Sika Ag Adr

Good afternoon everyone and thank you for joining. Our half-year call today will last 60 minutes with an opportunity for Q&A after the presentation. To give as many of you as possible the chance to ask questions, please limit yourself to one question each. With this, I hand over to Thomas.

Thank you, Dominik, and thank you also for the introduction video. It almost says everything. We could go into Q&A straight, but I think we still follow the program. And first of all, also from my side, welcome. Good afternoon. Good morning to all of you. And thank you also for joining us for our presentation of the half year results. It has been a strong half year. and it has been a strong half year despite that we have still muted markets conditions and supply chain disruption on and off over the course of the first six months. I think the strong results that we are capable to present today are the results of SICA's differentiation power. Differentiation that is convincing customers that their business in our hand is providing them more value. And that has driven our outperformance in the industry. And it's the backbone of our results that we are going to present in more details in the next few minutes. But let me start with the highlights of the first half year. And here, as also highlighted in the video, it starts with the top line, 5.59 million reported sales, a slight decline, but looking into local currency growth, 4% local currency growth. That's a tremendous momentum going from Q1 over the course of the half year into Q2. It is also coming with an improved profitability, starting again on the material margin, which has expanded by 60 base points to 55.7 percentage points. And Adrian will go into more details behind those elements. It is also very visible in the results that the fast forward program that we kicked off last year with some costs in last year is delivering excellence to the performance in the first six months and also for the remainder of the year. It's a significant contribution also to the bottom line, to the profitability element. I would also like to outline here that this share gain and this outperformance is across the board. It happens in all geographies. It happens in mature as well as in emerging markets. We are playing on all the elements to drive growth. Also, when we look at the last element, what's the full year expectation? With the momentum that we have seen piling up over the first six months, we have been Confident and we have raised our expectation on the local currency growth from 1 to 4 to 3 to 6 percent for the full year 26. Now, when we look into the regions and clearly outstanding here, when we look in the center, EMEA has contributed 7.7% growth in the first six months. EMEA was also the region that already had positive organic growth in Q1 and has further accelerated on that element. EMEA has also been the region that has been the earliest challenged by the Middle East conflict and de-escalation and therefore also has been early on in modifying the supply chain setup, making sure we have stayed available to our customers, but also have started to adopt surcharges and pricing as the evolution of the input cost took place. Here, especially the Middle East, has been a fantastic journey, starting with a lot of confusion with the breakout of the war. A few days of confusion, but going back to almost a normal procedure, supporting our customers and also delivering to our customers the confidence that They do not need to stop any activities because they are with Seca, with a trusted partner that makes everything possible to bring in materials to the construction site while they continue to build. And based on that, we have also seen a recovery of the growth trend in the Middle East, actually even an acceleration in the Middle East. When we look at the Americas, we have seen a rather soft start in Q1. We still had some issues, weather related, but also the government shutdown had still some limitations. But we see a strong rebound in Q2, which is to a large degree also volume dependent and has contributed very nicely also to the group advancement. When we look into Asia-Pacific, we still have a slight negative growth, but this is mainly related to our rebasing of our China construction business. Over at the end of the middle of this year, so we will expect also that we see in the second half a stronger contribution from Asia-Pacific overall. But besides the China construction in the first six months, we have seen a very solid high single digit growth of the rest of Asia-Pacific here in particular, Southeast Asia, India, our growth engines in particular, Vietnam has been Absolutely blasting the performance in Southeast Asia. So here we have a good momentum and when we look at the group overall, the 4%, this gives us the confidence also for the second half that we can raise our local currency growth expectation. I think at the backbone of these results here we have to clearly say that the trust element being available to the customer not only for Valued performance solutions but also the competencies that we provide the customers and then ultimately also the confidence that Sika will never let you down. Sika is capable to support you in all aspects including making the supply chain available when others are failing and cannot support the needs of the customer. This is also becoming more and more visible in our famous slide, the slide that shows the outperformance of SICA versus its peers. Here we continue to aggregate the numbers as they come in. We have only Q1 figures in here, but very soon we are also going to update this slide. As you can see, the outperformance is more pronounced in Q1 and we are also quite optimistic that this outperformance in Q2 and in the remainder of the year will further expand and contribute in a visual way to underline our market share gains in a still muted environment. While we have, let's say, our challenges from the market, SICK is investing. SICK is investing in the cycle into mature markets, into automation, into efficiencies. Here we have three elements in North America and in Europe, clearly best in