Sika Ag Adr

Good afternoon, everyone, and thank you for joining. Our nine-month 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 said, Thomas, over to you. Thank you, Dominik, and also from my side. Thanks for joining our nine months call and I'm very happy to report on the progression of the business since the last time we have met and here just on the general overview which you also have seen in the Short video screen, we have been able to accelerate our local currency growth up to 4.8% over the first nine months, which is a further enhancement and acceleration from the six months starting point. Also on the total revenue, we reached 8.7 billion in sales. Adrian will then further explain also the split with the currency and the evolution as we go forward. But here very clearly also a very strong testimonial of our outperformance of Still muted and challenged markets. Nothing changed since our mid-year touchpoint. The markets are still very much driven by uncertainty, ongoing uncertainty as we speak. Then I think the material margin, when we look a bit deeper than sales, has further still expanded 40 base points above prior year. A clear indication also of our activities in regards to pricing and offsetting inflationary elements. But also here I referred further to Adrian to give us the details. The EBITDA margin, as also shown in the short clip, 19.2%, a further increase from last year by 1.9%. Net profit, again, 1.9% improvement. And overall, when you look at this set of achievements, very clearly outperforming the market, outperforming through very selective, decisive initiatives, looking where markets are giving us opportunities and capturing those opportunities, capturing based on our value, A contribution towards our customer activities, demonstrating also in tough times that Sika is the best source for them to be more successful in their challenging environment. When we look how the sales contribution has built up over the three regions, then let me start with the largest region with EMEA that has an 8.3% local currency growth contributing to the group. The strongest contribution in there as well. We have acquisitions, but a very strong organic growth as well. So in EMEA, we have seen the Middle East doing very strong despite the very challenging environment. Strong double digit growth continued also in Q3. and this also from a perspective what we expect in the near future. As we have demonstrated in the Middle East to all these ongoing large infrastructure projects, we are the most reliable source. We bring not only the value through our systems and products, but also our supply chain doesn't disrupt any activities, even if it comes at the higher cost with more complexity. SICK is the partner. to stand by our customers in the Middle East that have a very challenging environment but they keep moving on the big projects on the airport that we showed last time. Activities are going there at high velocity and we are the partner of choice for our customer in the Middle East. But also other parts of EMEA are doing well. Africa, a strong contributor, a regular strong contributor. In high single digit growth momentum. And also in Europe, we have a differentiation in Europe where the eastern part of Europe clearly demonstrate a growth momentum, where other parts also a little bit weather related. The hot summer months were particularly more influential in the central and the southern part. Thank you very much. Infrastructure, renovation, it's still on a low level but it's a good sign that finally let's say through the process of allocating funds that these funds now find the way into the market and we expect also that this is then going to further pick up over time as more and more funds then go into execution. Europe clearly still the most challenged market, but also here, pockets of growth, green sprouts that we are working on and data centers as everywhere around the globe, very much an area where we are capturing more gains and where we are demonstrating also our ability to support large projects, large investment projects with more and more solutions that are contributing to the overall growth. Thank you for your attention. When we look into the Americas, the Americas has grown 4.1%. I think the momentum in the Americas, as this is mainly organic growth, here we have a very strong acceleration in Q3, above 6% in Q3. So a very reconfirming direction, as we also indicated at the mid-year point. In the Americas and here I have to start with the US and I have to start with the data center momentum, which has further accelerated. It is going at a high velocity and we are capturing here also a lion's share of the opportunities that are given to us or ahead of us. The same time our business in Canada but also in Latin America has good momentum and giving us also the confidence that the Americas will further evolve on the path as we have indicated again at the Meteor Point. Then we move to Asia Pacific and Asia Pacific and here I would just Start with the China contribution, which