2012Sika annual RepoRtannualreport.sika.com

The built environment offers tremendous market potential. Decision-makers confronted with aging high-rises, bridges, roads and tunnels inevitably face the question of whether to demolish and rebuild or renovate. Yet, when all key factors are weighed up, the integral life-cycle perspective for buildings and infrastructure increasingly shows that modernization and refurbishment is the best solution. For more on this subject, please read the feature article in this Annual Report on page 64 ff.

InhAlt

SucceSSful Year 2 lettertoShareholders InveStIng In SIka 5 StockPriceDevelopment 7 RiskManagement StrategY & focuS 11 GroupStrategy 12 BuildingtrusttheSikaBrand 13 CustomersandMarkets 16 ProductsandInnovation 20 SustainableDevelopment 22 AcquisitionsandInvestments Performance 25 GroupReporttargets 26 GroupReportGroup 28 GroupReportRegions 33 GroupReportoutlook 34 Sustainability Reportand SocialResponsibility leaderShIP 41 organizationandleadership 42 GroupManagement 46 organizationalDiagram 47 BoardofDirectors 49 employees 51 CorporateGovernance

refurbIShment 64 GreatPotentialforRefurbishment 66 theGlobalConstructionProject 69 Cityorganism 73 FocusontheBuildingenvelope 75 InnovationthroughMotivationandInspiration 76 extendingthelifeCycle SikaRefurbishmentProjects: empireStateBuildingnewYork, SydneyharbourBridge, londonUnderground, tDGardenBoston, PumarejoBridgeColombia 82 InDiscussionwithProfessorDr.hans-RudolfSchalcher fInancIal rePort 86 ConsolidatedFinancialStatements 91 AppendixtotheConsolidated FinancialStatements 137 Five-YearReviews 144 SikaAGFinancialStatements

fInancIal calendar ImPrInt

SikaAnnualReport2012 Content

1

Brief Overview

Netsales (consolidated)in CHFmn

Growthinlocal currenciesin 15

Operatingprot beforedepreciationin CHFmn

as%of netsalesin 15

Netprotin CHFmn

as%of netsalesin 8

Operatingfree cashowin CHFmn

as%of netsalesin 10

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14

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Sika Groupin CHF mn 2011 as % of net sales 2012 as % of net sales

Net sales Gross result Operating profit before depreciation (EBITDA) Operating profit (EBIT) Net profit Operating free cash flow Capital expenditures Balance sheet total Shareholders equity Equity ratio in % ROCE in % Earnings per share in CHF Number of employees Energy consumption in MJ per ton sold CO2 emissions in tons Water consumption in million m

4 563.7 2 304.6 477.4 347.1 214.8 186.1 117.1 3 830.3 1 839.1 48.0 15.6 85.06 15 254 595 31 000 2.0 50.5 10.5 7.6 4.7 4.1 2.6

4 828.9 2 519.3 568.9 428.8 281.1 302.5 131.3 4 262.3 2 007.4 47.1 18.3 110.98 15 233 560 47 000 1.87 52.2 11.8 8.9 5.8 6.3 2.7

Netsalesbyregion(consolidated) in CHF

Netsalesbymarket(consolidated) in CHF

EuropeNorth EuropeSouth NorthAmerica LatinAmerica IMEA* Asia/Pacic Othersegments andactivities 0 250 500 750 1000 1250 1500

1251mn 799mn 706mn 586mn 279mn 875mn 333mn 4829mn

(25.9%) (16.6%) (14.6%) (12.1%) (5.8%) (18.1%) (6.9%) Total

Construction Industry 0 500 1000 1500 2000 2500 3000 3500

3884mn (80.4%) 945mn (19.6%) 4000 4829mn Total

*India,MiddleEast,Africa

ROCE*in 25

EnergyconsumptioninMJper ton sold in1000 tons

Waterconsumptionin1000 cubic meters

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Portrait Sika AG, located in Baar, Switzerland, is a globally active specialty chemicals company. Sika supplies the building and construction industry as well as manufacturing industries (automotive, bus, truck, rail, solar and wind power plants, faades). Sika is a leader in processing materials used in sealing, bonding, damping, reinforcing and protecting load-bearing structures. Sikas product lines feature high-quality concrete admixtures, specialty mortars, sealants and adhesives, damping and reinforcing materials, structural strengthening systems, industrial flooring as well as roofing and waterproofing systems. Worldwide local presence in 80 countries and some 15 200 employees link customers directly to Sika and guarantee the success of all partners. Sika generated annual sales of CHF 4 829 million in 2012. regions The start of 2013 saw Sika reduce the number of its geographical regions from six to four. The new regional breakdown is based on unified economic areas and supply chain structures. The new region EMEA covers the previous regions Europe North and Europe South together with the Middle East and Africa. With the former region IMEA dissolved, India has been reallocated to the region Asia/Pacific due to its close association with this economic area. North America and Latin America are to remain independent regions on account of their differing market structures.

Core ComPetenCies One key factor for the success of Sikas research and development work is its strategic focus on clearly defined core competencies, namely sealing, bonding, damping, reinforcing and protecting of loadbearing structures in building and industry. target markets As global market leader in the construction chemicals sector, Sika continuously leverages new growth potential in all its target markets through innovation, quality and service. It provides its customers with innovative solutions that boost the efficiency, durability and aesthetic appeal of buildings, infrastructure facilities, installations and vehicles throughout production and use. The fully integrated concepts offered by Sika address the entire life cycle of a facility, from initial construction up to the point in time when repair, refurbishment or extension become necessary. The target markets of Sika are Concrete, Waterproofing, Roofing, Flooring, Sealing & Bonding, Refurbisment und Industry.

