In a challenging market environment, Sika has grown more strongly than the market in all regions and was able to further expand its business activities. Furthermore, the acquisition of Parex, which was completed on May 23, 2019, added another CHF 1.2 billion sales on an annualized basis.
EMEA (Europe, Middle East, Africa)
|Net sales in CHF mn (previous year)||3,432 (3,167)|
|Growth in local currencies||11.6%|
Key investments in 2019:
- New plants in Egypt, Qatar, Serbia, Senegal, Cameroon, and Ethiopia
- Acquisition of Belineco and Adeplast
(closing expected in the first quarter 2020)
EU countries posted their seventh year of successive growth in 2019. Gross domestic product increased by 1.4% in the EU and by 1.1% in the Eurozone. European labor markets proved robust, with the unemployment rate hovering at a persistently low level.
In Europe, the level of construction industry investment rose again in 2019, albeit not as strongly as the previous year, recording growth of 1.4%. For the current fiscal year, forecasts suggest the construction industry will grow by 1.6%. In Eastern Europe, strong investment momentum was evident in the year under review in the area of construction infrastructure projects, with growth amounting to 4.5%. A similarly high level of construction activity was evident in the Middle East and Africa, where there is an extremely pressing need for infrastructure projects. Waning investment appetite in the construction sector is particularly apparent in Italy, the UK, Sweden, Finland, and Spain. For example, construction market volumes in Spain remain at only a quarter of the level recorded back in 2007, despite a fouryear growth phase.
Within the Sika Group, the EMEA region recorded a sales increase in local currency of 11.6% in 2019 (previous year: 14.1%). Double-digit growth rates were recorded in Africa, while high single-digit growth was achieved in Eastern Europe. Sika’s product solutions were particularly in demand from the Target Markets of Concrete, Refurbishment, and Industry. Target Market Concrete benefited from a strong construction economy in Eastern Europe and the Middle East. Furthermore, the dynamic business activities of global key account customers, such as on roofing projects in the area of data centers, made an additional contribution to healthy business development in Europe.
In Belarus, Sika acquired Belineco, a specialist manufacturer of polyurethane foam systems. In Romania, the company agreed to acquire Adeplast, a leading manufacturer of mortar products and thermal insulation solutions. This deal is expected to close in the first quarter of 2020. Production capacity was expanded in Egypt, Qatar, Serbia, Senegal, Cameroon, and Ethiopia, with new factories opened for concrete admixtures and mortars.
|Net sales in CHF mn (previous year)||2,162 (1,821)|
|Growth in local currencies||19.2%|
Key investments in 2019:
- Acquisition of King Packaged Materials
The North American construction market exhibited very healthy growth momentum in the year under review. In the region’s largest market, the US, investments in commercial buildings remained at a persistently high level. In Canada, the economy benefited from a high demand for mineral resources.
Following robust economic development in the first half of the year, Latin America’s economy was characterized by stagnation from September onward due to protest movements. Political uncertainties and uprisings in the key economic regions, combined with a weakening of global trade, had a negative impact on this region’s economic output.
By clearly focusing its business activities on the largest metropolitan areas, Sika successfully outperformed the competition in the Americas region, generating strong sales growth of 19.2% (previous year: 11.7%). Growth momentum was particularly pronounced in North America and above all Canada, which recorded a double-digit increase in organic growth in the year under review. In Latin America, Brazil, Colombia, Argentina, Peru, Uruguay, and Paraguay all recorded good growth rates. Brazil’s construction economy is now back on a growth trajectory after years of stagnation. Sika managed to deliver double-digit growth (10%) in Latin America’s largest country. A strong distribution business contributed to the positive business result of the region as a whole.
All Target Markets in the Americas region recorded further growth. The strongest momentum was apparent in Concrete, Refurbishment, Roofing, Sealing & Bonding, and the distribution business. A further expansion of the company’s strong market position can be expected as a result of the integration of Parex, which completes Sika’s product portfolio and opens up new business potential in the areas of interior finishing and facade systems. Moreover, unleashing the synergy potential between North and Latin America will positively impact the business going forward.
