Sika Ag · SIX:SIKA
Sika — Investor Day (October 2024)
30 slides from Sika's investor day presentation, Oct 3, 2024
Slide 1: Driving 2028 Strategic Targets: Growth, Profitability and the Journey to Net Zero
DRIVING 2028 STRATEGIC TARGETS GROWTH, PROFITABILITY AND THE JOURNEY TO NET ZERO ADRIAN WIDMER CAPITAL MARKETS DAY - ZURICH, OCTOBER 3, 2024
Slide 2: Sika's Growth Strategy 2028 Targets
SIKA’S GROWTH STRATEGY 2028 TARGETS 6-9% 20% annual growth in LC GHG emission reduction MARKET PENETRATION Scope 1 & 2 (absolute reduction vs. 2022 base line) INNOVATION & 20-23% EBITDA* Scope 3 reduction in line with net-zero pledge SUSTAINABILITY >80% ACQUISITIONS >10% Operating free cash flow (as
Slide 3: Driving 2028 Strategic Targets
DRIVING 2028 STRATEGIC TARGETS 1. FINANCIAL TARGETS SALES GROWTH PROFITABILITY CASH FLOW & DELEVERAGING 2. NON-FINANCIAL TARGETS – JOURNEY TO NET ZERO
Slide 4: Megatrends Underpin Growth
FINANCIAL TARGETS STRATEGY 2028 MEGATRENDS UNDERPIN GROWTH CLIMATE CHANGE AND URBANIZATION SUSTAINABILITY Our growth ambition DIGITALIZATION INCREASING REGULATIONS 6-9% Sika’s average annual growth rate in local currencies DEMOGRAPHIC CHANGE TECHNOLOGICAL PROGRESS RESOURCE SHORTAGE Acquisitions Mark
Slide 5: Market Penetration Strategy 2028: Key Growth Levers/Initiatives
MARKET PENETRATION STRATEGY 2028 KEY GROWTH LEVERS/INITIATIVES KEY GEOGRAPHIES LEVERAGING STRONG POSITION MULTI-CHANNEL APPROACH Fostering our worldclass brand and leveraging our Following a multi-channel approach with dedicated strong reputation and specialized teams E RO E A S A A HI A DIRECT BUSI
Slide 6: Acquisitions as Growth Accelerator
ACQUISITIONS AS GROWTH ACCELERATOR ACQUISITIONS 2019 – 2024 2019 2020 2021 2022 2023 2024 5 2 7 2 2 2 L L Concrete Waterproofing S&B Refurbishment Roofing Flooring Building Finishing Industry L Large transaction 6
Slide 7: EBITDA Margin of 20%-23%
EBITDA MARGIN OF 20%-23% IMPROVING MARGIN PROFILE ALONG KEY PROFITABILITY BUCKETS 20% - 23% 18.2% EBITDA 2023 Organic Growth Material Margin Operational M&A EBITDA 2028 Management Efficiency 7
Slide 8: Organic Growth Driving Profit Growth
EBITDA MARGIN OF 20%-23% 1. ORGANIC GROWTH DRIVING PROFIT GROWTH INCREASED FALL THROUGH DUE TO OPERATING LEVERAGE Cross Selling (Direct Sales) 20% - 23% EBIT Application… EBIT Application… Application… 18.2% Sales Cost Sales Cost Sale of 1 Application Cross selling ▪ Targeted market penetration in
Slide 9: Material Margin Level of 54%-55% of Net Sales
EBITDA MARGIN OF 20%-23% 2. MATERIAL MARGIN LEVEL OF 54% - 55% OF NET SALES 20% - 23% ▪ Maintain 54% -55% Material Margin levels 18.2% ▪ Pricing and value selling ▪ Innovation (at higher margin) EBITDA 2023 Organic Growth Material Margin Operational M&A EBITDA 2028 ▪ Structural procurement initiat
Slide 10: Significant Material Margin Recovery
EBITDA MARGIN OF 20%-23% SIGNIFICANT MATERIAL MARGIN RECOVERY 56.0% Material Margin (quarterly) 54.0% 2023: 53.6% 52.0% 50.0% 48.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2020 2021 2022 2023 2024 10
Slide 11: Operational Efficiency Remains a Profitability Driver