The mosT imporTanT resulTs of financial year 2012 aT a glance sika had a successful 2012 wiTh sales growTh of 5.8% To chf 4 829 million a rise in neT profiT of 31% To chf 281 million a high level of operaTing free cash flow aT chf 303 million

The emerging markeTs saw double-digiT growTh in 2012 and are already generaTing 37% of consolidaTed neT sales The board of direcTors proposes To The annual general meeTing The paymenT of a 13% higher gross dividend Than in The previous year, namely, chf 51.00 per bearer share and chf 8.50 per regisTered share

* return on capital employed

letter to ShareholderS

SUCCeSSFUlYeAR

Jan Jenisch, CEO Dr. Paul Hlg, Chairman

DEARSHAREHOLDERS

Sikahadasuccessful2012withsalesgrowthof5.8%, ariseinnetprotof31%,andahighlevelofoperating freecashowatchf303million.Weacceleratedour investmentsinthegrowthmarketsandopenednew factoriesandproductionlinesinanumberofemerging countries.Theemergingmarketssawdoubledigit salesgrowthin2012andarealreadygenerating37%of ourconsolidatednetsales. Despitethedifficulteconomicconditionsonmany markets,Sikasgrowthmodel,withitscornerstonesof marketpenetration,technologyleadership,accelerated expansioninthegrowthmarkets,andmarketconsoli dationthroughacquisitions,workedwellduringthepast nancialyear.Weachievedstronggrowthintheemerg ingmarketsinAsiaandLatinAmerica.InNorthAmerica demandstabilizedandwerecordeda9%riseinsales thankstogainsinmarketshare.InEuropeontheother hand,wefelttheeffectsofthedebtproblemwithto someextentsignicantdeclinesinmarketvolumes. Sikaaccelerateditssuccessfulgrowthstrategyinthe emergingmarketswithanumberofinvestmentproj ects.In2012,weinvestedconsiderablefundsintheex pansionofcapacity,particularlyinBrazil,Chile,China, Colombia,Mexico,Mongolia,Peru,RussiaandVietnam, whichwillimprovethelocalsupplychainsandconsolidate ourlocalpresence.ThisenablesSikatocontinuouslyin creaseitscloseproximitytocustomers,whichdistinguish thecompanyinthemarket.Sikanowalsohasitsown subsidiariesinMongoliaandParaguay. Ourtechnologyleadershipisbasedonthecontinuous developmentofnewproductswithincreasedcustomer In2012,Sikalednumerouspatentsand benets. successfullylaunchedvariousnewproductssuchasthe new,fastcuringSikalasticwaterproongsystem forbridgedecks.Thisreducesthetimerequiredforappli cation,thusenablingtherenewaloflargebridgeareas withoutanymajoroperationaldisruption.Another exampleisthenewSikaProofsheetmembranesthat preventanylateralwaterunderowforfast,safesealing offreshconcretecomposites.Intheadhesivesand sealantsmarketsegment,welaunchednewproducts basedonouriCuretechnology,whichareodorlessand solventfree.Theyalsomeetthestrictestemissions standardsandarequickandeasytoapply. In2012,wesuccessfullycompletedthreeacquisitionsin SouthKorea,GermanyandParaguay.Theacquisitionin ParaguayroundsoutourstrongpositioninLatinAmerica andcontinuesoursuccessfulstrategyofinvestingin growthmarkets.

Wearewellpreparedforthefuture.Atthestartof2013, Sikacreatedastreamlined,moreefficientGroupleader shipstructure.GroupManagementwasslimmeddown fromfourteentoninemembers,retainingthetraditional atmanagementstructureswithintheGroup.Thepre vioussixgeographicalregionshavebeenreducedtofour. Thecomprehensivemanagementresponsibilitywillen sureholisticmanagementfromproductiontothecustomer. In2013,weexpectthestronggrowthmomentuminthe emergingmarketsinAsiaandLatinAmericato continue.Bycontrast,Europewillagainbemarkedby uncertaintiesthisyearandpresentachallengeto ourgrowthstrategy.Thankstoourstrongglobalposition andtheSikagrowthmodel,weareforecastingafurther increaseinsalesandprotfor2013. TheBoardofDirectorsproposestotheAnnualGeneral Meetingpaymentofa13%highergrossdividendthanin thepreviousyear,namely,chf51.00perbearershare (previousyear:chf45.00)andchf8.50perregistered share(previousyear:chf7.50).Thisproposalisanexpres sionofSikasconsistentdividendpayoutpolicyand followsourpositiveprotdevelopment. ItwillalsoberecommendedtotheAnnualGeneral MeetingtoreelectcurrentBoardmembersDr.WilliK. LeimerandChristophTobler.Dr.ThomasW.Bechtler isnolongerstandingforreelection.Hehasbeenamem beroftheBoardofDirectorssince1989andhasaccom paniedandhelpedtoshapethedevelopmentofour Group.Wewouldliketotakethisopportunitytothank himforhistirelessandvaluablecommitmenttoSika overmanyyears. Oursuccessin2012isduetotheexpertiseandcommit mentofour15233employees.Togethertheyhave initiatedsomeimportantstepsoverthepastyeartohelp makeourGroupevenstrongerforthefuture,andwe wouldliketothankthemallfortheirdedication andloyalty. Manythanksgotoourcustomers,businesspartnersand suppliers.Welookforwardtofurtherfruitfulcooperation in2013.Wealsoespeciallywouldliketothankourshare holdersfortheirloyalty.

Sincerely,

DR.PAULHLG ChairmanoftheBoard

JANJENISCH ChiefExecutiveOfficer

InVeStInGInSIkA

Performance of SIka bearer ShareS In SWISS francS from JanuarY 1, 2012, to december 31, 2012Share price as of december 31, 2012: chf 2 110

2 200

2 100

2 000

1 900

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1 600

1 500

1.12

2.12

3.12

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11.12

12.12

SMI Sika Bearer Share SLI

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Stock PrIce develoPment

Sika Share buoyed by emerging market SaleS combined with margin recovery.Despitetheuncertaintyoneuropesstockexchanges arisingfromthedebtcrisis,2012wasagoodyearfortheSwissequitymarket. theSikasharebenefitedfromtheGroupssalesgrowthintheemerging marketsaswellasthemarginrecovery.In2012,SikawasincludedintheSwiss leaderIndex(SlI),containingthe30largestSwisscompanies.

Stock market develoPmentS In 2012 economicuncertaintiescastashadowovermarkets worldwide,aboveallineurope.however,thishadlittle impactontheperformanceofSikasstock.In2012,Sika sharesincreasedby19.2%,fromCHF1770toCHF2110, showingabetterperformancethantheSwissexchanges SMIindex,whichitselfgainedaround14.9%year-on-year in2012.Intheyearunderreview,Sikasharespeakedat CHF2170onDecember19andreachedalowofCHF1704 onJune5. onJanuary10,2012,Sikapublishedthesalesfiguresfor 2011.theGroupachievedconsolidatednetsalesof CHF4.56billion,whichrepresentsanincreaseof15.5% inlocalcurrencies.Allregionsreportedgrowth,most notablyintheemergingmarketsofregionsAsia/Pacific (+28.1%)andlatinAmerica(+21%)aswellasinnorth America(+21.5%).theearningsfigurescameoutatthe beginningofMarch.Inthe2011businessyear,consolidatednetprofitdecreasedby30.8%year-on-yearto CHF214.8million,dueinparttothecurrencyeffect,but primarilytosignificantlyhigherrawmaterialprices. onApril17,theGroupreportedonbusinessinthefirst quarter.theyeargotofftoagoodstartforSika. Salesgrewby3.1%toCHF1.05billion.InnorthAmerica, Sikareportedasalesincreaseof18.6%inlocal currencies.latinAmericaachievedthesamelevelof growth.Bycontrast,europenorthfacedaslight fall-offinrevenuesowingtothecoldweather.onthe sameday,shareholdersattheAnnualGeneral MeetingapprovedallproposalsoftheBoardofDirectors. Paulhlg,DanielJ.SauterandUlrichW.Suterwere reelectedforafurthertermofofficeofthreeyears.the AnnualGeneralMeetingalsoelectedFritsvanDijk totheBoardofDirectorsforthefirsttime.