class automation in full scale. A large-scale mortar factory in the New England territory, giving us great opportunity to leverage there. But then also our expansion into emerging markets in South America, in Africa, in Asia, clearly investing where the demands are strong or where we also see outperformance possibility by leveraging our competencies in operations and supply chain. It's also worthwhile to mention here, supply chain availability, our footprint, global footprint has enabled us to also benefit from the challenges that recently have been seen globally. And this is also one of the core strengths of SICA to utilize new routes in case needed to best serve our customers. Acquisitions, absolutely a core element of our strategy. The bolt-on acquisitions that enhance our organic growth. Two great examples. The one closed, Finja in Sweden, closed the end of January. It's a fantastic acquisition. We also see in the first few months already a strong contribution and reconfirmation and expansion of our integration targets and synergies. So this clearly also giving us a broader platform in Scandinavia, in the Nordics. And we also see the first wave of implementations in Denmark, in Sweden, in Finland, and in Norway. So fantastic, typical bolt-on acquisition to build on. And then on the right-hand side, you see the Akim acquisition, An acquisition that very much builds on our strengths on the sealant and adhesive side. Akim, a Turkish based manufacturer with a strong footprint in the Middle East, in Central Asia and Africa, and here also enabling to leverage our European as well as our American and Asian business with these skills and with these possibilities that Akim brings to us. We still expect Closing in Q3 as we have announced earlier and we will further update you on AKIM in the near future. I have to come back to Fast Forward, as Fast Forward has been the program that set the tone in the second half of 2025 in two ways. One way in addressing some structural elements, in particular our China business, but also some other larger market opportunities, driving more efficiency. Implementing these initiatives in 2025 with one-time costs that are behind us that we have applied in 2025, giving us already in 2026 a great opportunity to leverage and we are full on track to get the 80 million In savings in 2026 in the first half we have good momentum we have a run rate of around 80 percent by the middle of the year and we are confident that we see the full impact of fast forward in in the second half then It is also clear that Fast Forward is an investment program, an investment program in future efficiencies, here mainly also driven by the investments into digitalization, sales excellence, supply chain excellence, innovation excellence are the three contributors also here. We have shaped our Our understanding and our investments since we last have talked about it and we will also hear in the near future also communicate further on how fast forward is going to provide in the next 18 to 24 months decisive elements of efficiency but not only efficiencies on the cost side but also Again, market shares by having digital solutions for our customer, enabling them for better, shorter supply chain, but also in their project business, helping them to be more successful in their field. We have been all excited about the World Cup in North America. I think that has been a global event. And for us at SICA, for me personally, I like to watch the game, but I must say I also like very much to watch the stadiums. And I think here a remarkable contribution from SICA, all 17 stadiums in North America have been built or have been substantially renovated for the World Cup this year. And this has been a great journey to see how our Mexican, Canadian and American Special thanks to all the people who helped to create these wonderful stadiums, these impressive stadiums for the games. And when you look on the screen, you know, on the screen, you see all the contribution. It's a wide portfolio of Thank you very much. The fire protection, the specialty grouts, it goes across many, many application fields. I would say probably doesn't, if not 50 to 100 different solutions go into such a renovation or new construction. And it is a fantastic landmark contribution that SICA has. And here, this is also relevant in terms of contribution. And when we look from Let's say the World Cup 26 into the near future, the World Cup 2030 is around the corner. And we have a lot of activities in Morocco, in Portugal, in Spain already lining up for making sure those stadiums are also properly up to date. And the latest one we just finished is the Bernabeu Stadium in Madrid that is ready for the World Cup, which is a fantastic stadium as well. and even if you look a little bit further out in 2034 Saudi Arabia will be the host of the World Cup and they have already started also here with big projects making sure they are ready when the games are on. A more internal highlight for us is clearly also the feedback that we got from our organization. As mentioned, markets are challenging, supply chain is challenging, so the organization is on their toes by making sure customers are served. And at the same time, we have asked our organization how they feel, how the engagement level is, and we had a fantastic outcome. 88% participated in the survey and the engagement level went up by two points to 88 points. This is outstanding. It's far above industry standards. It is also higher than two years ago. And it is for me a clear testimonial of the strength of the organization that pulls together, serves the customer, but see also the purpose and the meaning of the individual contribution and highly tied through our strategy and our initiatives on local level, regional level, on group level. Makes me very proud. To have this achieved in times where many things are challenged, but this is a continuous strength of Sika. Building trust inside is also building trust to the outside, to our customer, and that delivers the results that we have seen in the first six months, which leads me over to you, Adrian, to talk a bit more about the results.

