Sika Ag · SIX:SIKA
Sika — Investor Day (2018)
33 slides from Sika's investor day presentation, 2018
Slide 1: Megacities Drive Sika's Growth
MEGACITIES DRIVE SIKA’S GROWTH PAUL SCHULER, CEO, SIKA CAPITAL MARKETS DAY 2018
Slide 2: Welcome: Key Facts Region Americas
WELCOME KEY FACTS REGION AMERICAS 2
Slide 3: Table of Contents
TABLE OF CONTENTS 1. MEGACITIES DRIVE SIKA’S GROWTH 2. SUCCESSFUL STRATEGY EXECUTION 3. TARGETS 2020 4. OUTLOOK 3
Slide 4: 1. Megacities Drive Sika's Growth
1. MEGACITIES DRIVE SIKA’S GROWTH
Slide 5: Urbanization, Megacities and New Vehicle Design as Most Prominent Megatrends
URBANIZATION, MEGACITIES AND NEW VEHICLE DESIGN AS MOST PROMINENT MEGATRENDS IN THE WORLD TODAY New modular vehicle Increased safety, fire, Rising demand for high- manufacturing concepts water, earthquake and performance concrete, need fast, high-strength quality requirements sealing and bonding sys
Slide 6: Megacities Drive Sika's Growth
MEGACITIES DRIVE SIKA’S GROWTH 6
Slide 7: Megacities Drive Sika's Growth
MEGACITIES DRIVE SIKA’S GROWTH Megacities mean: Higher densification of cities More high-rise developments and below-ground construction Increased need for infrastructure solutions 7
Slide 8: Megacities Drive Sika's Growth: Construction Challenges
MEGACITIES DRIVE SIKA’S GROWTH Construction in urban centers faces significant challenges : Higher quality, safety and strength Waterproofing of buildings and structures Long and unpredictable transport times for high- performance concrete Lack of space at construction site 8
Slide 9: 2. Successful Strategy Execution
2. SUCCESSFUL STRATEGY EXECUTION
Slide 10: Sika's Growth Model Delivers Key Investments Since 2015
SIKA’S GROWTH MODEL DELIVERS KEY INVESTMENTS SINCE 2015 - Successful Target Market concept Market Penetration - Megatrends driving growth - 217 new patents filed Innovation - 20 Global Technology Centers Emerging Markets - 29 new plants opened - 11 new national subsidiaries Acquisitions
Slide 11: Continued Growth in Sales and Profit (Full Year)
SIKA’S GROWTH MODEL DELIVERS CONTINUED GROWTH IN SALES AND PROFIT (FULL YEAR) NET SALES NET 7000 SALES 16.0% EBIT 1100 14.3% 16.0% 1000 13.8% % growth in local currencies as % of net sales 14.0% 6500 14.0% 900 12.3% 5.3% 9.4% 13.0% 6.2% 5.5% 9.0% 11.4% 12.0% 800 12.0% 6000 10.2% 700 10.0% 9.0% 10.0%
Slide 12: Continued Increase in ROCE (Full Year)
SIKA’S GROWTH MODEL DELIVERS CONTINUED INCREASE IN ROCE (FULL YEAR) RETURN ON CAPITAL EMPLOYED (ROCE) in % * 29.8% 28.7% 24.3% 23.3% 21.0% 18.5% 15.6% 2011 2012 2013 2014 2015 2016 2017 12
Slide 13: Market Penetration
MARKET PENETRATION ® BUILDING TRUST Ds
Slide 14: Sika's Market Potential: Large and Growing Market Segments
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 14
Slide 15: 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 15
Slide 16: 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 16
Slide 17: Innovation
INNOVATION ® BUILDING TRUST Ds
Slide 18: Innovation Strong Track Record
INNOVATION STRONG TRACK RECORD More than 217 900 283 20 patents were employees are invention Technology filed since dedicated to disclosures Centers 2015 Research and since 2015 worldwide Development 18
Slide 19: Accelerated Build-up of Emerging Markets
ACCELERATED BUILD-UP OF EMERGING MARKETS
Slide 20: Emerging Markets Build-up Since 2015
EMERGING MARKETS BUILD-UP SINCE 2015 CAPTURING GROWTH POTENTIAL IN NEW MARKETS 29 5 11 36% new acquisitions new of sales in plants national emerging markets opened subsidiaries 20
Slide 21: Sika's Subsidiaries
SIKA’S 101 SUBSIDIARIES ROUILOING TRUST vin HONDURAS - 2018 am HCHEE lEuaibe EC E z é : 3 3 F] a: é E HBL: 7. 2m a: 3 i Ao Cc i g FA S 3 Hi Se im” Salm = : call a * i 4 \Netooin LHeoe. : WIN : ‘i: ‘ha: i j iv. iz Sie a : eis = im: 1 MM: : i i 21
Slide 22: Acquisitions
ACQUISITIONS ® BUILDING TRUST Ds
Slide 23: Acquisitions Since 2015: Growth Platforms for the Future
ACQUISITIONS SINCE 2015 GROWTH PLATFORMS FOR THE FUTURE In all In all 18 745 7 4 acquisitions million CHF Target regions additional Markets turnover 23
Slide 24: Sika Will Act as Market Consolidator
SIKA WILL ACT AS MARKET CONSOLIDATOR FRAGMENTATION OFFERS ACQUISITION OPPORTUNITIES CONSTRUCTION CHEMICAL MARKET 2017 > CHF 60 BILLION Sika Top 10 companies with a combined market share of 40% Other 24
Slide 25: Values and Principles
VALUES AND PRINCIPLES ® BUILDING TRUST Ds
Slide 26: Sika's Values and Principles: Strong Corporate Culture
SIKA’S VALUES AND PRINCIPLES STRONG CORPORATE CULTURE Customer first Courage for innovation Sustainability & integrity Empowerment and respect Manage for results 26
Slide 27: 3. Targets 2020
3. TARGETS 2020 ® BUILDING TRUST Ds
Slide 28: Sika's Growth Strategy 2020 Confirmed
SIKA’S GROWTH STRATEGY 2020 CONFIRMED TO BE UPDATED IN 2019 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 28
Slide 29: 4. Outlook 2018
4. OUTLOOK 2018 ® BUILDING TRUST Ds
Slide 30: Higher Raw Material Costs
HIGHER RAW MATERIAL COSTS PRESSURE ON MARGINS COUNTERED WITH HIGHER SALES PRICES 56.0% 1.06 Gross 55.0% 1.04 Margin 54.0% 1.02 Raw 53.0% 1 Material 52.0% 0.98 Prices 51.0% 0.96 Sales Price Increases 50.0% 0.94 2016 2017 2018* Increasing raw material prices in several phases since end of 2016 Con
Slide 31: Strong Outlook for 2018
STRONG OUTLOOK FOR 2018 CONTINUATION OF SUCCESSFUL GROWTH STRATEGY Sales increase of more than 10% expected with a sales target of CHF 7 billion in 2018 Volatile and rising raw material prices will continue to be a challenge In spite of costs related to the resolution and high raw material pri
Slide 32: Thank You for Your Attention
THANK YOU FOR YOUR ATTENTION BUILDING TRUST
Slide 33: 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