Sincemid-JunetheSikasharehasbeenlistedonthe SwissleaderIndex(SLI),whichcontainsthe30largest andmostliquidSwissstocks.Inthesamemonth,the Groupannouncedthatithadsuccessfullyplaceda6-year CHF150millionbondwithacouponof1.0%p.a.anda 10-yearCHF150millionbondwithacouponof1.75%p.a. intheSwisscapitalmarket. Inthehalf-yearreportpublishedinJuly,thecompany announceda3.4%increaseinsalestoCHF2.3billion, drivenbythemarketsofnorthAmerica(+13.9%)and latinAmerica(+16.6%).thegrossmarginwidenedfrom 49.4%inthesecondhalfof2011to53.1%.Mid-yearthe sharepriceembarkedonastrongrecovery,which continueduntiltheendoftheyear. InearlySeptember,Sikaannouncedthatitwouldbe streamliningitsorganizationalstructureeffective January1,2013.therearetobefourregionsinsteadof six:EMEA(europenorth,europeSouth,Middleeast andAfrica),Asia/Pacific(nowincludingIndia),north AmericaandlatinAmerica.thetraditionalflat managementstructureswillremaininplace. thethirdquarterwasencouraging.Withsalesup6% toCHF3.6billionand32.3%growthinnetprofitto CHF223.9million,Sikaexceededanalystsexpectations. themarketrewardedthisresultwithariseinthe shareprice.

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Per Share data2008 2009 2010 2011 2012

bearer shares, : nominal value chf 0.60 numberofsharesasofDecember31 ofwhichentitledtodividend ofwhichentitledtovote Grossdividend Repaymentofnominalvalue/netpayout ofcapitalcontributionreserves Stock quotations high low year-end Stockpriceperformance Averagedailytradingvolume4

2151199 2089691 2089691 ChF ChF 45.00

2151199 2095572 2095572 45.00

2151199 2151199 2115291 2122071 2115291 2122071 45.00 8.40 24.00 21.00

2151199 2136702 2136702 51.00

ChF ChF ChF % Shares

2082 788 900 -58.0 8871 2333874 2333874 2333874

1658 685 1615 79.4 5746 2333874 2333874 2333874 7.50

2145 1482 2051 27.0 10735

2250 1528 1770 -13.7 6333

2153 1719 2110 19.2 4672 2333874 2333874 2333874 8.50

registered shares5, 6: nominal value chf 0.10 numberofsharesasofDecember31 ofwhichentitledtodividend ofwhichentitledtovote Grossdividend Repaymentofnominalvalue/netpayout ofcapitalcontributionreserves key data per bearer share7 netprofitpershare(ePS)8 basicePS ePSdevelopment equitypershare Price-earningsratio(P/e),year-end Dividend/repaymentofnominalvalueyield other information Marketcapitalization9 in%ofequity totaldividend/repaymentofnom.value in%ofnetprofit(payoutratio)7 ChFmn % ChFmn % 2286 156 111.5 42 4102 258 111.8 50 5210 297 134.2 43 4496 246 113.3 53 5360 269 128.8 46 % ChF % ChF 107.00 -22.0 587 8.4 5.0 91.03 -14.9 640 17.7 2.8 124.48 36.7 704 16.5 2.6 85.06 -31.7 728 20.8 2.5 110.98 30.5 791 19.0 2.4 ChF ChF 2333874 2333874 2333874 2333874 2333874 2333874 7.50 1.40 4.00 3.50

7.50

1Registrationno.58797/Reuters:SIk.,Bloomberg:SIkSX 2ofwhich,in2012,Sikaowned14497(29128)bearersharesnot entitledtodividendorvotingrights 3PursuanttoproposaltoAnnualGeneralMeeting 4 AveragedailyvolumetradedonSIXSwissexchange (Source:SIXSwissexchange,Zurich)

5theregisteredsharesofSikaAGweredelistedfromtheSIX SwissexchangeonSeptember4,2003 6ofwhich,in2012,SikaAGownedno(0)registeredshares 7excludingminorityinterests 8ForePScalculation,seenote23 9theregisteredsharesweredelistedfromtheSwissstockexchangein 2003.Inourcalculationthesearetakenintoaccountwith16ofthe bearersharepriceofDecember31,2012

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rISk management

early identification of poSSible riSkS. Asaglobalplayer,Sikais exposedtoavarietyofrisks.ensuringtheGroupsfreedomofactionatall times,safeguardingitsgoodreputation,andprotectingthecapital investedinSikanecessitateatimelyanalysisofpotentialrisksandtheir integrationintostrategicdecision-makingprocesses.thismayalso unlocknewopportunities.

rISkS and oPPortunItIeS Flawedriskassessmentsmayseriouslyimpaira companysreputation,limititsfreedomofactionor,at worst,leadtoinsolvency.Wellawareofthis,Sikahas acomprehensiveriskmanagementsysteminplace,for theGroupandallitssubsidiaries.Dangersshouldbe identifiedatanearlystageandintegratedintostrategic decision-makingprocesses.Riskmanagementmay sometimesassistintheidentificationofnewopportunitiesandtherebyhelptogenerateaddedvalue.therisk managementprocesscomprisesfoursteps:risk identification,riskassessment,riskmonitoring,and riskcontrolling. grouP management and board of dIrectorS WhereasSikasGroupManagementregularlyreviews theprocessesunderlyingriskmanagement,theBoard ofDirectorsbearsultimateresponsibilityforrisk assessment. Itsdutiesincludeannualreassessmentof therisksituationatGrouplevel.here,thefocusis onthosestrategicandoperativerisksthatarecapable ofseriouslyendangeringtheGroupasawhole.All risksareassessedintermsofafewbasicquestions: Istheriskglobalorregionalinscope? howsignificantistheriskfortheGroup? howhighistheprobabilityoflossesoccurring? Whatmeasuresneedtobeimplementedtoprevent theriskormitigateitsconsequences? Suitablemeasuresarethentakentocounteractanyrisks thatareratedcriticalintheoverallassessment.