still is very visible in the overall contribution. It's a minus 2.3% as the rebasing of our business, construction business in China and especially also the residential oriented business has still a very significant impact. The market hasn't solidified yet. The residential market has not stopped to deteriorate and is still in a strong double-digit decline. But our measures are showing that we are countering that, especially on the bottom line, the profitability, securing our profitability is our clear goal. Target for our Chinese business, our Chinese business is healthy, is profitable, double digit profitable, but the market still gives us in one of the three sectors still a strong declining base that we are proactive acting on as part of the fast forward, but also with the given momentum. The other initiatives in the fast forward related to China are starting to show that we are here capturing with the focus on renovation, with the focus on large domestic commercial manufacturers, especially manufacturing in food and beverage, but in other industries as well. With our solutions for those players that are gaming up towards the international competition, they also see clearly the value of us helping them to have their infrastructure, their assets at the international level. And we gain share there. We also see that the renovation requirements in China in general are increasing. In line with our expectation, our business evolves on that direct China construction business and then ultimately also the automotive and industrial activities. Even so, the market is challenged. We are outperforming the market quite substantially and increase content. But let me also now talk about Asia-Pacific, excluding the China contribution. Here we have a significant organic growth, an organic growth similar to what we have seen in the Americas and also in other parts of the world. So here it is clearly a strong contributor to our business overall. Outperformance is the name of the game. It is clearly what drives us. We want to be the prime partner to our customer and we are the prime partner to our customer. This is then demonstrated also how we outperform our peers. You know this chart is the chart that we are putting together every then and now when we have reported numbers from our peers. And here, more significantly, when you look on the right-hand side, when we exclude the China influence, which is mainly an influence that is... Also based on our activities in China, we are in China as China is a key market, but most of our competitors are not in there. The peers are not active in China. And then you see the outperformance has further built in momentum in the last six months. And we also expected this outperformance is going to further be pronounced going forward. One topic I think for those of you that have joined us also a few weeks back at the investor event in Düdingen, the acquisition pipeline, the bolt-on transaction that we have done at the beginning of the year in Sweden, a bolt-on motor manufacturer giving us an exciting opportunity to expand not only in Sweden, but also in the adjacent countries in Denmark, in Norway, in Finland. And it's only six months since Finja is part of our family, but we see very good momentum in accelerating the growth of both Finja and of our Sika business. And also the reception from customers is reconfirming our assumptions that we put into this transaction. So a very, very interesting and a very decisive for the Nordic acquisition. Hakim, we mentioned at the investor event in Göttingen, it's a sizable, it's a 220 million company that we closed one month ago. We have a very strong start into this integration and it is an acquisition primarily focused on sealants, adhesives, foams that we can accelerate as a growth platform within Sika. And you will see later on our aspiration is to double the sales of the 220 million in the next five year with the integration of Akim into the Sika family. Just recently we have closed in the UK Aspects. It's a smaller transaction than Akim, but again, it's one of these bolt-ons that allows us to enter more significantly into an adjacent landscaping market, which is very much connected with our construction business. It is enabling us to take advantage of this very profitable, very fast growing opportunity, first in the UK, and then also later on become available for scaling in other parts of Europe. And then also I want to mention, even though it's not a nine-month relevant transaction, but we just announced it a few days back, the signing of the Resonac adhesives business that we buy out of the Resonac chemical group in Japan. It will still take some time until we close. We expect by mid of next year. But again, here it's an adhesives company active, especially on the automotive and the tiers of the automotive industry in Japan, in China, as well as in Taiwan. Akim, as I mentioned, the top line, let's say, expectation, the opportunity we have with Akim to double the business through their network, through our