Sika ended the first quarter of 2023 with a slight growth. Sales in local currencies and organic growth both increased by 1.2%. Sika posted sales of CHF 2,325.9 million. Compared with the strong prior-year period and due to the stronger Swiss franc, the sales development in CHF amounted to -3.0%. This figure includes a currency effect of -4.2%. The more dynamic markets in the Americas and Asia-Pacific regions offset the weaker performance in Europe. Growth in Global Business outstripped the market and was once again in double digits. Sika achieved a substantial increase in the material margin in the first quarter.
"Sika successfully navigated the economic challenges in the first quarter. With our balanced product and sales mix we could smooth out fluctuations in the individual regions. As anticipated, the first quarter was challenging, but – given the recovery expected in the markets – we are sticking with our growth ambitions for 2023. We expect that the acquisition of MBCC will be closed in the first half of the year. With MBCC, we are expanding our leadership position for sustainable solutions in the construction industry even further. We are thus strengthening the platform underpinning our Strategy 2028 for profitable, long-term growth and securing a sustained increase in value for our customers, for our employees, and for our shareholders," said Thomas Hasler, chief executive officer.
Due to higher inflation, interest rate hikes, and the war in Ukraine, the construction industry showed weaker development in the first quarter of 2023 than in the same period the previous year. These impacts were contrasted with an increased demand for solutions that reduce CO2 emissions and conserve resources. Through its sustainable technologies, Sika is able to offer its customers solutions to reduce their carbon footprint.
The EMEA region (Europe, Middle East, Africa) reported a sales decline in local currencies of -4.7% (previous year: +18.1%). Business was muted in Germany, Austria, and Switzerland in particular, as well as in Eastern Europe. Distribution business was up slightly from the previous quarter. In the project business, volumes declined despite economic stimulus programs and investments in energy transition. Sales in the countries in Africa and the Middle East continued to record double-digit growth in the first three months of 2023.
In local currency terms, the Americas region achieved a 5.1% increase in sales (previous year: 36.2%). A higher level of interest rates weighed on construction activity. Despite this, Sika registered a solid increase in the first quarter, with much of this increase attributable to U.S. infrastructure projects. Construction work focused on the modernization and expansion of subway lines, bridges, tunnels, and freeways, with investments in commercial construction projects sparking additional demand.
Sales in local currencies in the Asia-Pacific region increased by 2.6% (previous year: 18.6%). At the beginning of the first quarter, China continued to be marked by a high level of infections. The situation significantly improved toward the end of the quarter, with double-digit growth in the distribution business. Growth was solid in Japan, while India recorded double-digit growth. Business got off to a muted start in Southeast Asia in 2023, impacted by weaker sales in Vietnam triggered by the government's tightening monetary policy.
In the Global Business segment, Sika achieved growth in local currencies of 15.2% (previous year: 10.4%), growing at a considerably faster pace than the market, due to the demand for new vehicles and supply chain normalization. Sika is anticipating a continued recovery in the market for automotive business over the medium term, with long-term growth stimuli coming from electromobility and alternative drive concepts.
In the first quarter of 2023, Sika signed a purchase agreement with the private equity firm Cinven for parts of MBCC's admixture business. This business achieved sales of around CHF 920 million in fiscal year 2022. Closing of the acquisition is scheduled for the first half of 2023. The acquisition of MBCC is significantly value-enhancing with anticipated additional annual sales of CHF 160 – 180 million.
For 2023, Sika plans to continue its strategy built on sustainable and profitable growth even in a challenging economic environment. Sika expects sales to rise by 6–8% in local currencies and anticipates an over-proportional increase in EBIT (excluding the impact of the MBCC acquisition).
To learn more, visit https://www.sika.com/.