SuPPlIerS and raW materIalS Materials,asSikasbiggestcostfactor,arehighonthe riskassessmentagenda.Almost70%ofthematerials usedbySikainproductione.g.polyurethanes,epoxy resinsorpolyvinylchloridearebasedoncrudeoilor crudeoilderivatives(downstreamproducts).Purchase pricesconsequentlyvaryaccordingtotherespective supplyanddemandsituationofeachrawmaterialand thevolatilityinthepriceofoil. Sikapurchasesitsbasechemicalsfollowingstrictquality requirementsfromthesupplierofferingthebestvalue formoney.Inthecaseofkeyrawmaterialswithlimited availabilityorlargepurchasevolumes,Sikamandatesat leasttwosupplierswheneverpossible.theGrouptriesto manufacturetherawmaterialsforunique,highly innovativetechnologiesin-house. ProductIon and logIStIcS Sikasetsdefinedstandardsforriskprovisionsthatare bindingforitsproductionandlogisticsoperations.these formpartoftheGroup-wideSikaCorporatePolicies andManagementSystemanddetermine,forexample, theprocessesandguidelinesintheareasofquality, environment,healthandsafety.theyaredisplayedtogetherwiththestatutoryregulationsinthemanagement systemofeachsite.Forthispurpose,allSikaproduction companiesarecertifiedtoDINENISO14001(environmentalprotection)and9001(quality),andmanyalsoto OHSAS18001(safetyandhealth).Formoreinformation, seethecurrentcertificationstatusforthevarious Groupcompaniesstartingonpage132.

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1.5

%

CuStOMEr DIvErSIfICatIOn: nO SIngLE CuStOMEr aCCOuntS fOr MOrE tHan 1.5% Of SIkaS turnOvEr

Internalinspectionsofproductionandlogisticsoperations areconductedbythelocalcompaniesonanannualbasis. theseincluderecordingtherisksthatmayresultin productiondowntimes,personalinjury,propertydamage orliabilityclaims.theprobabilityandimplicationsof therisksareassessedandmeasuressubsequentlydefinedandimplementedtominimizetheriskpotentialat thesiteandenhancesafety.Accompaniedbythelocal managementandtheirteams,Groupspecialistsalso carryoutregularinternalinspectionsoftheSikaplants followingthesameprocedure. Riskanalysesperformedbyexternalspecialists,frequentlyinclosecollaborationwiththerelevantproperty insurancecompanies,complementthein-houseassessments.Sikaisinsuredagainstproductionlosses. theriskspotentiallyposedbyproductsareminimized throughtheimplementationofbindingprocedures governingproductdevelopmentandrefinementknown astheProductCreationProcessandProductMaintenance Process.Bothprocessesaresubjecttohighlystringent controls.theissuesaddressedrelate,ononehand,to ecologyandsafetyindevelopment,productionandproducthandling,and,ontheother,tomarketopportunities andintellectualpropertyprotection. FormorethantenyearsSikahashadaglobalprogram inplacetominimizetherisksinadvisoryandsales activitiesthatcouldprovidegroundsforproductcomplaints.thankstoahostofadditionalmeasures, includingtheregularandsystematictrainingofemployees,clearlyformulatedstandards,detailedcausal analyses,andstricter controls,expenditureforproductrelatedclaimsissteadilybeingreduced.toreduce theriskofcustomersusingSikasproductsincorrectly, Sikafocusesonprovidingtargetedsupportto customersandonqualitycontrol.

cuStomerS and marketS Sikahasapolicyofstrategicdiversificationtolimit market-andcustomer-relatedrisks.Geographicaldiversificationistremendouslyimportantinthelocallybased constructionindustrygiventhesometimescontrary businesstrendswitnessedinthissectorinthedifferent regionsoftheworld.Customerdiversificationwithno singlecustomeraccountingformorethan1.5%ofSikas turnoverisanotherstabilizingfactor.Asafurther safeguardagainsteconomicfluctuations,Sikaoperates bothinthenew-buildsectorandinthelesscyclical renovationandmaintenancemarket. fInancIal rISkS thepurposeoffinancialriskmanagementistooptimize fundingandachievealiquiditypositiongearedto paymentofobligations.liquidityisensuredbymeans offivelong-termbonds:CHF250million(2013),CHF300 million(2014),CHF250million(2016),CHF150million (2018),CHF150million(2022). liquidityisoptimizedbymeansofacash-pooling arrangement. Forselectedactivitiesinthetreasuryarea, Sikareliesonadditionalthird-partyservices.Sikaalso managesitsnetworkingcapitalwiththeutmost prudence.Forexample,thelocalcompanieshaveprecise definedprocessesforhandlingaccountsreceivable. ly Acoststructuredovetailedtotheprevailingmarket conditionsensuresadequatecashgeneration.Sika attacheshighprioritytoopenandcost-efficientaccess tocapitalmarkets.ofsignificancehereistheStandard& PoorsratingA-/stable(long-term).

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InVeStInG In SIk A

a

/stable

IS tHE StanDarD & POOrS ratIng fOr SIka

Internal audIt InternalAuditcarriesoutinspectionsassetoutin theannualauditplan,whichrecordsthemainfocusareas fortheyearinquestion.theauditsprimarilyinclude inspectionsofGroupcompaniesintheareasofproduct development,procurement,production,financial andoperationalreporting,sales,accountsreceivableand accountspayablemanagement,andItmanagement. Inadditiontotheglobalauditofsalesandproduction companies,regularin-depthauditsarecarriedout intheareaofheadquartersfunctionsorGroup-wide supportprocesses. Financialriskmanagementisdescribedindetailonpage 122ff.ofthisreport.

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StRAteGY&FoCUS

Withitsprovengrowthmodel,Sikastandsa goodchanceofgrowingmorestrongly thanthemarket.Particularsourcesofgrowth includethecompanysincreasedmarket penetration,theextensionofitsglobaltechnologicalleadershiprole,accelerated expansioninthegrowthmarkets,andmarket consolidationthroughacquisitions. theaimistoachieveleadershipinthe definedtargetmarkets.Asthepastbusiness yearshowed,strategyandfocuspaylongtermrewardsandhaveputSikasquarelyon thepathtosuccess.