network, it is well on track to success. Deliver according to this scale showing here. At the same time, I would just like to remind our bolt-on strategy to acquire companies at the lower multiple, bring it up to us, our multiple, and of course, use them as accelerator of our organic growth strategy, MBCC. As a reminder, moving from 15% EBTA to 20% EBTA within a very short period of time. And then all the bolt-ons for various contributions, very much in line with this accretive deployment of capital to enhance and accelerate our organic growth momentum. I would like to come back to Fast Forward. A year ago, pretty much a year ago, we initiated Fast Forward and gave you especially clarity on the structural side. We talked a lot about our Fast Forward structural saving initiative. It came with a Thank you very much. And in Düdingen, four weeks ago, we talked a bit more about the investment into growth as the one thing is shaping the business towards the reality that the markets are representing, especially here in China. But at the same time, investing into growth at the same moment when there's a challenging time, investing through the cycle is an investment into growth, into future growth. And here, at that time, we talked about 120 to 150 million of investments and also here, then a significant return to be expected. We shared that in Düningen a couple of weeks back, but I would like to reiterate some of that here now again. And where are the investments going and how are we going then also to benefit of those investments? And on one part is customer value, creating ease of operating with us through the B2B eShop, but the EPS, EPDs that are becoming even more relevant in doing business across the globe. Digital Sales Support, enabling our sales team to be more with the customer, more in the field, having on the tip of their fingers all the answers that they need to provide to the customer. And then as part of that, also building up AI-based customer journeys to enhance and bring tangible value to the customer by helping our customer to be more efficient in their value creation from prospecting into tendering into planning into execution. So very tangible customer value on that side. In the middle, our own supply chain, the ease of doing business with Seco, also investments here into having end-to-end supply chain capability, a digital factory to drive internal efficiency, but also to be closer to the customer and put Systems like TMS and end-to-end systems in place that again makes it easier for the customer but also easier for us to bring the products at the right time in the right quantity to the right place. And then the third element, and that's the acceleration of the innovation journey by utilizing also here AI platforms to gather all the knowledge, all the learnings from everyday experiments and make that available to Our 1800 chemists with an AI supported tool here. As you know, we call it Nuage. And here every day we feed this machine more and more information, which means these data then become more and more valuable. And these are overall also elements that make us very confident that this, let's say, Future digital data driven competitive advantage requires that you have the data and us as the largest player in the industry with having access to all core markets, we can leverage this know-how like nobody else. And we believe strongly that this digital leadership is going to be a key differentiator going forward as the world moves more digital also in construction. A year ago, or not a year ago, last time I showed you a stadium as it was the football season. This time I would close my introduction by showing you another topic. We love data centers. We are on it. Thank you very much. Energy provider, energy projects are large-scale infrastructure projects perfectly fitted for SICA. We are deep, deep into this infrastructure builds. We have all the elements that are vital for creating and bundling our solution. And here I brought this dam, the Daimler Basha Dam in Pakistan. It's under construction. And here you can also see that this dam consumes all our solution from the concrete admixtures, anchoring grouts, Coatings, waterproofing, everything that SICA contributes is on such a project. And again, a fantastic example of sizable infrastructure projects that are going to become much more vital. When you focus on the right-hand side of the picture, then you see that there's an expected 15% increase Kegger expected in the years ahead of us just in regards to hydropower energy contribution to the overall energy mix. And here, I think we are going to talk more about energy going forward as this is clearly also not only driven by the digitalization drive and the data centers, but also the consumption and the move towards a more electrical power and here I think a highlight that I just wanted to share you like the stadiums before a prime example of Seco's strengths to benefit from global trends. But with that, I would then hand over to Adrian to talk a bit about the financials.

