SUCCESSFUL STRATEGY EXECUTION CONTINUING · PDF fileSUCCESSFUL STRATEGY EXECUTION CONTINUING...

SUCCESSFUL STRATEGY EXECUTION CONTINUING

SIKA INVESTOR PRESENTATION NINE MONTHS, OCTOBER 29, 2015

1. HIGH OPERATING SPEED IN 2015

HIGH OPERATING SPEED IN FIRST NINE MONTHS 2015

Sales growth of 5.5% despite strong first nine months of 2014 (+15.8%) (Real CHF growth of -1.9% due to significant appreciation of CHF)

With negative growth of China excluded, sales up by 6.8%

Above-average margin improvement: EBIT +7.2%, net profit +9.0%

Growth in all regions: Double-digit in core markets, Latin America, Africa, Middle East, Eastern Europe, Southeast Asia and the Pacific

Negative market volumes in China, Brazil, Russia and France

8 new factories in United Arab Emirates, Sri Lanka, La Réunion, Paraguay, Russia, Argentina, Nigeria, Ivory Coast

New national subsidiaries in Myanmar, Tanzania, Ethiopia

5 acquisitions with CHF 115 million annualized sales

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KEY FIGURES NINE MONTHS 2015 ABOVE-AVERAGE INCREASE IN PROFIT

in CHF mn 2014 2015 Δ %

Net sales 4,174.4 4,095.0 -1.9%

Gross results as % of net sales 53.0 54.0

EBITDA 579.6 612.8 +5.7%

EBIT 457.3 490.2 +7.2%

Net profit 310.2 338.2 +9.0%

Operating free cash flow 213.3 234.0

ROCE in % 21.9 23.3

+ 10.9%

+ 4.4%

+ 1.3%

+ 7.7%

GROWTH MOMENTUM CONTINUES-NINE MONTHS 2015 5.5% SALES GROWTH (-1.9% IN CHF)

5

557 627

467 453

2,087 1,952

757 740

North America

Latin America EMEA

Asia/Pacific

9M / 2015

(in CHF million, growth at constant exchange rates)

9M / 2014

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SALES GROWTH BY QUARTER CONTINUED GROWTH MOMENTUM

14.1% 6.6% 6.3% 3.9% 4.0% 3.4% 3.1%

9.2%

7.4% 5.4%

1.4% 1.1% 2.6% 2.2%

acquisition organic

at constant FX

23.3%

14.0%

11.7%

5.3%

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

Quarterly sales

1,206.2 1,450.7 1,517.5 1,396.9 1,195.3 1,429.9 1,469.8

5.1% 6.0% 5.3%

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SALES NINE MONTHS 2015 GROWTH IN ALL REGIONS

1,952 627 740 453

EMEA NorthAmerica

Asia/Pacific Latin America

79%

21%

Construction

Industry

+ 4.4 % + 7.7 % + 1.3 % + 10.9 % Growth (at constant FX)