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SikaAnnualReport2012

StR AteGY & FoCUS

grouP StrategY

a trademark for innovation, quality and Service. Sikaconstantly seekstoexploitgrowthpotentialinallitstargetmarketsinordertoachieve marketleadershipandsustainableexpansion.

vISIon Withitsrangeofprocessmaterialsforsealing,bonding, damping,reinforcingandprotectingload-bearing structures,Sikastrivesforleadershipinclearlydefined targetmarkets. Sikastargetmarketsare: Concrete Waterproofing Roofing Flooring Sealing&Bonding Refurbishment Industry Foradetaileddescriptionofthetargetmarkets,please seepage13. Sikaprovidesitscustomerswithinnovativesolutions thatboosttheefficiency,durabilityandaestheticappeal ofbuildings,infrastructurefacilities,installationsandvehicles,throughoutproductionanduse,andtherebymakes asubstantialcontributiontosustainabledevelopment. market PotentIal and StrategY Despitebeingglobalmarketleaderintheconstruction chemicalssector,Sikadoesnotyetholdthenumberone positioninallitstargetmarkets.Sikascoretarget marketsaloneofferpotentialintheorderofCHF50billion.Sikasystematicallyleveragesthegrowthpotential initstargetmarkets.thecompanydrawsonitsinnovativepower,forinstance,tomeettherisingdemandfor energy-efficientandcost-effectivesolutionsinboth theconstructionandindustrialmanufacturingsectors. thishasledtothedevelopmentofnewroofingsystems thatvastlyimprovetheenergyperformanceofbuildings andstate-of-the-art,low-weight,time-savingadhesives forvehicleproductiontonamejusttwoexamples.As globalizationproceeds,theabilitytodelivercomprehensiveintegralsolutionsforgloballyoperatingkeyaccounts andlarge-scaleprojectsisadecisivesuccessfactor. ParticularlycrucialforSikaaretheemergingmarketsof latinAmerica,easterneurope,theMiddleeastandparts ofAsia.tocapitalizeonthemomentumintheserapidly growingmarketswherethepotentialforstructural growthisfarfromexhaustedthecompanyrelieson

cost-effectivesolutionsforearlymarketdevelopment. Atthesametime,investmentinthetrainingofbothemployeesandcustomerspavesthewayfortheintroduction ofnew,moreefficienttechnologiesandimprovesmarket penetration. SuStaInable develoPment and valueS SustainabledevelopmentisforSikanotagoalthatcan beachievedimmediately,butacontinuousprocessof optimization,adaptationtocustomerneedsandinnovation.thatiswhySikaisconstantlyonthesearchfor possiblerefinements,forwaysoffurtheringthegood ofthecompany,itscustomersandtheenvironment.At Sika,responsibilitytoshareholders,marketplayersand thegeneralpublicisfundamentaltosustainablebusiness activities.Sikaactsinaccordancewithcommonvalues thatformthebasisforthecompanyssustainable development. Sikapursuesadouble-prongedsustainabilitystrategy: itseekstodesignproductsandservicesthatmeetthe demandforefficient,sustainablesolutionsinthe targetmarkets; itcontinuouslyrefinesitsownoperationsinlinewith sustainablepracticeandbacksthisupbysuitable investmentinsustainabilityonthebasisofeconomic principles. Sikatechnologiesmakeanessentialcontributiontothe sustainabledevelopmentofoursociety.Sikaadmixtures helptoachievemassivecutsinCo 2emissionsinconcrete andcementproduction.Sikaroofingsystemsreduce energyconsumptioninbuildingsbyupto15%.Moreover, asthegloballeaderinwaterproofing,thecompanyhelps tooptimizeglobalwatermanagement. Inautomotiveproduction,Sikaadhesiveshavesupersededtraditionalweldingmethodsasameansofjoining togetherdifferenttypesofmaterial.thefundamental challengefacingtheautomotiveindustryistobuild lightervehicleswhilesimultaneouslymeetingever-higher safetyandcomfortstandards.Sikaslightweight materialsandsolutionsforstructuralstrengtheninghelp toattenuatevibration,enhancedesignrigidityand improvecollisionbehavior,whilealsoreducingthecar bodyweight.

SikaAnnualReport2012 StR AteGY & FoCUS

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buIldIng truSt the SIka brand

the Sika brand StandS for quality and conSiStency. Sikaisa strongbrand.ItallowstheGrouptopresentaconsistentidentityinalltarget marketsandwithallproducts.

SIka aS a brand Brandinglendsproductsadistinctidentityandassociates themwithaspecificsetofvalues.thisfactwasrecognizedearlyinSikashistorybyfounderkasparWinkler, whocoinedthecompanysnameanddesigneditslogo. theconsiderablestandingacquiredbytheSikabrand overtheyearsisatributetothisfarsightedness.having changedonlyslightlysinceitscreation,thelogoepitomizescontinuityandsolidity.Itisrecognizedacross theglobeassynonymouswithinnovation,qualityand service.thecombinedword/picturetrademarkhas provedavaluableassetthroughouttheworldduring theSikaGroupsdecades-longexpansion.Boththeword Sikaandthelogo,withitsfamiliarredandyellow hues,arereadilyacceptedacrossallculturalboundaries. WorldWIde trademark ProtectIon GiventhehighawarenessoftheSikabrand,particularly thegraphictrademark,thecompanyattacheshigh prioritytoaconsistentandstandardizeduseofthelogo, andverifiescompliancewiththeassociatedcorporate imageguidelines.Customersthroughouttheworldcan restassuredthattheywillreceiveSikaqualityandservice wherevertheyseetheSikalogo.thevariousattempts, inrecentyears,tocopythelogoonlyservetounderlineits enormousintangiblevalueforthecompany. theumbrellabrandSikatogetherwithsome685Sika producttrademarks,suchasSikaflex,SikaViscoCrete, SikaBondorSikaForce,sharpenthecompanyscompetitiveedge.hencethecrucialroleoftrademarkprotection asamanagementtask,performedbothglobally,atGroup level,andlocally,atnationallevel.Intotal,Sikaheld9477 trademarkregistrationsin160countriesattheendof 2012.SikaAGcontinuouslymonitorsitstrademarksand takesconsistentlegalactionincasesofinfringement.

