Dollar weakness negatively impacts Sika's initial financial report.
In a challenging market environment, Sika, the Swiss construction chemical maker, has reported a decline in its sales and profits for the first half of 2025. The company's results offer insight into the health of the broader construction industry.
Sales and Profit Decline
Sika's total sales for the six months to June 30 amounted to 5.68 billion Swiss francs, falling short of analyst forecasts of 5.72 billion francs. The company's core operating profit (EBITDA) for the same period was 1.07 billion Swiss francs, missing analysts' forecast of 1.09 billion francs.
The weak US dollar has negatively impacted Sika's 2025 sales and profits. The dollar lost value during the first half of 2025 due to concerns about U.S. debt and President Donald Trump's unpredictable trade policies. As a result, Sika suffered a foreign currency effect of minus 4.3%, which offset a 1.6% increase in local currency sales. This currency drag caused a reported sales decline of 2.7% in Swiss francs despite underlying growth in local terms.
Operating Profit and Net Profit
Operating profit before depreciation (EBITDA) decreased slightly due to these currency headwinds but the EBITDA margin increased from 18.7% to 18.9% owing to efficiency gains. Net profit declined by about 3.9%, with earnings per share dropping from CHF 3.59 to CHF 3.45, reflecting the negative currency impact. Operating free cash flow was also adversely affected by unfavorable currency effects and increased working capital needs, falling significantly compared to the prior year.
Looking Forward
Despite the ongoing currency challenges, Sika is still expecting a slight increase in sales in local currencies for the full-year 2025. The company continues to focus on margin improvement, acquisitions, and expansion in AI and digital infrastructure as part of its growth strategy. Sika expects to continue to grow faster than the market in 2025 and is confident in meeting EBITDA margins around 19.5-19.8%.
Market Share and Projects
Chief Executive Thomas Hasler stated, "In a challenging market environment, we once again outpaced the industry trend and continued to gain market share." Sika's additives were used in projects including the Gordie Howe International Bridge between the United States and Canada. The company also used its chemical additives in infrastructure projects such as the Daimer Basha dam in Pakistan. Sika counts the United States as its biggest market.
Stock Market Impact
Sika's shares were indicated 3.4% lower in premarket activity in Zurich, reflecting the company's weaker-than-expected first-half performance.
In summary, the US dollar’s weakness in 2025 has reduced Sika’s reported sales and profit growth in Swiss francs but has not altered the company’s underlying local currency growth and profitability improvement ambitions.
- The decline in Sika's EBITDA, despite a small decrease, can be attributed to the currency headwinds in the finance sector, specifically the weak US dollar, and the adverse effects on its operating profit.
- As the construction industry, a key business sector, grapples with the uncertain market conditions, Sika's ability to continue gaining market share and outpace industry trends points to the company's robustness and resilience in the face of challenges.
