Press Release: SIKA ON TRACK FOR RECORD RESULTS -- STRONG GROWTH IN SALES AND EBIT IN THE FIRST NINE MONTHS

SIKA ON TRACK FOR RECORD RESULTS -- STRONG GROWTH IN SALES AND EBIT IN

THE FIRST NINE MONTHS

-- Sales growth of 15.1% in local currencies to over CHF 6 billion (+12.9%

in CHF)

-- Growth in all regions

-- Organic growth of 4.1%

-- Strong operating profit growth (EBITDA +18.2%, EBIT +10.6%)

-- Strong cash-flow generation, operating free cash-flow of CHF 555.1

million

-- Boost to growth thanks to acquisition of Parex as well as of

Crevo-Hengxin, King Packaged Materials and Belineco

-- Opening of five new factories

-- Outlook: sales of over CHF 8 billion and double-digit EBIT growth for

2019

-- New Strategy 2023 will ensure Sika's success in the upcoming years

Sika demonstrated impressive performance in the first nine months of

2019, recording high growth and a new sales record of CHF 6,007.3

million. This equates to an increase of 15.1% in local currencies,

whereby the acquisition effect accounted for 11.0% and organic growth

4.1%. Sales growth in CHF amounted to 12.9% (-2.2% currency effect).

Paul Schuler, Chief Executive Officer: "Following strong sales growth of

15.1% and a solid organic growth in the third quarter, we are confident

that we will exceed our sales target for fiscal 2019 of CHF 8 billion.

Particularly pleasing is the strong operating free cash-flow that we

were able to achieve in the first nine months. The integration of Parex

and the realization of our shared business potential is proceeding very

successfully and at a good pace. Thanks to our recently announced

Strategy 2023 we are pointing our already powerful organization to the

next level, and will be implementing further initiatives to drive growth

momentum, sustainability, and operational efficiency."

DOUBLE-DIGIT EBIT INCREASE OF 10.6%

In the first nine months of the year, Sika was able to increase its

gross margin to 53.5% (previous year: 53.3%). At EBITDA level, profit

increased by 18.2% (CHF 1,039.8 million; previous year: CHF 880.0

million) which can mainly be attributed to the initial adoption of the

new leases standard. Operating profit (EBIT) improved by 10.6% to a new

record level of CHF 805.9 million (previous year: CHF 728.9 million).

This figure includes the one-off effects booked in connection with the

acquisition and integration of Parex, which amounted to CHF 38.5

million. In the operating profit figure for the prior-year period,

one-off effects in connection with the solution to the takeover dispute

with Saint-Gobain amounted to CHF 23 million. Excluding one-off and

acquisitions effects in 2019, EBIT growth would have been

over-proportional.

The first nine months of the current financial year have been

characterized by the fast and successful integration of the Parex

business. In more than 20 countries fully integrated management

structures are already in place. Initial successes have been delivered

with cross-selling activities in connection with the expanded product

portfolio and the benefits of combined procurement activities. For

example, in China 1,500 "shop-in shops", with Sika products in Parex

point of sales, were launched. The forecast synergies of CHF 80--100

million will therefore end up at the higher end of this bandwidth.

GROWTH IN ALL REGIONS

In a challenging market environment, Sika's growth in all regions was

stronger than the market.

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

in local currency of 10.8% for the first nine months (previous year:

14.4%). This region recorded strong growth with double-digit growth

rates in Africa and high single-digit growth in Eastern Europe. In

Belarus, Sika acquired Belineco, a specialist producer of polyurethane

foam systems. Production capacity was expanded in Senegal, Egypt, Qatar,

Serbia and Cameroon, with new factories opened for the production of

concrete admixtures and mortar.

The Americas region recorded strong sales growth of 18.1% (previous

year: 13.0%). Growth accelerated in North America despite the ongoing

shortage of skilled labor in the construction sector. Latin America

reported healthy growth. Business development was above-average in

Brazil, Colombia, and Peru. In Mexico, the repercussions of the change

in government were noticeable in the implementation of infrastructure

projects. In Canada, the acquisition of King Packaged Materials in the

reporting period brought a market leader in concrete repair systems into

the Group.

