Slide 1: Record Results in 2016, Strategic Targets Raised
RECORD RESULTS IN 2016 STRATEGIC TARGETS RAISED SIKA MEDIA AND INVESTOR PRESENTATION, FEBRUARY 24, 2017
Slide 2: Table of Contents
TABLE OF CONTENTS 1. HIGHLIGHTS Jan Jenisch, CEO 2. FINANCIAL RESULTS 2016 Adrian Widmer, CFO 3. STRATEGY Jan Jenisch, CEO 4. OUTLOOK Jan Jenisch, CEO 5. QUESTIONS & ANSWERS 2
Slide 3: 1. Highlights
1. HIGHLIGHTS JAN JENISCH, CEO
Slide 4: Highlights 2016
HIGHLIGHTS 2016 1. Record results +5.5% sales growth in local currencies to CHF 5,747.7 million CHF 795.3 million EBIT (+18.1%) CHF 566.6 million net profit (+21.8%) CHF 586.5 million operating free cash flow (+29.9%) 28.7% ROCE (2015: 24.3%) 2. Key investments 4 new national subsidiarie
Slide 5: Key Figures: Record Results
KEY FIGURES RECORD RESULTS in CHF mn 2015 2016 Δ% Net sales 5,489.2 5,747.7 + 4.7% EBIT 673.3 795.3 + 18.1% Net profit 465.1 566.6 + 21.8% Operating free cash flow 451.5 586.5 + 29.9% ROCE 24.3% 28.7% 5
Slide 6: 2016 – Growth in All Regions
2016 – GROWTH IN ALL REGIONS 5.5% SALES GROWTH (4.7% IN CHF) + 4.6% + 3.6% +7.8% 923 North America 1,081 +5.1% 2,695 Asia/Pacific EMEA 564 Latin America 2015 2016 (in CHF mn, growth in LC) Growth of 6.7% in Emerging Markets 6
Slide 7: Key Investments in 2016: Continued Supply Chain Expansion
KEY INVESTMENTS IN 2016 CONTINUED SUPPLY CHAIN EXPANSION Opening of Sika plants: 2nd plant in Greece (Kryoneri, Athens, January 2016) 1st plant in Myanmar (Yangon, February 2016) 1st plant in Cambodia (Phnom Penh, February 2016) 4th plant in Canada (Vancouver, March 2016) 2nd plant in Thai
Slide 8: Key Investments in 2016: Expansion with Own National Subsidiaries
KEY INVESTMENTS IN 2016 EXPANSION WITH OWN NATIONAL SUBSIDIARIES New subsidiaries: Kuwait (March 2016) Nicaragua (June 2016) Cameroon (August 2016) Djibouti (August 2016) Now present in 97 countries with own operations 8
Slide 9: Acquisitions as Growth Platform: L.M. Scofield
KEY INVESTMENTS IN 2016 ACQUISITIONS AS GROWTH PLATFORM L.M. Scofield, USA US‐based market leader for concrete color additives (ready‐mixed concrete) and decorative treatments for refurbishment Buying new technology and spreading it out to Sika’s existing customer base Continued strong executi
Slide 10: Acquisitions as Growth Platform: FRC Industries
KEY INVESTMENTS IN 2016 ACQUISITIONS AS GROWTH PLATFORM FRC Industries, USA Producer of high-quality synthetic polypropylene fibers for concrete Strong growth trend for concrete fibers in the US, out-pacing overall construction growth Expansion of concrete additives portfolio enables Sika to r
Slide 11: Acquisitions as Growth Platform: Ronacrete
KEY INVESTMENTS IN 2016 ACQUISITIONS AS GROWTH PLATFORM Ronacrete (Far East) Ltd., Hong Kong Leading suppliers of repair mortars, tile adhesives and other mortar products in Hong Kong Strong specification business and a preferred partner for private and public key developers Extension of manuf
Slide 12: Acquisitions as Growth Platform: Rmax
KEY INVESTMENTS IN 2016 ACQUISITIONS AS GROWTH PLATFORM Rmax Operating, LLC, USA Market leader in the production of polyiso insulation products for complete Building Envelope solutions (roofing and wall systems) CHF 75 million sales New technology and know-how will accelerate growth and drive
Slide 13: Acquisitions as Growth Platform: Bitbau Dörr
KEY INVESTMENTS IN 2016 ACQUISITIONS AS GROWTH PLATFORM Bitbau Dörr, Austria Leading waterproofing system manufacturer CHF 50 million sales Sika will be able to offer its customers a wider range of durable, high-grade waterproofing systems based on polymer-modified bitumen membranes Strong g