In Canada, the acquisition of King Packaged Materials in the reporting period brought a market leader in concrete repair systems into the Group.
|Net sales in CHF mn (previous year)||1,585 (1,177)|
|Growth in local currencies||35.1%|
Key investments in 2019:
- New plant in Indonesia
- Acquisition of Crevo-Hengxin
The ongoing trade conflict between the USA and China dominated – and negatively impacted – Asian economies last year. In China, the world’s second-largest economy, growth slowed further to around 6%. The economy was stimulated by several state measures, such as investment in the commercial construction sector and in infrastructure. A stimulus package which supported economic growth was also introduced in Japan, despite a shortage of labor. In India, the government announced various measures to support the economy, including tax cuts. Australia’s economic growth rate slowed further, and at 1.7% was some way behind the growth figure of 2.6% reported the previous year. The repercussions of drought, declining real estate prices in the major cities, high levels of private debt, and reluctant consumers all slowed economic growth.
Sika’s growth in the Asia/Pacific region amounted to 35.1% (previous year: 5.5%), a figure that includes a significant acquisition effect of 30.3%. The highest growth rates were recorded in China, India, and the Philippines. In China in particular, Sika was able to benefit from market developments in commercial construction and infrastructure, recording organic growth. The company generated double-digit growth rates in the Flooring Target Market. The largest contributory factor to the impressive growth in China was the takeover of Parex. Due to the persistent shortage of labor in Japan, easy-to-apply products and solutions enjoyed an increase in demand. A number of sports facilities, and the associated infrastructure for the 2020 Olympic Games in Tokyo, are being realized with Sika solutions.
Particularly healthy business development in the Asia/Pacific region was recorded by New Zealand, with strong growth in almost all Target Markets, and Bangladesh. Thanks to a huge need for infrastructure, the latter’s construction market is recording solid growth rates. Major projects being implemented include several railroad and highway projects, such as the Dhaka Metro Railway.
Good growth rates were recorded by the Philippines, Cambodia, and Myanmar. In the Asia/Pacific region, the Concrete, Flooring, and Refurbishment Target Markets showed particularly good development.
In China, Sika acquired Crevo-Hengxin, a manufacturer of silicon- based sealants and adhesives. The newly acquired range of products opens up cross-selling opportunities in the extended distribution channels. Furthermore, a new factory in the Bekasi district on the outskirts of Jakarta commenced operations in Indonesia in the reporting period. Sika now produces concrete admixtures and mortar products for the local construction market in three factories.
|Net sales in CHF mn (previous year)||930 (920)|
|Growth in local currencies||3.0%|
The automotive sector failed to bounce back in the year under review, as global production figures dropped, and the number of manufactured vehicles declined by just under 6%. At a global level, less than 90 million vehicles were produced, with China and Europe in particular exhibiting negative trends. This situation was compounded by the ongoing uncertainty among consumers against the backdrop of the diesel crisis, and the paradigm shift taking place in the automotive and transport industry toward drive concept alternatives to the combustion engine.
The Global Business segment recorded growth of 3.0% (previous year: 29.2%). Programs to increase operational efficiency were ramped up in the year under review. Despite the global decline in production figures, Sika managed to win market share in the automotive sector in 2019. Megatrends in modern automotive construction, which are dominated by electro-mobility and lightweight construction, are opening up new avenues with long-term growth potential for Sika, thanks to multi-material designs and new adhesive technologies, as well as heat management in modern battery technologies for electric vehicles. E-mobility remains a key driver of innovation and new development projects. Sika was able to win numerous new clients in the reporting year, as well as opening up further areas of application for its products. At the end of 2019, Sika received the coveted Swiss Technology Award for an innovative new adhesive technology used in the automotive and transport sector.