January 9, 2018 / 8:02 AM / 8 days ago

Sika beats sales forecasts and expects faster growth in 2018

ZURICH, Jan 9 (Reuters) - Sika beat both its annual sales target and market expectations in 2017, the Swiss construction chemicals maker said on Tuesday, forecasting even faster growth in 2018.

The company, which has been mired in a bitter takeover battle with France’s Saint-Gobain for three years, reported annual sales of 6.25 billion Swiss francs ($6.39 billion) for 2017 - exceeding its target of 6 billion francs.

The 8.9 percent increase in local currencies narrowly beat the average estimate of 6.2 billion francs in a Reuters poll, and was marked by a faster growth rate during its fourth quarter as a raft of acquisitions kicked in.

Sika, which makes additives for building materials and adhesives for cars, said it expected an even higher increase in its 2017 profits, anticipating beating its previous highest net profit of 567 million francs it made in 2016.

It said it expected operating profit of 880 to 900 million francs for 2017. The company, which shrugged off the departure of Chief Executive Jan Jenisch to cement maker LafargeHolcim , is due to report its earnings on Feb 23.

Under new CEO Paul Schuler, the company was even more bullish about 2018, saying it expected sales growth of more than 10 percent and an ever higher growth rate for operating profit.

The improvements reflected Sika’s investments during 2017, Schuler said. The company veteran has already indicated the company will ramp up its buying spree.

“With nine new factories, three further national subsidiaries, and seven company takeovers, we have made significant investment in growth markets as well as in growth platforms in the form of product technologies and distribution channels,” Schuler said.

“These 19 strategic investments, our pipeline with innovative quality products and our global presence - we now have 100 national subsidiaries and more than 200 factories - allow us to look toward the future with optimism.”

The company was entering 2018 with significant momentum, with high organic growth as well as a faster pace of acquisitions, Bernstein analyst Phil Roseberg said.

“Sika outperformed against already high expectations in 2017,” said Roseberg.

“We interpret a ‘disproportionate increase’ in EBIT to suggest that Sika is confident about offsetting the dilutive impact of M&A and posting another year of margin expansion in 2018,” he added.

Sika did not mention its takeover fight with Saint-Gobain, which was sparked by the Swiss company’s founding family wanting to sell its controlling stake to the French group.

The next court decision -- centering on the family’s voting rights -- is expected in the next few months.

$1 = 0.9784 Swiss francs Reporting by John Revill

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