By John Revill and Oliver Hirt ZURICH, March 24 (Reuters) - Swiss construction chemicals maker Sika's annual results could trend towards the lower end of its outlook due to turbulence unleashed by the
Sika dampens sales expectations due to Middle East conflict
Impact of Middle East Conflict on Sika's Financial Outlook
By John Revill and Oliver Hirt
Sika's Annual Results and Guidance
ZURICH, March 24 (Reuters) - Swiss construction chemicals maker Sika's annual results could trend towards the lower end of its outlook due to turbulence linked to the Middle East conflict, CEO Thomas Hasler said.
Sika, which makes additives used in projects including Hamburg's Elbphilharmonie Concert Hall and the Grand Egyptian Museum in Giza, guided in February for a 1-4% annual sales increase in local currencies and an EBITDA margin of 19.5% to 20% in 2026.
CEO's Confidence and Revised Expectations
Hasler confirmed the outlook, but said results could be at the lower end of the range, as uncertainty around inflation, oil prices and the economic outlook has risen due to the war.
"I feel confident with our 2026 guidance, on top line growth and the bottom line, that we are still in safe waters," Hasler told Reuters in an interview.
"In February, we thought we would be rather on the mid to higher side of guidance, with the possibility of outperforming. Now, given the much increased uncertainty, it's probably more towards the mid to lower side of our expectations."
Market Reactions and Regional Impact
The Middle East conflict has pushed up oil prices, raising concerns that prolonged increases in energy prices could fuel inflation and weigh on global economic growth.
Stock Performance and Regional Exposure
Shares in Sika, which generates about 4% of its sales in the region, have fallen nearly 19% since U.S.-Israeli strikes on Iran began on February 28. The European construction index is down 13%.
Potential Delays in Construction Projects
Hasler said there had been no halt or cancellation of existing construction projects, but new developments could be delayed if the conflict continued.
Inflation, Costs, and Company Response
Inflation Concerns and Interest Rates
Inflation was also a major concern, especially if central banks raised interest rates to contain it, he said.
Rising Input and Transportation Costs
Sika was mainly being hit by higher transportation costs and input costs for chemicals it produces, many of which are derived from oil, with crude making up 10% of its raw materials costs.
Mitigation Strategies
The company was offsetting this by price increases of around 5% globally and 10-20% in the Middle East, while it also had room to manoeuvre because of its current 200 million Swiss franc ($255 million) savings programme.
"There are no plans to cut jobs or close any plants as there is no drop in demand that would warrant this," Hasler said.
Outlook for Key Markets
China and Data Centres
Sika expects the Chinese market to remain subdued this year, although Hasler was upbeat about the data centres business, where it provides flooring, roofing and waterproofing products.
Growth in Data Centre Projects
"The number of data centres is increasing and we are selling more into them as well," said Hasler, noting Sika was working on around 400 projects globally. "This is a strong boom that we expect to continue for the next two years at least."
($1 = 0.7847 Swiss francs)
(Reporting by John Revill, editing by Dave Graham/Keith Weir)
