strong growth momentum: all regions with double-digit growth in q3

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STRONG GROWTH MOMENTUM: ALL REGIONS WITH DOUBLE-DIGIT GROWTH IN Q3 PRESENTATION NINE MONTHS 2014, OCTOBER 2014

Transcript of strong growth momentum: all regions with double-digit growth in q3

Page 1: strong growth momentum: all regions with double-digit growth in q3

STRONG GROWTH MOMENTUM: ALL REGIONS WITH DOUBLE-DIGIT GROWTH IN Q3

PRESENTATION NINE MONTHS 2014, OCTOBER 2014

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1. HIGHLIGHTS AND RESULTS NINE MONTHS 2014

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HIGHLIGHTS NINE MONTHS 2014 Q3 with continued growth momentum and strong margins

15.8% sales growth (9.6% in CHF) to CHF 4,174.4 million

High growth dynamic in all regions

Sales up 16.5% in emerging markets

21.2% increase in net profit to CHF 310.2 million

6 new factories in Brazil, Indonesia, India, Serbia and USA (2)

3 acquisitions with CHF 53 million in sales

Strategy 2018 on track

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+ 17.1%

+ 17.4%

+ 15.6%

+8.5%

15.8% SALES GROWTH NINE MONTHS STRONG GROWTH IN ALL REGIONS

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557

467

757

North America

Latin America

EMEA Asia/Pacific

(in CHF mn, Growth at constant FX)

2013 2014

2,087

Growth of 16.5% in Emerging Markets

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Opening of Sika plant:

7th plant in Brazil (Aparecida de Goiânia, January 2014)

2nd plant in Indonesia (Surabaya, May 2014)

6th plant in India (Jhagadia, June 2014)

New plant in Serbia (Simanovci, September 2014)

ACCELERATED BUILD-UP OF EMERGING MARKETS INVESTMENTS NINE MONTHS 2014

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India Serbia

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Opening of Sika plants in North America:

11th plant in the USA (Denver, May 2014)

12th plant in the USA (Atlanta, July 2014)

BUILD-UP OF SUPPLY CHAIN IN GROWTH MARKETS INVESTMENTS NINE MONTHS 2014

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USA USA

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LEADING ROLE IN MARKET CONSOLIDATION ACQUISITIONS NINE MONTHS 2014

Company Country Target Market

Klebag Chemie AG Switzerland Sealing & Bonding, Flooring

Company for flooring and coating products

South Korea Flooring

Lwart Química Ltda. Brazil Waterproofing, Roofing

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Total sales: CHF 53 million

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2. PERFORMANCE NINE MONTHS 2014

