Sika Ag · SIX:SIKA
Sika — Investor Day (2020)
35 slides from Sika's investor day presentation, 2020
Slide 1: Weathering the Storm – Emerging from the COVID-19 Crisis as a Stronger Company
WEATHERING THE STORM – EMERGING FROM THE COVID-19 CRISIS AS A STRONGER COMPANY PAUL SCHULER CEO SIKA CAPITAL MARKETS DAY 2020
Slide 2: The Impact of COVID-19
THE IMPACT OF COVID-19 MAINTAIN HIGH FLEXIBILITY
Slide 3: The Impact of the Pandemic February to September 2020
THE IMPACT OF THE PANDEMIC FEBRUARY TO SEPTEMBER 2020 ▪ Severe COVID-19 wave started in March ▪ Around 35 of 100 Sika countries with full lockdown for about two months in the first half of the year, rest of countries strongly impacted (partly estimates) (estimates) March April May June July August S
Slide 4: Measures Addressing Pandemic Situation
MEASURES ADDRESSING PANDEMIC SITUATION MAINTAIN HIGH FLEXIBILITY 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 of local suppo
Slide 5: Sika's Success Factors in the Crisis
SIKA’S SUCCESS FACTORS IN THE CIRSIS NAVIGATING THE PANDEMIC
Slide 6: 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 6
Slide 7: Structural Growth, Market Penetration and Acquisition
STRUCTURAL GROWTH, MARKET PENETRATION AND ACQUISITION HOW SIKA DELIVERS SUPERIOR AND SUSTAINABLE GROWTH OF 6-8% 50% 40% 30% 20% 10% 0% 2019 2020 2021 2022 2023 Market Growth Structural Growth (Megatrends) Market Penetration Acquisition Growth in local currencies 7
Slide 8: Infrastructure Programs Stimulate Market Growth
INFRASTRUCTURE PROGRAMS STIMULATE MARKET GROWTH CHF 10 TRILLION PLANNED STIMULI FOR CONSTRUCTION Europe CHF 750 billion Americas Asia/Pacific CHF 1 trillion CHF 8.6 trillion Investments in the areas of: ▪ Transportation infrastructure ▪ Public buildings (hospitals, schools) ▪ Renewable energy ▪ IT i
Slide 9: Examples of COVID-19 Infrastructure Programs
INFRASTRUCTURE PROGRAMS STIMULATE MARKET GROWTH EXAMPLES OF COVID-19 INFASTRUCTURE PROGRAMS EU USA China ▪ EUR 750 billion ▪ Lowest common denominator ▪ Investment plans and EU recovery plan between the two parties is a major infrastructure ▪ Focuses on renewable USD 1 trillion infrastructure projec
Slide 10: EU Green Deal Initiative to Boost Business
EU GREEN DEAL INITIATIVE TO BOOST BUSINESS SIKA TO PROFIT AS GLOBAL LEADER IN BUILDING FINISHING Existing buildings New regulations Sika solutions reducing heat loss and water impact ▪ EU Green Deal ▪ Stricter building regulations leading to renovations of buildings and infrastructure ▪ Countries su
Slide 11: Digital Economy and E-Commerce
DIGITAL ECONOMY AND E-COMMERCE UNLOCKING ADDITIONAL POTENTIAL ▪ COVID-19 has accelerated digital and Huge investments in data- e-commerce boom transfer and G5 technology ▪ Increasing investments from civil infrastructure to data centers Increasing need for data ▪ Sika as preferred provider of Roofin
Slide 12: Trend for More Urbanization Continues
TREND FOR MORE URBANIZATION CONTINUES UNLOCKING ADDITIONAL POTENTIAL ▪ Big cities remain highly attractive Urbanization trend to continue ▪ Companies will not transition to 100% 1,750 mn 7,244 mn 9,804 mn World population home office mid-term ▪ Even if less people will be working in office buildings