- 10.8 % + 4.9 % - 3.5 % - 13.9 % FX impact

+ 2.8 % + 0.8 % + 1.9 % + 1.9 % Acquisition

FIVE-YEAR OVERVIEW – NINE MONTHS FIGURES CONTINUOUSLY IMPROVING MARGINS

8

169

222

256

310

338

4.9%

6.1%

6.7%

7.4%

8.3%

2.0 %

3.0 %

4.0 %

5.0 %

6.0 %

7.0 %

8.0 %

9.0 %

100

145

190

235

280

325

370

415

2011 2012 2013 2014 2015

In % of sales

NET PROFIT IN CHF

+9.0%

281

344

390

457

490

8.2%

9.5%

10.2%

11.0%

12.0%

3.0 %

4.0 %

5.0 %

6.0 %

7.0 %

8.0 %

9.0 %

10. 0%

11. 0%

12. 0%

13. 0%

200

255

310

365

420

475

530

2011 2012 2013 2014 2015

In % of sales

EBIT IN CHF

+7.2%

2. SIKA’S STRATEGY 2018

STRATEGY 2018: SIKA’S GROWTH MODEL IS DELIVERING

10 | 10 | 10

6-8% GROWTH PER YEAR

MARKET PENETRATION

INNOVATION

EMERGING MARKETS

ACQUISITIONS

VALUES

42% - 45% OF SALES IN EMERGING MARKETS

> 10% OPERATING PROFIT > 6% OPERATING FREE

CASH FLOW

> 20% RETURN ON CAPITAL EMPLOYED

SIKA IS ACTIVE IN ATTRACTIVE MARKETS WITH CORE COMPETENCIES IN BONDING, SEALING, DAMPING, REINFORCING AND PROTECTING

Sealing & Bonding Refurbishment Industry

Concrete Waterproofing Roofing Flooring & Coating

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Higher demand for infrastructure and

refurbishment solutions

Sustainability: Increasing demand for safe-to-use and

low-emission products

Increased safety, fire, water, earthquake and quality requirements

Increasing world population with urbanization and

megacities

New modular vehicle

manufacturing concepts need fast,

high strength bonding systems

New vehicle design with material mix requires bonding

solutions

Rising demand for high performance concrete, sealing

and waterproofing

MEGATRENDS DRIVE OUR GROWTH: URBANIZATION, NEW VEHICLE DESIGN & SUSTAINABILITY

STRATEGY 2018: SIKA’S GROWTH MODEL IS DELIVERING

13 | 13 | 13

6-8% GROWTH PER YEAR

MARKET PENETRATION

EMERGING MARKETS

ACQUISITIONS

VALUES

42% - 45% OF SALES IN EMERGING MARKETS

> 10% OPERATING PROFIT > 6% OPERATING FREE

CASH FLOW

> 20% RETURN ON CAPITAL EMPLOYED

INNOVATION

14

70 Patents were filed for in 2014

880 Employees are dedicated to Research and Development

72 Invention disclosures in 2014

20 Technology Centers world-wide

WE ARE INNOVATION SIKA KEY FACTS AND FIGURES

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INNOVATION AS A KEY DRIVER – REFURBISHMENT NEW LEVEL OF SUSTAINABILITY IN TILE ADHESIVES

SikaCeram®-290 StarLight FOR

80% HIGHER COVERAGE

WITH SUSTAINABLE RAW MATERIALS ACCOUNTING FOR 50% OF ITS CONSTITUTENTS, IT HAS ACHEIVED AN

EC1 PLUS RATING

SikaCeram® COMBINES COST EFFECTIVENESS WITH ECO-EFFICIENCY

SIKA’S NEW HIGH PERFORMANCE

TILE ADHESIVE OFFERS A CONSIDERABLY LOWER CONSUMPTION RATE

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INNOVATION AS A KEY DRIVER – CONCRETE INCREASED WORKABILITY TIME

A NEW SUBSTANCE THAT PERMITS THE TIME-DEPENDENT CONTROL OF

CONCRETE CONSISTENCY > 8 HOURS WORKABILITY

Sika® ViscoFlow® ADMIXTURE FOR CONTROLLABLE CONCRETE WORKABILITY TIMES

MEETING THE CHALLENGES OF

CONSTRUCTION IN URBAN ENVIRONMENTS

ALLOWING

LONG TRANSPORTABILITY COUPLED WITH SHORT SETTING TIMES

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INNOVATION AS A KEY DRIVER – AUTOMOTIVE THE NEXT GENERATION IN VEHICLE BONDING

