Sika Ag · SIX:SIKA
Sika — 9M 2022 Earnings Presentation
37 slides from Sika's earnings presentation, November 2022
Slide 1: Our Nine-Month Results 2022: Sika with Strong Performance in Demanding Markets
OUR NINE-MONTH RESULTS 2022 SIKA WITH STRONG PERFORMANCE IN DEMANDING MARKETS SIKA INVESTOR PRESENTATION NOVEMBER 2022
Slide 2: Agenda
1. NINE-MONTH RESULTS 2022 – RECORDS IN SALES, EBIT, PROFIT 2. SIKA’S GROWTH DRIVERS 3. SIKA’S WAY TO NET ZERO 4. UPDATE ON MBCC ACQUISITION 5. OUTLOOK
Slide 3: 1. Nine-Month Results 2022 – Records in Sales, EBIT, Profit
1. NINE-MONTH RESULTS 2022 – RECORDS IN SALES, EBIT, PROFIT
Slide 4: Strong Performance in Demanding Markets: Growth in Local Currencies of 18.5%
SIKA WITH STRONG PERFORMANCE IN DEMANDING MARKETS GROWTH IN LOCAL CURRENCIES OF 18.5% 1. Sales and profit ▪ Sales growth of 18.5% in local currencies. Record sales of CHF 7,998.5 million (+16.6% in CHF). ▪ Record operating profit (EBIT) at CHF 1,231.5 million (+16.8%), including profit from divestme
Slide 5: Key Investments in 2022 – Continued Execution
SUCCESSFUL, RESILIENT STRATEGY KEY INVESTMENTS IN 2022 – CONTINUED EXECUTION Acquisitions and divestments New plants Acquisition of Sable Marco, Canada Opening of a new plant in the Ivory Coast (March 2022) (February 2022) Closing of transaction related to divestment of European industrial coatings
Slide 6: Record Results in the First Nine Months of 2022: Key Figures
RECORD RESULTS IN THE FIRST NINE MONTHS OF 2022 KEY FIGURES in CHF mn 2021 2022 Δ% Net sales 6,862.7 7,998.5 +16.6% Gross results as % of net sales 52.6 49.3 EBITDA 1,327.5 1,521.4 +14.6% EBIT 1,054.0 1,231.5 +16.8% Net profit 765.1 885.9 +15.8% 6
Slide 7: Record Results in the First Nine Months of 2022: Key Figures
RECORD RESULTS IN THE FIRST NINE MONTHS OF 2022 KEY FIGURES 19% 18.1% 18.5% 1.3% 3.4% 14% 2.6% 16.8% 9% 15.1% 4% 9.2% in LC acquisition -1% organic -6.6% -6% 9M 2020 9M 2021 9M 2022 in CHF mn 9M 2020 9M 2021 9M 2022 Net sales 5,805.5 6,862.7 7,998.5 7
Slide 8: Growth in Local Currencies of 18.5%
RECORD RESULTS IN THE FIRST NINE MONTHS OF 2022 GROWTH IN LOCAL CURRENCIES OF 18.5% +4.0% +36.8% +17.3% +20.2% Growth in CHF +10.5% +31.9% +17.6% +22.0% Growth in LC -6.5% +4.9% -0.3% -1.8% FX impact -0.8% +6.8% +7.1% +5.9% Acquisition 17% 83% Construction Industry EMEA Americas Asia/Pacific Global
Slide 9: All Regions with Double-Digit Growth
SIKA WITH STRONG PERFORMANCE IN DEMANDING MARKETS ALL REGIONS WITH DOUBLE-DIGIT GROWTH + 10.5% + 18.5% + 31.9% + 17.6% + 22.0% 2.43 3.22 1.75 0.60 8.00 Americas EMEA Asia/Pacific Global Business Group 9M 2021 9M 2022 (in CHF billion, growth in LC) 9
Slide 10: Sika's Growth Model Delivers Continuous Strong Performance
SIKA’S GROWTH MODEL DELIVERS CONTINUOUS STRONG PERFORMANCE Net NETSales SALES(9 Months) 18.5% Net EBIT Profit NET (9 Months) SALES in CHF mn, growth in LC in CHF mn 18.1% 15.1% 2.6% 14.1% 7.9% 7,998.5 1,231.5 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 10
Slide 11: 2. Sika's Growth Drivers
2. SIKA’S GROWTH DRIVERS ® BUILDING TRUST By
Slide 12: Resilient Strategy – Major Megatrends Supporting Growth
RESILIENT STRATEGY – MAJOR MEGATRENDS SUPPORTING GROWTH FURTHER ACCELERATION THROUGH DIGITALIZATION Urbanization Climate Change and Digitalization Scarcity of Resources Demographic Dynamic Technological Change Economy Progress 12
