Press Release: Sika: STRONG SALES GROWTH IN FIRST QUARTER -- SLOWER IN MARCH DUE TO COVID-19

STRONG SALES GROWTH IN FIRST QUARTER -- SLOWER IN MARCH DUE TO COVID-19

-- Sales increase of 15.4% in local currencies to CHF 1,813.6 million

(+10.3% in CHF)

-- Negative currency effect of --5.1%

-- Acquisition of Adeplast (Romania) concluded, new production facility in

Sarnen (Switzerland) comes on stream

-- Outlook for 2020: forecast for 2020 not yet possible due to ongoing

developments related to COVID-19

-- Confirmation of 2023 strategic targets for sustainable, profitable growth

Thanks to a good start to the 2020 business year, Sika has continued its

growth trajectory, reporting a new sales record of CHF 1,813.6 million

in the first quarter. This equates to an increase of 15.4% in local

currencies. A negative currency effect of --5.1% led to sales growth in

Swiss francs of 10.3%, with an acquisition effect of 16.7%. Organic

growth was thus slightly negative in the first quarter, at --1.3% This

reflects the first repercussions on business of the COVID-19 pandemic.

Paul Schuler, Chief Executive Officer: "Since the start of the

coronavirus pandemic, Sika has been quick to react in all markets

affected, implementing the necessary measures swiftly and rigorously.

This has been done with a view to safeguarding the health of employees,

maintaining business activity, and adapting to the new market conditions

through targeted cost management. The crisis will affect Sika, too, but

-- thanks to our proximity to customers in all countries -- we are able

to move fast in order to grasp opportunities and thus capture further

market share. I want to thank all of our employees for their great

dedication at this difficult time."

SLOWER GROWTH IN MARCH IN ALL REGIONS

As the coronavirus pandemic gained ground in January 2020, first in

China and then in the rest of Asia, followed by the EMEA region and the

Americas region, from mid-March around 30 countries where Sika is

present through subsidiaries and production sites found themselves in

lockdown. The extent of the lockdown varies from country to country.

Since the situation is changing constantly, Sika is adapting measures

specifically in line with the new circumstances.

In the first quarter of 2020, the EMEA region recorded a sales increase

in local currency of 13.3% (previous year: 8.2%). Business developed

well in Germany, Austria, and Switzerland (the "DACH"area), the Nordic

countries, Eastern Europe, and the Middle East. The impact of the

pandemic made itself felt on the entire EMEA region from mid-March, with

the first countries entering the lockdown phase. The acquisition of

Adeplast (Romania) was concluded at the end of March. In addition, in

the first quarter Sika also brought into operation in Sarnen,

Switzerland, a new production facility for the manufacture of

SikaProof(R) structural waterproofing membrane.

The Americas region recorded growth in local currencies of 23.0%

(previous year: 4.8%). Business was strong in the region until

mid-March. The United States and Canada in particular saw double-digit

growth rates, and many countries in Latin America recovered from the

political tensions of the previous months. However, with the lockdown,

growth momentum came to an abrupt halt in several Latin American markets

from March 20.

Sales in local currencies in the Asia/Pacific region increased by 29.8%

(previous year: 2.8%), a figure which includes a significant acquisition

effect from the Parex takeover (39.5%). China, where the COVID-19

outbreak started, was in lockdown from mid-January to March. Sika was

able to restart business activities in the country from early March,

with all factories recommencing production on a reduced scale. Australia,

Japan, and Korea were less affected by the pandemic in economic terms,

and construction activity continued in most areas with some

restrictions.

The automotive industry reported a decline of -25% in production figures

in the first quarter. Despite the difficult environment, Sika was able

to capture increased market share. The Global Business segment posted

negative growth in local currencies of --7.1% (previous year: 13.3%).

Most car manufacturers in Europe and North America halted production

from mid-March, just as their Chinese counterparts were restarting their

production operations. Despite the coronavirus-related forecasted

decline in automotive sales, Sika expects the megatrends in modern auto

manufacturing to generate growth stimuli in the long term, with

electro-mobility and lightweight construction also dominating in future.

MEASURES IN THE CURRENT SITUTATION

From the outset, the central focus has been the health of employees,

customers, and suppliers. Sika was able to react swiftly, with its local

management teams developing and implementing targeted operational

measures for the national subsidiaries.

Cash management is a key issue. Non-business-critical investment has

been postponed and cost structures have been adapted, without

jeopardizing long-term growth. Close attention is paid to working

capital management. Sika has a solid balance sheet and kicked off the

2020 business year with a high cash holding of CHF 995 million. On top

of this, the Group has CHF 1.25 billion in credit lines.

OUTLOOK

Sika confirms its strategic targets 2023. The organization will continue

to be aligned for continued long-term success and profitable growth. By

targeting six strategic pillars -- market penetration, innovation,

operational efficiency, acquisitions, strong corporate values, and

sustainability -- Sika is seeking to grow by 6--8% a year in local

currencies by 2023. It is aiming for a higher EBIT margin of 15--18%

from 2021 onward. Projects in the areas of operations, logistics,

procurement and product formulation should result in an annual

improvement in operating costs equivalent to 0.5% of sales.

Given the volatility of the current backdrop, it is not possible to

issue any concrete forecast as regards the course of business for

full-year 2020. Much will depend on when individual large countries exit

lockdown and how the further spread of the virus can be contained over

the year. Although Sika will not be able to escape a global recession

entirely unscathed, it is convinced that it will be able to continue to

further improve its position thanks to the measures taken and its

proximity to the market, emerging from the current situation

strengthened as a company.

NET SALES IN THE FIRST THREE MONTHS OF 2020

1/1/2019 1/1/2020 Year-on-year change

In CHF mn -3/31/2019 -3/31/2020 (+/- in %)

-------------- ---------- ---------- --------------------------------------------------------

In local Currency Acquisition Organic

In CHF currencies(1) effect effect(2) growth(3)

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

By region

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

EMEA 723.8 786.4 8.6 13.3 -4.7 13.3 0.0

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

Americas 412.5 480.8 16.6 23.0 -6.4 17.7 5.3

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

Asia/Pacific 266.2 332.7 25.0 29.8 -4.8 39.5 -9.7

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

Global

Business 242.3 213.7 -11.8 -7.1 -4.7 0.0 -7.1

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

Net sales 1,664.8 1,813.6 10.3 15.4 -5.1 16.7 -1.3

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

Products for

the

construction

industry 1,225.8 1,428.9 16.6 21.7 -5.1 22.4 -0.7

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

Products for

industrial

manufacturing 419.0 384.7 -8.2 -3.2 -5.0 0.0 -3.2

-------------- ---------- ---------- ------ ------------- -------- ----------- ----------

(1) Growth in local currencies including acquisitions.

(2) Sales contribution by acquired companies without

considering the growth after business combination.

Sales growth of the acquired businesses since initial

consolidation is included in organic growth.

(3) Growth adjusted for acquisition and currency impact.

Sales growth of the acquired businesses since initial

consolidation is included in organic growth.

FINANCIAL CALENDAR

Half-Year Report 2020 Thursday, July 23,

2020

Results first nine months 2020 Thursday, October 22,

2020

Net sales 2020 Tuesday, January 12,

2021

Media conference/analyst presentation on 2020 full-year Friday, February 19,

results 2021

Net sales first quarter 2021 Tuesday, April 20,

2021

53rd Annual General Meeting Tuesday, April 20,

2021

Telephone conference on April 21, 2020, at 9:30 AM

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