Record result on the back of strong growth momentum

The Sika success story continued in 2017 with another record year. In local currencies, 2017 sales increased by 9.0% to CHF 6,248.3 million. Strong growth momentum and disciplined cost management led to new record figures of CHF 896.3 million (+CHF 101.0 million, +12.7%) for operating profit and CHF 649.0 million (+14.5%) for net profit. In the reporting year, 19 strategic investments were executed with a view to driving future growth. The strategic targets for 2020 were confirmed, and the growth target for 2018 raised to more than 10%.  

GROWTH IN ALL REGIONS

In 2017, sales in the EMEA region (Europe, Middle East, Africa) increased by 7.4% in local currencies (previous year: 4.8%). The major EU countries with the core markets of France, Italy, and the UK recorded strong growth rates. The Middle East, Eastern Europe, and Africa delivered double-digit growth.

At 18.4%, it was the North America region that posted the strongest growth (previous year: 7.8%), of which 8.5% was through acquisitions. Sika reported a significant increase in its business volume in the USA, growing much more rapidly than the local construction market in the reporting year. The positive development of the North American business was attributable in particular to the targeted investment in this region over the last few years.

The Latin America region increased sales by 3.2% (previous year: 5.0%). Both Mexico and Argentina generated above-average growth. By contrast, construction activity continued to develop modestly in the more commodity-based countries of this region, such as Brazil, Peru, and Chile.

Sales in the Asia/Pacific region rose by 5.2% (previous year: 3.6%). High growth rates were recorded in China, while double-digit growth was achieved in Australia, New Zealand, and Thailand.

In the “Other segments and activities” area, Sika generated growth of 14.0% in local currencies (previous year: 11.7%). The automotive business, which is managed centrally on a global basis, forms a key part of these areas of operation. Posting organic growth of 20.2% in the fourth quarter, Sika significantly exceeded the growth of the market as a whole.

In local currencies, Sika increased its sales of special chemical products for the construction industry by 9.0%. Sales of solutions for industrial applications were up 8.7% in local currencies.

Sika ist auf der ganzen Welt verbreitet

2020 STRATEGIC TARGETS SET TO BE MET

The Group’s accelerated expansion into growth markets continued in 2017, with a total of 19 strategic investments in nine new factories, three newly established national subsidiaries, and seven acquisitions. Along with its annual growth target of 6–8%, Sika is seeking to achieve an EBIT margin of 14–16% and operating free cash flow of more than 10% by 2020. At the same time, the return on capital employed (ROCE) should amount to more than 25%.

The Group’s international expansion will be further driven over the same period with 21 additional factories and five new national subsidiaries.

RECORD PROFIT

The high growth momentum produced above-average increases in the operating result and profit. Commodity price increases and volatility posed a challenge, with access to commodities in China, for example, being limited by environmental regulations imposed by the state. Thanks to persistent cost management, margins were boosted further while record figures were recorded for both EBIT (CHF 896.3 million, +12.7%) and net profit (CHF 649.6 million, +14.6%).

The tax rate decreased to 24.7% (previous year: 25.0%).

SELECTIVE INVESTMENTS, IMPROVED KEY PROFIT AND LOSS FIGURES

Sika invested in production capacity expansion in order to be able to act fast and tap into the business potential offered by high-growth markets. At CHF 188 million, investments in new factories in the period under review were higher year on year (previous year: CHF 155 million).

At 19.0%, the ratio of net working capital to net sales rose slightly, partly as a result of the sharp increase in acquisition activity (previous year: 18.4%). The management of inventories and accounts receivable remains a major priority. As at year-end, cash and cash equivalents amounted to CHF 1,037.9 million (previous year: CHF 1,155.0 million). The net credit balance once again remained high in the reporting year at CHF 294.3 million (previous year: CHF 415.6 million), while gearing likewise remained at a solid level, namely –8.6% (previous year: –14.1%). Return on capital employed (ROCE) reached a new record level of 29.8% (previous year: 28.7%).

The equity ratio now stands at 58.8% (previous year: 57.8%), thereby confirming Sika’s solid financial base.

Outlook

The foundations for future growth were laid in 2017 with the opening of nine new factories, the establishment of three further national subsidiaries, and the acquisition of seven companies. The strong sales organization, the well-filled product pipeline, and these 19 key investments give the Group reason to look to the future with optimism.

For the 2018 business year Sika is anticipating an increase in sales of more than 10%. Commodity price increases and volatility remain a challenge in the current year, with access to commodities in China, for example, being limited by environmental regulations imposed by the state. Operating profit (EBIT) should continue to grow at a disproportionately high rate in 2018. The unknown outcome of Saint-Gobain’s hostile takeover attempt remains an element of uncertainty for the future.