corPorate IdentItY thecompanyregularlyinvestsinmeasuresaimedat strengtheningthelong-termpositionoftheSikabrand. theendof2012,forexample,sawtheconclusionofa corporateidentityprocesslaunchedtwoyearsago.this processhasdeliveredasustainable,clear-cutpositioning ofthebrand,anupdatedframeworkforGroup-widecommunicationplusuniformguidelinesforamoreexpressive andcontemporarycorporatedesign.thisAnnualReport markstherolloutofthenew-lookcorporateidentity. thecorporateidentityprocessalsoinvolvedareformulationoftheSikatagline.thesloganfortheanniversary yearin2010,Innovation&Consistencysince1910,has nowbeenreplacedbyBuildingtrust. thewordbuildingexpressesbothSikascorebusiness areaandtheactivitiesofitscustomers,e.g.asbridge buildersorautomotivemanufacturers.theenglishword alsoresonateswithGermanspeakersduetoitsphonetic andsemanticaffinitieswiththeGermanwordbilden (forming).this,inturn,hasconnotationsofshaping, designing,structuringanddeveloping.onesingleword thusunitesallthecorecompetenciesofSikaandits customers. trustisthefoundationofalltypesofpartnershipand collaboration.ItisfosteredbythequalityofSikaswork andistheresultofthecompanysinnovativepowerand perseverance.trustunderpinsSikasphilosophyaswellas allitspromisesandobligationsvis--viscustomersand partners.Yet,itisnotastaticstate,butacontinuous processthatneedstobeactivelycultivated.Anybrand theSikabrandbeingnoexceptionexistsandthriveson thetrustplacedinitbythecompanyscustomers.

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cuStomerS and marketS

individual SolutionS for global requirementS. Sikasgrowth strategyfocusesonseventargetmarkets,whosevaryingrequirementsare conscientiouslymetatglobal,regionalandlocallevel.

cuStomerS thebreakdownintoseventargetmarketsallowsSikato sharpenitscustomerfocus,optimizeitstechnicalmarket supportactivitiesandconcentrateitsresearchanddevelopmentoperationsonkeyareas. target marketS Asglobalmarketleaderintheconstructionchemicals sector,Sikacontinuouslyleveragesnewgrowthpotential inallitstargetmarketsthroughinnovation,quality andservice.Itprovidesitscustomerswithinnovative solutionsthatboosttheefficiency,durabilityand aesthetic appealofbuildings,infrastructurefacilities, installations andvehiclesthroughoutproduction anduse.thefullyintegratedconceptsofferedbySika addresstheentirelifecycleofafacility,frominitial constructionuptothepointintimewhenrepair,refurbishment orextensionbecomenecessary.thelengtheningofafacilitysservicelife,throughappropriatemaintenanceandmodernization,makesbotheconomicand ecologicalsense.Sikasseventargetmarketsare: ConCRete Sikadevelopsandmarketsnumerousadmixturesandadditivesforuseinconcrete,cementandmortarproduction. theseproductsenhancespecificpropertiesofthefresh orhardenedmaterial,suchasworkability,durability,or earlyandfinalstrength.thedemandforadmixturesand additivesiscurrentlyontherise,particularlyduetothe increasedperformancerequirementsplacedonconcrete, cementandmortarandthegrowinguseofalternative cementitiousmaterialsincement,mortarandconcrete production. WAteRPRooFInG Sika'ssolutionscoverthefullrangeoftechnologiesused forbelow-groundwaterproofing:flexiblemembrane systems,liquidappliedmembranes,waterproofingconcreteadmixtures,jointsealings,waterproofmortars, injectiongroutsandcoatings.keymarketsegments includebasements,undergroundparkings,tunnelsandall typesofwater-retainingstructures(e.g.reservoirs,storagebasins,storagetanks).Watertightsystemsarefaced withmorestringentrequirementsregardingdurability, easyapplicationandtotalcostmanagement.therefore productqualityisbecomingincreasinglyimportant.

RooFInG Sikaprovidesafullrangeofsingle-plyandbuilt-upflat roofingsystemsincorporatingbothflexiblesheetand liquidappliedmembranes.Demandinthissegmentis drivenbytheneedforeco-friendly,energy-savingsolutions suchasgreenroofsystems,light-reflectivecoolroofs andsolarroofs,whichsimultaneouslyhelptocutCo 2 emissions.Whilerefurbishmentprojectscontinuetogain significanceinthematuremarkets,theemergingmarketsaremovingtowardshigherqualityroofsolutions. FlooRInG Sikassolutionsincludealltypesoffloorcoatingsneeded forindustrialandcommercialbuildings,suchaspharmaceuticalandfood-industryfacilities,productionplants, educationalestablishments,parkingdecksandresidential properties.eachmarketsegmentissubjecttoitsown particularrequirementsintermsofmechanicalwear,antistaticperformance,slipresistance,aestheticimpact, andchemicalorfireresistance.Dominanttrendsinthe flooringmarketincludethegrowingimportanceof custom-developedtechnicalsolutions,theincreasein buildingrefurbishmentcontractsandstrictercountryspecificenvironmentalregulations. SeAlInG&BonDInG Sikaswide-rangingportfolioincludestop-classelastic sealingandbondingsolutionstomeetalljobsiteneeds, e.g.jointsealantsforfaadesorresistantsealantsfor floorandspecialjointsaswellasmultipurposebonding solutionsforinteriorfinishingsorparquetinstallation. thegrowingdemandinthismarketisfueledbythesharper focusonenergy-efficientbuildingenvelopes,theevergreatervarietyofmaterialsusedinconstruction,the increasingvolumeofhigh-riseprojectsandthegrowing significanceofhealth,safetyandenvironmentalissues. ReFURBIShMent thissegmentfeaturesconcreteprotectionandrepair solutions,e.g.repairmortars,protectivecoatings,grouts andstructuralstrengtheningsystems.Markettrends aredictatedbytherisingqualityrequirementsplacedon productsandservices,withglobalcustomersexpecting uniformstandardsworldwide.thepresentuptrendindemandisattributabletoarisingvolumeofinfrastructure rehabilitationprojectsinthetransport,watermanagementandenergysectors.

