The Sika Growth Model is synonymous with long-term success and profitable growth. By focusing on market penetration, innovation, emerging markets, and acquisitions, and driven by its strong corporate values, Sika is growing successfully. Since the targets of Strategy 2018 had been achieved two years early, Sika’s strategic goals were reviewed in the second half of 2016 in conjunction with senior managers worldwide. This review resulted in a confirmation of the growth model and a raising of the strategic targets.
Sika is now aiming for an EBIT margin of 14–16% (previously 12–14%) and an operating free cash flow greater than 10% (previously over 8%). The aim is to achieve a return on capital employed in excess of 25%. By 2020, 30 new factories are to be commissioned and 8 new national subsidiaries established. The annual sales growth target remains at 6–8%. Sika intends to increase EBIT to more than CHF 1 billion by 2020.
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.