Sika increased sales by 17.2% in local currencies in the first nine months of the year. The company witnessed double-digit growth in all regions apart from Europe South. The result for the third quarter was also pressured by continually rising raw material prices and currency effects.
Sales
In the first nine months of the current business year, Sika increased sales by 17.2% in local currencies, including an acquisition effect of 3.9%. Translated into CHF, sales were up by 3.2% year-on-year from CHF 3 318.6 million to CHF 3 424.8 million.
Regions
Sika posted gains in local currencies in all regions. As was the case in the first half of the year, Sika could rely on sustained strong demand from the emerging markets. In North America too, Sika gained further share in a fiercely contested market. While Europe North saw double-digit growth, Europe South was able to maintain single-digit growth thanks to the French and UK markets. Broken down by regions, Sika reported the following local currency sales growth for the first nine months: Asia/Pacific 37.0%, North America: 25.1%, Latin America 22.6%, IMEA (India, Middle East and Africa) 13.1%, Europe North 11.8% and Europe South 4.2%.
Earnings
At end-September 2011 the gross margin stood at 50.8% (end-September 2010: 54.7%), due primarily to higher raw material prices. The substantial price rises faced in the first and second quarters will feed through to margins in the third and fourth quarters with a time lag. Likewise, the sales price increases subsequently implemented will not have an impact until after a certain delay and so failed to offset continually rising material costs.
Despite the expansion drive underway in the emerging markets, Sika saw a 0.8 percentage point improvement in cost efficiency (costs expressed as a percentage of net sales) from 40.5% to 39.7%. Operating profit (EBIT) after nine months came to CHF 281.3 million (previous year: CHF 368.7 million), corresponding to a margin of 8.2% (previous year: 11.1%). Consolidated net profit amounted to CHF 169.3 million (previous year: CHF 249.2 million).
Outlook
Apart from country-specific exceptions (North Africa), the outlook in the emerging markets remains positive. In Europe, on the other hand, the situation is somewhat uncertain. While key operating figures do not reveal any noticeable levelling off of business, the financial and political backdrop makes it difficult to gauge developments going forward.
Since increases in material prices only impact on the income statement after a delay of 3 to 6 months, the gross result will remain under pressure. Accordingly, efforts to lift sales prices will continue.
Even factoring in further efficiency increases on the cost side, net profit for full year 2011 will be well below the figure for 2010.
Income Statement
For full income statement and additional notes, please see "Shareholder Letter: 9 Months 2011" (PDF)
Financial Calendar
- January 10, 2012: net sales 2011
- March 1, 2012: full-year results 2011; media conference/analysts’ presentation
- April 17, 2012: shareholder letter (net sales three months), Annual General Meeting
- July 26, 2012: shareholder letter (Half-Year Report 2012)
- October 31 2012: shareholder letter (nine months 2012)
Sika AG Corporate Profile
Sika AG, located in Baar, Switzerland, is a globally active specialty chemicals company. Sika supplies the building and construction industry as well as manufacturing industries (automotive, bus, truck, rail, alternative energies, building components). Sika is a leader in processing materials used in sealing, bonding, damping, reinforcing and protecting load-bearing structures. Sika’s product lines feature high-quality concrete admixtures, specialty mortars, sealants and adhesives, damping and reinforcing materials, structural strengthening systems, industrial flooring as well as roofing and waterproofing systems. Worldwide local presence in 76 countries and some 14 000 employees link customers directly to Sika and guarantee the success of all partners. Sika generated annual sales of CHF 4.4 billion in 2010. Visit our website at www.sika.com.
Contact
Dominik Slappnig
Corporate Communications & Investor Relations
Tel.: +41 58 436 68 21
Fax: +41 58 436 68 50
slappnig.dominik@ch.sika.com