Slide 13: Resilient and Growing in Distribution Business
RESILIENT AND GROWING IN DISTRIBUTION BUSINESS INCREASING OPPORTUNITIES ▪ Boom in DIY business ▪ Sika’s distribution business highly ▪ Home improvement business is resilient booming ▪ Leading retail and hardware store chains report strong double digit increase in sales during lockdown ▪ Access to nu
Slide 14: Overall Stronger Growth of Refurbishment Business
SUCCESS FACTORS IN THE CRISIS OVERALL STRONGER GROWTH OF REFURBISHMENT BUSINESS ▪ High resilience of refurbishment in crisis ▪ Urbanization and densification drive the need for refurbishment ▪ Structures have to be maintained ▪ Complexity favor refurbishment over new build ▪ New regulations and buil
Slide 15: Strong Customer Focus
SUCCESS FACTORS IN THE CRISIS STRONG CUSTOMER FOCUS ▪ Close contact with customers ▪ Daily calls and personal contact ▪ Over 100,000 webinars and online trainings ▪ New sales-driven website with access to all products in all countries ▪ Solution-driven mentality 15
Slide 16: Successful Parex Integration
SUCCESSFUL PAREX INTEGRATION ON TRACK TO MEET AMBITIOUS TARGETS
Slide 17: Fast and Successful Integration of Parex
FAST AND SUCCESSFUL INTEGRATION OF PAREX EXCELLENT PROGRESS – COMPLETION IN FOCUS TOTAL SYNERGIES TOTAL COST CHF 40 MILLION+ Around CHF 100 SYNERGIES Run rate synergies million identified CHF 55 million achieved to date PRODUCT SHOP IN SHOP 23 INTEGRATED CROSS-SELLING LAUNCHES concept TEAMS working
Slide 18: Short Re-visit of Strategy 2023
SHORT RE-VISIT OF STRATEGY 2023 ON TRACK TO MEET AMBITIOUS TARGETS
Slide 19: Major Megatrends Supporting Sika's Growth
MAJOR MEGATRENDS SUPPORTING SIKA’S GROWTH NO CHANGES DUE TO PANDEMIC TECHNOLOGY RAPID ADVANCEMENT URBANIZATION DYNAMIC CLIMATE CHANGE, ECONOMY SHORTAGE OF RESOURCES CHANGING DEMOGRAPHICS 19
Slide 20: Sika's Growth Strategy 2023
SIKA’S GROWTH STRATEGY 2023 THE PILLARS OF THE STRATEGY 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-materia
Slide 21: Market Penetration: Increase Market Share to 12%
MARKET PENETRATION INCREASE MARKET SHARE TO 12% Construction chemicals Construction chemicals Driver for future growth: market 2020 market 2025 How we increase market share approx. CHF 70 billion approx. CHF 80 billion Sika 12% New Sika 9% Building Finishing Target Market Others +2.5% p.a. 58% marke
Slide 22: Innovation: More Performant – More Sustainable
INNOVATION MORE PERFORMANT – MORE SUSTAINABLE FIVE CORE TECHNOLOGIES: Concrete Technology Adhesive Systems Coating Systems Focus on Sika’s five 25% of sales with new core technologies products Increased focus on Cementitious Systems Thermoplastic Systems Shift in construction product sustainability:
Slide 23: Operational Efficiency Drives Margin Improvement
OPERATIONAL EFFICIENCY DRIVES MARGIN IMPROVEMENT MORE THAN OPERATING LEVERAGE Sika’s footprint significantly expanded over the years 1 Operations / Factory Efficiency Initiatives to 2 Formulation Efficiency increase 3 Logistics operational efficiency 4 Procurement 5 Sales and admin costs in % 0.5% s
Slide 24: Acquisitions as Growth Platforms
