Slide 1: Successful Start to 2019 – Parex Transaction Closed
SUCCESSFUL START TO 2019 – PAREX TRANSACTION CLOSED SIKA INVESTOR PRESENTATION JUNE 2019
Slide 2: Successful Start to 2019
SUCCESSFUL START TO 2019 ® BUILDING TRUST Bs
Slide 3: Highlights
HIGHLIGHTS 1. Strong Q1 2019 +7.1% sales growth in local currencies to CHF 1,644.8 million Growth in all regions 2. Key investments in 2019 Announcement of three acquisitions: Parex (global) – closed May 23, 2019 King (Canada), Belineco (Belarus) – closed end April New mortar plant in Senega
Slide 4: Growth Momentum Continues in 2019
GROWTH MOMENTUM CONTINUES IN 2019 7.1% SALES GROWTH IN LOCAL CURRENCY (5.8% IN CHF) + 7.1% + 8.2% + 2.8% 1.64 + 4.8% Group + 13.3% 0.27 0.41 Asia/Pacific Americas 0.72 0.24 EMEA Global Business 3M 2018 3M 2019 (in CHF bn, growth in LC) 4
Slide 5: Growth Momentum Continues in 2019
GROWTH MOMENTUM CONTINUES IN 2019 7.1% SALES GROWTH IN LOCAL CURRENCY (5.8% IN CHF) 7.1% +4.6% organic +2.5% acquisition Q1 2017 Q1 2018 Q1 2019 in CHF mn Sales 1,389.0 1,554.0 1,644.8 5
Slide 6: Investments in New Plants
HIGH OPERATING SPEED CONTINUED IN 2019 INVESTMENTS IN NEW PLANTS Opening of Sika plants: Mortar plant in Senegal (Dakar, March 2019) Expansion of mortar plant in Egypt (Alexandria, April 2019) New plant in Senegal Doubling mortar capacity in Egypt 6
Slide 7: 3 Acquisitions in 2019
HIGH OPERATING SPEED CONTINUED IN 2019 3 ACQUISITIONS IN 2019 Company Country Target Market Parex Global Refurbishment, Waterproofing, Flooring King Packaged Materials Company Canada Concrete, Refurbishment Belineco Eastern Europe Sealing & Bonding Total annual sales: CHF 1,288 million Belineco King
Slide 8: Acquisition of King Packaged Materials Company
KEY INVESTMENTS IN 2019 ACQUISITIONS AS GROWTH PLATFORM Acquisition of King Packaged Materials Company (Canada) Large manufacturer of dry shotcrete and mortars for concrete repair Products for the construction and mining industry as well as for the home improvement distribution channel King op
Slide 9: Acquisition of Belineco, Belarus
KEY INVESTMENTS IN 2019 ACQUISITIONS AS GROWTH PLATFORM Acquisition of Belineco, Belarus Manufacturer of polyurethane foam systems Further expansion of production capacity and know-how for polyurethane foam systems Cross-selling opportunities in Eastern Europe 9
Slide 10: Update on Parex
UPDATE ON PAREX ® BUILDING TRUST Bs
Slide 11: Transaction Highlights (1/2)
TRANSACTION HIGHLIGHTS (1/2) Parex, an excellent company A leading mortar manufacturer – great expertise in facade, tile adhesives, waterproofing Impressive track record of profitable growth (7 year growth CAGR of 7%; 2018E sales: CHF 1.2 billion, EBITDA 16%) Strong position in distribution
Slide 12: Transaction Highlights (2/2)
TRANSACTION HIGHLIGHTS (2/2) Financial parameters Enterprise value of CHF 2.5 billion Annual synergies of CHF 80 – 100 million expected Multi-step transaction Sika signed exclusive put option agreement, announcement January 8, 2019 SPA signed on February 12, 2019 Closing May 23, 2019 1
Slide 13: Parex – A Leading Mortar Company
PAREX – A LEADING MORTAR COMPANY 80% OF SALES THROUGH DISTRIBUTION CHANNEL Sales CHF 1,204 million EBITDA CHF 195 million Waterproofing & Tech. Solutions 26% Tile Setting Sales by products Materials 40% Facade Protection & Decoration 34% Americas 25% Asia Sales by region 42% EMEA 33% Sites 74 plants
