Strong Start to the Year - Sika Unveils Record Sales in First Quarter

In the first quarter of 2022, Sika once again performed strongly in a challenging market environment. Despite supply shortages in raw materials and a highly inflationary environment, Sika significantly increased sales, posting a new record figure of CHF 2,398.2 million. This equates to an increase of 21.9% in local currencies compared to the previous year (CHF 1,998.6 million). All regions were able to tap into the dynamic momentum of the construction economy and contribute to the strong sales growth. Sales growth in Swiss francs amounted to 20.0%, which includes a negative currency effect of –1.9%. The acquisition effect was 4.3%. Organic growth in the first quarter amounted to 17.6%.

Growth in All Regions

The construction sector is benefiting from significant global economic support programs and is being shaped by the megatrend of climate change, which is ushering in a paradigm shift for the construction industry. Solutions for reducing CO₂ emissions and conserving resources are becoming increasingly sought after in the world of construction. With its technologies, Sika is ideally positioned to offer its customers solutions that allow them to reduce their CO₂ footprint, while at the same time enhancing longevity and minimizing the use of resources in construction. Thanks to the considerable demand for future-oriented, environmentally-friendly products, Sika was able to grow significantly in all regions in the first quarter of 2022.

The EMEA region (Europe, Middle East, Africa) reported a sales increase in local currencies of 18.1% (previous year: 13.2%). Above-average growth was recorded by the distribution and renovation business, as well as by the sale of Sika product solutions through e-commerce platforms. Nearly all countries in the region achieved double-digit growth rates. Particularly strong growth was recorded in the countries of Africa and the Middle East. Sika moved to a new site in the East African country of Tanzania in the period under review, and is now producing mortars locally in addition to concrete admixtures. Sika 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 36.2% (previous year: 6.2%). The USA in particular exhibited a strong level of momentum in business. The key drivers here were large-scale refurbishment and new-build projects in connection with distribution and data centers. Strong growth rates were reported by Mexico, Colombia, Brazil, and Chile. In the Americas region, the strategic focus of business activities on big cities and metropolitan areas continued to pay off, as did the concentration on major infrastructure projects and the targeted realization of cross-selling potential.

Sales in local currencies in the Asia/Pacific region increased by 18.6% (previous year: 25.8%). In China, it was mainly the distribution business that benefited from ongoing strong growth momentum, recording double-digit growth rates, whereas the project business was impacted by numerous lockdowns. Nevertheless, China as a whole achieved double-digit growth. India, Bangladesh, and Sri Lanka saw a dynamic development, while the countries in Southeast Asia and Japan managed to record high single-digit growth in challenging markets.

In the Global Business segment, Sika achieved growth in local currencies of 10.4% (previous year: 2.7%), and therefore grew more strongly than the market as a whole. The automotive industry once again saw significant supply chain bottlenecks. Sika anticipates continued strong growth stimuli from the megatrends evident in modern automotive production: electromobility and lightweight construction. In particular, the transition from traditional drive systems to electromobility has accelerated considerably over the last few years, and is being underpinned by a number of government support programs.

Update on Acquisition of MBCC

In November 2021, Sika signed a binding agreement to acquire the MBCC Group (the former BASF construction chemicals business). With sales of CHF 2.9 billion, the MBCC Group is a leading supplier of construction chemicals and solutions worldwide. The acquisition will complement and broaden Sika’s portfolio in four of five core technologies and seven of eight Sika Target Markets, while further strengthening the company’s geographic footprint. The transaction will give rise to a major player supporting greater sustainability.

The market for construction chemical products and solutions is set to grow to around CHF 80 billion over the next few years. As this market is heavily fragmented, it will continue to offer substantial growth opportunities, particularly in the area of sustainability. MBCC generates around 53% of its sales in the construction systems sector and the remaining 47% in the concrete admixtures segment. The acquisition is subject to approval by the authorities. Sika is confident it will receive all required clearances in a timely manner and will cooperate closely with the authorities to this end. The closing of the acquisition remains targeted for the second half of 2022.

Outlook

Thanks to its innovative technologies, Sika is the partner of choice for many customers in the construction and industrial sectors. Government-supported investment programs running into the billions will provide further impetus for its business in the coming years. In addition, Sika is making targeted use of the megatrends that drive its key markets. 

Based on these expectations, Sika is confirming its 2023 strategic targets. The company remains aligned for long-term success and profitable growth. With its focus on the six strategic pillars – market penetration, innovation, operational efficiency, acquisitions, strong corporate values, and sustainability – Sika is seeking to grow by 6%–8% a year in local currencies up to 2023. From 2021 onwards, the company is aiming to achieve an EBIT margin in the range of 15%–18%. Projects in the areas of operations, logistics, procurement, and product formulation should result in an annual improvement in operating costs equivalent to 0.5% of sales.

For fiscal 2022, Sika expects sales to rise by well over 10% in local currencies – surpassing CHF 10 billion for the first time – and is anticipating an over-proportional increase in EBIT. 

¹    Growth in local currencies including acquisitions.
²    Share of sales of acquired companies not including post-combination growth. The sales growth of the acquired companies since initial consolidation is included in organic growth.
³    Growth adjusted for acquisition and currency effect. The sales growth of the acquired companies since initial consolidation is included in organic growth.