ACQUISITIONS AS GROWTH PLATFORMS NUMEROUS OPPORTUNITIES TO CONSOLIDATE MARKET ▪ Fragmentation offers acquisition opportunities ▪ Sika acting as market consolidator ▪ More than 60 bolt-on acquisitions in the last 12 years ▪ Acquisitions as growth platforms ▪ Solid pipeline but due diligence process h
Slide 25: Values and Principles
VALUES AND PRINCIPLES WHAT SIKA STANDS FOR 25,000 HIGH ▪ Customer first employees COMMITMENT ▪ Courage for innovation ▪ Sustainability and integrity OF EMPLOYEES ▪ Empowerment and respect 6.0% DURING ▪ Manage for results employee turnover PANDEMIC rate in 2019 Global Employee Survey in 2019 showed v
Slide 26: Sustainability: 70% of Sika Products with Positive Sustainable Impact
SUSTAINABILITY 70% OF SIKA PRODUCTS WITH POSITIVE SUSTAINABLE IMPACT ▪ 70% of Sika products with a positive sustainable impact ▪ Sika products help to drive CO2 footprint of our customers down Overall target 12% CO2 emission reduction per ton sold by 2023 Our «More Value - Less Impact» targets: ▪ Su
Slide 27: High Emissions in the Building Industry
HIGH EMISSIONS IN THE BUILDING INDUSTRY CONSTRUCTION CHEMICALS ENABLER FOR STRUCTURAL CHANGE 800 kg CO2 per ton produced 700 600 500 400 300 200 100 0 Sika Light-side Heavy-side Building Material companies Building Material companies 27
Slide 28: Sustainability – Climate Performance
SUSTAINABILITY – CLIMATE PERFORMANCE STRATEGIC CO2 TARGET LEADS TO CLIMATE NEUTRALITY BY 2050 2019 2020 2023 2030 2050 27 kg CO2/tons sold - 12% - 50% CO2 neutral (Scope 1&2) In 2020 Sika concentrates on Scope 1 and 2 Internal CO2 footprint Scope 1 (direct) Scope 2 (indirect) ▪ Internal fossil fuel
Slide 29: Sika Enables Sustainable Construction
SIKA ENABLES SUSTAINABLE CONSTRUCTION SIKA PRODUCTS DRIVE CO2 FOOTPRINT DOWN Scope 3 (external CO2 footprint) 70% of Sika products with a positive sustainable impact HIGH-STRENGTH CONCRETE WITH Sika® ViscoCrete® REDUCES CONCRETE CONSUMPTION AS THINNER CONSTRUCTIONS ARE POSSIBLE Sika® ViscoCrete® TEC
Slide 30: Sika Enables Sustainable Construction: Repair and Refurbishment
SIKA ENABLES SUSTAINABLE CONSTRUCTION SIKA PRODUCTS DRIVE CO2 FOOTPRINT DOWN Scope 3 (external CO2 footprint) 70% of Sika products with a positive sustainable impact SIKA SOLUTIONS FOR REPAIR AND REFURBISHMENT STRENGTHEN, WATERPROOF, INSULATE, PROTECT, AND REPAIR BUILDINGS AND STRUCTURES SIKA REPAIR
Slide 31: Sika Enables Sustainable Construction: Green Roofs
SIKA ENABLES SUSTAINABLE CONSTRUCTION SIKA PRODUCTS DRIVE CO2 FOOTPRINT DOWN Scope 3 (external CO2 footprint) 70% of Sika products with a positive sustainable impact SIKA SUPPLIES HIGHLY DURABLE, ROOT RESISTANT MEMBRANES FOR GREEN ROOFS ▪ REDUCE URBAN HEAT EFFECT AND IMPROVE AIR QUALITY ▪ INSULATING
Slide 32: Outlook
OUTLOOK ® BUILDING TRUST By
Slide 33: Outlook: Continuation of Successful Growth Strategy
OUTLOOK CONTINUATION OF SUCCESSFUL GROWTH STRATEGY ▪ Confirmation of 2023 strategic targets for sustainable, profitable growth ▪ Outlook for the second half of the year: Sika is expecting more favorable market conditions. With the anticipated improvement in sales volumes, the company expects an over
Slide 34: Thank You for Your Attention
al THANK YO U 4 FOR YOUR ATTENTION BUILDING TRUST
Slide 35: 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