Sika rushes to record to record | News, analysis and recommendations on brokerage firms | Industry of society

Sika achieved its goal: the company remains independent and independent. With the settlement of the dispute over the acquisition of control by the French company Saint-Gobain (SGO), since the extraordinary general meeting of June 11, Sika has become a real public company with a single share and no majority shareholder. With the exceptional figures of the first semester of 2018, it proves that, for the moment at least, it does not need support or industrial partner. The stock market reacts accordingly and gives Sika a higher rating.

The company managed to accelerate its growth in the second quarter. Sales increased by 19.3%, in local currencies by 16.3%. During the first half, Sika achieved a turnover of just under 3.5 billion francs, which corresponds to an increase of 15.9%. Excluding the positive currency effect, there was an increase of 13.9% in local currencies. This means that Sika has grown faster than the market in many countries, according to CEO Paul Schuler.

Broad-Based Growth

All regions contributed to growth, albeit to varying degrees. The regions of Emea (Europe, Middle East, Africa) and the Americas increased their sales by 13.6% each. The Middle East, Africa and Eastern Europe have developed particularly dynamically in the region of Emea. The acquisition of the Italian Index Construction Systems and Products (sealing systems) also had a positive impact.

Growth in the Americas region was boosted by double-digit growth in the United States. The Asia / Pacific region is down slightly with a 5% increase in sales. Above all, the major markets of India and China have developed positively.

The new Global Business segment increased sales by 28.6%. However, 20.7% of this amount is attributable to the acquisition of the international company Faist ChemTec, active in the reduction of vehicle noise. The globally managed automotive business is grouped into the new segment. It realizes a good 13% of the consolidated business figure

The settlement of the dispute over the sale of Schenker-Winkler Holding or the Burkard stock package to SGO has left its mark. EBIT grew by only 10.6% to CHF 444.6 million, a gain of CHF 23 million. They include the suspended remuneration of the Board of Directors for the period 2015-2018 and the transaction costs involved in the agreement. Without this effect, EBIT would have increased by more than 16%.

Profit reached CHF 318.2 million, 11.4% more than a year earlier. The financial situation deteriorated during the settlement of disputes. Sika took a 7% stake in SGO for an amount of about CHF 2.1 billion. The capital ratio went from 58.9% to 21.9%.

In addition to the above-mentioned acquisitions, Sika opened three new plants (in Senegal, Saudi Arabia and Vietnam) and created a national company (Honduras) in the first half of the year. It is now present in 101 countries and produces in more than 200 factories. For the entire year, the company intends to put into operation eight new factories and to create other national companies. The activity of acquisition is likely to be intensified. The CEO of the Schuler Group can also imagine major acquisitions. Apparently some projects are under revision.

Excellent prospects

For the first time, Sika is forecasting a turnover of more than CHF 7 billion for the first time, a growth of more than 10%. The EBIT and the profit should increase slightly disproportionately. "Finanz und Wirtschaft" forecasts earnings per share of CHF 5.15 for 2018, an increase of 12.5%. In the coming year, growth should still accelerate, 6 Fr. profit per share seems possible. The equity ratio is expected to improve rapidly and reach about 40% by the end of 2019.

Based on the estimate of earnings for 2019, Sika displays a price / earnings ratio. profit slightly above 23%. They remain a clear purchase.

The full story of Sika can be found here.