Slide 14: Sika and Parex: 1+1=3
SIKA AND PAREX: 1+1=3 EXPAND HIGHLY PROFITABLE MORTAR BUSINESS Combined Adhesive Systems Thermoplastic Adhesive 23% Systems Systems Concrete 28% 26% Systems 14% CHF 7.1 bn CHF CHF1.1bn 1.2 bn CHF 8.3 bn Coating Systems Coating Concrete Thermoplastic 12% Systems Systems Systems 14% 17% 24% Mortars Mo
Slide 15: Exciting Synergy Opportunities
SIKA AND PAREX: 1+1=3 EXCITING SYNERGY OPPORTUNITIES Cross-selling Sika products through Parex’ distribution network Parex gain access to Sika’s direct sales channels Parex products included in Sika specifications Optimized utilization of warehouses, logistics and production network Access t
Slide 16: Synergy Opportunities – Example China
EXCITING SYNERGY OPPORTUNITIES - EXAMPLE CHINA HIGH CHANNEL COMPLEMENTARITY AND CROSS-SELLING POTENTIAL Parex strong in distribution, Sika strong in direct business Expanded footprint in China Technical mortars Sika with 90% of direct business in China Industrial Flooring High complementarit
Slide 17: Synergy Opportunities – Example USA
EXCITING SYNERGY OPPORTUNITIES - EXAMPLE USA FACADE AND TILE SYSTEMS AS NEW GROWTH PLATFORMS Refurbishment Expand factory footprint for mortars with Parex plants in Industrial Flooring Florida, California, New York, and New Mexico Roofing & Waterproofing Parex’s Facade/EIFS business connec
Slide 18: Revenue and Cost Synergies
REVENUE AND COST SYNERGIES EXPECTED RUN-RATE SYNERGIES OF CHF 80-100M Cross-selling of Sika products through Parex distribution Expected run-rate channels (Acrylics, PUs, Epoxies etc.) synergies of Revenue CHF 80-100m p.a. Leverage Sika’s direct access to jobsites for Parex products synergies
Slide 19: 2018 Business Year
2018 BUSINESS YEAR ® BUILDING TRUST Bs
Slide 20: Strong Growth Momentum Continued in 2018
STRONG GROWTH MOMENTUM CONTINUED IN 2018 + 13.6% 13.6% SALES GROWTH IN LC (13.4% IN CHF) 7,085 + 14.1% + 5.5% + 11.7% Group + 29.2% 1,177 1,821 3,167 Americas 920 Asia/Pacific Global Business EMEA 12M 2017 12M 2018 (in CHF mn, growth in LC) 20
Slide 21: Investments in New Plants
HIGH OPERATING SPEED CONTINUED IN 2018 INVESTMENTS IN NEW PLANTS Opening of Sika plants: New mortar plant Vietnam (Hanoi, March 2018) 1st admixture plant Senegal (Dakar, April 2018) New admixture factory Saudi Arabia (Dammam, June 2018) New admixture and mortar plant Azerbaijan (Baku, July 2
Slide 22: Expansion in Emerging Markets
HIGH OPERATING SPEED CONTINUED IN 2018 EXPANSION IN EMERGING MARKETS New subsidiary: Honduras (February 2018) Now present in 101 countries with own national subsidiaries 22
Slide 23: Closing of Acquisitions in 2018
HIGH OPERATING SPEED CONTINUED IN 2018 CLOSING OF 4 ACQUISITIONS IN 2018 Company Country Target Market Faist ChemTec Global Global Business Index Construction Systems and Products Italy Roofing, Waterproofing Polypag Switzerland Sealing & Bonding Fibermesh Concrete Fibers Global Concrete Arcon Membr
Slide 24: Counter Pressure from Rising Raw Material Prices
HIGHLIGHTS 2018 COUNTER PRESSURE FROM RISING RAW MATERIAL PRICES 65.0% 115.0% 110.0% 60.0% Gross Margin 105.0% 55.0% Raw Material Price Development 100.0% 50.0% 95.0% Sales Price Increases 45.0% 90.0% 2015 2016 2017 2018 Significant increase in raw material prices since end of 2016 with biggest im
