2018 SALES EXCEED CHF 7 BILLION FOR THE FIRST TIME SIKA MADE BINDING - PowerPoint PPT Presentation

2018 SALES EXCEED CHF 7 BILLION FOR THE FIRST TIME SIKA MADE BINDING OFFER TO ACQUIRE PAREX SIKA INVESTOR PRESENTATION JANUARY 2019

AGENDA 1. HIGHLIGHTS SALES 2018 2. SUCCESSFUL STRATEGY EXECUTION 3. SIKA MADE BINDING OFFER TO ACQUIRE PAREX 4. TARGETS 2020 AND OUTLOOK 2

1. HIGHLIGHTS SALES 2018

STRONG GROWTH OF 13.7% 2018 SALES EXCEED CHF 7 BILLION FOR THE FIRST TIME  Sales growth of 13.7% in local currencies to CHF 7.09 billion in 2018  Strong growth in all regions  Continued investment in supply chain expansion with opening of 11 factories, 1 national subsidiary, and 4 acquisitions  Outlook 2019: in line with the strategic targets, sales growth of 6-8% and over- proportional profit increase are expected 4

SALES 2018 GROWTH IN ALL REGIONS +15.8% +8.1% +5.0% +30.1% Growth in CHF +14.2% +11.7% +5.5% +29.2% Growth in LC +1.6% -3.6% -0.5% +0.9% FX impact +6.7% +4.7% +0.0% +23.1% Acquisition 23% 77% Construction Industry EMEA Americas Asia/Pacific Global Business 5

STRONG GROWTH MOMENTUM CONTINUES + 13.7% 13.7% SALES GROWTH (13.4% IN CHF) IN 2018 + 14.2% 7.09 + 5.5% Group + 11.7% + 29.2% 1.18 1.82 Asia/Pacific 3.17 Americas 0.92 EMEA Global Business 12M 2017 12M 2018 (in CHF billion, growth in LC) 6

CONTINUING HIGH OPERATING SPEED IN 2018 CLOSING OF 4 ACQUISITIONS Company Country Target Market Faist ChemTec Global Global Business Index Construction Systems and Italy Roofing & Waterproofing Products Polypag Switzerland Sealing & Bonding Fibermesh Concrete Fibers Global Concrete Arcon Membrane Srl Romania Roofing & Waterproofing Total annual sales: CHF 398 million Faist ChemTec Index Construction Systems and Products Fibermesh Concrete Fibers 7

CONTINUING HIGH OPERATING SPEED IN 2018 EXPANSION IN EMERGING MARKETS New subsidiaries:  Honduras (February 2018) Now present in 101 countries with own national subsidiaries 8

CONTINUING HIGH OPERATING SPEED IN 2018 INVESTMENTS IN NEW PLANTS Opening of Sika plants:  New mortar plant Vietnam (Hanoi, March 2018)  1 st admixture plant Senegal (Dakar, April 2018)  New admixture factory Saudi Arabia (Dammam, June 2018)  New admixture and mortar plant Azerbaijan (Baku, Juily 2018)  Mortar and admixture factory United Arab Emirates (Dubai, August 2018)  Automotive plant Mexico (Querétaro, September 2018)  2 new admixture plants Kazakhstan (Almaty and Astana, October 2018)  New admixture plant Russia (Yekaterinburg, October 2018)  Admixture, mortar and liquid applied membrane (Lima, November 2018) plant in Peru  Concrete admixtures, mortars, and liquid applied (Palin, December 2018) membranes plant in Guatemala New plant in Peru New factory in Dubai 9

2. SUCCESSFUL STRATEGY EXECUTION

SIKA’S GROWTH MODEL DELIVERS KEY INVESTMENTS SINCE 2015  - Successful Target Market concept Market Penetration  - Megatrends driving growth  - 217 new patents filed Innovation  - 20 Global Technology Centers  - 37 new plants opened Emerging Markets  - 11 new national subsidiaries  - 20 acquisitions in all regions Acquisitions  - CHF 798 million sales added  - Strong corporate culture Values  - High employee loyalty 11

SIKA’S GROWTH MODEL DELIVERS CONTINUED GROWTH IN SALES AND PROFIT (FULL YEAR) NET SALES EBIT NET SALES 1100 16.0% 13.8% 14.3% 7000 16.0% % growth in local currencies as % of net sales 1000 14.0% 12.3% 14.0% 900 6500 5.5% 9.0% 13.0% 6.2% 5.3% 9.4% 11.4% 12.0% 800 12.0% 10.2% 6000 700 9.0% 10.0% 10.0% 600 7.6% 5500 8.0% 8.0% 500 5000 400 6.0% 6.0% 300 4500 4.0% 4.0% 200 4000 2.0% 100 2.0% 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 12

SIKA’S GROWTH MODEL DELIVERS CONTINUED INCREASE IN ROCE (FULL YEAR) RETURN ON CAPITAL EMPLOYED (ROCE) in % * 29.8% 28.7% 24.3% 23.3% 21.0% 18.5% 15.6% 2011 2012 2013 2014 2015 2016 2017 13