Slide 14: 2. Financial Results 2016
2. FINANCIAL RESULTS 2016 ADRIAN WIDMER, CFO
Slide 15: Financial Highlights 2016
FINANCIAL HIGHLIGHTS 2016 New and all time records in: Net Sales: CHF 5,747.7 million (+5.5% in LC, 4.7% in CHF) EBIT: CHF 795.3 million (+18.1%) reaching 13.8% of net sales, +CHF 122 million in absolute terms Net Profit: CHF 566.6 million (+21.8%) Operating free cash flow: CHF 586.5 milli
Slide 16: Revenues 2016: 5.5% Growth in Local Currencies
REVENUES 2016 5.5% GROWTH IN LOCAL CURRENCIES in CHF mn 2015 2016 + 0.9 % - 0.8% Net sales 5,489.2 5,747.7 + 4.6% 5,748 Organic growth + 253.7 5,489 Acquisition effect + 52.0 Currency effect - 47.2 2015 2016 16
Slide 17: Sales Growth 2012 to 2016
SALES GROWTH 2012 TO 2016 STRONG ORGANIC GROWTH 16% 14% 13.0% 12% 10% 9.4% 5.7% 3.5% 8% 6.2% in LC 6% 5.3% 5.5% acquisition 2.2% 0.9% organic 7.3% 3.5% 4% 5.9% 4.6% 4.0% 2% 1.8% 0% 12M 2012 12M 2013 12M 2014 12M 2015 12M 2016 in CHF mn 2012 2013 2014 2015 2016 Sales 4,828.9 5,142.2 5,571.3 5,489.2 5
Slide 18: Profit & Loss: Record Year on All Levels
PROFIT & LOSS RECORD YEAR ON ALL LEVELS in CHF mn 2015 NS 2016 NS Growth Net sales 5,489.2 100% 5,747.7 100% + 4.7% Gross result 2,970.8 54.1% 3,181.1 55.3% + 7.1% Personnel costs -1,106.5 -20.1% -1,159.1 -20.1% + 4.8% Other OPEX -1,027.0 - 18.7% -1,056.3 - 18.4% + 2.9% Depreciation and -164.0 -3.0%
Slide 19: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET OVER 1 BILLION CASH – NET CASH OF 416 MILLION in CHF mn 31.12.2015 31.12.2016 Δ% Cash and cash equivalents 1,074.4 1,155.0 + 7.5 Other current assets 1,703.7 1,742.0 + 2.2 Current assets 2,778.1 2,897.0 + 4.3 Non-current assets 2,145.7 2,202.2 + 2.6 Total assets 4,923.8 5,
Slide 20: Record Cash Flow
RECORD CASH FLOW OVER PROPORTIONAL CASH CONVERSION in CHF mn 28.9 550 500 106.1 586.5 450 400 451.5 350 2015 Incremental Other net-cash 2016 net profit items (capital after cash tax efficiency) 20
Slide 21: Cash Flow Statement
CASH FLOW STATEMENT RECORD OPERATING FREE CASH FLOW in CHF mn 2015 2016 Cash flow from operating activities 585.8 735.7 CapEx/sale of assets/acquisitions -206.3 -172.7 Free cash flow 379.5 563.0 Acquisitions/financial assets 72.0 23.5 Operating free cash flow 451.5 586.5 Free cash flow 379.5 563.0 C
Slide 22: Record Dividend
RECORD DIVIDEND BOARD PROPOSES 30.8% DIVIDEND INCREASE Dividend payment CHF 102.00 per bearer share CHF 17.00 per registered share in CHF mn 2015 2016 Group profit (after minorities) 460.3 563.1 Dividend out of retained earnings 198.1 258.8 Total payout ratio 43.0 % 46.0 % 22
Slide 23: 3. Strategy
3. STRATEGY JAN JENISCH, CEO ® BUILDING TRUST By
Slide 24: Strategy Review: Confirmation of Growth Model and Raised Targets 2020
STRATEGY REVIEW: CONFIRMATION OF SIKA’S GROWTH MODEL AND RAISED TARGETS 2020 1) Performance and investments ahead of STRATEGY 2018 2) Global strategy review performed 3) Market Penetration 4) Innovation 5) Accelerated build-up of Emerging Markets 6) Acquisitions 7) Values 8) Raised targets 2020 24
Slide 25: 1) Performance and Investments Ahead of Strategy 2018
1) PERFORMANCE AND INVESTMENTS AHEAD OF STRATEGY 2018
Slide 26: Strategy 2018: Sika's Growth Model Delivers
STRATEGY 2018 SIKA’S GROWTH MODEL DELIVERS MARKET PENETRATION 6 - 8% GROWTH PER YEAR 6 - 8 NEW PLANTS PER INNOVATION YEAR 100 NATIONAL SUBSIDIARIES BY 2018 EMERGING MARKETS 12 - 14% OPERATING PROFIT PER YEAR ACQUISITIONS > 8% OPERATING FREE CASH FLOW PER YEAR 25% RETURN ON CAPITAL EMPLOYED BY 2018 V
