Sika's Growth Model
Sika's Growth Model ensures the long-term success and the profitable growth of our company.
- Market Penetration: We aim for global market leadership in our 7 target markets through cross selling, life-cycle management and the strengthening of our brand.
- Innovation: The core of our business is our innovation management and our focus on developing quality products and the best solutions for our customers.
- Emerging Markets: We accelerate the build-up of our organizations in the emerging markets and further expand our supply chain footprint.
- Acquisitions: Acquisitions will enable us to leverage our market access and to strengthen our economies of scale.
- Values: The Sika Spirit – which is defined in Sika’s Values & Principles – is the foundation of our future success. We act with respect and responsibility towards our customers, our shareholders and our employees which is reflected in our Sika brand promise “Building Trust”.
The five strategic pillars market penetration, innovation, emerging markets, acquisitions, and values are not only the foundation for growth but they also drive improvements in margins, cash flow, and return on capital. Within the framework of the growth model, various initiatives contribute to the achievement of the strategic targets.
- Key investments in the accelerated expansion of the supply chain in growth markets, new national subsidiaries and acquisitions drive growth and margins. Since 2012 Sika has invested in 51 new plants, 20 new national subsidiaries and 20 acquisitions – a total of 91 key investments.
- Investments in R&D lead to the launch of a large number of new products in all target markets every year. Sika spends approximately 3% of sales on R&D annually.
- Globally organized procurement coordinates purchasing in all regions, resulting in more price efficient sourcing.
- Focus on pricing with global pricing tools and monthly pricing reporting.
- Transparent performance management focused on well-defined KPIs.
- Strict cost management. Fast efficiency measures in countries which are not growing.
- Operating leverage: Sales growth of 6-8% generates higher margins, as costs increase at a disproportionately lower rate.
|Strategic Targets||Target Achievement in 2015|
|6-8% Growth per year||6.2% Sales growth in local currencies|
|6-8 New plants per year||9 New factories|
|100 National subsidiaries by 2018||97 National subsidiaries by July 2016|
|12-14% Operating Profit per year||12.3% Operation Profit as % of net sales|
|>8% Operating Free Cash Flow per year||8.2% Operating Free Cash Flow as % of net sales|
|25% ROCE by 2018||24.3% ROCE|
Outlook for 2016
Strategy 2018 was successfully continued in the first nine months of 2016 with new record results achieved. The annual targets for 2016 can be confirmed. Sales of around CHF 5.8 billion are expected, as well as a disproportionately high increase in margins with operating profit (EBIT) between CHF 780 and 800 million. The number of growth investments is ahead of schedule with four new national subsidiaries and eight new factories. The unknown outcome of Saint-Gobain’s hostile takeover attempt remains an element of uncertainty for the future.