3. SIKA MADE BINDING OFFER TO ACQUIRE PAREX

TRANSACTION HIGHLIGHTS (1/2)  Sika made binding offer to acquire Parex from CVC Fund V  Parex, an excellent company  A leading mortar manufacturer – great expertise in facade, tile adhesives, waterproofing  Impressive track record of profitable growth (7 year growth CAGR of 7%; 2018E sales: CHF 1.2 billion, EBITDA 16%)  Strong position in distribution (80% of sales)  Present in 23 countries with key position in 8 markets  Key benefits  Very good strategic fit with no overlaps  Combining two “growth engines”  Boost Sika’s position in mortars and distribution  Sika and Parex with strong brands and position in complementary channels, therefore multiplier potential for Sika and Parex products  Rollout Parex’s facade business in Sika world  Leverage potential in technology and operations  Cultural fit  Highly decentralized organization  Management by empowerment 15

TRANSACTION HIGHLIGHTS (2/2)  Financial parameters  Enterprise value of CHF 2.5 billion  Annual synergies of CHF 80 – 100 million expected  Bridge loan facility for the full amount committed by UBS/Citi  Multi-step transaction  Sika signed exclusive put option agreement  Consummation of transaction subject to French consultation process and regulatory approvals, expected in Q2/Q3 2019 16

PAREX – A LEADING MORTAR MANUFACTURER 80% OF SALES THROUGH DISTRIBUTION CHANNEL Key facts Key figures 2018  Strong position and expertise in mortar solutions for Sales CHF 1,204 million renovation and new builds EBITDA approx. CHF 195 million  Addressing increasing urbanization, growing market Waterproofing & penetration and sophistication trends (such as higher building Tech. Solutions Ceramic Tile standards) 26% Settings Materials Sales by products 40% Facade Protection  & Decoration Strong position in 8 key markets 34% Americas  Comprehensive product portfolio for critical applications in 25% the construction industry with well known brands Asia Sales by region 42% EMEA  80% of sales through distribution channel 33%  Global production footprint and broad distribution network Sites 74 plants across 23 countries with strong local presence R&D centers 13 R&D centers  Highly decentralized and performance oriented organization Employees 4,600 employees worldwide  Strong reputation for quality, safety and reliability 17

PAREX – A PORTFOLIO OF STRONG BRANDS IN KEY MARKETS Segments Brands 8 Key Markets  Self-leveling compounds Ceramic Tile Setting  Ceramic tile adhesives Materials China France  Grouts (incl. epoxy grouts) 40%  Grey mortars Facade USA Argentina  Protection & Mineral mortars Decoration  Organic renders 34%  EIFS Brazil Singapore  Waterproofing systems Waterproofing & Technical  Concrete repair Solutions  Other technical solutions UK Australia 26% 18

PAREX – TRACK RECORD OF CONSISTENT PROFITABLE GROWTH Strong organic and acquisitive revenue growth (in EUR bn) … and EBITDA growth (in EUR mn) 1.1 200 1.0 0.9 0.8 150 0.7 0.6 100 0.5 0.4 0.3 50 0.2 0.1 0 0.0 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 19

TRANSACTION RATIONALE EXPAND HIGHLY PROFITABLE MORTAR BUSINESS Combined Adhesive Systems Thermoplastic Adhesive Mortars 23% Systems Systems 100% Concrete Systems 28% 26% 14% CHF7.1bn CHF1.2bn CHF1.1bn CHF8.3bn Coating Systems Thermoplastic Coating Concrete 12% Systems Systems Systems 24% 14% 17% Mortars Mortars 27% 15% Others 8% Cementitious Others Cementitious floors 20% Others Tile setting floors 9% 20% 22% 18% Interior wall levelling Concrete repair 5% mortars Concrete repair CHF1.1bn CHF1.2bn CHF2.3bn Tile setting 11% Facade mortars Facade mortars mortars 18% Facade mortars and protection and protection 12% 6% and protection 34% Waterproofing 21% Waterproofing mortars Waterproofing mortars 14% Concrete repair mortars 10% Cementitious Tile setting Cementitious floors mortars 12% grouts 25% 13% 12% 11% 20 Note: Based on FY18 financials

TRANSACTION RATIONALE SIKA AND PAREX COMBINED - GLOBAL PLAYER IN MORTARS Double sales in mortars and significantly increase expertise in key technology (in CHF bn) 2x  Mortar is a key growth technology for Sika and one of its most important earnings contributors 2.3  In line with past acquisitions (Akzo Nobel Building Adhesives, Everbuild etc.) CAGR 1.2  Significant expansion of our capacity opening 39 + 11% new factories since 2011 and 13 acquisitions including 16 factories 1.1  Acquisition of Parex more than doubles Sika's mortar business 0.5  Sika will become one of the global top 3 players in mortars / refurbishment with complete offering and expertise across the full building life cycle 2011 2018 Parex Pro-Forma 21

TRANSACTION RATIONALE STRENGTHENING ACROSS ALL REGIONS + 13% + 43% + 17% + 17% 1.18 1.68 7.09 8.29 1.82 2.12 3.57 Asia/Pacific 3.17 Total 1 Americas Sika 2018 Sika 2018 EMEA (in CHFm) post acquisition (in CHFm) Note: 22 1 Including Global Business segment