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PROFIT & LOSS STRONG IMPROVEMENT OF KEY FINANCIALS

in CHF mn 2013 NS 2014 NS Growth

Net sales 3,807.7 100 % 4,174.4 100 % + 9.6%

Gross results 2,003.4 52.6 % 2,214.5 53.0 % + 10.5%

Personnel cost -783.6 -20.6 % -825.1 -19.8 % + 5.3%

Other OPEX -719.2 -18.9 % -809.8 -19.3 % + 12.6%

Depreciation -110.6 -2.9 % -122.3 -2.9 % + 10.6%

EBIT 390.0 10.2 % 457.3 11.0 % + 17.2%

Financial expense -34.6 -28.9

Income taxes -99.5 -118.2

Net profit 255.9 6.7 % 310.2 7.4 % + 21.2%

Tax rate 28.0 % 27.6 %

Non-material cost -1,613.4 -42.4 % -1,757.2 -42.1 % + 8.9%

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REVENUES NINE MONTHS 2014

in CHF mn 2013 2014 Δ %

Net sales 3,807.7 4,174.4 + 366.7 +9.6

Organic growth + 326.2 +8.6

Acquisition effect + 273.1 +7.2

Currency effect - 232.6 -6.1

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SALES GROWTH BY QUARTER DYNAMIC GROWTH MOMENTUM

-1.3%

7.0% 7.3% 8.2%

14.1%

6.6% 6.3%

+1.1%

1.2% 3.3%

9.6%

9.2%

7.4% 5.4%

acquisition organic

at constant currency

-0.2%

8.2%

10.6%

17.8%

in CHF mn Q1 PY Q2 PY Q3 PY Q4 PY Q1 CY Q2 CY Q3 CY

Quarterly sales

1,043.1 1,359.4 1,405.2 1,334.5 1,206.0 1,450.9 1,517.5

23.3%

14.0%

11.7%

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SALES GROWTH BY REGION

2,087

557

757

467

EMEA NorthAmerica

Asia/Pacific Latin America

81%

19%

Construction

Industry

+ 17.4 % + 8.5 % + 15.6 % + 17.1 % Growth (at constant FX)

- 2.9 % - 5.7 % - 8.7 % - 16.1 % FX impact

+ 12.3 % + 0.0 % + 3.8 % + 4.7 % Acquisition

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FIVE-YEAR OVERVIEW (NINE MONTHS) NET SALES

in CHF mn

3'319

3'425

3'630

3'808

4'174

8.7%

17.2%

5.4%

6.7%

15.8%

5.9%

3.2%

6.0% 4.9%

9.6%

2010 2011 2012 2013 2014

Sales growth in LC

Sales growth in CHF

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FIVE-YEAR OVERVIEW (NINE MONTHS) EBIT in CHF mn

369

281

344

390

457

11.1%

8.2%

9.5% 10.2%

11.0%

2010 2011 2012 2013 2014

EBIT % NS

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+17.2% +13.3% +21.2% -23.7% +23.3%

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FIVE-YEAR OVERVIEW (NINE MONTHS) NET PROFIT

in CHF mn

249

169

222

256

310

7.5%

4.9%

6.1%

6.7%

7.4%

2010 2011 2012 2013 2014

Net profit % NS

+21.2% +15.3% +32.3% -32.1% +24.7%

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3. STRATEGY 2018

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ATTRACTIVE INDUSTRY AND MARKETS

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ATTRACTIVE INDUSTRY AND MARKETS SIGNIFICANT GROWTH POTENTIAL

Market Volume 2018* > CHF 70 billion

Concrete

Water- proofing

Roofing

Flooring

Sealing & Bonding

Refurbish-ment

Industry Concrete

Water- proofing

Roofing

Flooring

Sealing & Bonding

Refurbish-ment

Industry

Market Volume 2013 CHF 60 billion

*3% annual market growth expected

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GROWING DEMAND FOR SIKA PRODUCTS URBANIZATION AND MEGACITIES

Increasing world population fuels construction markets

Higher demand for performance / specialty concrete

More waterproofing solutions needed

Functional sealing and building envelopes

Innovative roofing solutions

Increased safety, fire, water, earthquake and quality requirements

High demand for infrastructure

Increasing demand for refurbishment & repair solutions

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GROWING DEMAND FOR SIKA PRODUCTS TREND FOR LIGHTER, SAFER VEHICLES

New materials like carbon fiber require bonding solutions

Composite body structures need bonding instead of welding

Adhesives enable stiffer, lighter, safer metal structures

Modular production concepts are based on fast, high strength bonding systems

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GROWING DEMAND FOR SIKA PRODUCTS TREND FOR SUSTAINABILITY

More efficient use of limited natural resources and energy («green cities»)

Demand for longer life cycles of infrastructure and buildings

Demand for low-energy housing

Drive towards higher recyclability of materials

Demand for safe-to-use products, lower-emission products

New technologies for vehicles and transportation

Increasing environmental regulations

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FRAGMENTED GLOBAL INDUSTRY OFFERS SIGNIFICANT GROWTH POTENTIAL

Construction Chemical Market 2013 > CHF 50 billion

Sika

Others

Competitor 2

Competitor 1

Competitor 3

Competitor 4

Top 5 companies with 26% market share

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SIKA’S POSITION & COMPETITIVE ADVANTAGES