Growth in the Asia/Pacific region amounted to 31.1% (previous year:

4.8%), a figure that includes the strong acquisition effect of the Parex

takeover. The highest growth rates in Asia/Pacific were recorded in the

Philippines, in India and in China. In China, Sika took over

Crevo-Hengxin, a manufacturer of silicon based sealants and adhesives.

The newly acquired range of products opens up cross-selling synergies in

the extended distribution channels.

The Global Business segment recorded a growth rate of 3.6% (previous

year: 29.9%). Sika generated further growth in the automotive area in

the first nine months of the year, despite a significant decline in the

production figures of automotive manufacturers around the world. The

megatrends in modern automotive construction, which are dominated by

electro-mobility and lightweight construction, are opening up new

avenues of long-term growth potential for Sika thanks to new, lighter

platforms with multi-material designs and new adhesive technologies, as

well as heat management in modern battery technologies for electric

vehicles.

OUTLOOK FOR 2019: SALES OF OVER CHF 8 BILLION AND DOUBLE-DIGIT EBIT

GROWTH

For the 2019 financial year, Sika is expecting an increase in sales to

more than CHF 8 billion along with double-digit EBIT growth. The

implementation of the Group's growth strategy will continue in 2019 with

the opening of between seven and nine new factories. Activities to

establish further growth platforms in the form of company acquisitions

are continuously being pursued.

Strategy 2023, which was unveiled on October 3, is designed to expand

Sika's growth model and align the organization for continued long-term

success and profitable growth. By targeting six key areas -- market

penetration, innovation, operational efficiency, acquisitions, strong

corporate values and sustainability -- Sika is seeking to grow by 6--8%

a year up to 2023. It is aiming for a higher EBIT margin of 15--18% by

2021. Projects in the areas of operations, logistics, procurement and

product formulation should result in annual improvement in operating

costs equivalent to 0.5% of sales.

KEY FIGURES FOR FIRST NINE MONTHS OF 2019

1. 1.2018 1. 1.2019

In CHF mn -30.9.2018 -30.9.2019 Difference in %

------------------- ------------------- ------------------- ---------------

Net sales 5,322.7 6,007.3 12.9

------------------- ------------------- ------------------- ---------------

Gross result 2,838.3 3,216.3 13.3

------------------- ------------------- ------------------- ---------------

Operating profit

before

depreciation

(EBITDA) 880.0 1,039.8 18.2

------------------- ------------------- ------------------- ---------------

Operating profit

(EBIT) 728.9 805.9 10.6

------------------- ------------------- ------------------- ---------------

Profit after taxes 527.7 566.8 7.4

------------------- ------------------- ------------------- ---------------

NET SALES OF THE REGIONS

1.1.2018 1.1.2019

In CHF mn -30.9.2018 -30.9.2019 Year-on-year change (+/- in %)

-------------- ---------- ---------- --------------------------------------------------------

In In local Currency Acquisition Organic

CHF currencies(1) effect effect(2) growth(3)

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

By region

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

EMEA 2,400.4 2,572.8 7.2 10.8 -3.6 7.7 3.1

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

Americas 1,382.6 1,623.3 17.4 18.1 -0.7 12.1 6.0

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

Asia/Pacific 852.3 1,112.1 30.5 31.1 -0.6 24.4 6.7

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

Global

Business 687.4 699.1 1.7 3.6 -1.9 3.5 0.1

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

Net sales 5,322.7 6,007.3 12.9 15.1 -2.2 11.0 4.1

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

Products for

the

construction

industry 4,108.4 4,766.4 16.0 18.1 -2.1 13.6 4.5

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

Products for

industrial

manufacturing 1,214.3 1,240.9 2.2 4.4 -2.2 2.0 2.4

-------------- ---------- ---------- ---- ------------- -------- ----------- ------------

(1) Growth in local currencies including acquisitions.

(2) Sales contribution by acquired companies without

(MORE TO FOLLOW) Dow Jones Newswires

October 23, 2019 23:00 ET (03:00 GMT)