Slide 1: Record Results for Profit and Cash Flow – Sika Strong in Year of Coronavirus
RECORD RESULTS FOR PROFIT AND CASH FLOW – SIKA STRONG IN YEAR OF CORONAVIRUS SIKA INVESTOR PRESENTATION MARCH 2021
Slide 2: 1. Highlights
1. HIGHLIGHTS ® BUILDING TRUST By
Slide 3: Financial Highlights 2020
FINANCIAL HIGHLIGHTS 2020 RECORD RESULTS FOR PROFIT AND CASH FLOW ▪ Record results ▪ Sales growth of 3.4% in local currencies ▪ CHF 1,130.5 million EBIT (+7.1%) ▪ EBIT margin improved from 13.0% to 14.4% ▪ CHF 825.1 million net profit (+8.8%) ▪ CHF 1,259.4 million operating free cash flow (+22.7%) ▪
Slide 4: ESG Highlights 2020
ESG HIGHLIGHTS 2020 REDUCTION OF CO2 EMMISSIONS BY 25.9% -12.1% -21.2% waste energy consumption per ton sold per ton sold -25.9% 10.1 CO2 emissions per ton sold hours of training (20kg, previous year: 27kg) per employee 4
Slide 5: Key Figures
KEY FIGURES RECORD PROFITABILITY in CHF mn 2019 2020 Δ% Net sales 8,109.2 7,877.5 - 2.9 Gross margin 53.6% 54.8% EBITDA 1,387.6 1,497.6 + 7.9 EBIT 1,055.1 1,130.5 + 7.1 Net profit 758.5 825.1 + 8.8 Operating free cash flow 1,026.1 1,259.4 + 22.7 5
Slide 6: Local Currency Growth in All Regions
LOCAL CURRENCY GROWTH IN ALL REGIONS + 3.4% 3.4% SALES GROWTH (-2.9% IN CHF) IN 2020 + 4.4% + 12.6% 7,877.5 + 1.0% Group - 11.4% 1,696 1,996 3,410 Asia/Pacific Americas 776 EMEA Global Business 2019 2020 (in CHF million, growth in LC) 6
Slide 7: Gaining Further Market Share: Investments in Six Plants and One Acquisition
GAINING FURTHER MARKET SHARE INVESTMENTS IN SIX PLANTS AND ONE ACQUISITION Investment in polyurethane Admixtures, Mortars, and Acrylic Plant production facilities Barranquilla, Colombia Düdingen, Switzerland Modern Waterproofing Group, Egypt Waterproofing Adeplast, Romania (Closing) Mortar plant Bui
Slide 8: 2. Sika's Success Factors in the Pandemic
2. SIKA’S SUCCESS FACTORS IN THE PANDEMIC
Slide 9: The Impact of the Pandemic
THE IMPACT OF THE PANDEMIC MARCH 2020 TO JANUARY 2021 ▪ Severe COVID-19 Country Argentina Mar 20 48 Apr 20 95 May 20 83 Jun 20 65 Jul 20 58 Aug 20 66 Sep 20 58 Okt 20 43 Nov 20 30 Dez 20 35 Jan 21 35 Australia 46 76 55 43 43 43 43 43 38 38 43 wave started in March 2020 Austria 48 83 55 29 19 19 24 3
Slide 10: Highly Resilient Distribution Business
SIKA’S SUCCESS FACTORS IN THE PANDEMIC HIGHLY RESILIENT DISTRIBUTION BUSINESS ▪ Booming home improvement ▪ Sika establishes itself as household brand ▪ Tailor-made solutions and customer focus for every distribution channel ▪ Gaining further market share in online sales and e-commerce double digit 4
Slide 11: High Resilience of Refurbishment
SIKA’S SUCCESS FACTORS IN THE PANDEMIC HIGH RESILIENCE OF REFURBISHMENT ▪ Structures have to be maintained and projects do not tolerate delay for security reasons ▪ New regulations and building standards make refurbishment mandatory ▪ Complexity favor refurbishment over new build ▪ Sika with strong
Slide 12: Huge Investments in Digitalization
SIKA’S SUCCESS FACTORS IN THE PANDEMIC HUGE INVESTMENTS IN DIGITALIZATION ▪ COVID-19 has accelerated digital and Sika offers solutions from basement to roof, like e-commerce boom waterproofing, fire protection, protection against electrostatic charge, or cool roofs ▪ Many new data centers as backbon
Slide 13: Strong Customer Focus
SIKA’S SUCCESS FACTORS IN THE PANDEMIC STRONG CUSTOMER FOCUS ▪ Decentralized organisations can quickly adapt to local situation ▪ Strong, locally managed teams ▪ Close to projects and close to customers ▪ Already close contact with customers was further intensified during pandemic ▪ Daily calls and