Slide 13: Resilient Growth Strategy 2023 Strategic Targets Confirmed
RESILIENT GROWTH STRATEGY 2023 STRATEGIC TARGETS CONFIRMED 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-mate
Slide 14: Strong Performance During Turbulent Years
RESILIENT GROWTH STRATEGY STRONG PERFORMANCE DURING TURBULENT YEARS Net Sales EBIT in CHF mn In CHF mn 2Y CAGR 2Y CAGR* +14.8% +10.0% 1,391.4 9,252.3 2019 2020 2021 2019 2020 2021 *Growth in % LC 14
Slide 15: Sustainable Growth Beyond Market Growth
SUSTAINABLE GROWTH BEYOND MARKET GROWTH MULTIPLE LAYERS OF GROWTH Sustainable volume growth Growing markets Market (Market growth Penetration Y1 Y2 Y3 Y4 Y5 and Megatrends) Market Growth Structural Growth (Megatrends) Market Penetration Acquisition M&A Net Sales 10Y CAGR, at constant FX +9.8% 15
Slide 16: Growth Driver – Construction Chemicals Market
GROWTH DRIVER – CONSTRUCTION CHEMICALS MARKET STRONG PENETRATION INCREASE Construction chemicals penetration (1991 = 100) 600 500 400 300 200 2.5 – 4.0x penetration increase 100 2x penetration increase 0 1990 2000 2010 2020 2030 2040 2050 Source: IHS, Freedonia 1) penetration = global construction c
Slide 17: Growth Driver – Repair and Refurbishment
GROWTH DRIVER – REPAIR AND REFURBISHMENT HIGHLY RESILIENT THROUGH THE CYCLES ▪ High resilience of refurbishment 55% of Group sales in construction In mature markets, 70% of sales in through economic cycles generated by refurbishment construction generated by refurbishment ▪ Corrective maintenance ca
Slide 18: Growth Driver – Emerging Markets
GROWTH DRIVER – EMERGING MARKETS CONTINUOUS STRONG GROWTH ▪ Enormous need for infrastructure, energy and power, real estate ▪ Expansion of supply chain footprint ▪ Acquisitions to leverage our market access ▪ Increased demand to meet international construction standards ▪ Need for qualified workforc
Slide 19: Growth Driver – Infrastructure Programs
GROWTH DRIVER – INFRASTRUCTURE PROGRAMS CHF 10 TRILLION PLANNED STIMULI EU working towards US infrastructure climate neutrality investments running approx. CHF China invests in technology into the billions approx. CHF 400 billion and infrastructure approx. CHF 850 billion 8,000 billion ▪ Extensive i
Slide 20: Growth Driver – Global Automotive Production
GROWTH DRIVER – GLOBAL AUTOMOTIVE PRODUCTION RECOVERY EXPECTED IN THE NEXT FEW YEARS in mn units 100 95 Strong recovery expected 90 ▪ Backlog in demand ▪ Supply chain “normalization” 85 ▪ E-vehicle demand 80 75 Global automotive production 70 Forecast (as of May 2022) 2018 2019 2020 2021 2022 2023 2
Slide 21: Growth Driver – Our People
GROWTH DRIVER – OUR PEOPLE UNIQUE CORPORATE CULTURE ▪ Courage for Innovation ▪ Customer First ▪ Empowerment and Respect ▪ Manage for Results ▪ Sustainability and Integrity 21
Slide 22: 3. Our Way to Net Zero
3. OUR WAY TO NET ZERO ® BUILDING TRUST By
Slide 23: Sustainability and Our Way to Net Zero
SUSTAINABILITY AND OUR WAY TO NET ZERO CONTINUE TO GROW AND REDUCE GREENHOUSE GAS MAKING A POSITIVE IMPACT OUR COMITTMENT ▪ 40% of global CO2 emissions attributable to ▪ We continue our growth strategy and engage our construction and building sector innovative developments to decouple growth from gr
Slide 24: Sika's Net Zero Roadmap: Our Key Levers