EBITDA MARGIN OF 20%-23% 3. OPERATIONAL EFFICIENCY REMAINS A PROFITABILITY DRIVER 20% - 23% ▪ Not a specific strategic pillar anymore but significant potential 18.2% remains ▪ Footprint alignment, optimization and automation EBITDA 2023 Organic Growth Material Margin Operational M&A EBITDA 2028 Ma
Slide 12: Footprint & Supply Chain Optimization Example: Japan
FOOTPRINT & SUPPLY CHAIN OPTIMIZATION EXAMPLE: JAPAN Footprint in Japan Efficiency Initiatives ▪ Reduction of overlaps ▪ Site specialization to improve production efficiency ▪ Product Line Simplification ▪ Economies of scale, automation ▪ Optimize warehousing and logistics footprint driving customer
Slide 13: M&A: Increasing Margin Profile After Initial Dilution
EBITDA MARGIN OF 20%-23% M&A: INCREASING MARGIN PROFILE AFTER INITIAL DILUTION 20% - 23% ▪ M&A as growth and profit accelerator, lifting margin profile 18.2% over time ▪ MBCC impact plus further bolt-on acquisitions EBITDA 2023 Organic Growth Material Margin Operational M&A EBITDA 2028 Management
Slide 14: MBCC Contribution to EBITDA Growth
MBCC CONTRIBUTION TO EBITDA GROWTH EXPECTED SYNERGIES OF 180 – 200 MCHF BY 2026 EBITDA % NS MBCC incl. Synergies EBITDA % NS Sika organic 18.7% CHF 180-200M ▪ MBCC with strong «standalone» CHF 140-160M contribution Synergies ~15% CHF 100-120M Synergies Synergies ▪ On track to achieve increased 2024
Slide 15: Expected Synergies of MBCC Acquisition: Strong Trajectory
EXPECTED SYNERGIES OF MBCC ACQUISITION STRONG TRAJECTORY WITH INCREASING TOP-LINE CONTRIBUTION ~35% CHF 180-200M CHF 140-160M Revenue related ~15% Procurement CHF 100-120M Formulation / Product Line Efficiency <10% CHF 41M Production / Supply Chain SG&A 2023 2024 2025 2026 Cost Synergies Revenue Rel
Slide 16: Expected Synergies of MBCC Acquisition: 2024 On Track
EXPECTED SYNERGIES OF MBCC ACQUISITION 2024 ON TRACK TO REACH INCREASED TARGETS ▪ Cross-selling initiatives across portfolio/geographies – good traction June 24 YTD: CHF 53M CHF 100-120M ▪ Reinforced sustainability and innovation capabilities ▪ Economies of scale in procurement ▪ Formulation efficie
Slide 17: Strong Cash Conversion: Operating Free Cash Flow >10% of Net Sales
STRONG CASH CONVERSION OPERATING FREE CASH FLOW >10% OF NET SALES Operating Free Cash Flow >10% of Net Sales 16.2% ▪ Profitability improvements 12.7% 12.2% 9.8% ▪ Footprint alignment and supply chain efficiency driving effective 8.2% NWC management 7.2% ▪ CapEx spend to remain at approx. 3%
Slide 18: Net Debt/EBITDA Development: Strong Deleveraging Profile
NET DEBT/EBITDA DEVELOPMENT STRONG DELEVERAGING PROFILE 4.1 ▪ Strong cash conversion 3.4 driving rapid deleveraging 2.5 2.6 from post M&A-peaks ▪ Maintain A- S&P credit rating 1.0 1.1 ▪ Flexibility to act on M&A opportunities 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 18
Slide 19: Non-Financial Targets – Journey to Net Zero
2. NON-FINANCIAL TARGETS – JOURNEY TO NET ZERO
Slide 20: Growth and the Journey to Net Zero: Our Key Levers
GROWTH AND THE JOURNEY TO NET ZERO SIKA’S VALI ATE SBTI TARGETS OUR KEY LEVERS Accelerated use of alternative low carbon supplies Education and Partnerships with capacity building key suppliers who to improve support Sika's path material efficiency to net zero and circularity Development of new Cont