Slide 25: Efficiency Improvements to Counter Pressure on Margins
HIGHLIGHTS 2018 EFFICIENCY IMPROVEMENTS TO COUNTER PRESSURE ON MARGINS 7’000 Efficiency gains from: 41.8% Net Sales Operating leverage 3Y CAGR +9.4% Lean corporate organization -220bp Various efficiency programs in 6’000 emerging countries with volatile currencies OPEX Prudent cost managemen
Slide 26: Urbanization – High Requirements Favor Sika Solutions
HIGHLIGHTS 2018 URBANIZATION – HIGH REQUIREMENTS FAVOR SIKA SOLUTIONS Demand for high- More waterproofing performing and specialty solutions needed concrete Innovative roofing solutions for challenging Functional sealing of construction conditions: building envelopes liquid applied membranes Increas
Slide 27: Urbanization – Supertall Buildings on the Rise
HIGHLIGHTS 2018 URBANIZATION – SUPERTALL BUILDINGS ON THE RISE Projected +1,200% in 20 years. Sika solutions are the driving force of this trend. Source: http://www.skyscrapercenter.com 27
Slide 28: Concrete – No. 1 Structural Material for High-Rise Buildings
HIGHLIGHTS 2018 – URBANIZATION CONCRETE – NO. 1 STRUCTURAL MATERIAL FOR HIGH-RISE BUILDINGS Sika inside Source: http://www.skyscrapercenter.com 28
Slide 29: Managing Tight Concrete Logistics: One Vanderbilt, NYC
HIGHLIGHTS 2018 – URBANIZATION MANAGING TIGHT CONCRETE LOGISTICS: ONE VANDERBILT, NYC 1.5 hrs ride from plant to >400 m height job site easy to pump, hardens quickly 100 rides a day and 70,000 m3 concrete 200 bar high pressure, still Every fifth cohesive truckloadMixing is Plant officially being Man
Slide 30: Financial Results 2018
FINANCIAL RESULTS 2018 ® BUILDING TRUST Bs
Slide 31: Financial Highlights 2018
FINANCIAL HIGHLIGHTS 2018 New and all-time records in: Net sales: CHF 7,085.4 million (+13.6% in LC, 13.4% in CHF) EBIT: CHF 945.9 million (+5.5%) reaching 13.4% of net sales, +CHF 50 million in absolute terms Excluding SGO resolution cost, EBIT is at 13.7% of net sales Net Profit: CHF 687
Slide 32: Revenues 2018 – Execution on All Pillars of the Strategy
REVENUES 2018 EXECUTION ON ALL PILLARS OF THE STRATEGY in CHF mn -17 428 248 7,085 179 6,248 2017 Organic Growth Organic Growth Acquisitions Translation Impact 2018 Mature Markets Emerging Markets 32
Slide 33: Sales Growth 2016 to 2018
SALES GROWTH 2016 TO 2018 STRONG ORGANIC GROWTH 13.6% 9.0% 6.8% in LC 2.7% acquisition 5.5% organic 0.9% 6.3% 6.8% 4.6% 2016 2017 2018 in CHF mn Sales 5,747.7 6,248.3 7,085.4 33
Slide 34: Sales Growth by Quarter
SALES GROWTH BY QUARTER DYNAMIC GROWTH MOMENTUM 16.3% 18% 16% 14.5% 14% 12.3% 12.5% 12% 11.0% 7.7% 10% 3.5% 7.1% 7.4% 6.2% in LC 8% 6.3% acquisition 6% 2.4% organic 4% 8.8% 8.6% 7.4% 5.0% 6.3% 2% 4.7% 0% Q3 CY Q4 CY Q1 CY Q2 CY Q3 CY Q4 CY in CHF mn Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Quarterly 1,63
Slide 35: Income Statement
INCOME STATEMENT STRONG GROWTH AND OPERATIONAL IMPROVEMENTS in CHF mn 2017 NS 2018 NS Growth Net sales 6,248.3 100% 7,085.4 100% 13.4% Gross result 3,399.1 54.4% 3,751.7 53.0% 10.4% Personnel costs -1,212.1 -19.4% -1,345.4 -19.0% 11.0% Other OPEX -1,118.5 -17.9% -1,256.4 -17.7% 12.3% Depreciation an
Slide 36: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET CONTINUED PRUDENT BALANCE SHEET POLICY in CHF mn 31.12.2017 31.12.2018 Δ% Cash and cash equivalents 1,037.9 914.0 -11.9 Other current assets 2,047.2 2,262.7 10.5 Current assets 3,085.1 3,176.7 3.0 Non-current assets 2,710.7 3,205.5 18.3 Total assets 5,795.8 6,382.2 10.1 Cu