Thank you, Thomas, for highlighting here our quite successful business execution. I will now like to focus and give a bit more insights on the financials of the first nine months. In the nine months to end of September, SICA delivered very solid revenue growth, as we have heard. Let me now walk you through some of the key elements in looking at the nine months sales bridge. Driven by another solid quarter in Q3, organic growth was 3.5% in the first nine months, with acquisitions adding a further 1.3% of growth. This is slightly above the first. have here taking Zika overall to 4.8% growth in local currencies. As Thomas had highlighted, our growth in every region, with the exception of China, was strong. Here you can clearly see this without the decline of the China construction business of around 127 million in the first nine months. We delivered actually 6.2% of local currency growth. This is up from 5.5% in the first half year. Organic Growth X China was actually 4.9% for the period under review. Overall, a very strong performance in what still is a subdued market and I think clearly showing that our strategies are delivering. In terms of Swiss francs turnover, we delivered 8.71 billion in sales in the first nine months. This is up from 8.58 billion in the same period of last year. The adverse foreign exchange trajectory and reversed in Q3, reducing nine months negative foreign exchange impact to minus 3.2%. As in the isolated Q3, the foreign exchange effect was actually positive, positively contributing 1.5% in the quarter. So looking forward, of course, at today's foreign exchange rates, we expect here a full year impact of foreign exchange to be between minus two and minus three percent for the whole year from today's point of view. If we look at here the growth development or the sales development on a sequential basis, we have clearly shown here a reversal of the trend in the first half and have further improved in Q3. Organic sales, as mentioned, organic sales growth at 3.5% for the first nine months. In isolation 4.6 in the quarter, this being up from 2.9 in the first half year. Pricing has played a part in our growth after the start of the conflict in the Middle East. But we also delivered about 1% volume growth in the first nine months, gaining further market share and in spite of a negative China. Contribution from acquisitions in the quarter 1.5%. and slightly above here of the first half year. This is due to one month of contribution of AKIM already, which we closed at the beginning of September. And given AKIM, you should expect about a 2.5% acquisition contribution in the fourth quarter. Let's now look at the full P&L and move down here from the sales line. In the first nine months, we delivered a further expansion here of the material margin going up to 55.4%. This is up 40 base points compared to the same period of last year, which reflects procurement scale, efficiency, as well as pricing amid increasing input cost and it also includes higher cost paths through of strongly increasing transportation costs that do sit in the OPEX line but passing this on through pricing or surcharges. and dilution from acquisitions was relatively minor here on gross result level, about 10 base points. In looking at personnel expenses, personnel expenses actually declined modestly as our fast-forward initiatives compensated underlying wage inflation and also the addition of M&A-related headcount. Other operating expenses, on the other hand, with an increase of 5.5%, largely due to a significant higher transportation cost, Reflecting both an increase in cost of diesel and the impact of driver shortages in parts of the world. But as mentioned with this corresponding path through on the top or material margin line. As a result, EBITDA came in at 1.676 billion, an increase of 1.9% and a flat EBITDA margin of 19.2% including also here at 10 base points for an exchange drag. Our EBIT margin at 14.5% was up 10 basis points or 2.3% versus last year. on marginally higher depreciation and amortization cost. Net profit came in at 888 million, up 1.9% on last year. and more than 10% of sales correspondingly diluted. EPS also increased from 5.42 to 5.52 per share in the previous year. Now let's look a bit closer in terms of the individual buckets here driving EBITDA development in looking at the EBITDA bridge and the various elements delivering this 10 base point increase in EBITDA margin on a constant currency basis. and on a reported basis, as mentioned, a stable EBITDA margin of 19.2%. Clearly, on the one hand, continued improvement of our organic material margin by 50 base points and cost savings and benefits through fast forward were the two elements here offsetting some of The cost increases, as mentioned, largely related to a significant increase in transportation costs, also including in last year some a couple of positive one timers in the in the previous year. But as mentioned, this being passed through on the top or the material margin line in terms of increased cost. So as you can see, Fast Forward is delivering. At our Eastern Investor Day, I presented an update on Fast Forward. Also, Thomas mentioned it before. Here, a brief recap. We are clearly on track here to deliver the 80 million of productivity benefits in 2026. This will rise to about 110 million of savings then through 2027. Now at this point, at the end of the nine months, we are run rating on a monthly basis close to 8 million of savings per month. Here the last two buckets on M&A also a solid continued revenue capture relating to MBCC driving here 20 base points of margin contribution. In the first nine months, this brings basically the trailing 12 months impact in terms of absolute synergies compared to the period before closing to above 200 million. So here within the guided and targeted range for 2026. Acquisitions closed this year had a minor dilution impact on the one hand integration cost on the other hand also PPA effects playing a role here. And lastly, excluding here the 10 base points for an exchange, Hedvind, this 10 base points improvement of EBITDA margin is underlying here a solid material margin management as well as execution here and delivery on fast forward and on M&A synergy capture. And with this, I'll hand back to you, Thomas, for the outlook.