Sika gains market share and reduces costs

10-30-2009: In the first nine months of the business year Sika expanded its market share and reduced operating costs. In addition the company benefited from lower raw material prices in comparison with those of the previous year period. The decline in sales in local currencies slowed to 5.2% (half-year -6.3%). Sales decreased by 11.6% in Swiss francs to CHF 3 132.6 million. The operating profit of CHF 321.8 million before restructuring costs lay 18% (half-year -40.8%) below that of the previous year.

Conditions in the company's target markets did not change significantly during the period under review. Sika nevertheless succeeded in expanding its market share in some markets. The decline in sales has thus slowed somewhat, amounting to 5.2% in local currencies for the first nine months of the business year (half-year -6.3%). Included is an acquisition effect of 2.3%. Exchange rate fluctuations had a negative effect of 6.4%, so that sales in Swiss francs decreased by 11.6% from CHF 3 543.1 million to CHF 3 132.6 million in comparison with the previous year period.

Sika experienced further growth in local currencies in the Regions IMEA (India, Middle East, Africa, +9.9%) and Latin America (+8.2%). In other Regions sales declined: Europe North -10.0%, Europe South -4.5%, North America -9.1% and Asia/Pacific -3.1%. In this latter Region sales development varied widely from country to country. While Sika achieved double-digit growth rates in emerging countries such as China and Indonesia, sales decreased in OE CD nations (Japan, Australia, New Zealand). Adjusted for exchange rates, sales of products for the construction industry declined by 2.1% during the first nine months of the business year, including an acquisition effect of 3.0%. The decrease in sales of products for industrial manufacturing (primarily in vehicle construction) amounted to 16.6%.

Sika benefited during this reporting period from significantly lower raw material prices in comparison with the previous year period. Gross profit in relation to net sales improved by 2.1 percentage points to 55.1%. Operating costs before restructuring declined all in all by 6.3% (adjusted for acquisitions by more than 9%). In particular the reduction of other operating expenses by CHF 80 million added to this result. At CHF 321.8 million, the operating profit before extraordinary restructuring costs lay 18% (half-year -40.8%) below that of the previous year, yielding a margin of 10.3% (previous year 11.1%). Restructuring costs in the amount of CHF 22.7 million impacted the income statement in the third quarter. Operating profit (EBIT) amounted to CHF 299.1 million, corresponding to a decline of 23.8% in comparison with the previous year period. The EBIT margin reached 9.5% (previous year 11.1%). Consolidated net profit totaled CHF 199.9 million, or 6.4% (previous year 7.3%) of sales.