Slide 1: Sika with higher EBIT margin and sales growth in first nine months of 2020
SIKA WITH HIGHER EBIT MARGIN AND SALES GROWTH IN THE FIRST NINE MONTHS OF 2020 SIKA NINE MONTHS COMPANY PRESENTATION OCTOBER 22, 2020
Slide 2: Nine-month results 2020
NINE-MONTH RESULTS 2020 ON TRACK TO MEET AMBITIOUS TARGETS
Slide 3: Growth in local currencies of 2.6% – highlights first nine months 2020
GROWTH IN LOCAL CURRENCIES OF 2.6% HIGHLIGHTS FIRST NINE MONTHS 2020 1. Sales and profit ▪ Sales growth of 2.6% in local currencies. Sales of CHF 5,805.5 million (-3.4% in CHF) ▪ High negative currency effect of -6.0% (impact of CHF 357 million in sales and CHF 48 million in EBIT) ▪ EBITDA margin in
Slide 4: Key figures first nine months 2020
KEY FIGURES FIRST NINE MONTHS 2020 RECORD RESULTS – STRONG TOP LINE MOMENTUM CONTINUES in CHF mn 2019 2020 Δ% Net sales 6,007.3 5,805.5 -3.4% Gross results as % of net sales 53.5 54.6 EBITDA 1,039.8 1,071.7 +3.1% EBIT 805.9 797.4 -1.1% Net profit 566.8 561.5 -0.9% 4
Slide 5: 2.6% sales growth in the first nine months 2020
2.6% SALES GROWTH IN THE FIRST NINE MONTHS 2020 SIKA WELL ON TRACK 15.1% 14.1% 14% 7.1% 2.6% 9% 11.0% 9.2% 7.0% 4% in LC 4.1% acquisition -1% organic -6.6% -6% 9M 2018 9M 2019 9M 2020 in CHF mn 9M 2018 9M 2019 9M 2020 Net sales 5,322.7 6,007.3 5,805.5 5
Slide 6: Sales first nine months 2020 growth by region
SALES FIRST NINE MONTHS 2019 GROWTH IN ALL REGIONS -1.4% -6.8% +8.3% -21.4% Growth in CHF +3.8% +0.9% +13.9% -16.1% Growth in LC -5.2% -7.7% -5.6% -5.3% FX impact +9.0% +7.0% +18.5% +0.0% Acquisition 18% 82% Construction Industry EMEA Americas Asia/Pacific Global Business 6
Slide 7: Growth momentum continues in first nine months
GROWTH MOMENTUM CONTINUES IN FIRST NINE MONTH 2.6% SALES GROWTH (-3.4% IN CHF) + 3.8% + 13.9% - 16.1% + 0.9% 1,204 550 1,501 2,551 Asia/Pacific Global Business Americas EMEA 9M 2019 9M 2020 (in CHF mn, growth in LC) 7
Slide 8: Investments in new plants and acquisitions in 2020
HIGH OPERATING SPEED CONTINUES IN 2020 INVESTMENTS IN NEW PLANTS & ACQUISITIONS IN 2020 Opening of Sika plants: Expansion of admixtures, mortar, and acrylic plant in Colombia Barranquilla, January 2020 Mortar plant in China Chengdu, October 2020 Acquired company Country Target Market Adeplast Romani
Slide 9: The impact of the pandemic February to September 2020
THE IMPACT OF THE PANDEMIC FEBRUARY TO SEPTEMBER 2020 ▪ Severe COVID-19 wave started in March ▪ Around 35 of 100 Sika countries with full lockdown for about two months in the first half of the year, rest of countries strongly impacted (estimates) March April May June July August September Country 03
Slide 10: Measures addressing pandemic situation maintain high flexibility
MEASURES ADDRESSING PANDEMIC SITUATION MAINTAIN HIGH FLEXIBILITY Measures ▪ General ▪ Strong local management actions in each country Operational ▪ Preparation and response according to local situation which differs from country to Agility country, scenario planning ▪ Taking advantage of local suppo
Slide 11: Sika's success factors in the crisis
SIKA’S SUCCESS FACTORS IN THE CRISIS NAVIGATING THE PANDEMIC
Slide 12: 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 12
Slide 13: Structural growth, market penetration and acquisition
STRUCTURAL GROWTH, MARKET PENETRATION AND ACQUISITION HOW SIKA DELIVERS SUPERIOR AND SUSTAINABLE GROWTH OF 6-8% 50% 40% 30% 20% 10% 0% 2019 2020 2021 2022 2023 Market Growth Structural Growth (Megatrends) Market Penetration Acquisition Growth in local currencies 13
Slide 14: Infrastructure programs stimulate market growth
INFRASTRUCTURE PROGRAMS STIMULATE MARKET GROWTH CHF 10 TRILLION PLANNED STIMULI FOR CONSTRUCTION Europe CHF 750 billion Americas Asia/Pacific CHF 1 trillion CHF 8.6 trillion Investments in the areas of: ▪ Transportation infrastructure ▪ Public buildings (hospitals, schools) ▪ Renewable energy ▪ IT i
Slide 15: Examples of COVID-19 infrastructure programs
