Sika confident it can handle raw material price rises

October 7, 2021

ZURICH (Reuters) – Sika can overcome rising raw material costs and supply chain restrictions to increase its sales and profit margins this year, the Swiss construction chemicals maker said on Thursday.

The company, whose products are used to seal, reinforce and protect building materials, said it expects sales growth in local currencies of 13%–17% this year, and a higher increase in operating profit, confirming previous guidance.

The operating profit (EBIT) margin will reach 15% for the first time this year, it added, “despite a challenging raw material price development and supply chain restrictions.” In 2020 it posted an EBIT margin of 14.4%.

In a statement ahead of its investor day, Sika also confirmed its 2023 targets, saying it is still aiming for 6-8% local currency sales growth per year and expects to raise operating profit margins to 15-18% from 2021 onwards.

The outlook confirmed guidance given by the company at its half-year results in July.

Margin improvements would come from cost savings in operations, logistics, procurement and product formulations, it said.

These should result in an annual improvement in operating costs equivalent to 0.5% of sales, said Sika, which is also aiming to reduce its carbon emissions.

Chief Executive Thomas Hasler, who took charge of the company in May, said Sika would continue to look at acquisitions and new products to achieve its goals. The company has already made seven acquisitions this year.

“Our company has great potential for further growth and long-term success,” he said.

(Reporting by John Revill and Silke Koltrowitz; Editing by Riham Alkousaa and Mark Potter)

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