Sika recently announced its results for 2020, a year characterized by the deep-rooted global challenges caused by COVID-19. Lockdowns (prolonged, in many cases) in most of the hundred countries in which Sika is active resulted in significant restrictions on construction activity. According to Sika, its strong market position and the swift, targeted implementation of measures enabled the company to record solid sales figures despite the significant repercussions of the global pandemic.
The company’s growth trajectory was reportedly extended with a rise in sales of 3.4% in local currencies. The acquisition effect amounted to 7.2% and contributed to the sales increase accordingly. A strongly negative currency effect (down 6.3%) caused sales in Swiss francs to decline by 2.9% to CHF 7.9 billion (approximately $8.9 billion), which includes a negative currency impact of around CHF 500 million (~ $562 million). When the fourth quarter is viewed in isolation, Sika achieved growth in local currencies of about 5.5% (organic, 4.1%).
“The 2020 fiscal year was overshadowed by the global coronavirus pandemic, which had a number of serious repercussions for the construction and automotive sectors,” said Paul Schuler, CEO. “Thanks to the strong motivation of our employees and their pronounced customer focus, Sika managed to perform successfully in this highly challenging market environment and achieve above-average results. We remain very well positioned in what is still a difficult environment—thanks to our innovative products and solutions, as well as to our employees, who continue to deliver their utmost even in times such as these. On behalf of Group Management, I would like to thank our global workforce of 25,000 people for the tremendous dedication they have shown and for the unique way they identify with our company.”
In an environment characterized by widespread temporary lockdowns, Sika reports that it grew more strongly than the market in all regions. The EMEA region (Europe, Middle East, Africa) reported a sales increase in local currencies of 4.4% in 2020. 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 in Eastern Europe, Scandinavia, the Middle East, and Africa. Sales developed in a more stable manner in central European countries such as Germany, Austria, and Switzerland. Growth in the UK continues to be negatively affected by the pandemic.
During 2020, Sika initiated the manufacture of shotcrete admixtures used in tunnel construction at its main plant in Gournay-en-Bray, to the northwest of Paris, and invested in new facilities. Sika also expanded its production in Switzerland in the form of a new environmentally friendly polyurethane technology at its Düdingen site. At the site in Sarnen, a new facility began operations at the start of the year for the manufacture of SikaProof® structural waterproofing membrane. In Dubai, the company’s production capacity in the United Arab Emirates was expanded further. In addition to concrete admixtures, epoxy resins are now being produced locally for the flooring target market.
In addition, Sika acquired Modern Waterproofing Group, a leading manufacturer of roofing and waterproofing systems. The completion of the acquisition of Adeplast SA also brought a manufacturer of mortar products and thermal insulation solutions into the group. Sika reports that these acquisitions significantly strengthen its position in the local construction chemicals markets and expand its manufacturing capacity.
The Americas region recorded sales growth in local currencies of 1%. Despite the high COVID-19 infection rates recorded in Mexico, Brazil, and the U.S., Sika recorded an uptrend in the Americas region in the last quarter of 2020. Although many cities in North America continue to be affected by the pandemic and construction projects have slowed significantly, the situation in Latin America has reportedly seen a substantial improvement. Many countries (e.g., Brazil, Chile, Peru, and Uruguay) have recovered from lockdowns lasting many months or returned to growth in the double digits.
Growth in the Asia-Pacific region amounted to 12.6%. China, in particular, has performed well over the last months, recording double-digit organic growth rates; most target markets are back on a clear growth trajectory. Sika reports that the former Parex business has been especially resilient in the face of the crisis, generating further growth in its various distribution channels. The project business in China is now also once again recording double-digit growth rates thanks to infrastructure orders. Elsewhere, Australia and New Zealand were likewise able to make positive contributions to business development in the region. By contrast, India and a number of countries in the Southeast Asia region recovered only slowly from the far-reaching effects of the coronavirus pandemic.
Sika’s Global Business recorded a sales decline of 11.2% in 2020, due primarily to the 17% decline of output in the global automotive sector. Although business volumes in the automotive area recovered noticeably in the second half of the year, particularly in Europe, it is expected to take some time before sales figures for the automobile industry return to 2019 levels. In the current year, Sika expects positive growth numbers for the industry.
Despite the coronavirus crisis and its impact for operating results, Sika is confirming its 2023 strategic targets. The company reports that it 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% per year in local currencies up to 2023. Projects in the areas of operations, logistics, procurement, and product formulation are anticipated to result in an annual improvement in operating costs equivalent to 0.5% of sales.
Additional details are available at www.sika.com.