INFRASTRUCTURE PROGRAMS STIMULATE MARKET GROWTH EXAMPLES OF COVID-19 INFASTRUCTURE PROGRAMS EU USA China ▪ EUR 750 billion ▪ Lowest common denominator ▪ Investment plans and EU recovery plan between the two parties is a major infrastructure ▪ Focuses on renewable USD 1 trillion infrastructure projec
Slide 16: EU Green Deal initiative to boost business
EU GREEN DEAL INITIATIVE TO BOOST BUSINESS SIKA TO PROFIT AS GLOBAL LEADER IN BUILDING FINISHING Existing buildings New regulations Sika solutions reducing heat loss and water impact ▪ EU Green Deal ▪ Stricter building regulations leading to renovations of buildings and infrastructure ▪ Countries su
Slide 17: Digital economy and e-commerce unlocking additional potential
DIGITAL ECONOMY AND E-COMMERCE UNLOCKING ADDITIONAL POTENTIAL ▪ COVID-19 has accelerated digital and Huge investments in data- e-commerce boom transfer and G5 technology ▪ Increasing investments from civil infrastructure to data centers Increasing need for data ▪ Sika as preferred provider of Roofin
Slide 18: Trend for more urbanization continues
TREND FOR MORE URBANIZATION CONTINUES UNLOCKING ADDITIONAL POTENTIAL ▪ Big cities remain highly attractive Urbanization trend to continue ▪ Companies will not transition to 100% 1,750 mn 7,244 mn 9,804 mn World population home office mid-term ▪ Even if less people will be working in office buildings
Slide 19: Resilient and growing distribution business
RESILIENT AND GROWING IN DISTRIBUTION BUSINESS INCREASING OPPORTUNITIES ▪ Boom in DIY business ▪ Sika’s distribution business highly ▪ Home improvement business is resilient booming ▪ Leading retail and hardware store chains report strong double digit increase in sales during lockdown ▪ Access to nu
Slide 20: Overall stronger growth of refurbishment business
SUCCESS FACTORS IN THE CRISIS OVERALL STRONGER GROWTH OF REFURBISHMENT BUSINESS ▪ High resilience of refurbishment in crisis ▪ Urbanization and densification drive the need for refurbishment ▪ Structures have to be maintained ▪ Complexity favor refurbishment over new build ▪ New regulations and buil
Slide 21: Strong customer focus
SUCCESS FACTORS IN THE CRISIS STRONG CUSTOMER FOCUS ▪ Close contact with customers ▪ Daily calls and personal contact ▪ Over 100,000 webinars and online trainings ▪ New sales-driven website with access to all products in all countries ▪ Solution-driven mentality 21
Slide 22: Successful Parex integration
SUCCESSFUL PAREX INTEGRATION ON TRACK TO MEET AMBITIOUS TARGETS
Slide 23: Fast and successful integration of Parex
FAST AND SUCCESSFUL INTEGRATION OF PAREX EXCELLENT PROGRESS – COMPLETION IN FOCUS TOTAL SYNERGIES TOTAL COST CHF 40 MILLION+ Around CHF 100 SYNERGIES Run rate synergies million identified CHF 55 million achieved to date PRODUCT SHOP IN SHOP 23 INTEGRATED CROSS-SELLING LAUNCHES concept TEAMS working
Slide 24: Strategy 2023
STRATEGY 2023 ON TRACK TO MEET AMBITIOUS TARGETS
Slide 25: Major megatrends supporting Sika's growth
MAJOR MEGATRENDS SUPPORTING SIKA’S GROWTH NO CHANGES DUE TO PANDEMIC TECHNOLOGY RAPID ADVANCEMENT URBANIZATION DYNAMIC CLIMATE CHANGE, ECONOMY SHORTAGE OF RESOURCES CHANGING DEMOGRAPHICS 25
Slide 26: Sika's growth strategy 2023: the pillars of the strategy
SIKA’S GROWTH STRATEGY 2023 THE PILLARS OF THE STRATEGY 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-materia
Slide 27: Market penetration: increase market share to 12%
MARKET PENETRATION INCREASE MARKET SHARE TO 12% Construction chemicals Construction chemicals Driver for future growth: market 2020 market 2025 How we increase market share approx. CHF 70 billion approx. CHF 80 billion Sika 12% New Sika 9% Building Finishing Target Market Others +2.5% p.a. 58% marke
Slide 28: Innovation: more performant, more sustainable
INNOVATION MORE PERFORMANT – MORE SUSTAINABLE FIVE CORE TECHNOLOGIES: Concrete Technology Adhesive Systems Coating Systems Focus on Sika’s five 25% of sales with new core technologies products Increased focus on Cementitious Systems Thermoplastic Systems Shift in construction product sustainability:
