MOSCOW (MRC) -- Sika (Baar, Switzerland) reports a fall of 7.6% in net profit in the first half of 2020, to 275.6 million Swiss Francs (USD297.1 million) compared with SFr330.7 million in the same period of the year before, reported Chemweek.
This is mainly attributed to the adverse impact of COVID-19 on sales, Sika says. Revenue declined 3.2% year on year (YOY), to SFr3.61 billion, due to the effect of lockdown measures on demand, the company says. The acquisition of Parex in 2019 had a positive effect on sales, amounting to 13.4%, Sika says. Second-quarter figures have not been disclosed.
EBITDA and EBIT decreased 4.8% and 14.8% YOY, respectively, due to a negative operating leverage in March-May, initial expenses in connection with structural adjustments and efficiency measures, integration costs in connection with the acquisition of Parex, and strongly negative currency effects, Sika says.
In the EMEA region, Sika's sales of SFr1.58 billion compared with SFr1.62 billion in the first half of 2019, with Central Europe the area affected most by measures against COVID-19, the company says. In the Americas, sales went down to SFr942 million from SFr986.7 million in the prior-year period, mainly due to the impact of COVID-19 on the construction sector in the US, Sika says. However, the company’s sales in the APAC region went up to SFr746.7 million, due mainly to China’s economy recovering after the first quarter, it says. In the rest of the world, Sika’s sales were 28.5% lower YOY, at SFr341.7 million.
“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. 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,” says Paul Schuler, CEO at Sika.
The company’s “strong focus on liquidity and cash management resulted in a high operating free cash flow of SFr254.7 million," which exceeded the year-earlier figure by SFr75 million, Sika says. “Key drivers of this were an optimized inventory management, a focus on accounts receivables, and reduced capital expenditures,” the company says.
For the second half of the year, Sika expects more favorable market conditions that should lead to higher sales volumes. The company saw an improvement in sales in June, due to the construction industry reopening and returning gradually to normality. The company also anticipates an over-proportional EBIT increase in the second half.
Sika has confirmed its targets for 2023. It is seeking to grow 6%–8%/year in local currencies in this period. It is also aiming for an EBIT margin of 15%–18% from 2021 onward. 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, Sika 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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.
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