Sika AG, Nine Months 2023 Earnings Call, Oct 20, 2023

Dominik Slappnig

Thank you, Sandra, and good afternoon, and welcome to our 9 months results conference call.

Present on the call with me today is Thomas Hasler CEO; Adrian Widmer, CFO; and Christine Kukan, Head of IR.

We published our 9 months figures this morning at 5:00. The 9 months presentation is as well published on our website.

With this, Thomas Hasler and Adrian Widmer will provide further details on the results and the outlook. Afterwards, we will be ready to take your questions.

I hand now over to Thomas to start with the highlights of this 9 months.

Thomas Hasler

Thank you, Dominik, and good afternoon to our 9 months results call from my side. In summary, Sika performed very strong in a very challenging economical environment and geopolitical distress. It is a 9-month result that needs a few explanations as we have the reported numbers and underlying business evolution, which we will present in the coming 45 minutes.

We reported an increase in net sales of 5.6% in Swiss francs. The heavy impact from the currency appreciation because our local currency growth is 12.4%. The vast majority of our growth comes from acquisition, 11.1% in local currency. So that leaves 1.3% on the organic side. The organic side has strongly come back from a weak start into the year, and we have momentum going forward. This gives us confidence also going into the Q4 and into next year.

On the material margin, which has been and still remains a strong target for us to reestablish our corridor of 54% to 55%, we achieved 53.1% in the first 9 months, a strong recovery considering last year's level of 49.3%.

On the reported EBIT margin of 13.5%, which is lower than prior year, we have to consider in there also the onetime effects. So if you take the onetime effects out, our underlying EBIT margin is at 14.8%, which again is 100 basis points higher than prior year. Here, Adrian will go into the details guiding you through this.

For me, it's very important that the underlying organic business is going and moving in the right direction. As an indication for this, our Q3 performance is the strongest Q3 or strongest quarter ever on absolute numbers in profitability but it is also one of the strongest ever achieved in Sika's history. It's 24.3% higher than Q3 2022. And it is a quarter where we had little impact from one time. So it is a much more transparent comparison of the going rate of Sika given all the great, let's say, achievements in the first 9 months with MBCC now being closed, but at the same time, of course, also having then onetime effects into our reported EBIT.