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FOCUS ON 7 TARGET MARKETS

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With our core competencies bonding, sealing, damping, reinforcing and protecting

Sealing & Bonding Refurbishment Industry

Concrete Waterproofing Roofing Flooring

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STRONG GLOBAL POSITION: COMPETITIVE ADVANTAGES FOR PROFITABLE GROWTH

World market leader in construction chemicals

Leading adhesive producer for industrial markets

Successful focus on innovation (73 patents in 2013)

First mover in emerging markets (38% of sales)

Global footprint with over 160 factories worldwide

Leading global brand

Entrepreneurial company culture

Solid financial position (A- rating)

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GROWTH MODEL AND TARGETS 2018

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1. Market penetration - from roof to floor (cross selling, 7 target markets, KPM) - from new-build to refurbishment (life-cycle management) - push and pull market channels (specification, branding)

2. Global technology leadership with continuous innovations and economies of scale in core technologies

3. Accelerated build-up of emerging markets

4. Acquisitions to strengthen market access, technology, economies of scale

5. Strong company values with entrepreneurial spirit and high employee loyalty

STRATEGY 2018 SIKA’S GROWTH MODEL WILL DELIVER

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Annual sales growth of 6% to 8% (at constant exchange rates, including acquisitions)

Emerging markets with 42% to 45% of group sales by 2018

Operating profit (EBIT) above 10% of net sales

Operating free cash flow above 6% of net sales

ROCE above 20%

Maintain A- rating

STRATEGY 2018 TARGETS

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4. OUTLOOK

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Continued build-up of growth markets with new plants and strengthening of local organizations (investments, employees):

7 to 9 new factories in 2014 e.g. - Brazil, 7th plant in Aparecida de Goiânia, January 2014

- Indonesia, 2nd plant in Surabaya, May 2014

- India, 6th plant in Jhagadia, June 2014

- Serbia, new plant in Simanovci, September 2014

New subsidiaries in:

- Sri Lanka

- Nigeria - Ivory Coast

- Mozambique - Bosnia-Herzegovina

OUTLOOK 2014

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OUTLOOK 2014

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Asia/Pacific: double-digit growth expected with continued high growth in China, Southeast Asia and Pacific

Latin America: double-digit growth expected overall but uncertainties in various markets

North America: commercial and infrastructure markets have improved, expect high single-digit growth

EMEA: Continuation of slow recovery, double-digit growth in Middle East and Africa, high acquisition impact

Sales growth overall between 9 – 11% (at constant exchange rates)

EBIT increase of 8 – 12%

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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 of, among other things, strategy, goals, plans or intentions. Various factors may cause actual results to differ materially in the future from those reflected in forward-looking statements contained in this presentation, among others:

Fluctuations in currency exchange rates and general financial market conditions

Interruptions in production

Legislative and regulatory developments and economic conditions

Delay or inability in obtaining regulatory approvals or bringing products to market

Pricing and product initiatives of competitors

Uncertainties in the discovery, development or marketing of new products or new uses of existing products, including without limitation negative results of research projects, unexpected side-effects of pipeline or marketed products

Increased government pricing pressures

Loss of inability to obtain adequate protection for intellectual property rights

Litigation

Loss of key executives or other employees

Adverse publicity and news coverage.

Any statements regarding earnings per share growth is not a profit forecast and should not be interpreted to mean that Sika’s earnings or earnings per share for this year or any subsequent period will necessarily match or exceed the historical published earnings or earnings per share of Sika.

For marketed products discussed in this presentation, please see information on our website: www.sika.com

All mentioned trademarks are legally protected.

FORWARD-LOOKING STATEMENTS

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THANK YOU FOR YOUR ATTENTION