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1. Company Snapshot

1.a. Company Description

Sika AG, a specialty chemicals company, develops, produces, and sells systems and products for bonding, sealing, damping, reinforcing, and protecting in the building sector and automotive industry worldwide.It offers tile adhesives and grouts, and systems for under-tile waterproofing and sound reduction, as well as renders and decorative finishes for exterior and interior walls; and develops and markets various admixtures and additives for use in concrete, cement, and mortar production, as well as flat roofing systems.The company also provides a range of technologies used for below and aboveground waterproofing, including flexible membrane systems, liquid applied membranes, joint waterproofing systems, waterproofing mortars and mortar admixtures, and injection resins and grouts for use in various markets, such as commercial and residential basements, tunnels, bridges, and various types of water-retaining structures, such as reservoirs, storage basins, and storage tanks.


Further, it offers flooring solutions, such as synthetic resin and cementitious systems for industrial and commercial buildings; and sealants, tapes, spray foams, and elastic adhesives for the building envelope, interior finishing, and infrastructure construction applications.In addition, the company provides repair, strengthening, and protective solutions for concrete structures, such as repair mortars, shrinking grouts, anchoring adhesives, protective coatings, and corrosion control and structural strengthening systems.It serves automobile and commercial vehicle assembly, automotive aftermarket, marine vessel, industrial lamination, renewable energy, and facade engineering industries.


The company was founded in 1910 and is headquartered in Baar, Switzerland.

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1.b. Last Insights on SIKA

The recent 3 months performance of Sika AG was negatively impacted by a slowdown in sales growth, despite a strong Q1 2024 earnings and revenue beat. The company's Q1 sales growth in local currencies was 1.9%, lower than the 4.7% growth in 2024. Organic growth was 0.9%, while the acquisition effect was 1.0%. The company's expansion into new markets through acquisitions, such as Elmich in Singapore, Cromar in the UK, and HPS in the USA, may not have fully offset the slowdown in sales growth.

1.c. Company Highlights

2. Sika's Resilient Performance Amidst Market Uncertainty

Sika reported a modest sales growth of 1.1% in local currency for the first 9 months of 2025, despite facing challenges in its China construction business, which declined in double digits. The company's EBITDA margin rose by 10 basis points to 19.2%, and the material margin increased to 55%. Earnings per share (EPS) came in at 3.45, slightly below analyst estimates of 3.6. Revenue was impacted by foreign exchange effects, particularly a weak U.S. dollar. The company's organic growth was flat year-to-date, with a decline of 1.1% in Q3, primarily driven by China.

Publication Date: Oct -25

📋 Highlights
  • Resilient Sales Growth: Achieved 1.1% local currency sales increase despite double-digit China construction decline.
  • Fast Forward Program: CHF 100-150M investment (CHF 80-100M one-off costs in 2025) to drive CHF 150-200M annual savings by 2026.
  • China Restructuring: Double-digit workforce reduction, focusing on core tile setting/waterproofing, with 30% growth in automotive/industrial segments.
  • EBITDA Margin Progress: Rose to 19.2% (up 10 bps) with 2026 target of 20-23%, supported by material margin improvement to 55%.
  • Market Guidance Adjustment: Updated 2026-2028 growth to 3-6% local currency (from prior 2.5% assumption), reflecting market uncertainty.

Segment Performance and Market Outlook

The China business, which accounts for a significant portion of Sika's revenue, faced substantial challenges, with a double-digit decline in the construction segment. However, the company's automotive industrial manufacturing business in China is growing. Sika is taking decisive actions to adjust to the market conditions in China, including a significant reduction in the workforce and a restructuring of its operations. According to Thomas Hasler, "We're taking decisive actions to adjust to these conditions." The U.S. market is expected to see a nice progression in reshoring in 2026, driven by increased demand and more predictable tariffs discussions.

Fast Forward Program and Profitability

Sika introduced its Fast Forward investment and efficiency program, which aims to drive annual savings of CHF 150 million to CHF 200 million. The program involves investments of CHF 100 million to CHF 150 million over the coming years and one-off costs of CHF 80 million to CHF 100 million in 2025. Adrian Widmer mentioned that about CHF 80 million of the expected savings will positively impact the P&L in 2026. The company's EBITDA margin is expected to reach the band of 20% to 23% in 2026.

Valuation and Growth Prospects

Analysts estimate Sika's revenue growth at 3.9% for next year. The company's current valuation metrics include a P/E Ratio of 23.09, P/B Ratio of 4.58, and EV/EBITDA of 15.0. The Dividend Yield is 2.05%, and the Free Cash Flow Yield is 4.0%. Sika's ROIC is 9.96%, and ROE is 18.53%. The Net Debt / EBITDA ratio is 2.52. These metrics indicate that the market is pricing in a certain level of growth and profitability for the company.

3. NewsRoom

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Sika Flags One-Off Hit From China Restructuring, Costs

Nov -27

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Is Now The Time To Look At Buying Sika AG (VTX:SIKA)?