Slide 14: Sika Clearly Outperforms Competitors
SIKA’S SUCCESS FACTORS IN THE PANDEMIC SIKA CLEARLY OUTPERFORMS COMPETITORS 2018 2019 2020 +16.3% +13.6% +10.7% +3.4% -2.1% -5.1% Sika Peers Sika Peers Sika Peers Notes: Growth in constant currencies 14
Slide 15: Parex Integration Successfully Completed During Pandemic
PAREX INTEGRATION SUCCESSFULLY COMPLETED DURING PANDEMIC
Slide 16: Parex Integration Successfully Completed
PAREX INTEGRATION SUCCESSFULLY COMPLETED MOVING FORWARD AS ONE STRONG COMPANY ▪ Integration of Parex successfully completed ▪ 23 countries with fully integrated teams working together to achieve results ▪ Synergy guidance overachieved: CHF 55 million annual synergies in 2020 ▪ Integration of 9 brand
Slide 17: Operational Efficiency Increased During Pandemic
OPERATIONAL EFFICIENCY INCREASED DURING PANDEMIC
Slide 18: Strategic Levers Driving Improvement
OPERATIONAL EFFICIENCY INCREASED DURING PANDEMIC STRATEGIC LEVERS DRIVING IMPROVEMENT +0.5% -0.7% +0.4% HIGH LEVEL OF AUTOMATION SMART PACKAGING +1.2% 14.4% GLOBAL TEAMS OF OPTIMIZED LOGISTICS EXPERTS 13.0% Key Initiatives Operational Efficiency EBIT % 2019 Material Margin Operational M&A Dilution /
Slide 19: Examples with Strong Impact
OPERATIONAL EFFICIENCY INCREASED DURING PANDEMIC EXAMPLES WITH STRONG IMPACT US Supply Chain Alignment Energy Reduction Projects Programs focusing on energy reduction Initial situation Sand Drying Membrane Production Compressed Air Clustered production areas Waste Reduction Formulation Efficiency Pr
Slide 20: Resilient Growth Strategy 2023 Despite Pandemic
RESILIENT GROWTH STRATEGY 2023 DESPITE PANDEMIC
Slide 21: Resilient Strategy – Major Megatrends Supporting Growth
RESILIENT STRATEGY – MAJOR MEGATRENDS SUPPORTING GROWTH FURTHER ACCELERATION DESPITE PANDEMIC Technological Climate Change and Urbanization Progress Scarcity of Resources Demographic Dynamic Change Economy 21
Slide 22: Strategic Targets Confirmed Despite Pandemic
RESILIENT GROWTH STRATEGY 2023 STRATEGIC TARGETS CONFIRMED DESPITE PANDEMIC 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
Slide 23: Accelerated Automation in the Building Industry
RESILIENT GROWTH STRATEGY ACCELERATED AUTOMATION IN THE BUILDING INDUSTRY ▪ Increasing demand for shorter Singapore is forerunner in modular building. In construction time and shortage of order to accelerate industrialization of qualified labor favors modular construction, authorities explicitly req
Slide 24: Unlocking Additional Potential in Suburbia
RESILIENT GROWTH STRATEGY UNLOCKING ADDITIONAL POTENTIAL IN SUBURBIA ▪ Urbanization trend to continue ▪ Big cities remain highly attractive, suburban centers are becoming more important in developed industrialized countries ▪ Need for housing and infrastructure facilities to increase in megacities a
Slide 25: CHF 10 Trillion Planned Stimuli for Construction
RESILIENT GROWTH STRATEGY CHF 10 TRILLION PLANNED STIMULI FOR CONSTRUCTION ▪ Extensive infrastructure programs stimulate economies around the globe Americas stimulus programs CHF 1 trillion ▪ Thanks to its expertise and product portfolio EMEA stimulus programs for new construction, refurbishment, an
Slide 26: 3. Financial Results 2020
3. FINANCIAL RESULTS 2020 ® BUILDING TRUST By
Slide 27: Financial Highlights 2020
FINANCIAL HIGHLIGHTS 2020 ▪ Net sales: CHF 7,877.5 million (+3.4% in LC, -2.9% in CHF) ▪ Record profitability on all levels: ▪ EBITDA: CHF 1,497.6 million (+7.9%) ▪ EBIT: CHF 1,130.5 million (+7.1%) or 14.4% of net sales (up from 13.0% in PY) ▪ Net Profit: CHF 825.1 million (+8.8 %) ▪ Earnings per s
Slide 28: Sales 2020: 3.4% Growth in Local Currencies