Slide 37: Cash Flow Statement
CASH FLOW STATEMENT STRONG CASH FLOW DEVELOPMENT DESPITE ONE-OFF EFFECT in CHF mn 2017 2018 Cash flow from operating activities 651.9 744.0 CapEx/sale of assets/acquisitions -478.2 -705.2 Free cash flow 173.7 38.8 Acquisitions/financial assets 323.1 474.4 Operating free cash flow 496.8 513.2 Free ca
Slide 38: Investments – Efficient Capital Management
INVESTMENTS EFFICIENT CAPITAL MANAGEMENT Lease buyback • R&D building in Switzerland 353 • Production facilitiy in Switzerland in CHF mn 114 204 Fixed Assets 160 40 71 11 new Factories through Acquisitions 5 A mortar plant in Hanoi, Vietnam Capacity Increase 82 85 75 A new plant in Dakar, Senega
Slide 39: Return on Capital Employed (ROCE 2012–2018)
RETURN ON CAPITAL EMPLOYED (ROCE 2012 – 2018) STRONG ROCE WITH IMPACT FROM ACQUISITIONS 29.8% 28.7% 26.2% 24.3% 23.3% 21.0% 18.5% 2012 2013 2014 2015 2016 2017 2018 39
Slide 40: Successful Strategy Execution
SUCCESSFUL STRATEGY EXECUTION
Slide 41: Sika's Growth Model Delivers Strategic Targets 2020
SIKA’S GROWTH MODEL DELIVERS STRATEGIC TARGETS 2020 MARKET PENETRATION 6 - 8% ANNUAL GROWTH 30 NEW PLANTS INNOVATION 105 NATIONAL SUBSIDIARIES EMERGING MARKETS 14 - 16% EBIT MARGIN PER YEAR ACQUISITIONS > 10% OPERATING FREE CASH FLOW PER YEAR VALUES > 25% ROCE PER YEAR 41
Slide 42: 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 42
Slide 43: Megatrends Drive Our Growth
MEGATRENDS DRIVE OUR GROWTH URBANIZATION, NEW VEHICLE DESIGN AND SUSTAINABILITY Increased safety, fire, Rising demand for high- New modular vehicle earthquake and quality performance concrete, manufacturing concepts requirements sealing and need fast, high-strength waterproofing bonding systems Sust
Slide 44: Sika Will Act as Market Consolidator
SIKA WILL ACT AS MARKET CONSOLIDATOR FRAGMENTATION OFFERS ACQUISITION OPPORTUNITIES CONSTRUCTION CHEMICAL MARKET 2019 > CHF 60 BILLION Sika Top 10 companies with a combined market share of 40% Other 44
Slide 45: 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 45
Slide 46: Key Investments Since 2015
SIKA’S GROWTH MODEL DELIVERS KEY INVESTMENTS SINCE 2015 - Successful Target Market concept Market Penetration - Megatrends driving growth - 302 new patents filed Innovation - 20 Global Technology Centers Emerging Markets - 38 new plants opened - 11 new national subsidiaries Acquisitions
Slide 47: Continued Growth in Sales and Profit (Full Year)
SIKA’S GROWTH MODEL DELIVERS CONTINUED GROWTH IN SALES AND PROFIT (FULL YEAR) NET NET SALES SALES EBIT in CHF mn, % growth in local currencies in CHF mn 13.6% 900 9.0% 5.5% 13.0% 6.2% 600 9.4% 5.3% 7,085.4 945.9 300 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 47
Slide 48: Outlook
OUTLOOK ® BUILDING TRUST Bs
Slide 49: Strong Outlook 2019
STRONG OUTLOOK 2019 CONTINUATION OF SUCCESSFUL GROWTH STRATEGY 6 to 8% sales growth in local currencies (with over-proportional profit increase) With initial consolidation of Parex as of May 23, 2019: sales expected to exceed CHF 8 billion Opening of seven to nine new factories Strategy 2023
Slide 50: Thank You for Your Attention
THANK YOU FOR YOUR ATTENTION ® BUILDING TRUST ViN
Slide 51: 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