Sika increases sales outlook after strong start to the year

ZURICH, April 20 (Reuters) - Sika hiked its sales guidance for 2021 on Tuesday after reporting record revenue in all of its regions during the first quarter of the year, sending a positive signal for the broader construction industry.

The company, whose chemical additives strengthen and waterproof concrete, reported a 10.2% increase in sales in the three months to the end of March to 1.99 billion Swiss francs ($2.18 billion).

Europe and Asia were particularly strong, posting sales increases of 12.8% and 25% respectively from a year earlier, as the company rebounded strongly from the coronavirus shutdown which hit many construction projects last year.

Sales in local currencies increased by 12.6%, the company said, an acceleration from the 5.5% rate during the fourth quarter of 2020.

Sika said it now expects to increase its local-currencies sales in the double-digit range this year, up from its previous guidance for an increase of 6% to 8%.

It sill expects an over-proportional increase in operating profit and its EBIT margin to reach 15% for the first time.

“As the new year got under way, we were able to seamlessly build on our strong performance in the fourth quarter of last year,” said Chief Executive Paul Schuler, who is due to step down and join the board from May 1.

Analysts viewed the results as a positive sign.

“As Sika is known to guide conservatively it is in our view a strong signal to lift its guidance by over 2 percentage points at the beginning of 2Q21,” said Baader Helvea analyst Markus Mayer.

Its shares were indicated more than 2% higher in pre-market activity.

$1 = 0.9146 Swiss francs Reporting by John Revill; Editing by Michael Shields