LIGHTWEIGHT CONSTRUCTION AND MULTI-MATERIAL DESIGN ARE THE

MEGATRENDS IN THE AUTOMOTIVE INDUSTRY

ADHESIVE BONDING IS BECOMING THE SUPREME JOINING TECHNOLOGY AND A KEY ROLE IS PLAYED BY

SikaPower®

EVERY YEAR SikaPower®ADHESIVES MAKE

20 MILLION CARS SAFER AND MORE STABLE

SikaPower®ADHESIVES COMBINE

HIGH STRENGTH AND ELASTICITY IDEAL FOR CONTEMPORARY AUTOMOTIVE MANUFACTURING

> 40% SALES GROWTH EVERY YEAR LAST 3 YEARS

STRATEGY 2018: SIKA’S GROWTH MODEL IS DELIVERING

18 | 18 | 18

6-8% GROWTH PER YEAR

MARKET PENETRATION

INNOVATION

ACQUISITIONS

VALUES

42% - 45% OF SALES IN EMERGING MARKETS

> 10% OPERATING PROFIT > 6% OPERATING FREE

CASH FLOW

> 20% RETURN ON CAPITAL EMPLOYED

EMERGING MARKETS

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30 New plants opened

16.3% Average sales growth (2012-2014)

16 New countries

37% of turnover in Emerging Markets (end 2014)

EMERGING MARKETS BUILD-UP SINCE 2012

Opening of Sika plants:

2nd plant in United Arab Emirates (Dubai, March 2015)

1st plant on Reunion Island (March 2015)

1st plant in Sri Lanka (Ekala, March 2015)

1st plant in Paraguay (Asunción, May 2015)

4th plant in Russia (Volgograd, August 2015)

2nd plant in Argentina (Cordoba, September 2015)

1st plant in Nigeria (Lagos, September 2015)

1st plant in Ivory Coast (Abidjan, September 2015)

CONTINUING HIGH OPERATING SPEED INVESTMENTS IN 2015

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Argentina Reunion Island

New subsidiaries:

Myanmar (March 2015)

Tanzania (September 2015)

Ethiopia (September 2015)

CONTINUING HIGH OPERATING SPEED NEW NATIONAL SUBSIDIARIES IN 2015

21

Sika Myanmar Temples in Bagan, Myanmar

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Nigeria

Angola

Botswana

Kenya

Egypt Algeria

Tun

isia

Namibia

Foundation years of Sika companies:

Algeria (1947)

Tunisia (1958)

Morocco (1979)

Mauritius (1981)

La Réunion (1981)

South Africa (1984)

Egypt (1985)

Angola (2010)

Kenya (2013)

Ivory Coast (2014)

Nigeria (2014)

Namibia (2014)

Botswana (2014)

Mozambique (2014)

Tanzania (2015)

Ethiopia (2015) Mauritius

La Réunion

ACCELERATED BUILD-UP: EXAMPLE AFRICA FROM 8 TO 16 SUBSIDIARIES IN THE LAST THREE YEARS

Tanzania

Ethiopia Ivory Coast

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ACCELERATED BUILD-UP: EXAMPLE AFRICA FROM 7 TO 14 FACTORIES IN THE LAST THREE YEARS

Ivory Coast Nigeria

Angola

Botswana

Kenya

Egypt Algeria

Tun

isia

Namibia Mauritius

Number of factories and employees

Algeria: 1 factory, 108 employees

Tunisia: 1 factory, 60 employees

Morocco: 1 factory, 94 employees

Mauritius: 1 factory, 40 employees

South Africa: 2 factories, 184 employees

Egypt: 2 factories, 174 employees

Kenya: 1 factory, 27 employees

Mozambique: 1 factory, 27 employees

La Réunion: 1 factory, 20 employees

Angola: 1 factory, 17 employees

Ivory Coast: 1 factory, 16 employees

Nigeria: 1 factory, 20 employees

Sika factories opened in the last three years

La Réunion

STRATEGY 2018: SIKA’S GROWTH MODEL IS DELIVERING

24 | 24 | 24

6-8% GROWTH PER YEAR

MARKET PENETRATION

INNOVATION

EMERGING MARKETS

VALUES

42% - 45% OF SALES IN EMERGING MARKETS

> 10% OPERATING PROFIT > 6% OPERATING FREE

CASH FLOW

> 20% RETURN ON CAPITAL EMPLOYED

ACQUISITIONS

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17 Acquisitions

563 million CHF turnover

7 Target Markets

ACQUISITIONS: SINCE 2012

4 regions

In all In all

CONTINUING HIGH OPERATING SPEED ACQUISITIONS IN 2015

Company Country Target Market

Duro-Moza Mozambique Refurbishment

BMI USA Refurbishment, Flooring

Axson Technologies Global Industry

CTA Australia Refurbishment

Addiment Italia Europe Concrete

Total annual sales: CHF 115 million

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Axson Technologies Duro-Moza BMI