SALES 2020 3.4% GROWTH IN LOCAL CURRENCIES in CHF mn 2019 2020 Net sales 8,109.2 7,877.5 -6.3% 7.2% Organic growth -310.5 -3.8% Acquisition effect +580.6 8,109 7,878 Currency effect -501.8 2019 Org. Acq. FX 2020 28
Slide 29: Sales Development 2018 to 2020
SALES DEVELOPMENT 2018 TO 2020 3.4% GROWTH IN LOCAL CURRENCIES IN 2020 16.3% 13.6% 16% 11% 6.8% 13.0% 3.4% 6% in LC 7.2% 6.8% acquisition 1% 3.3% organic -3.8% -4% 2018 2019 2020 12M 2018 12M 2019 12M 2020 in CHF mn Sales 7,085.4 8,109.2 7,877.5 In 2020, sales growth of acquired businesses since ini
Slide 30: Income Statement
INCOME STATEMENT PROFITABILITY GROWTH ACROSS THE BOARD in CHF mn 2019 NS 2020 NS Growth Net sales 8,109.2 100% 7,877.5 100% -2.9% Gross result 4,344.0 53.6% 4,314.8 54.8% -0.7% Personnel costs -1,544.3 -19.0% -1,525.9 -19.4% -1.2% Other OPEX -1,412.1 -17.5% -1,291.3 -16.4% -8.6% EBITDA 1,387.6 17.1%
Slide 31: EBIT Improvement 2020
EBIT IMPROVEMENT 2020 STRATEGIC LEVERS DRIVING IMPROVEMENT +0.5% -0.7% +0.4% +1.2% 14.4% 13.0% EBIT % 2019 Material Margin Operational M&A Dilution / M&A Synergies EBIT % 2020 Improvements Efficiency (cost) Other 31
Slide 32: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET SIGNIFICANT REDUCTION OF NET DEBT in CHF mn 31.12.2019 31.12.2020 Δ% Cash and cash equivalents 995.1 1,318.7 32.5 Other current assets 2,474.8 2,315.9 -6.4 Current assets 3,469.9 3,634.6 4.7 Non-current assets 6,489.8 6,159.4 -5.1 Total assets 9,959.7 9,794.0 -1.7 Current
Slide 33: Operating Free Cash Flow Development
OPERATING FREE CASH FLOW DEVELOPMENT STRONG CASH CONVERSION Operating Free Cash Flow 12.7% 16.0% ▪ 2020 operating free cash flow at 16.0% of sales 10.2% 8.0% 7.2% ▪ Higher profitability and lower 1,259.4 CapEx 1,026.1 586.5 496.8 513.2 ▪ NWC reduction of CHF 124 2016 2017 2018 2019 2020 million (vs.
Slide 34: Cash Flow Statement
CASH FLOW STATEMENT RECORD OPERATING FREE CASH FLOW in CHF mn 2019 2020 Cash flow from operating activities 1,213.9 1,372.4 CapEx/sale of assets -187.8 -113.0 Operating free cash flow 1,026.1 1,259.4 Acquisitions/financial assets -1,743.1 -139.1 Free cash flow -717.0 1,120.3 Cash flow from net finan
Slide 35: Net Debt/EBITDA Development
NET DEBT/EBITDA DEVELOPMENT (AS REPORTED) STRONG DELEVERAGING PROFILE ▪ De-leveraging well on track 3.4 ▪ Strong cash conversion in 2.3 2.5 2019/2020 led to significant 1.8 1.9 leverage reduction from peak in 2019 (3.4x in June 2019) ▪ Net debt decreased by CHF 550 million in 2020 Q1 Q2 Q3 Q4 Q1 Q2
Slide 36: Dividend: Board Proposes 8.7% Increase
DIVIDEND BOARD OF DIRECTORS PROPOSES 8.7% DIVIDEND INCREASE Dividend payment of CHF 2.50 per share (+8.7% vs. previous year) in CHF mn 2019 2020 Group profit (after minorities) 751.9 824.5 Dividend out of retained earnings 326.1 354.5 Dividend per share 2.30* 2.50* Total payout ratio 43.4% 43.0% *in
Slide 37: 4. Sika as Enabler
4. SIKA AS ENABLER ® BUILDING TRUST By
Slide 38: Sika as Enabler for a Sustainable Future
SIKA AS ENABLER FOR A SUSTAINABLE FUTURE Construction Automotive 40% of global CO2 emissions Road traffic responsible for attributable to construction fifth of global greenhouse and building sector gases Huge opportunity as potential for progress is immense Sika possesses the solutions and innovativ
Slide 39: Heat Loss Reduction by 35%
SIKA AS ENABLER HEAT LOSS REDUCTION BY 35% Examples of Sika applications and products for sustainable buildings Where heat escapes 26% Roofs Roofing systems 33% Walls Facades 21% Windows & Doors 8% Floor Windows & Doors Flooring 12% Ventilation Interior Finishing 35% Waterproofing of heat loss reduc