Nov -27

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SIKA PRESENTS STRATEGIC “FAST FORWARD” PROGRAM FOR PROFITABLE GROWTH AND DIGITAL LEADERSHIP

Nov -27

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SIKA SUCCESSFULLY PLACES CHF 600 MILLION BOND

Nov -11

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[Latest] Global Construction Anchors Market Size/Share Worth USD 5.65 Billion by 2034 at a 4.12% CAGR: Custom Market Insights (Analysis, Outlook, Leaders, Report, Trends, Forecast, Segmentation, Growth Rate, Value, SWOT Analysis)

Nov -10

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Waterproofing Chemicals Market Size | Companies Analysis 2025- 2034

Nov -03

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Earnings Release: Here's Why Analysts Cut Their Sika AG (VTX:SIKA) Price Target To CHF218

Oct -29

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RESILIENT PERFORMANCE IN FIRST NINE MONTHS – STRATEGIC ACTIONS TO DRIVE GROWTH AND PROFITABILITY

Oct -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.64%)

6. Segments

Products for Construction Industry

Expected Growth: 4.5%

Sika AG's construction products growth (4.5%) is driven by increasing demand for sustainable and high-performance materials, urbanization, and infrastructure projects. The company's innovative solutions, such as sealants, adhesives, and waterproofing systems, enable efficient and durable construction processes, contributing to its strong growth in the construction industry.

Products for Industrial Manufacturing

Expected Growth: 5.5%

Sika AG's industrial manufacturing products growth of 5.5% is driven by increasing demand for sustainable and high-performance materials in construction and automotive industries. Expansion into emerging markets, innovative product offerings, and strategic acquisitions contribute to this growth. Strong R&D capabilities and operational efficiency also play a crucial role in meeting customer needs and maintaining competitiveness.

7. Detailed Products

Concrete Admixtures

Chemical additives used to enhance the properties of concrete, such as workability, strength, and durability.

Sealants and Adhesives

Chemical products used to seal and bond various materials, such as glass, metal, and concrete.

Waterproofing Systems

Solutions used to protect buildings and structures from water ingress and damage.

Shotcrete and Fibre-Reinforced Polymers

Specialized materials used for repair and rehabilitation of concrete structures.

Flooring Systems

Solutions used for industrial and commercial flooring applications.

Roofing and Waterproofing Membranes

Specialized membranes used for roofing and waterproofing applications.

Mortars and Grouts

Specialized materials used for bonding and anchoring applications.

8. Sika AG's Porter Forces

Forces Ranking

Threat Of Substitutes

Sika AG operates in the specialty chemicals industry, specifically in the field of sealing and bonding solutions. While there are alternative products available, such as mechanical fastening systems or traditional building materials, Sika's products offer unique benefits, including energy efficiency, sustainability, and design flexibility. However, the threat of substitutes remains moderate, as customers may opt for alternative solutions depending on factors like price, performance, and availability.

Bargaining Power Of Customers

Sika AG's customers are primarily builders, architects, and engineers. These customers typically have limited bargaining power, as Sika's products are often essential components of construction projects. Additionally, Sika's strong brand reputation and extensive distribution network make it a preferred supplier for many customers. While large customers may have some negotiating power, the overall bargaining power of customers remains low.

Bargaining Power Of Suppliers

Sika AG sources raw materials from various suppliers worldwide. While some suppliers may have significant market share or negotiating power, Sika's diversified sourcing strategy and long-term supply agreements mitigate the bargaining power of individual suppliers. Furthermore, Sika's significant volume purchases and strategic partnerships with suppliers allow the company to maintain a relatively low-cost position.

Threat Of New Entrants

The specialty chemicals industry, particularly in sealing and bonding solutions, has high barriers to entry. New entrants would need to invest heavily in research and development, manufacturing capacity, and marketing to compete effectively with established players like Sika AG. Additionally, Sika's strong brand reputation and extensive distribution network create significant challenges for new entrants.

Intensity Of Rivalry

The specialty chemicals industry, particularly in sealing and bonding solutions, is highly competitive. Sika AG competes with several established players, including Henkel, 3M, and Wacker Chemie. The competitive landscape is characterized by intense pricing pressure, significant marketing and advertising expenditures, and ongoing product innovation. While Sika AG has a strong market position, the intensity of rivalry remains high.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 44.87%
Debt Cost 4.33%
Equity Weight 55.13%
Equity Cost 9.17%
WACC 7.00%
Leverage 81.39%

11. Quality Control: Sika AG passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Air Liquide

A-Score: 5.5/10

Value: 2.2

Growth: 4.8

Quality: 6.5

Yield: 4.4

Momentum: 5.0

Volatility: 10.0

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CRH

A-Score: 5.4/10

Value: 2.6

Growth: 7.2

Quality: 5.3

Yield: 4.4

Momentum: 7.5

Volatility: 5.7

1-Year Total Return ->

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Linde

A-Score: 5.0/10

Value: 1.6

Growth: 5.9

Quality: 6.6

Yield: 3.1

Momentum: 3.0

Volatility: 10.0

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EMS-Chemie

A-Score: 4.5/10

Value: 1.4

Growth: 2.7

Quality: 8.6

Yield: 2.5

Momentum: 2.0

Volatility: 10.0

1-Year Total Return ->

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Sika

A-Score: 4.4/10

Value: 3.4

Growth: 5.7

Quality: 6.0

Yield: 2.5

Momentum: 1.0

Volatility: 8.0

1-Year Total Return ->

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Givaudan

A-Score: 4.2/10

Value: 1.1

Growth: 5.0

Quality: 6.0

Yield: 3.8

Momentum: 0.5

Volatility: 9.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

160.25$

Current Price

160.25$

Potential

-0.00%

Expected Cash-Flows