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SIka EStaBLISHED tHE fIrSt SuBSIDIary OutSIDE EurOPE In JaPan

1932

InDUStRY themarketsservedbySikaincludeautomobileconstruction,thecommercialvehicleindustry(structuralbonding, directglazing,acousticsystems,reinforcingsystems), automotiveaftermarket(carglassreplacement,carbody repair),renewableenergies(solarandwind),andfaade engineering(structuralglazing,sealingofinsulatingglass units).theincreasingmarketpenetrationofSikatechnologiesisparticularlynoticeableinthecommercialvehicle manufacturingandautomotiveaftermarketsectors.In thecar-makingindustrythereisaconstantlygrowing demandforproductsthatenablethedesignofligh- weightvehicles.Manufacturersarealsoseekingsolutions thatsavetimeandcosts. regIonS Sikahasgrowncontinuouslysinceitsfoundationin1910. thefirstsubsidiaryoutsideeuropewasestablishedas earlyas1932inJapan.theGroupwassplitintoregionsat anearlystagesoastoallowthenationalorganizationsto capitalizeonsynergiesandsetupfurthercompanies.the regionsareheadedbyregionalmanagersandeffectively shapethecompanysmanagementstructure.theregionalmanagersaremembersofGroupManagementand assumelineresponsibilityfortheirregion.theregional managementstructuresencompasssalesfunctions,productionresponsibilityaswellasthemarketingand developmentactivitiesgearedtothetargetmarkets. thestartof2013sawSikareducethenumberofits geographicalregionsfromsixtofour.thenewregional breakdownisbasedonunifiedeconomicareasand supplychainstructures.thenewregionEMEAcoversthe previousregionseuropenorthandeuropeSouth togetherwiththeMiddleeastandAfrica.WiththeformerregionIMEAdissolved,Indiahasbeenreallocatedto theregionAsia/Pacificduetoitscloseassociationwith thiseconomicarea.northAmericaandlatinAmericaare toremainindependentregionsonaccountoftheirdifferingmarketstructures.Fordetailsofdevelopmentsinthe individualregionsduringthereportingyear,seepages28 and127ff.

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WorldWIde market PreSence

EurOPE nOrtH Sales in CHf mn 1 251 Employees 4 907

EurOPE SOutH Sales in CHf mn 799 Employees 2 218

nOrtH aMErICa Sales in CHf mn 706 Employees 1 437

LatIn aMErICa Sales in CHf mn 586 Employees 2 170

IMEa Sales in CHf mn 279 Employees 1 281

aSIa/PaCIfIC Sales in CHf mn 875 Employees 3 220

SIka SuBSIDIary

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ProductS and InnovatIon

inveStment in a SuStainable future. Productsthathavebeenonthe marketforamaximumoffiveyearsaccountedfor30.1%ofSikasalesin2012. thissuccesslargelyderivesfromthecompanysstrategicfocusonthetarget markets,expertresearchanddevelopmentmanagementprimarilygearedto clientprojects,efficientdevelopmentprocessesandatargetedresponseto theneedsofthecustomers.

InnovatIon and groWth Innovationisakeydriverinthesuccessfulimplementationofthecompanysgrowthstrategy.Itmakesamajor contributiontotheachievementofanaveragemediumtermgrowthinlocalcurrenciesof8%to10%.Research anddevelopment(R&D)enjoyanaccordinglyhighpriority withinthecompany.theR&DstrategyadoptedbySika inrecentyearshasyieldedahighinnovationrate,with numerouspatentsplusahostofnewproducts.Products thathavebeenonthemarketforonlyfiveyearsorless accountedfor30.1%ofSikasalesinthereportingyear (previousyear:32.7%). core comPetencIeS onekeyfactorforthesuccessofSikasR&Dworkisits strategicfocusonclearlydefinedcorecompetencies, namelysealing,bonding,damping,reinforcingandprotect- ingofload-bearingstructuresinbuildingandindustry. oursealingproductsareusedtoinstalldurablewind-, rain-anddraft-proofbarriersinflatroofs,complextunnel systems,damage-pronewater-retainingstructuresand sophisticatedcurtainwallassemblies.Bondingensures thepermanent,elasticorstructurallycontinuousconnectionofdifferentmaterials.Innovativeproductsand processesareusedtobondvehiclecomponents,window assembliesorevenconcretebridgeunitsweighingseveral tons.Dampingreducesvibrationsinfixedandmoving objects,therebyloweringresonanceandnoiseemission inload-bearingstructuresandincavitieswithinvehicles. ourreinforcingCarbodurproductsarestrategicallyincorporatedinstructurestoimprovetheirresistanceto staticanddynamicloads,whileprotectivesystemsserve toincreasetheirdurability.Sikacoatingsguarantee long-termprotectionforconcreteandsteelworkassembliesagainstclimaticconditions,chemicalaction,pollutionandfire.

focuS of develoPment In IndIvIdual target marketS ConCRete Activitiesinthissegmentarelargelydirectedatdevelopingadmixturesystemsthatpermitamoreextensive useofsecondaryrawmaterialsinconcrete,therebyre ducingitscarbonfootprint,andpolymericconcrete plasticizersandshotcreteacceleratorsmadefromlocally sourcedrawmaterials. WAteRPRooFInG here,thefocusisonimprovedproductapplicationand newwaterproofingsystemsforinstallationbefore concreting. RooFInG Developmentworkinthisfieldcentersoneasy-to-install, self-adhesiveroofingsheetsandprotectivecoatings designedtoextendtheservicelifeofwaterproofing membranes. FlooRInG Criteriathatshapecurrenttrendsintheflooringmarket includeenhancedcomfortandaestheticappealplusthe ever-greaterdemandsintermsoftrouble-freeapplication andenvironmentalcompatibility. SeAlInG&BonDInG newconstruction-sectorregulationscallforamorewide spreaddeploymentofsolvent-free,eco-efficientand user-friendlyadhesivesandsealants.Developmentactivitiesforindustrialapplicationstargetthereductionof waitingtimesduringrepairworkandtheloweringoftemperaturesinvehiclemanufacturingprocesses.

