Sika Ag · SIX:SIKA
Sika — Investor Day (September 2020)
15 slides from Sika's investor day presentation, Sep 30, 2020
Slide 1: Weathering the Storm – Swift Implementation of Initiatives as Key Profit Driver
WEATHERING THE STORM – SWIFT IMPLEMENTATION OF INITIATIVES AS KEY PROFIT DRIVER ADRIAN WIDMER CFO SIKA CAPITAL MARKETS DAY 2020
Slide 2: Response Measures to COVID-19 in Support of Long-Term Profitability Improvement
RESPONSE MEASURES TO COVID-19 IN SUPPORT OF LONG-TERM PROFITABILITY IMPROVEMENT 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
Slide 3: Driving Towards an EBIT Margin of 15%-18%
DRIVING TOWARDS AN EBIT MARGIN OF 15%-18% IMPROVING MARGIN PROFILE IN SPITE OF COVID-19 EBIT 15%-18% NS 1'055 EBIT 2019 Organic Growth Material Margin Operational M&A EBIT 2023 Improvements Efficiency ▪ Negative organic growth leverage of -10.5% in 1HY 2020 masking underlying improvements 3
Slide 4: Profitability Drivers
PROFITABILITY DRIVERS ® BUILDING TRUST By
Slide 5: Strong Material Margin Improvements Move into 54%-55% Range
STRONG MATERIAL MARGIN IMPROVEMENTS MOVE INTO 54% - 55% RANGE ▪ Organic Material Margin has moved into 54-55% range 15% - 18% ▪ Supportive material cost development, negative FX, secured by pricing 1'055 ▪ Innovation (at higher margins) EBIT 2019 Organic Growth Material Margin Operational Efficiency
Slide 6: Strong Material Margin Improvements: Waste Reduction and Formulation Efficiency
STRONG MATERIAL MARGIN IMPROVEMENTS MOVE INTO 54% - 55% RANGE Example: Waste Reduction Example: Formulation Efficiency ▪ Programs to reduce direct manufacturing waste ▪ Programs to simplify and optimize similar formulations Mortar Production Adhesive Production Admixture production Optimize formulat
Slide 7: Operational Efficiency with Strong Impact
OPERATIONAL EFFICIENCY WITH STRONG IMPACT 0.5% PTS IMPACT ALSO DURING CRISIS ▪ Structured, continuous improvement program across value chain 15% - 18% ▪ Positive EBIT impact of 0.5% pts also during crisis ▪ Key initiatives in factory automation 1'055 ▪ Supply Chain consolidation and improvements to
Slide 8: Operational Efficiency: US Supply Chain Alignment and Energy Reduction
OPERATIONAL EFFICIENCY WITH STRONG IMPACT 0.5% PTS IMPACT ALSO DURING CRISIS Example: US Supply Chain Alignment Example: Energy Reduction Projects ▪ Programs focusing on energy reduction Present State Future State Sand Drying Membrane Production Compressed Air ▪ Fragmented and sometimes ▪ Consolidat
Slide 9: Strong Parex Synergy Run-Rate to Overcompensate Dilution Effect in 2021
STRONG PAREX SYNERGY RUN-RATE TO OVERCOMPENSATE DILUTION EFFECT IN 2021 ▪ M&A as growth platform, lifting margin profile over time ▪ Parex impact plus further M&A ▪ Run-rate synergies of CHF 100 million fully validated and confirmed 1'055 ▪ Accelerated integration EBIT 2019 Organic Growth Material O
Slide 10: Parex Integration On Track to Exceed Targeted Synergy Contribution
PAREX INTEGRATION ON TRACK TO EXCEED TARGETED SYNERGY CONTRIBUTION FOR 2020 Monthly run-rate synergies have reached close to Optimization of CHF 5 million in August Cross-Selling synergies Formulations is increased profitability of leading to savings, as Sika product sold to Parex know-how exchange
Slide 11: Driving Towards an EBIT Margin of 15%-18%: Initiatives Masked by Dilution and COVID
DRIVING TOWARDS AN EBIT MARGIN OF 15%-18% STRONG IMPACT OF INITIATIVES MASKED BY DILUTION AND COVID 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
Slide 12: Strong Cash Conversion
STRONG CASH CONVERSION ® BUILDING TRUST By
Slide 13: Successful Receivable Management
SUCCESSFUL RECEIVABLE MANAGEMENT AVERAGE DAYS SALES OUTSTANDING TRENDING VS. < 60 DAYS ▪ Successful Receivables Days Sales Outstanding (DSO) management despite 90d lockdowns and economic impact due to COVID-19 60d ▪ Days sales outstanding with improvement in 2020 30d 2018 2019 2020 DSO 13
Slide 14: Strong Cash Conversion: Operating Free Cash Flow >10% of Net Sales
STRONG CASH CONVERSION OPERATING FREE CASH FLOW >10% OF NET SALES 12.7% ▪ Increasing profitability 10.2% ▪ Footprint alignment 8.2% 8.0% 7.2% driving efficient inventory management ▪ Automation/digitalization supporting disciplined NWC Management 2015 2016 2017 2018 2019 6/2020 2021 2022 2023 (TTM)
Slide 15: Building Trust
® BUILDING TRUST By