With gains in first-quarter sales of 38.6% (+32.5% expressed in local currencies), Sika was off to a lightning-fast start in fiscal 2006. Net sales rose from CHF 598 mil. to CHF 829 mil. Adjusted for acquisitions, the sales gain, denominated in Swiss francs, amounted to 23.7%. All acquisitions relate to the company’s Construction Division. In addition to favorable currency effects (+6.1 percentage points), the sales increase benefited from the Sarnafil, Fosroc New Zealand and Polyment Germany acquisitions (+14.9 percentage points) and broadly-supported internal growth (+17.6 percentage points) in all regions and both divisions.

Performance by Divisions

Expressed in Swiss francs, Construction Division net sales climbed 46.2%, from CHF 422 mil. in the first quarter of 2005 to CHF 617 mil. in the corresponding period this year. Of this gain, CHF 106 mil. (+25.1 percentage points) is due to organic growth, and CHF 89 mil. (+21.1 percentage points) to acquisitions.

While all Construction Division markets contributed to the upturn, it was especially spurred by sales to distributors, manufacturers of ready-mix concrete and precast concrete elements. The cooperative Sika Sarnafil process is moving ahead according to plan.

Industry Division sales rose from CHF 176 mil. to CHF 212 mil. or 20.5%. Like Construction, the Industry Division achieved two-digit growth rates in all markets. Gains were most pronounced in the fenestration market.

Our Sikaflex® and Sika® ViscoCrete® product groups are foremost pillars of our business expansion.

Regions

Two-digit growth prevailed in all regions.

Expressed in Swiss francs, North America led with an advance of up 90.7% of which the Sarnafil acquisition accounts for +48.0 percentage points.

Sales in Latin America were up 51.1%. At about 20% the positive currency effects in Latin America as well as North America were significant.

In the Europe North and Europe South regions, sales, denominated in Swiss francs, increased by 28.2% and 30.7% respectively. In Europe North acquisitions contributed 12.7 percentage points to the expansion and 10.4 percentage points in Europe South.

The Asia Pacific region achieved 28.2% higher sales of which 9.0 percentage points were provided by the Sarnafil and Fosroc New Zealand acquisitions.

Outlook

Sika is benefiting from invigorated markets. Should this dynamic persist, this year’s sales growth, exclusive of the Sarnafil acquisition effect, is likely to exceed 10%. Sika net sales will surpass the CHF 3.5 billion level in 2006. Raw material prices are increasing again. Sika will attempt to pass the higher costs to customers, although this will only be possible with a certain time lag.

In 2006 we anticipate a slightly disproportional gain in EBIT and consolidated net profit. The launch of 2006 may be described as a success; it prompts our optimism. Yet before year-end, there will be uncertainties respecting raw material prices to face and to be managed.