SIKA’S NET ZERO ROADMAP OUR KEY LEVERS Education and capacity building to improve material efficiency and circularity Accelerated use Continued of alternative focus on low carbon operational supplies efficiencies Partnerships Development with key of new innovative suppliers who solutions for support
Slide 25: 4. Update on MBCC Acquisition
4. UPDATE ON MBCC ACQUISITION
Slide 26: Update on MBCC Acquisition: Complementary in Many Ways
UPDATE ON MBCC ACQUISITION COMPLEMENTARY IN MANY WAYS Solutions Channel Geography Supply Chain 26
Slide 27: We Will Have an Even Stronger Product Range Together
UPDATE ON MBCC ACQUISITION WE WILL HAVE AN EVEN STRONGER PRODUCT RANGE TOGETHER Underground Construction Offshore Wind Installation High-performance industrial floors Floor Covering Applications Sikaplan® Sikafloor® Sikafloor® Sika Power® High performance epoxy sealing and PVC membrane for waterproo
Slide 28: Unconditional Approvals in Most Jurisdictions
UPDATE ON MBCC ACQUISITION UNCONDITIONAL APPROVALS IN MOST JURISDICTIONS Brazil China Japan Colombia Unconditional approvals received in most jurisdictions Saudi-Arabia Thailand South Africa Turkey 28
Slide 29: Divestments Required in Admixture Business
UPDATE ON MBCC ACQUISITION DIVESTMENTS REQUIRED IN ADMIXTURE BUSINESS USA Canada Process ongoing divestment of admixture Europe UK business Scope: up to CHF 850 million New Zealand Australia 29
Slide 30: Divestments Required in Admixture Business
UPDATE ON MBCC ACQUISITION DIVESTMENTS REQUIRED IN ADMIXTURE BUSINESS Remaining business CHF 2.15 billion* To be divested CHF 850 million* Countries with MBCC subsidiaries that will be fully integrated Countries with MBCC subsidiaries where admixture business will be divested *Based on full year 202
Slide 31: Financing and Leverage Considerations
FINANCING AND LEVERAGE CONSIDERATIONS FINANCIAL TERMS OF TRANSACTION REMAIN VERY ATTRACTIVE ▪ Financing through cash and debt instruments ▪ Fully committed bridge loan facility ▪ Long-term funding over combination of cash-on-hand, bank loans and bonds ▪ Expected annual interest cost of CHF 90 millio
Slide 32: Historical and Expected Leverage Development
FINANCING AND LEVERAGE CONSIDERATIONS HISTORICAL AND EXPECTED LEVERAGE DEVELOPMENT ≈2.5x ▪ 2023 Leverage expected at ≈2.5x ▪ With early Convertible Bond 2.6x conversion at around 0.5 turns lower 2.1x 1.6x ▪ Fast deleveraging – similar ≈1.2x deleveraging profile as with Parex 2019 2020 2021 2022FC 20
Slide 33: Confirmation of Strategic Fit
UPDATE ON MBCC ACQUISITION CONFIRMATION OF STRATEGIC FIT ▪ Synergies: CHF 160-180 million ▪ 2023 Leverage expected at ≈2.5x ▪ Funding structure of MBCC acquisition unchanged ▪ Favorable FX impact ▪ Closing targeted in first half of 2023 33
Slide 34: 5. Outlook
5. OUTLOOK ® BUILDING TRUST By
Slide 35: Annual Sales Target for 2022 Raised
ANNUAL SALES TARGET FOR 2022 RAISED CONTINUATION OF SUCCESSFUL GROWTH STRATEGY ▪ Sales increase by over 15% in local currencies Expected sales ▪ Surpassing CHF 10 billion for the first time ▪ Over-proportional EBIT increase expected for for 2022 the year > 10 ▪ Confirmation of 2023 strategic targets
Slide 36: Thank You for Your Attention
VW ' £3 | a Poa 2 E a i oe i aoe = a = l| Hh THANK YOU FOR YOUR ATTENTION as ® BUILDING TRUST By
Slide 37: 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