Slide 27: Growth Model Delivers Continued Growth in Sales and Profit
SIKA’S GROWTH MODEL DELIVERS CONTINUED GROWTH IN SALES AND PROFIT 27
Slide 28: 20 Consecutive Quarters of Margin Improvement
SIKA’S GROWTH MODEL DELIVERS - 20 CONSECUTIVE QUARTERS OF MARGIN IMPROVEMENT PERIODIC EBIT MARGINS 16% 15% 14% 2016 13% 2015 2014 12% 11% 10% 2013 9% 8% 2012 7% 6% 2011 5% HY Q3 Q4 28
Slide 29: Key Investments Since 2012
SIKA’S GROWTH MODEL DELIVERS KEY INVESTMENTS SINCE 2012 PILLARS OF THE GROWTH MODEL ACHIEVEMENTS • Successful Target Market concept MARKET PENETRATION • Megatrends driving growth • 370 new patents filed INNOVATION • 20 Global Technology Centers • 51 new plants opened EMERGING MARKETS • 20 new
Slide 30: Performance Two Years Ahead of Targets
SIKA’S GROWTH MODEL DELIVERS PERFORMANCE TWO YEARS AHEAD OF TARGETS 2012 2013 2014 2015 2016 Targets 2018 Net sales growth in local currencies 5.3% 9.4% 13.0% 6.2% 5.5% 6-8% EBIT as % Net Sales 9.0% 10.2% 11.4% 12.3% 13.8% 12-14% OpFCF as % Net Sales 6.3% 8.4% 7.5% 8.2% 10.2% >8% ROCE in % (EBIT bas
Slide 31: 2) Global Strategy Review Performed
2) GLOBAL STRATEGY REVIEW PERFORMED
Slide 32: Global Strategy Review Performed: Bottom-Up Review
GLOBAL STRATEGY REVIEW PERFORMED BOTTOM-UP REVIEW Considering the strong performance ahead of targets, a comprehensive review of the strategy was performed: A bottom-up review of STRATEGY 2018 with Senior Managers worldwide carried out throughout the second half of 2016 Excellency of STRATEGY 20
Slide 33: 3) Market Penetration
3) MARKET PENETRATION ® BUILDING TRUST By
Slide 34: Megatrends Drive Our Growth
MEGATRENDS DRIVE OUR GROWTH URBANIZATION, NEW VEHICLE DESIGN & SUSTAINABILITY Increasing world population with Higher demand for urbanization and Increased safety, fire, infrastructure and megacities water, earthquake and refurbishment quality requirements solutions Sustainability: Rising demand for
Slide 35: Sika's Market Potential
SIKA’S MARKET POTENTIAL LARGE AND GROWING MARKET SEGMENTS TOTAL MARKET SIZE 2016 2020 > CHF 70 BILLION CHF 80 BILLION INDUSTRY CONCRETE INDUSTRY CONCRETE WATER- WATER- FLOORING FLOORING PROOFING PROOFING ROOFING SEALING & BONDING ROOFING SEALING & BONDING REFURBISHMENT REFURBISHMENT 35
Slide 36: 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 36
Slide 37: Sika's Market Potential: From New Build to Refurbishment
GROWTH MODEL WITH EARLY MARKET PENETRATION FROM NEW BUILD TO REFURBISHMENT Sika is ideally positioned to Sika‘s long-term Sika‘s Market Potential Repair & profit from all phases of market potential Refurbishment the construction life-cycle Concrete repair, mortars, Market Education & roofing, floori
Slide 38: 4) Innovation
4) INNOVATION ® BUILDING TRUST By
Slide 39: Innovation: Strong Track Record
INNOVATION STRONG TRACK RECORD More than More than More than Established 370 880 400 20 patents were employees are invention Technology filed since dedicated to disclosures Centers 2012 Research and since 2012 world-wide Development 39
Slide 40: Innovations Drive Growth: Automotive Vehicle Content
SIKA INNOVATIONS DRIVE GROWTH E.G. INCREASE IN AUTOMOTIVE VEHICLE CONTENT AVERAGE VEHICLE CONTENT GREAT WALL HAVAL H7 CONTENT: > CHF 50 TESLA MODELS S & X BMW 7 SERIES CONTENT: > CHF 70 CONTENT: > CHF 60 7.45 6.75 6.19 JAGUAR XF CHRYSLER PACIFICA 5.21 5.57 CONTENT: > CHF 100 CONTENT: > CHF 40 4.73 4
Slide 41: Innovations Drive Growth: Workability for Concrete
