Sika continued its profitable growth in the challenging economic environment in the first six months of 2023. High inflation rates and the substantial rise in interest rates weighed on the construction industry, however, Sika increased sales in the first half of 2023 to a record CHF 5,345.5 million, up 1.8% year-over-year. In local currencies, this corresponds to a sales growth of 7.9%.
The first half of 2023 was dominated by the completion of the largest acquisition in the company’s history – the takeover of the MBCC Group. The successful acquisition has added additional annual sales of CHF 2.1 billion, many new innovations, and 6,000 new employees. The joint forces of the two businesses create a leading innovator in the construction chemicals market.
Thomas Hasler, CEO of Sika, said, “Market conditions were challenging in the first semester, as expected. We are proud of having successfully met this challenge, in addition to completing the MBCC acquisition. We are currently expecting the market environment to improve in the second half of the year. Major construction and infrastructure projects are planned or about to be implemented in all regions, and growth potential remains apparent despite a subdued global economy. With our 33,000 employees, we are well placed to benefit from our strong market position and to continue to gain market share in a weak environment.”
In the first half of the year, Sika expanded its material margin significantly year-over-year from 49.4% to 52.7%, signifying an important step on the road to a material margin recovery. Profit at EBIT level was shaped by one-time effects due to the divestment of its European industrial coating business and costs incurred in connection with the MBCC acquisition. When adjusted for these effects, Sika expanded its EBIT margin to 14.0% compared year-over-year to 13.4%. Excluding the one-time effects, EBIT increased to CHF 749.9 million in the first half of 2023. EBIT amounted to CHF 660.4 million, while in the first half of 2022 it was CHF 841.9 million. Overall, Sika is anticipating the costs relating to the MBCC takeover to amount to approximately CHF 200 million.
The EMEA region (Europe, Middle East, Africa) reported a sales increase in local currencies of 3.2% compared to 12.9% last year. The countries of the Middle East and Africa posted strong growth rates, as well as France, Italy, and Spain. Growth in these areas were offset by subdued business activity both in the DACH region (Germany, Austria, and Switzerland) and in Eastern Europe.
The Americas region achieved an 11.0% increase in local currency sales compared to the previous year of 35.8%. Rising inflation, high interest rates, destocking in the roofing sector, and an increasing shortage of skilled labor weighed on construction activity. Overall, however, the sentiment in the United States was positively influenced by infrastructure projects initiated under government-supported infrastructure programs as well as planned projects under the Inflation Reduction Act. In addition, increasing funds are being invested in reshoring, which brings industrial know-how back to the United States from Asia and builds new manufacturing plants. Latin America contributed to the increase in sales by recording moderate growth.
At the start of July, Sika reported the acquisition of Thiessen Team USA, a manufacturer of shotcrete and grouting products for the U.S. mining sector. The acquired company supplies mines in the Western United States, which excavates critical minerals for the growing electro-mobility industry. The acquisition will create significant cross-selling potential and strengthen Sika’s expansion in the U.S. mining sector.
Sales in local currencies in the Asia-Pacific region increased by 10.1% compared to 17% last year. In the first quarter of the year, China was heavily impacted by the surge in COVID cases. However, the situation improved significantly in the second quarter, allowing Sika to record double-digit growth, primarily in the distribution business.
Sika opened a new factory in Kharagpur in Eastern India, expanding its production capacity in this high-growth market. This factory produces mortar products, concrete admixtures, and shotcrete accelerators for customers in the West Bengal region, an area populated by over 100 million inhabitants.
In the Global Business segment, Sika achieved growth in local currencies of 16.2% year-over-year from 13.2%. Growth was driven by solid demand for new vehicles, especially electric cars, combined with supply chain normalization. Sika continues to develop and expand its range of solutions for batteries, including thermal conductive adhesives for the new generation of electric vehicles.
For the current fiscal year, Sika believes that it will successfully continue its strategy built on sustainable and profitable growth even in a challenging economic environment. With its innovative technologies and its many partners in the construction and industrial sectors being heavily shaped by the megatrend of sustainability, coupled with the rise of automation, digitization, and easy-to-apply products, Sika expects demand to continue to grow. For the full 2023 fiscal year, Sika is expecting a sales increase in local currencies of above 15%.
To learn more, visit www.sika.com.