Sika recently announced its 2020 financial results, including sales of approximately CHF 7.9 billion (~ $8.8 billion). This represents a 2.9% decline in CHF and a 3.4% increase in local currencies. The company reports that its 2020 fiscal year was overshadowed by the COVID-19 pandemic, which had a number of severe effects for the construction and automotive sectors.
CEO Paul Schuler said, "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."
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. The company's strong market position and swift, targeted implementation of measures reportedly allowed Sika to record 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.
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 CO2 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. Sika is achieving this goal 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 announced that it had exceeded its prescribed target of a 3% reduction in CO2 annually, reducing emissions by no less than 26%. Sika now releases 20 kg of CO2 per ton sold (previous year: 27 kg).
However, in its clear commitment to sustainability, Sika is looking not only to reduce its own CO2 emissions, but also to help customers reduce their CO2 footprint 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 contribute to climate-friendly vehicles.
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 U. S., 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 well 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.
On May 1, 2021, Thomas Hasler, currently head of Global Business and Industry, will succeed Paul Schuler as CEO. 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 U.S. 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. 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 become 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.
Schuler will be proposed for election to the board of directors at the Annual General Meeting on 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.
Despite the coronavirus crisis and its repercussions for operating results, Sika is confirming its 2023 strategic targets. The company remains aligned for long-term success and profitable growth. With its focus on the 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 up to 2023. From 2021, the company is aiming to increase its EBIT margin to 15-18%. 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.
For the 2021 fiscal year, Sika is expecting an increase in sales in local currencies of 6-8%, along with an over-proportional rise in EBIT. The EBIT margin should for the first time reach 15%.
To learn more about Sika, visit www.sika.com.