Slide 29: Operational efficiency drives margin improvement
OPERATIONAL EFFICIENCY DRIVES MARGIN IMPROVEMENT MORE THAN OPERATING LEVERAGE Sika’s footprint significantly expanded over the years 1 Operations / Factory Efficiency Initiatives to 2 Formulation Efficiency increase 3 Logistics operational efficiency 4 Procurement 5 Sales and admin costs in % 0.5% s
Slide 30: Acquisitions as growth platforms
ACQUISITIONS AS GROWTH PLATFORMS NUMEROUS OPPORTUNITIES TO CONSOLIDATE MARKET ▪ Fragmentation offers acquisition opportunities ▪ Sika acting as market consolidator ▪ More than 60 bolt-on acquisitions in the last 12 years ▪ Acquisitions as growth platforms ▪ Solid pipeline but due diligence process h
Slide 31: Values and principles
VALUES AND PRINCIPLES WHAT SIKA STANDS FOR 25,000 HIGH ▪ Customer first employees COMMITMENT ▪ Courage for innovation ▪ Sustainability and integrity OF EMPLOYEES ▪ Empowerment and respect 6.0% DURING ▪ Manage for results employee turnover PANDEMIC rate in 2019 Global Employee Survey in 2019 showed v
Slide 32: Sustainability: 70% of Sika products with positive sustainable impact
SUSTAINABILITY 70% OF SIKA PRODUCTS WITH POSITIVE SUSTAINABLE IMPACT ▪ 70% of Sika products with a positive sustainable impact ▪ Sika products help to drive CO2 footprint of our customers down Overall target 12% CO2 emission reduction per ton sold by 2023 Our «More Value - Less Impact» targets: ▪ Su
Slide 33: High emissions in the building industry
HIGH EMISSIONS IN THE BUILDING INDUSTRY CONSTRUCTION CHEMICALS ENABLER FOR STRUCTURAL CHANGE 800 kg CO2 per ton produced 700 600 500 400 300 200 100 0 Sika Light-side Heavy-side Building Material companies Building Material companies 33
Slide 34: Sustainability – climate performance
SUSTAINABILITY – CLIMATE PERFORMANCE STRATEGIC CO2 TARGET LEADS TO CLIMATE NEUTRALITY BY 2050 2019 2020 2023 2030 2050 27 kg CO2/tons sold -12% -50% CO2 neutral (Scope 1&2) In 2020 Sika concentrates on Scope 1 and 2 Internal CO2 footprint Scope 1 (direct) Scope 2 (indirect) ▪ Internal fossil fuel us
Slide 35: Sika enables sustainable construction: concrete admixtures
SIKA ENABLES SUSTAINABLE CONSTRUCTION SIKA PRODUCTS DRIVE CO2 FOOTPRINT DOWN Scope 3 (external CO2 footprint) 70% of Sika products with a positive sustainable impact HIGH-STRENGTH CONCRETE WITH CONCRETE ADMIXTURES Sika® ViscoCrete® REDUCES CONCRETE CONSUMPTION AS THINNER CONSTRUCTIONS ARE POSSIBLE S
Slide 36: Sika enables sustainable construction: repair and refurbishment
SIKA ENABLES SUSTAINABLE CONSTRUCTION SIKA PRODUCTS DRIVE CO2 FOOTPRINT DOWN Scope 3 (external CO2 footprint) 70% of Sika products with a positive sustainable impact SIKA SOLUTIONS FOR REPAIR AND REFURBISHMENT STRENGTHEN, WATERPROOF, INSULATE, PROTECT, AND REPAIR BUILDINGS AND STRUCTURES SIKA REPAIR
Slide 37: Sika enables sustainable construction: green and cool roofs
SIKA ENABLES SUSTAINABLE CONSTRUCTION SIKA PRODUCTS DRIVE CO2 FOOTPRINT DOWN Scope 3 (external CO2 footprint) 70% of Sika products with a positive sustainable impact SIKA SUPPLIES HIGHLY DURABLE, ROOT RESISTANT MEMBRANES FOR GREEN ROOFS ▪ REDUCE URBAN HEAT EFFECT AND IMPROVE AIR QUALITY ▪ INSULATING
Slide 38: Outlook
OUTLOOK ® BUILDING TRUST By
Slide 39: Driving towards an EBIT margin of 15%-18%
OUTLOOK DRIVING TOWARDS AN EBIT MARGIN OF 15%-18% 15% – 18 % 12.9% - 2.6% pts. 11.3% +0.5% pts. Efficiencies Negative Volume +0.5% pts. Synergies leverage / Dilution M&A 2019 HY 2020 2023 39
Slide 40: Continuation of successful growth strategy
OUTLOOK CONTINUATION OF SUCCESSFUL GROWTH STRATEGY ▪ Confirmation of 2023 strategic targets for sustainable, profitable growth ▪ Outlook for 2020: For the fiscal year 2020, Sika is expecting slightly lower sales in CHF but EBIT broadly in line with last year, implying an over-proportional rise in EB
Slide 41: Thank you for your attention
al THANK YO U 4 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