Slide 21: SBTi Validated Reduction Targets and Identified Levers
GROWTH AND THE JOURNEY TO NET ZERO SIKA’S VALI ATE SBTI TARGETS A I E TIFIE LEVERS SBTi VALIDATED REDUCTION TARGETS SIKA’S IDENTIFIED LEVERS Green energy Reduce fossil fuels SCOPE 1&2 Optimize sourcing energy Production processes efficiency Reduce energy losses electrification Alternative Increase d
Slide 22: Operational Efficiency for Scope 1 and 2 Reduction: Indicative Roadmap
OPERATIONAL EFFICIENCY FOR SCOPE 1 AND 2 REDUCTION INDICATIVE ROADMAP FOR LARGE FACTORIES (CLUSTERS) KEY ACTIONS: Scope 1 and 2 baselines ▪ Reduce energy losses Scope 1 and 2 initiatives ▪ Monitor cooling/heating ▪ Recover waste heat from processes ▪ Reduce fossil fuels ▪ Install PV panels 22
Slide 23: Operational Efficiency: Impact in Sarnen, Switzerland
OPERATIONAL EFFICIENCY FOR SCOPE 1 AND 2 REDUCTION HAVING AN IMPACT IN THE HEART OF SARNEN, SWITZERLAND ▪ Detailed analysis of energy flow to evaluate energy saving potentials ▪ Installing heat pumps to reuse waste heat from production for building heating and optimize cooling ▪ 30 fully digitalized
Slide 24: Alternative Low Carbon Supplies: Clinker Reduction
ALTERNATIVE LOW CARBON SUPPLIES CLINKER REDUCTION: SIKA FORMULATION COMPETENCE IS KEY ▪ With Sika chemistry know-how and 60% expertise, new type of 50% SCMs1 can be introduced 30-50%* in formulations replacing 40% part of the cement in all mortar categories 30% ▪ 18% substitution rate by 20% 25% end
Slide 25: Bio-Based Material in Epoxy Products
BIO-BASED MATERIAL IN EPOXY PRODUCTS ALTERNATIVE AND EFFICIENT USE OF RAW MATERIALS Bio-based polymers Bio-based resin Sikashield®-501 Primer pro Sikafloor® product range ▪ Bio-polymer in combination with bio-based ▪ Partnership with a supplier to find alternatives resin to fossil fuel-based resins
Slide 26: Recycling Initiatives Roofing
RECYCLING INITIATIVES ROOFING POST- AND PRE-CONSUMER RECYCLING ▪ From linear “make – use – waste” to circular economy ▪ US recycled 300 tons of single ply roofs in 2023 ▪ EMEA single ply roof recycling program launched in 2024; 50 tons taken back ▪ Mechanical recycling is more cost effective than us
Slide 27: Innovative Solutions for Construction and Industry: Increase Durability
INNOVATIVE SOLUTIONS FOR CONSTRUCTION AND INDUSTRY INCREASE DURABILITY ▪ Launched in 2024, Sarnafil® AT FSH Self- ▪ Small damages in membrane are closed by healing roof waterproofing membrane is the self-healing technology next generation of roofing technology ▪ For mechanical and self-adhered roofs
Slide 28: Collaboration with Suppliers and Partners
COLLABORATION WITH SUPPLIERS AND PARTNERS SUPPLIER ENGAGEMENT (SECTORAL DECARBONIZATION) ▪ The Scope 3 GHG Emissions Program with TfS* partners is a chemical industry wide approach to monitor, manage, and reduce emissions ▪ A key initiative of TfS was to develop a dedicated tool "PCF** Exchange Solu
Slide 29: Build on the Sika Spirit and Keep Our Culture
BUILD ON THE SIKA SPIRIT AND KEEP OUR CULTURE
Slide 30: 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