STRATEGY 2018: SIKA’S GROWTH MODEL IS DELIVERING

27 | 27 | 27

6-8% GROWTH PER YEAR

MARKET PENETRATION

INNOVATION

EMERGING MARKETS

ACQUISITIONS

42% - 45% OF SALES IN EMERGING MARKETS

> 10% OPERATING PROFIT > 6% OPERATING FREE

CASH FLOW

> 20% RETURN ON CAPITAL EMPLOYED

VALUES

Customer first

Courage for innovation

Sustainability & Integrity

Empowerment and Respect

Manage for results

28 |

SIKA’S VALUES AND PRINCIPLES

STRATEGY 2018: SIKA’S GROWTH MODEL IS DELIVERING

29 | 29 | 29

6-8% GROWTH PER YEAR

MARKET PENETRATION

INNOVATION

EMERGING MARKETS

ACQUISITIONS

VALUES

42% - 45% OF SALES IN EMERGING MARKETS

> 10% OPERATING PROFIT > 6% OPERATING FREE

CASH FLOW

> 20% RETURN ON CAPITAL EMPLOYED

FIVE-YEAR OVERVIEW NET SALES & EBIT AT ACTUAL CURRENCY

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4'422 4'564

4'829

5'142

5'571

2010 2011 2012 2013 2014

+5.8%

+3.2%

439

347

433

524

633

9.9%

7.6%

9.0%

10.2%

11.4%

0.0 %

2.0 %

4.0 %

6.0 %

8.0 %

10. 0%

12. 0%

300

350

400

450

500

550

600

650

700

2010 2011 2012 2013 2014

+25.0%

SALES IN CHF EBIT IN CHF

-21.0%

+21.0%

+21.0%

+8.3%

+6.5%

3. SAINT-GOBAIN’S HOSTILE TAKEOVER ATTEMPT

FUNDAMENTAL REASONS TO OPPOSE HOSTILE TAKEOVER ATTEMPT BY SAINT-GOBAIN

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1. Lack of industrial logic

2. Saint-Gobain will execute control with only 16% of the capital

3. No adequate representation of public shareholders on the Board

4. Saint-Gobain is a direct competitor of Sika

5. Sika loses A- credit rating

6. Sika’s Growth Model at risk

“The Board of Directors reserves the right to refuse an acquirer of registered shares as shareholder, if the number of registered shares held by him exceeds 5% of the total number of registered shares entered in the commercial register.

[…¨]natural persons or legal entities or, which act in concert in view of a circumvention of registration limitations, are regarded under these provisions as a single buyer.”

Many other Swiss companies have a similar restriction of transferability with a threshold (Vinkulierung) such as: Nestlé, Novartis, Swatch, Swisscom, Guivaudan, Sonova, Schindler, Lindt & Sprüngli.

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SIKA ARTICLES OF ASSOCIATION ARTICLE 4 RESTRICTION OF TRANSFERABILITY, THE 5% THRESHOLD

4. OUTLOOK

2015 Sales growth expectations of 5% at constant exchange rates

Continued build-up of growth markets with investments in new factories and the establishment of new national subsidiaries

Double-digit sales growth expected in the Mexico, Africa, the Middle East, Eastern Europe, Southeast Asia and the Pacific

Negative market development expected in China, Brazil, Russia and France

The appreciation of CHF remains a challenge

Above-average rise in margins expected thanks to continued volume growth, efficiency improvements and lower commodity prices

UNKNOWN OUTCOME OF SAINT-GOBAIN’S HOSTILE TAKEOVER ATTEMPT

OUTLOOK BUSINESS DEVELOPMENT IN THE CURRENT YEAR

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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