide 24: Return on Capital Employed (ROCE 2012-2017)
RETURN ON CAPITAL EMPLOYED (ROCE 2012 – 2017) CONTINUED INCREASE IN SPITE OF GROWTH INVESTMENTS 29.8% 28.7% 24.3% 23.3% 21.0% 18.5% 2012 2013 2014 2015 2016 2017 24
Slide 25: Record Dividend Proposal of the Board of Directors
RECORD DIVIDEND PROPOSAL OF THE BOARD OF DIRECTORS Dividend payment CHF 111.00 per bearer share CHF 18.50 per registered share in CHF mn 2016 2017 Group profit (after minorities) 563.1 643.5 Dividend out of retained earnings 243.7 281.8 Total payout ratio 43.3% 43.8% 25
Slide 26: 3. Successful Strategy Execution
3. SUCCESSFUL STRATEGY EXECUTION
Slide 27: Strategic Targets Confirmed for 2020
STRATEGIC TARGETS CONFIRMED FOR 2020 SIKA’S GROWTH MODEL WILL DELIVER 1) Performance 2) Market Penetration 3) Innovation 4) Accelerated build-up of Emerging Markets 5) Acquisitions 6) Values 7) Targets 27
Slide 28: 1) Performance
1) PERFORMANCE ® BUILDING TRUST Ds
Slide 29: Sika's Growth Model Delivers: Key Investments Since 2015
SIKA’S GROWTH MODEL DELIVERS KEY INVESTMENTS SINCE 2015
Slide 30: Continued Growth in Sales and Profit
SIKA’S GROWTH MODEL DELIVERS CONTINUED GROWTH IN SALES AND PROFIT (FULL YEAR) NET SALES NET SALES 700 0 16. 0% EBIT 110 0 14.3% 16. 0% 100 0 13.8% % growth in local currencies as % of net sales 14. 0% 650 0 14. 0% 900 12.3% 5.3% 9.4% 13.0% 6.2% 5.5% 9.0% 11.4% 12. 0% 800 12. 0% 600 0 10.2% 700 10. 0
Slide 31: 2) Market Penetration
2) MARKET PENETRATION ® BUILDING TRUST Ds
Slide 32: 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 32
Slide 33: 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 34: 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 34
Slide 35: Sika's Market Potential: Growth Model with Early Market Penetration
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 35
Slide 36: 3) Innovation
3) INNOVATION ® BUILDING TRUST Ds
Slide 37: Innovation: Strong Track Record
INNOVATION STRONG TRACK RECORD More than 217 900 283 20 Technology patents were employees are invention Centers filed since dedicated to disclosures worldwide 2015 Research and Since 2015 Development 37
Slide 38: 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 38
Slide 39: Sika Innovations Drive Growth: Fire Protection
SIKA INNOVATIONS DRIVE GROWTH E.G. TIME AND COST EFFECTIVENESS IN FIRE PROTECTION Sika® Unitherm® Platinum-120 FIRE PROTECTION COATING DELAYS HEAT BUILD-UP AND PROLONGS EVACUATION TIME BY UP TO 150 MINUTES FAST CURING AND ROBUST • INCREASED SAFETY SURFACE ALLOW • SHORT CONSTRUCTION TIME TRANSPORTATI
Slide 40: Sika Innovations Drive Growth: Flooring
SIKA INNOVATIONS DRIVE GROWTH E.G. REDUCING APPLICATION TIME IN FLOORING 3 INSTEAD OF 13 DAYS IS HOW LONG IT TAKES TO REFURBISH 1,000m2 OF FLOORING WITH SikaScreed® HardTop, COMPARED TO REFURBISHMENT WITH CONVENTIONAL PRODUCTS UNIQUE WORLDWIDE: SikaScreed® HardTop INCREASES • FEWER WORKING STEPS PRO
Slide 41: 4) Accelerated Build-up of Emerging Markets
4) ACCELERATED BUILD-UP OF EMERGING MARKETS
Slide 42: Emerging Markets Build-up Since 2015
EMERGING MARKETS BUILD-UP SINCE 2015 CAPTURING GROWTH POTENTIAL IN NEW MARKETS 26 5 10 36% new acquisitions new of sales in plants national emerging markets opened subsidiaries 42
Slide 43: 5) Acquisitions
5) ACQUISITIONS ® BUILDING TRUST Ds
Slide 44: Fragmentation Offers Acquisition Opportunities
SIKA’S MARKET POTENTIAL FRAGMENTATION OFFERS ACQUISITION OPPORTUNITIES CONSTRUCTION CHEMICAL MARKET 2017 > CHF 60 BILLION Sika Top 10 companies with a combined market share of 40% Other 44
Slide 45: Acquisitions Since 2015: Growth Platforms for the Future
ACQUISITIONS SINCE 2015 GROWTH PLATFORMS FOR THE FUTURE In all In all 17 705 7 4 acquisitions million CHF Target regions additional Markets turnover 45
Slide 46: 6) Values and Principles
6) VALUES AND PRINCIPLES ® BUILDING TRUST Ds
Slide 47: 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 47
Slide 48: 7) Targets 2020
7) TARGETS 2020 ® BUILDING TRUST Ds
Slide 49: Strategic Targets 2020
SIKA’S GROWTH MODEL WILL DELIVER STRATEGIC TARGETS 2020 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 49
Slide 50: 4. Outlook
4. OUTLOOK PAUL SCHULER, CEO, IVO SCHÄDLER, EMEA CHRISTOPH GANZ, AMERICAS MIKE CAMPION, ASIA/PACIFIC THOMAS HASLER, INDUSTRY & AUTOMOTIVE
Slide 51: Outlook EMEA
OUTLOOK EMEA Positive outlook for EMEA Over-proportional growth in Africa and strong growth in Eastern Europe Middle East: well positioned in major projects such as new Istanbul Airport and Dubai Creek Harbour Tower Project Good position in mature markets driven by substantial infrastructure
Slide 52: Outlook Americas
OUTLOOK AMERICAS Positive Market environment expected for the US and Canada (US infrastructure, tax reform etc.) Positive outlook for Mexico and Argentina, still challenging situations in Brazil, Peru and Chile Major business opportunities in North America: Data and distribution center boom, r
Slide 53: Outlook Asia/Pacific
OUTLOOK ASIA/PACIFIC The market in Asia/Pacific remains strong with huge growth potential in all Target Markets Double digit growth in Greater China and Pacific Areas Continued development of large infrastructure projects throughout Southeast Asia and India Tokyo 2020 Olympics will continue
Slide 54: Outlook Automotive & Industry
OUTLOOK AUTOMOTIVE & INDUSTRY Dynamic and positive market conditions with growth in all key markets. Global car production is forecasting a 2% base growth rate Additional growth potential fueled by increased needs for light weight, multi-material concepts, comfort and safety Full electric and
Slide 55: Strong Outlook 2018 for Sika
STRONG OUTLOOK 2018 FOR SIKA CONTINUATION OF SUCCESSFUL GROWTH STRATEGY Sales increase of more than 10% expected in 2018 Volatile and rising commodity prices will continue to be a challenge Disproportionally high growth in profit expected for the year 2018 as a whole 55
Slide 56: 5. Questions and Answers
5. QUESTIONS AND ANSWERS ® BUILDING TRUST Ds
Slide 57: Thank You for Your Attention
vl his rene, ‘ ERE THANK YOU FOR YOUR ATTENTION ® BUILDING TRUST Bs
Slide 58: 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