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 3
15.8% SALES GROWTH NINE MONTHS STRONG GROWTH IN ALL REGIONS +8.5% + 17.4% + 15.6% 557 North America + 17.1% EMEA 2,087 757 Asia/Pacific 2013 2014 (in CHF mn, Growth at constant FX) 467 Latin America Growth of 16.5% in Emerging Markets 4
ACCELERATED BUILD-UP OF EMERGING MARKETS INVESTMENTS NINE MONTHS 2014 Opening of Sika plant: 7 th plant in Brazil (Aparecida de Goiânia, January 2014) 2 nd plant in Indonesia (Surabaya, May 2014) 6 th plant in India (Jhagadia, June 2014) New plant in Serbia (Simanovci, September 2014) India Serbia 5
BUILD-UP OF SUPPLY CHAIN IN GROWTH MARKETS INVESTMENTS NINE MONTHS 2014 Opening of Sika plants in North America: 11 th plant in the USA (Denver, May 2014) 12 th plant in the USA (Atlanta, July 2014) USA USA 6
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 Total sales: CHF 53 million 7
2. PERFORMANCE NINE MONTHS 2014
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% 9
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 10
SALES GROWTH BY QUARTER DYNAMIC GROWTH MOMENTUM 23.3% at constant currency acquisition organic -0.2% +1.1% -1.3% 8.2% 1.2% 10.6% 3.3% 17.8% 9.6% 7.0% 7.3% 8.2% 9.2% 14.1% 7.4% 5.4% 6.6% 6.3% in CHF mn Q1 PY Q2 PY Q3 PY Q4 PY Q1 CY Q2 CY Q3 CY Quarterly sales 14.0% 11.7% 1,043.1 1,359.4 1,405.2 1,334.5 1,206.0 1,450.9 1,517.5 11
SALES GROWTH BY REGION + 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 2,087 557 757 467 19% 81% Construction Industry EMEA North America Asia/Pacific Latin America 12
FIVE-YEAR OVERVIEW (NINE MONTHS) NET SALES in CHF mn Sales growth in LC 17.2% 4'174 15.8% Sales growth in CHF 3'808 8.7% 3'630 9.6% 5.9% 3'319 3'425 3.2% 6.0% 5.4% 6.7% 4.9% 2010 2011 2012 2013 2014 13
FIVE-YEAR OVERVIEW (NINE MONTHS) EBIT in CHF mn 457 11.1% 369 EBIT % NS 8.2% 9.5% 10.2% 390 11.0% 344 281 +23.3% -23.7% +21.2% +13.3% +17.2% 2010 2011 2012 2013 2014 14
FIVE-YEAR OVERVIEW (NINE MONTHS) NET PROFIT in CHF mn 7.5% 310 7.4% Net profit % NS 6.7% 249 6.1% 256 4.9% 222 169 +24.7% -32.1% +32.3% +15.3% +21.2% 2010 2011 2012 2013 2014 15
3. STRATEGY 2018
ATTRACTIVE INDUSTRY AND MARKETS 17
ATTRACTIVE INDUSTRY AND MARKETS SIGNIFICANT GROWTH POTENTIAL Market Volume 2013 CHF 60 billion Market Volume 2018* > CHF 70 billion Industry Concrete Industry Concrete Waterproofing Refurbishment Refurbishment Waterproofing Sealing & Bonding Flooring Roofing Sealing & Bonding Flooring Roofing *3% annual market growth expected 18
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 19
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 20
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 21
FRAGMENTED GLOBAL INDUSTRY OFFERS SIGNIFICANT GROWTH POTENTIAL Construction Chemical Market 2013 > CHF 50 billion Sika Competitor 1 Competitor 2 Others Competitor 3 Competitor 4 Top 5 companies with 26% market share 22
SIKA S POSITION & COMPETITIVE ADVANTAGES 23
FOCUS ON 7 TARGET MARKETS With our core competencies bonding, sealing, damping, reinforcing and protecting Concrete Waterproofing Roofing Flooring Sealing & Bonding Refurbishment Industry 24
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) 25
GROWTH MODEL AND TARGETS 2018 26
STRATEGY 2018 SIKA S GROWTH MODEL WILL DELIVER 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 27
STRATEGY 2018 TARGETS 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 28
4. OUTLOOK
OUTLOOK 2014 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, 7 th plant in Aparecida de Goiânia, January 2014 - Indonesia, 2 nd plant in Surabaya, May 2014 - India, 6 th plant in Jhagadia, June 2014 - Serbia, new plant in Simanovci, September 2014 New subsidiaries in: - Sri Lanka - Nigeria - Ivory Coast - Mozambique - Bosnia-Herzegovina 30
OUTLOOK 2014 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% 31
FORWARD-LOOKING STATEMENTS 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. 32
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