Press Release: RECORD RESULTS FOR PROFIT AND CASH FLOW -- SIKA STRONG IN YEAR OF CORONAVIRUS

RECORD RESULTS FOR PROFIT AND CASH FLOW -- SIKA STRONG IN YEAR OF

CORONAVIRUS

-- Sales of CHF 7,877.5 million (-2.9% in CHF, +3.4% in local currencies)

-- EBITDA increased to CHF 1,497.6 million (+7.9%)

-- Operating profit (EBIT) increased to CHF 1,130.5 million (+7.1%)

-- EBIT margin increased to 14.4% (previous year: 13.0%)

-- Net profit up to CHF 825.1 million (+8.8%)

-- Operating free cash flow increased to CHF 1,259.4 million (+22.7%)

-- Reduction of CO2 emissions by 25.9% to 20 kg per ton sold (previous year:

27 kg per ton sold)

-- 6 factories opened or extended, 1 company acquired and one expanded

partnership

-- Proposal for dividend increase of 8.7% to CHF 2.50 (previous year: CHF

2.30)

-- From May 1, 2021: Thomas Hasler to succeed CEO Paul Schuler

-- Outlook for 2021 fiscal year

-- Sales increase in local currencies of 6%--8%

-- Over-proportional increase in EBIT, EBIT margin to reach 15% for

the first time

-- Confirmation of 2023 strategic targets for sustainable, profitable growth

The 2020 fiscal year was overshadowed by the COVID-19 pandemic, which

had a number of severe effects for the construction and automotive

sectors. Despite this difficult environment, Sika nonetheless achieved

record results. Sales increased by 3.4% in local currencies. Due to

negative currency effects, this equates to a slight decline in sales in

Swiss francs of -2.9% compared to the prior year. Operating profit

(EBIT) grew by an over-proportional 7.1% to CHF 1,130.5 million -- a new

record result. In keeping with this development, new records were also

set for net profit at CHF 825.1 million (+8.8% year-on-year) and

operating free cash flow at CHF 1,259.4 million (+22.7% year-on-year).

Paul Schuler, CEO: "For our success in the challenging market

environment of the last fiscal year, we must thank our employees in

particular. Their strong customer focus and impressive dedication

coupled with our successful business model made a significant

contribution to the Group's resilience in the face of the COVID-19

pandemic. Particularly crisis-resistant in 2020 were the distribution

business and our refurbishment business. In the future, the strong

growth in demand for environmentally-friendly products will make a

further contribution to our positive business development. Sika is the

global leader in solutions for sustainable construction and sustainable

mobility. Already today, a large part of our sales is generated by

technologies that provide sustainability benefits for customers, the

environment, and society."

CORONAVIRUS PANDEMIC AND MEASURES TAKEN IN RESPONSE

In the majority of the 100 countries in which Sika is present, lengthy

lockdowns have partially restricted construction activity. Furthermore,

many customers in the automotive industry had to close their factories

for a number of weeks. Thanks to its strong market position and swift,

targeted implementation of measures, Sika was able to record very robust

results despite this challenging environment.

The focus of the measures initiated was threefold. Employees, customers,

and suppliers needed to be protected, operating activity was continued

at a high level, and the Group's strong customer focus was retained or

even strengthened. Sika therefore enforced social distancing rules all

around the world at a very early stage, introduced mask-wearing and

protective clothing in production processes, and complied with rigorous

travel restrictions. The emphasis was on working from home wherever

possible, and meetings were held virtually. Sika's close contact with

its customers even increased during the crisis. For example, more than

150,000 webinars were hosted in order to train customers worldwide.

SIKA -- ENABLER OF SUSTAINABLE CONSTRUCTION AND ENVIRONMENTALLY-FRIENDLY

MOBILITY

In addition to the pandemic, climate change poses significant long-term

challenges to society. As part of its growth strategy, Sika has

committed to reducing CO(2) emissions by 12% until 2023, with the

ultimate goal of being climate-neutral by 2050 at the latest. The

interim target is to halve greenhouse gas emissions per ton of product

sold by 2030 compared to the levels recorded in 2019. This is being

achieved by increasing the energy efficiency of the production process,

and obtaining an increasing proportion of the energy it requires from

renewable resources (Scope 1+2). Already in the past fiscal year, Sika

clearly exceeded its prescribed target of a three percent reduction in

CO(2) annually, reducing emissions by no less than 26%. Sika now

releases 20 kg of CO(2) per ton sold (previous year: 27 kg).

