strong growth momentum: all regions with double-digit growth in q3
TRANSCRIPT
STRONG GROWTH MOMENTUM: ALL REGIONS WITH DOUBLE-DIGIT GROWTH IN Q3
PRESENTATION NINE MONTHS 2014, OCTOBER 2014
1. HIGHLIGHTS AND RESULTS NINE MONTHS 2014
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
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
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
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
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
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%
3. STRATEGY 2018
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
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
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%
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