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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
3
4
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
6
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%
7
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
11
12
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
15
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
16
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
17
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
19
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
20
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
22
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
23
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
25
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
26
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
30
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
32
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.
33
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
35
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
36
THANK YOU FOR YOUR ATTENTION