Zurich (Reuters)-Chief Executive Thomas Hasler said on Thursday that Sika can overcome rising raw material costs worldwide and the uncertainty associated with the debt problems of developer China Evergrande in order to achieve its 2021 target.
After last year’s pandemic caused a downturn in construction projects, the Swiss construction chemicals manufacturer expects sales in local currencies to increase by 13%-17% this year.
The company also expects to achieve an operating profit margin of 15% for the first time this year, confirming its guidance given in July.
Hasler took over Sika in May and said that despite the uncertainty surrounding China Evergrande, he is still optimistic about China.
“There is a lot of speculation, but our Chinese organization is much easier. The risk exposure is quite small,” Hasler told Reuters on the Corporate Investor Day in Zurich.
He said that Sika’s products are used for the reinforcement and waterproofing of building materials. Compared with mass markets such as accommodations mainly operated by Chinese companies, Sika is more involved in high-end projects such as bridges, ports and tunnels.
“Our value is that if you build a nuclear power plant or a bridge, they rely on high technology, and then they want reliability,” said the 56-year-old executive.
“This type of building will be strengthened and accelerated,” Hasler added. “Our growth strategy in China is very balanced; our goal is to develop in China as in other regions.”
Hasler added that Sika’s annual sales in China now account for about 10% of its annual sales, and this share “may increase a bit,” although the company’s goal is not to double this level.
Sika confirmed its 2021 target, “despite the challenges of raw material price development and supply chain constraints.”
For example, due to polymer suppliers experiencing problems in restarting full-scale production, Sika expects raw material costs to increase by 4% this year.
Chief Financial Officer Adrian Widmer said at the event that the company will respond with price increases in the fourth quarter and early next year.