However, in its clear commitment to sustainability, Sika is looking not

only to reduce its own CO(2) emissions, but also to help customers

reduce their CO2 footprint massively with innovative solutions and

products. With its various technologies, Sika is in many ways an

"enabler" with the expertise to achieve the goal of climate neutrality

in the construction and automotive industries. Sika's admixtures

facilitate low-emission and resource-saving construction, its facade

systems allow for energy-efficient buildings, and Sika adhesives

contributes to climate-friendly vehicles.

MARKET SHARE GAINS IN ALL REGIONS

In an environment characterized by widespread temporary lockdowns, Sika

managed to grow more strongly than the market in all regions.

Furthermore, the distribution business posted considerable gains in all

regions.

The EMEA region (Europe, Middle East, Africa) reported a sales increase

in local currencies of 4.4% in 2020 (previous year: 11.6%). A strong

improvement started to become apparent in the markets in the fourth

quarter in particular. The countries that benefited from the biggest

recovery were those of southern Europe -- Italy, Spain, Portugal, and

France -- as well as the countries of Eastern Europe, Scandinavia, the

Middle East, and Africa.

The Americas region recorded sales growth in local currencies of 1.0%

(previous year: 19.2%). Despite the high COVID-19 infection rates

witnessed in Mexico, Brazil, and the United States, Sika recorded an

uptrend in the Americas region in the last quarter of 2020. Many cities

in North America continue to be affected by the pandemic and

construction projects have slowed. The situation in Latin America has

seen a clear improvement.

Growth in the Asia/Pacific region amounted to 12.6% (previous year:

35.1%). China in particular performed impressively over the last few

months, recording double-digit organic growth rates, and most target

markets are on a clear growth trajectory. Australia was also able to

contribute to the positive business development of this region. By

contrast, India and a number of countries in the Southeast Asia region

recovered only slowly from the far-reaching effects of the pandemic.

Global Business recorded a sales decline of 11.4% in 2020 (previous

year: 3.0%). In the same period, the automotive sector reported a global

decline in output of 17%. Despite the pandemic-related decline in sales

figures during the crisis year of 2020, Sika is convinced that the

megatrends shaping modern automotive construction -- which include

e-mobility, further new drive concepts, and the trend toward lightweight

construction -- will help the Group to capture additional market share.

RECORD FIGURES FOR PROFIT AND CASH FLOW

The Group was able to post new records for both profit and cash flow in

the fiscal year 2020. This proves that Sika can rapidly adapt to

changing market conditions and work cost-efficiently even in a difficult

year. The material margin recorded a year-on-year increase from 53.6% to

54.8%. Sika increased EBIT by 7.1% to CHF 1,130.5 million (previous

year: CHF 1,055.1 million), while the EBIT margin came in at 14.4%

(previous year: 13.0%). In keeping with this development, net profit

rose by 8.8% to CHF 825.1 million (previous year: CHF 758.5 million).

Yet another record was set by operating free cash flow, which amounted

to CHF 1,259.4 million (previous year: CHF 1,026.1 million).

HIGHER DIVIDEND TO BE PROPOSED

Given the increase in net profit, the Board of Directors will be

proposing an 8.7% increase in the gross dividend to CHF 2.50 at the

Annual General Meeting of April 20, 2021 (previous year: CHF 2.30).

SIKA ENSURES CONTINUITY

On May 1, 2021, Thomas Hasler, currently Head of Global Business and

Industry, will succeed Paul Schuler as CEO. Thomas Hasler has worked for

Sika for 32 years, and has been a Member of Group Management since 2014.

He began his career with Sika as a research chemist working in the area

of adhesives for the Industry business. He then transferred to the

United States in 2005 in order to head up Automotive North America. In

2011, he was appointed Global Head of Automotive. In 2014, he became

Chief Technology Officer and was appointed as a Member of Group

Management. He has been Head of Global Business and Industry since 2018.

Thomas Hasler has made a key contribution to the development and

implementation of Sika's successful growth strategy. Under his

leadership, the "Innovation" growth pillar has been made substantially

more customer-focused and globally-oriented. The early and consistent

promotion of new solutions for sustainable mobility and the modular

building concept are opening up significant additional growth potential

for the company.

Paul Schuler will be proposed for election to the Board of Directors at

the Annual General Meeting of April 20. Frits van Dijk, who has been a

member of the Board of Directors since 2012, will not be standing for

re-election. Esther Berrozpe Galindo, who had been recommended for

appointment to the Board of Directors, has withdrawn her candidacy as

she wishes to focus on a new CEO mandate. Sika regrets her decision but

would like to wish her all the best in her future career.

(MORE TO FOLLOW) Dow Jones Newswires

February 18, 2021 23:00 ET (04:00 GMT)