Sika With Strong Performance in Demanding Markets

Sika continued to perform well in a volatile economic environment and achieved another record result in the first nine months of fiscal year 2022. Sales increased notably to CHF 7,998.5 million (+16.6%), corresponding to growth of 18.5% in local currencies. The currency effect amounted to –1.9%. The acquisition effect was 3.4%, corresponding to organic growth of 15.1% in the reporting period.

Higher Raw Material Costs, EBIT Increase of 16.8%

Sharp rises in raw material costs led to a lower material margin of 49.3% in the first nine months (previous year: 52.6%). Thanks to the systematic use of price increases and by exploiting synergies and efficiency gains along the entire value chain, further economies of scale were achieved. The operating profit margin was maintained at a high level, at 15.4% (previous year: 15.4%). Operating profit (EBIT) thus amounts to CHF 1,231.5 million (previous year: CHF 1,054.0 million), corresponding to a year-on-year increase of 16.8%. EBIT includes a profit of CHF 168 million resulting from the divestment of the European industrial coatings business. It also contains expenses of CHF 39 million incurred in connection with the planned acquisition of MBCC. Net profit increased to CHF 885.9 million (previous year: CHF 765.1 million).

DOUBLE-DIGIT GROWTH IN ALL REGIONS

The global construction sector is characterized by the climate change megatrend as well as by increasing automation, digitalization, and easy-to-apply products, which are increasingly changing the construction industry. There is growing demand for solutions that increase climate efficiency, reduce CO2 emissions, and use resources sparingly. With its broad product portfolio, Sika is ideally positioned to offer its customers technologies that allow them to reduce their CO₂ footprint, while at the same time enhancing longevity and minimizing the use of resources in construction. In addition, Sika is benefiting from broad-based, global, state-driven economic support programs.

The EMEA region (Europe, Middle East, Africa) reported a sales increase in local currencies of 10.5% for the first nine months (previous year: 17.6%). Sika’s distribution business, which includes sales via home improvement stores, builders’ merchants, and online platforms, posted a decline in the last two quarters of the current fiscal year. By contrast, the project business, driven by economic support programs and new investments in the energy sector, is more robust and saw only a slight decline. Countries in Africa and the Middle East are continuing to benefit from strong double-digit growth.

Sika moved to a new site in the East African country of Tanzania in the first half of the year and is now producing mortars locally in addition to concrete admixtures. It also extended its facility in Western Africa’s Ivory Coast. This site is now double its previous size and enjoys not only additional manufacturing facilities but also new warehousing capacities, office space, and laboratories.

The Americas region recorded growth in local currencies of 31.9% (previous year: 19.3%). Sika generated most of this growth in US infrastructure projects, which in 2022 alone received state-funded investments amounting to the equivalent of CHF 200–250 billion. Construction activity is focused on the modernization and expansion of subway lines, bridges, tunnels, and freeways. High demand also stems from investments in commercial construction projects, including stadiums, warehouses, and data centers. In the USA, large-scale investments are also being made related to the reimporting of industrial know-how from Asia.

The acquisition of Sable Marco in Canada and UGL in the USA means that Sika has acquired two companies which sell their high-performance products via established distribution channels. Also, a new mortar production plant was commissioned in Bolivia, and a production facility for concrete admixtures was opened near Washington D.C. in the USA.

Sales in the Asia/Pacific region increased by 17.6% in local currencies (previous year: 20.7%). In China, it was above all the distribution business that benefited from ongoing strong growth momentum, recording double-digit growth rates, whereas the project business was impacted by additional lockdowns due to the COVID-19 pandemic. Sika nevertheless achieved double-digit growth in China. Business in India continued to grow dynamically, and double-digit growth was achieved in challenging markets in the countries in Southeast Asia.

In the Global Business segment Sika achieved growth in local currencies of 22.0% (previous year: 9.9%), and therefore grew more strongly than the market as a whole. High demand for new vehicles and a normalization of supply chains have boosted business. Sika expects the automotive market to recover in the medium term with sustained growth momentum. This will be driven by the transformation of the automotive industry, with electromobility and alternative drive concepts playing a central role.

Achieve Further Growth Through Sustainability and Net Zero Objectives

Sustainability has been a core element in Sika’s growth strategy for over a decade and will be embedded even more broadly going forward as part of Sika’s net zero promise. With its powerful capacity for innovation, Sika develops sustainable solutions for the construction sector and for industrial applications, such as those in the automotive industry. The company is focused on innovating in a very targeted manner in order to achieve its net zero objectives. Sika's goal is to continue to grow sustainably and in doing so use its innovations to decouple the growth of the company from greenhouse gas emissions.

Strategic Fit of MBCC Confirmed – Outlook for 2022

Sika confirms the strategic fit of the MBCC acquisition. Unconditional approval has been received from the authorities in most countries, among them Japan, China, Brazil, South Africa, Saudi Arabia, Turkey, and Thailand. The acquisition is significantly value-enhancing and Sika confirms annual synergies of CHF 160–180 million. A suitable buyer is being sought for part of the MBCC admixture business. The completion of this acquisition is targeted for the first half of 2023.

For fiscal year 2022, Sika expects sales in local currencies to increase by over 15%, with an over-proportional increase in EBIT.

¹ Growth in local currencies including acquisitions.

² Sales contribution by acquired companies without considering the growth after business combination. Includes lost sales of discontinued operations. Sales growth of the acquired business since initial consolidation is included in organic growth.

³ Growth adjusted for acquisition, discontinued operations, and currency effect. Sales growth of the acquired business since initial consolidation is included in organic growth.