Slide 40: Saving Resources with Innovative Roofing Solutions
SIKA AS ENABLER SAVING RESOURCES WITH INNOVATIVE ROOFING SOLUTIONS ▪ Sika Sarnafil® AT is first Cradle to Cradle CertifiedTM Membrane worldwide ▪ Recycling of roof membranes saves resources and reduces burden on climate ▪ Used roof membranes are retrieved and processed into granular material. Recycl
Slide 41: Clean Water for Millions of People
SIKA AS ENABLER CLEAN WATER FOR MILLIONS OF PEOPLE ▪ Demand for drinking water and wastewater treatment facilities is increasing rapidly ▪ Sika has innovative solutions to protect water quality in these facilities Concrete Waterproofing 35% Repair Mortars of population connected to a sewage system i
Slide 42: reCO2ver – Concrete Recycling
SIKA AS ENABLER reCO2ver – CONCRETE RECYCLING Sika’s new patented recycling process for used concrete Sika Additive Sika’s new recycling Demolished Concrete process for used Sand concrete separates the components completely. Limestone They can be re-used + stored CO2 for new concrete. This further r
Slide 43: Sustainability Assessment Scores – Sika in Top Class
SIKA AS ENABLER SUSTAINABILITY ASSESSMENT SCORES – SIKA IN TOP CLASS ▪ Leading sustainability position of Sika confirmed by latest S&P ESG Evaluation results ▪ Sika is included in the MSCI Switzerland ESG Leaders Index ▪ Placing great importance in constantly improving in all ESG assessments; such a
Slide 44: Community Engagement
COMMUNITY ENGAGEMENT STRONG GLOBAL ENGAGEMENT DURING THE PANDEMIC Education Infrastructure Water and climate Library Project, China Kovive Child welfare Zona Cero, Chile Rebuilding together, USA ▪ 6th year organization, Switzerland ▪ Involvement in the project ▪ For over 10 years ▪ Donation of over
Slide 45: 5. Outlook
5. OUTLOOK ® BUILDING TRUST By
Slide 46: Outlook: Global Business & Industry
OUTLOOK GLOBAL BUSINESS & INDUSTRY ▪ Recovery of automotive markets ongoing with China reaching pre-COVID level while North America and Europe still in a slow catch-up mode. High volatility and uncertainties related to supply chain disruptions, lockdowns and consumer confidence. ▪ Strong automotive
Slide 47: Outlook: Americas
OUTLOOK AMERICAS ▪ COVID remains a challenge; but Sika learnt to deal with it and adapted strategy to “go where the money is”. ▪ Area outlook: Canada with another good year, US with a slower start but then accelerating, LATAM led by Brazil, Peru and Chile showing strong performance despite continuou
Slide 48: Outlook: EMEA
OUTLOOK EMEA ▪ Recovery of construction business in most markets expected, especially in infrastructure with promising project pipeline across areas. Several big railway projects in Norway ▪ Proactive specification- and cross-selling to be early engaged in major projects (new build and refurbishment
Slide 49: Outlook: Asia/Pacific
OUTLOOK ASIA/PACIFIC ▪ Significant recovery in economic momentum with easing of pandemic related lockdowns and travel restrictions throughout most of APAC particularly in Southeast Asia and India. ▪ China leads the recovery with expansion of retail ecosystem along with accelerated cross- selling act
Slide 50: Strong Outlook 2021
STRONG OUTLOOK 2021 CONTINUATION OF GROWTH STRATEGY 2023 ▪ Confirmation of 2023 strategic targets for sustainable, profitable growth ▪ Outlook 2021: ▪ Sales growth of 6%-8% in local currency expected ▪ Over-proportional EBIT increase expected for the year ▪ EBIT margin to reach for the first time 15
Slide 51: Thank You for Your Attention
THANK YOU FOR YOUR ATTENTION
Slide 52: 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