SIKA achieves record sales

SIKA achieves record sales
27 July 2017

With sales growth of 8.1 per cent in local currency, Sika achieved a new sales record of CHF2994.9m (US$3140.4m) in the first half of 2017. Targeted investments in new products, national subsidiaries and factories as part of Sika's growth strategy provided growth stimuli. In the first half of the year, the negative currency effect (-1.4 per cent) reduced sales growth in Swiss francs to 6.7 per cent.

Net profit up 16%
Volume growth, together with disproportionately low cost development and price adjustments, resulted in a further improvement in margins, which helped to offset slightly negative currency effects and rising commodity prices. As a result, operating profit and net profit posted new record values in the 1H17. Operating profit (EBIT) improved by 13.7 per cent (+ CHF48.4m) to CHF402.1m (previous year: CHF353.7m). Net profit rose significantly by 16 per cent (+ CHF 39.4m) to CHF285.7m (previous year: CHF246.3m.).
Paul Schuler, CEO: "With a clear sales increase of 8.1 per cent and a surge in net profit of 16.0 per cent, we are continuing to consistently and successfully deliver our growth strategy. We posted double-digit growth rates in Eastern Europe, Africa, North America, Argentina, the Pacific area and in our automotive business, and we have clearly grown much faster than the market in a number of countries. The positive performance in the first half of 2017, the opening of a further national subsidiary, and the commissioning of three new factories all bring us one step closer to achieving our strategic targets for 2020. Sika's success is based on team effort. Thanks to the commitment of our employees and the strength of our growth model, we can look forward to the further business performance in the second half of 2017."
Growth in all regions
In the first half of the year, sales in the EMEA (Europe, Middle East, Africa) region increased by seven per cent YoY (previous year: 6.6 per cent). The core markets of Germany, France, Switzerland, Italy and the UK achieved solid growth rates. Eastern Europe and Africa posted double-digit growth. Bitbau Dörr, a leading manufacturer of waterproofing systems, was acquired in Austria. Furthermore, a new factory for concrete admixtures was opened in Tanzania and a further national subsidiary was founded in Senegal. In Kazakhstan concrete admixture and mortar production in Almaty was relocated to a larger site.
At 17.4 per cent, it was North America that posted the strongest growth (previous year: 12.7 per cent), of which 8.7 per cent was through acquisitions. Sika boosted its business volume significantly in the USA, achieving strong double-digit growth of around 20 per cent, thus growing much more quickly than the North American construction market. Targeted investments that have been made in North America over the last few years contributed substantially to this positive business performance. These include the investment in sales force, the acquisition of companies and the expansion of the supply chain with new factories close to fast-growing metropolitan areas.
In Latin America sales increased by 2.7 per cent in the first half-year, compared to 5.9 per cent in the corresponding period of 2016. In particular, the large countries in the region, such as Mexico and Argentina, produced above-average performance. In Brazil the effects of the difficult economic and political situation continued to have a restrictive impact on business. Furthermore, construction activity in the raw material-based countries in the region has been subdued. In the southeast of Mexico, a new factory for mortar products came into operation.
Sales in the Asia/Pacific region increased by 4.1 per cent (previous year: 4.6 per cent). The markets in southeast Asia, with the exception of Indonesia and Singapore, achieved high growth rates. In Singapore investment in state-funded residential construction projects remained at a low level, while in Indonesia investments in infrastructure fell. In China the construction industry continued to stabilise in the first half of 2017, enabling Sika to achieve high single-digit growth.
Outlook for 2017
The strategic targets 2020 were successfully pursued in the first half of 2017, with new record results achieved. The strong start to the year supports the target for the full year, which aims at a 6-8 per cent increase in sales to more than CHF6bn for the first time. Volatile and rising commodity prices present a challenge in the current year. EBIT and net profit are once again expected to increase at disproportionately high rates. The successful growth strategy with the new targets for 2020 will continue in 2017. The unknown outcome of Saint-Gobain's hostile takeover attempt remains an "element of uncertainty for the future", the company added.

Published under Cement News

Tagged Under: Results Switzerland Sika