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Sika profits slip on lower sales, confirms 2023 targets

October 23/2020

MOSCOW (MRC) -- Construction chemicals company Sika (Baar, Switzerland) says its net profits for the first nine months of 2020 were lower by almost 1% on a year-on-year (YOY) basis, to 561.5 million Swiss francs (USD619.5 million) on sales down 3.4% YOY, to SFr5.81 billion, reported Chemweek.

The company says that lower sales in the March-to-May period had a negative impact on profits, with nine-month EBIT slipping by approximately 1% YOY, to SFr797.4 million. However, EBITDA increased 3.1% YOY, to SFr1.07 billion. Third-quarter figures have not been disclosed.

The 2020 financial year to date has been dominated by the coronavirus pandemic. With our decentralized organization, we have been able to adapt swiftly to changed local conditions in all 100 countries and gain market share, says Paul Schuler, CEO at Sika.

Sika's sales in the first nine months includes a strong acquisition effect of 9.2%, the company says. The EMEA region business reported a 3.8% increase in sales in local currency compared with 10.8% in the same period of the previous year. The Americas region business recorded sales growth in local currencies of 0.9%, compared with 18.1% in third-quarter 2019, and in the APAC region growth amounted to 13.9%, compared with 31.1% a year earlier. Sikas worldwide business unit recorded a decline in sales of 16.1%, compared with 3.6% growth in 2019.

Sika says that it has been observing a modest upward trend in construction markets since June, with sales returning to more normal levels due to the gradual opening of building sites. For 2020, Sika expects slightly lower sales in local currency but EBIT broadly in line with last year, which implies an over-proportional rise in EBIT in the second half, it says. Sikas forecasts assume that markets will no longer face almost complete lockdowns, the company says.

As announced previously, Sika has confirmed its 2023 targets. It is seeking to grow by 6-8% annually in local currencies until 2023. From 2021, the company aims to increase its EBIT margin to 15-18%. Projects in the areas of operations, logistics, procurement, and product formulation should result in an annualized improvement in operating costs equivalent to 0.5% of sales, the company says.

As MRC reported earlier, in August 2015, Swiss specialty chemicals company Sika opened its forth production site in Russia. A new mortar factory and a plant to produce concrete admixtures were opened in Volgograd, in southern Russia. Thus, at the existing site in Lobnya, 30 km north of Moscow, a new production facility, which manufactures polymers for concrete admixtures, came on stream.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Sika is a specialty chemicals company with a leading position in the development and production of systems and products for bonding, sealing, damping, reinforcing, and protecting in the building sector and motor vehicle industry. Sika has subsidiaries in 101 countries around the world and manufactures in over 200 factories. Its more than 20,000 employees generated annual sales of CHF 7.09 billion in 2018.
Author:Margaret Volkova
Tags:PP, PE, LLDPE, PP random copolymer, petrochemistry, adhesives, construction, Sika, Russia, Switzerland.
Category:General News
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