Despite the substantial impact of the coronavirus pandemic, Sika recently announced that it was able to continue its growth trajectory in the 2020 first half. A high negative currency effect (-6.1%) led to a 3.2% decline in sales; in local currencies, sales grew 2.9% to CHF 3.6 billion (approximately $3.9 billion).

In March, April, and May, the business was impacted by the ongoing coronavirus pandemic in almost all subsidiaries. In June, Sika recorded positive organic sales growth for the first time since February, as lockdown measures ended or were significantly relaxed in many countries. Business activities started to normalize, and the dynamics in the construction sector picked up.

“Around 35 of the 100 countries Sika is present in experienced a full lockdown for about two months in the first half of the year, and the rest of our countries have been strongly impacted by the pandemic,” said Paul Schuler, CEO. “With our local management structure in place, we quickly adapted globally to the changing market conditions in the respective countries. We swiftly implemented the necessary measures to protect our employees, customers, and suppliers, whilst simultaneously maintaining our supply chain and business activities with a focus on consistent cost management. Thanks to our high speed of implementation and the proximity to our customers in all countries, we were able to quickly grasp business opportunities and thus capture further market share. I would like to thank all of our employees worldwide for their great efforts and never losing focus during this challenging time.”

The EMEA region grew by 3.2% in local currencies in the first half of the year. In June, the region achieved single-digit organic growth after already exhibiting considerable improvement in May compared to April. The impact of the pandemic was limited in most Central European countries, such as Germany, Austria, Switzerland, Eastern European countries, and Nordic countries. The UK and the Middle East, which still show a very diverse picture, slightly improved in June. In May, Southern Europe showed the biggest improvement vs. the previous month, with most lockdown restrictions being eased in Italy, Spain, Portugal, and France, with the latter returning to growth in June. Across the entire EMEA region, direct sales activities can again be supported with customer visits. Digital sales support measures, such as webinars, continue to be used to maintain close contact with customers.

In the first half of the year, the Americas region recorded growth in local currency of 2.6%. Despite higher COVID-19 infection rates in the U.S., Mexico, and Brazil, Sika saw an improvement in the Americas region in June. Canada, in particular, recorded strong performance with positive organic growth. In the U.S., operating profit remained unchanged in June compared to the previous year, with the distribution business recording double-digit growth in sales. The business in the Americas region was most heavily impacted by the pandemic in May. During this month, many major cities in North America were affected by stringent restrictions, and several Latin American countries were in a complete lockdown. In Latin America, the development continues to be uncertain, as most countries are still in a partial or total lockdown, with repeated transitioning between reopening and more restrictive measures.

The Asia-Pacific region reported growth of 21.8% in local currencies in the first half of the year. Despite numerous extended lockdowns, several key countries were back to growth in June. China, in particular, recorded double-digit growth and most Target Markets are also back to growth. The Parex business, with its granular distribution channels, has proven to be quite resilient throughout the crisis. The operating business in Japan is slowly recovering. In parts of Southeast Asia, many countries remained in lockdown for a longer period of time, whereas the situation in Vietnam and Thailand improved more quickly. Australia recorded organic growth in the first half of the year.

In the Global Business, the automotive industry reported a decline of 35% in car build rates in the 2020 first half. While some signs of improvement were visible in June, it is expected to take some time until the numbers climb back to 2019 levels. Sika has therefore focused the business on lower capacity requirements and invested in process improvements. Most car manufacturers in China, Europe, and North America halted production for a longer period of time during the first six months of the year, with Chinese manufacturers being the first to restart their operations. From May onward, car production in China is back on the growth trajectory and incentives are boosting customer demand. For the first half of the year, Global Business posted negative growth in local currencies of -23.1%, therefore developing more favorably than the global automotive sector.

Despite the coronavirus crisis and its impact on business operations, Sika confirms its strategic targets. The organization will continue to be aligned for sustainable, long-term success and profitable growth. By targeting six strategic pillars (market penetration, innovation, operational efficiency, acquisitions, strong corporate values, and sustainability), Sika is seeking to grow by 6-8% a year in local currencies until 2023. Projects in the areas of operations, logistics, procurement, and product formulation should result in an annual improvement in operating costs equivalent to 0.5% of sales.

In June, Sika saw a further improving trend in construction markets, and sales volumes are steadily returning to normal levels. Global construction activity is gaining momentum thanks to the gradual reopening of construction sites around the world. For the second half of the year, Sika is expecting more favorable market conditions.

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