Very good. And thank you, Thomas. Thank you for sharing here the highlights of quite a successful business execution in the first half of 26. I would like now to provide further details on the financial performance of the first half year, starting again with the top line and the bridge of our first half year revenue performance. As you can see here, and driven by a very strong Q2, as we have heard, organic growth was 2.9%, adding close to 250 million of organic growth in the first half year. Further, 1.1% of acquisition contribution taking CK to 4% local currency growth in the first half year. Excluding China Construction, which, as we have anticipated, continued to be about a 1.5% headwind to the first half top-line result outside of China, we grew 4.4% organically compared to the 2.9% of the whole group on a reported basis. If we look at Swiss francs, we delivered revenues of 5.59 billion, just slightly below the previous year, driven by still a very strong adverse foreign exchange impact of minus 5.5% or more than 300 million. Foreign exchange impact softened a bit in Q2 and from today's perspective we expect less headwind in the second half from foreign exchange with an approximate three to four percent negative foreign exchange impact for the full year on group level. In the second half, we will also face somewhat easier comparatives in China, given the actions we undertook from mid last year onwards. But so far, we continue to see a subdued market, so no help from a market perspective overall. If we look at growth on a sequential basis, here we show a clear trend reversal with an organic growth of 2.9% in the first half year. This marks a change in trajectory versus the previous three periods. If you look at M&A contribution, fairly stable, one percentage point here across All the periods. Also, that's how you should think about Q3. Whereas in Q4, following the closure of the Ockim transaction, which is planned or expected for late Q3, then a step up in acquisition contribution in the fourth quarter. Now let's look at the full P&L here on a summarized basis and move down from the sales line. In the first half year, we delivered a further expansion of the material margin to 55.7%. This is up 60 basis points from the same period last year which reflects obviously procurement scale efficiencies but also pricing amid increasing input cost but also includes here the higher cost path through of for example transportation cost which do sit on the OPEX line but are If we move down, personnel costs declined by 3% as our fast forward execution is well on track and is compensating underlying wage inflation and also M&A related headcount additions. Adjusting for M&A, our headcount is down by more than 1,000 year on year. On the other hand, other operating expenses increased by 2.7%, largely due to the significantly higher transportation and supply chain costs directly and indirectly related to the situation in the Middle East, but with a corresponding path through, as just alluded to here on the top line, positively impacting material margin. As a result, EBITDA came in at 1 billion and 63 million, pretty flat year on year, given here foreign exchange translation with margin expanding 10 base points on EBITDA level, also here including a further 20 BIP drag on foreign exchange. Also on EBIT level, pretty similar improvement, 10 basis points versus last year. On marginally lower depreciation and amortization charges, net profit of 552 million in line with last year. Here, the foreign exchange impact was partially offset by lower interest expenses being reflective of A good cash generation and correspondingly EPS slightly down 3.43 Swiss francs versus 3.45 in the same period of last year. Operating free cash flow of 139.6 million, which I will cover later. But maybe first looking here at the EBITDA bridge and sort of peeling out a bit better the various profitability buckets here delivering the 30 base points profitability improvement on EBITDA. and many others. The strong material margin was the main contributor but also here with 50 base points improvement our fast forward program both elements were Offsetting here the increase in certain costs largely related to the conflict in the Middle East, notably transportation and supply chain costs alongside some one-off items. We passed through these transportation cost increases to our customers, as mentioned, and this recovery sits in the material margin. The first half, the run rate of our Fast Forward program is about 80%, as Thomas mentioned, so well on track to deliver here the full 80 million in 2026 as anticipated. On the M&A side, we continue to see a good synergy capture Relating to MBCC with an incremental positive margin impact of 20 base points in the first half of 26 bringing trailing 12 months synergies to 195 million up from 182 in the full year of last year also here well on track to deliver the 200 to 220 million then in 20 On the new acquisition, a small initial dilution of 10 base points, largely related to initial purchase price accounting impacts. Excluding the 20 base points FX impact our first half year margin expanded 30 base points year on year which underlies here the solid execution both on the fast forward as well as on M&A related synergies. Now on cash flow, here a very similar cash generation as in the first half of last year, although against quite a different backdrop compared to 2025. Here in the first half year, the only difference here is a one-off tax. and payment which reduced here operating free cash flow below previous year level. If we look at the components here on profit, pretty similar as well while obviously impacted by foreign exchange as well. On working capital, same seasonal increase, although here against a very sort of different backdrop, very strong growth compared to the previous year. And as sales accelerates, receivables rise with them. Also given the Middle East and input cost increases, here also our materials are valued at the higher level. and we're also carrying you know somewhat higher inventories to service our customers at the same time very let's say diligent working capital management overall and then on the tax line here the increase is purely related to a one-time payment that has been accrued and was now paid out which makes the difference. If it was not for that payment, we would have been slightly above the previous year level of 186 million. Now, networking capital typically comes down in the second half, which we also expect in 2026. And we also do not expect any further here one time Tax items of any significance. So for the full year, very confident to deliver an operating free cash flow in line with our strategic target of more than 10% of net sales as cash generation here is heavily skewed towards the second half due to seasonality. And with this, I will pass it back to you, Thomas, for the outlook.