SIKA INNOVATIONS DRIVE GROWTH E.G. INCREASED WORKABILITY FOR CONCRETE Sika® ViscoFlow® IN-HOUSE DEVELOPED HIGH- PERFORMANCE POLYMER PERMITS > 8 HOURS WORKABILITY OF CONCRETE + 30% SALES GROWTH IN 2016 Tons sold 40'000 20'000 0 2013 2014 2015 2016 MEETING THE CHALLENGES OF CONSTRUCTION IN URBAN ENVIR
Slide 42: 5) Accelerated Build Up of Emerging Markets
5) ACCELERATED BUILD UP OF EMERGING MARKETS
Slide 43: Emerging Markets Build-Up Since 2012
EMERGING MARKETS BUILD-UP SINCE 2012 CAPTURING GROWTH POTENTIAL IN NEW MARKETS 51 11.0% 20 36% new average sales new of sales plants growth national in Emerging opened subsidiaries Markets 43
Slide 44: Accelerated Build-Up of Emerging Markets: Investments in Africa
ACCELERATED BUILD-UP OF EMERGING MARKETS E.G. INVESTMENTS IN AFRICA 44
Slide 45: 6) Acquisitions
6) ACQUISITIONS ® BUILDING TRUST By
Slide 46: Fragmentation Offers Acquisition Opportunities
SIKA’S MARKET POTENTIAL FRAGMENTATION OFFERS ACQUISITION OPPORTUNITIES CONSTRUCTION CHEMICAL MARKET 2016 > CHF 60 BILLION Sika Top 10 companies with a combined market share of 40% Other 46
Slide 47: Acquisitions Since 2012: Growth Platforms for the Future
ACQUISITIONS SINCE 2012 GROWTH PLATFORMS FOR THE FUTURE More than More than In all In all 20 670 7 4 acquisitions million CHF Target regions additional Markets turnover 47
Slide 48: Acquisitions: Improved Technology Know-How in the USA
ACQUISITIONS E.G. IMPROVED TECHNOLOGY KNOW-HOW IN THE USA L.M. Scofield FRC Industries Rmax US market leader Producer of high- Market leader in for concrete color quality synthetic the production of additives polypropylene polyiso insulation (ready‐mixed fibers for concrete products for concrete) an
Slide 49: 7) Values and Principles
7) VALUES AND PRINCIPLES ® BUILDING TRUST By
Slide 50: 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 50
Slide 51: 8) Raised Targets 2020
8) RAISED TARGETS 2020 ® BUILDING TRUST By
Slide 52: Growth Strategy: New and Raised Targets 2020
GROWTH STRATEGY NEW AND RAISED TARGETS 2020 STRATEGY 2018 NEW TARGETS 2020 6 - 8% ANNUAL GROWTH 6 - 8% ANNUAL GROWTH 6 - 8 NEW PLANTS PER 30 NEW PLANTS YEAR 100 NATIONAL 105 NATIONAL SUBSIDIARIES BY 2018 SUBSIDIARIES 12 - 14% EBIT MARGIN 14 - 16% EBIT MARGIN PER YEAR PER YEAR > 8% OPERATING FREE > 1
Slide 53: Growth Model Will Deliver Strategic Targets 2020
SIKA’S GROWTH MODEL WILL DELIVER STRATEGIC TARGETS 2020 MARKET PENETRATION 6 - 8% ANNUAL GROWTH INNOVATION 30 NEW PLANTS 105 NATIONAL SUBSIDIARIES EMERGING MARKETS 14 - 16% EBIT MARGIN PER YEAR ACQUISITIONS > 10% OPERATING FREE CASH FLOW PER YEAR > 25% ROCE PER YEAR VALUES 53
Slide 54: More Than CHF 1 Billion EBIT in 2020
SIKA’S GROWTH MODEL WILL DELIVER MORE THAN CHF 1 BILLION EBIT IN 2020 Sika’s GROWTH MODEL delivers: Performance two years ahead of targets Megatrends Urbanization, New Vehicle Design & Sustainability drive growth Fragmented market of CHF 80 billion with huge growth opportunities Sika is idea
Slide 55: 4. Outlook
4. OUTLOOK JAN JENISCH, CEO ® BUILDING TRUST By
Slide 56: Outlook for 2017
OUTLOOK FOR 2017 Sales growth expectations of 6-8% in local currencies with sales first time over CHF 6 billion Continued build-up of growth markets with 8 new factories 3 new national subsidiaries Improvements in margins 56
Slide 57: 5. Questions and Answers
5. QUESTIONS AND ANSWERS ® BUILDING TRUST By
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
Slide 59: Thank You for Your Attention
THANK YOU FOR YOUR ATTENTION ® BUILDING TRUST Bs