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73PatEntS wErE fILED fOr In 2012 In aDDItIOn 85 InvEntIOn DISCLOSurES wErE MaDEReFURBIShMent Innovativefillertechnologieshaveusheredinthedevelopmentofhigh-performancemortarproductswithimprovedworkabilityandextendedfunctionalproperties. Furthernoveltiesincludeproductsbasedonnewfiber andbinderconceptsforthestiffeningofstructuralbuildingelements. InDUStRY thestructuralbondingofdifferentmaterialtypes, e.g.metalwithplastics,andemissionscutsenjoyhigh researchpriorityinthismarket. reSearch StrategY AtSika,researchanddevelopmentaredictatedbytwo mainfactors.thefirstoftheserelatestoglobaltrends drivenbytheprinciplesofsustainabledevelopment andenhancedcustomerutility,suchasthedemandfor resource-savingbuildingmethods,energy-efficient constructionmaterialsorlighterandsafervehicles.the secondrelatestotheconsiderableadaptationofproducts necessarytomeetlocalneeds,whichvaryaccordingto theparticularitiesoftheconstructionindustryindifferent countriese.g.withregardtorawmaterials,climateor legalframework.Accordingly,Sikasresearchstrategyhas bothcentralizedandstronglyregionalcomponents. thecentralizedelementsoftheresearchstrategyare devolvedtothesubsidiarySikatechnologyAG,whichis responsibleforlong-termresearchprograms,analytical servicesandresearchmanagement.thelong-termresearchprogramsaregearedtothetechnologyroadmaps, whicharegovernedbythekeymegatrendsandassociatedtechnologygoals.here,theidentificationofnew products,forexample,toincreasesafetyordurability, shortenprocesstimesorgenerallyenablecustomersto cutsystemcosts,isonlyoneaspect.equallyimportantis therefinementofexistingproductstoenhancecustomer utilityortheirintroductioninnewfieldsofapplication. theregionalcomponentsofSikasresearchstrategyare entrustedtothetentechnologycentersinAmerica, europeandAsia.thesesitesassumespecifictechnology responsibilitiesanddevelopnewproductsandapplicationsindependently.thetechnologycentersalsosupport theglobalmarketlaunchoftheirinnovations.Forthis, theyliaisecloselywithregionalandlocalcustomer-oriented laboratories.thisallowstheswiftadjustmentofnew productstolocalrequirements,e.g.thefine-tuningofcon- admixturestoclimaticconditionsortolocally crete sourcedaggregatessuchasgravelorsand.theSikatechnologycentersarealsoresponsibleforfindinglocal rawmaterialssoastominimizeproductioncostsand maximizesupplysecurity. collaboratIonS Inthefieldofbasicresearch,SikareliesmainlyoncollaborationswithpremieruniversitiesinSwitzerland,theUSA, Germany,France,China,Indiaandothercountries,with thefocusbeingmainlyondoctoraltheses.thecombinationofsharedinterestsandgeographicproximityoften spawnsprompt,unbureaucraticsolutionsthatbring obviousbenefitsforthecompany.Atthesametime,Sika isatpainstocounteracttheprevailingshortageofengineersandchemistsincertaincountriesbyattractingsuitablecandidatestothecompany. Sikaispermanentlyengagedinarangeofinternational projectssuchasthenanoCemconsortium.thiseuropean researchnetworkstudiesnanoscale-to-microscalephenomenathatinfluencetheperformanceofcementitious materialsandtheproductsandstructuresinwhichthey areused.Sikaalsocollaborateswithitskeysuppliersand customerstopromoteinnovationasearlyaspossiblein thesupplychainandpavethewayfortheuseoftailored intermediateproducts.

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ProductCreationProcessSCIENCEPUSH TechnologyCreationProcess EquipmentCreationProcess ProductDevelopmentProcess TradingProductProcess ProductMaintenanceProcess EliminationProcess R&D CorporateOperations Procurement CorporateExpertTeams MARKETPULL OBSOLESCENCE

SikatechnologyAGparticipatesinarangeofprojects fundedbySwitzerlandandtheeuropeanUnionoritsmem- bercountries.theseprojectsrangefrombasicresearch intosustainablechemistrytoprocessandapplicationdevelopment.SikaisalsoactiveintheUnitednationsSustainableBuildingsandClimateInitiative(SBCI),whoseaim istoestablishsustainablebuildingpracticesworldwide. InnovatIon expendituresonresearchanddevelopmentfortheGroup intheyearunderreviewtotaledCHF172.9million(2011: CHF167.5million),roughlyequivalentto3.6%ofsales (2011:3.7%).CentralexpendituretotaledCHF86.1million (2011:82.8million).theR&Dbudgetwasallocatedin accordancewithstrategicpriorities. theSikaGroupsResearch&Developmentunitisaligned withtheenterprisestrategyandfocusesonresearch intotechnologyplatformsandimplementationprocedures forhigh-priorityR&Dprojectsinthedevelopmentdepartments.theseven-stagedevelopmentprocessfor products,theso-calledProductCreationProcess(PCP), isemployeduniformlyworldwidetoensurethatnewand patentedproductscanbebroughttomarketasquickly aspossible.Yet,apartfromshorttimetomarket, Sikaalsoaimsforhighefficiencyandstrivestoachieve costleadershipforitsproductsinalltargetmarkets. Incollaborationwiththeregionsandtargetmarketrep resentatives,theR&Dunitalsocontinuouslyworks tostreamlinethecomprehensiveproductrangeinorder toconsolidate,simplifyandlowerthecostofmarketing, productionanddistributionprocesses.

theregionaltechnologysupportfunctionsare,among otherthings,responsibleforcompliancewiththePCPin theirareaandperformregularPCPauditstoreview processquality.theauditsensurethatemployeesalways applyanup-to-datestateofknowledgesoastomeetthe highstandardsspecifiedbySikaandthatlocalchemists arekeptabreastofthelatesttechnologies.Atthesame time,specialworkshopsareheldtocollectinnovative ideasfromtheregionsandleveragethesefortheGroup. 2012sawSikalaunchontothemarketanumberofnew importantproducts,whichincludethefollowing: State-of-the-art industrialflooringsystemsbased onaqueousepoxyresinscombiningultralowVOC emissionswithextra-highcolorconsistency highly elasticMTCliquidpolyurethanemembraneto meetspecificrequirementsoftheJapanesemarket new generationofSikaGrindcementadditives designedtoreduceCo 2emissionsofblendedcements (basedonlimestoneflourandpulverized-fuelash) ViscoCreteconcreteplasticizerbasedonlocally sourcedrawmaterialsformajormarkets,especially inemergingcountries UniqueSikaRepmultipurposemortar,designedas singleproducttocaterforavarietyofapplications nextgenerationofepoxy-basedSikaDurgrouts optimizedtechnologyforPVCwaterproofingmembranes,particularlygearedtotheeuropeanmass market Go-aheadforanewwaterproofingmembranewhich createsadurablebondtoconcreteincivilengineering applicationsandpreventsanylateralwaterunderflow

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Expenditureresearch anddevelopmentin CHFmn

as%of netsalesin 5.0

175

140

4.0

105

3.0

70

2.0

35

1.0

0

0

highly reflectiveroofmembranesforcoolandsolar roofsystems two-component structuralsiliconeadhesivewithexceptionallyhighearlystrengthforfixingsolarmodules; winnerof2012CSPtechnologyandSupplierAward Ultra-high-performance faadesealantbasedoni-Cure technology:exceptionallyweather-resistantsealant combininghighelasticitywithexcellentworkability properties OEM-approved carglassrepairadhesivebasedonSika PUhybridtechnologywithhighelasticmodulus expanding adhesivesparticularlysuitableforlightweightassembliestoallowinvisiblejointingofeven thinnestmetalsheeting SikaReinforcer-960 which,whenbondedtocarbodies, addsanewdimensiontocrashresistance PatentS In2012,Sikafiledfor73patents(2011:70)andmade 85inventiondisclosures(2011:75).

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SuStaInable develoPment

reSponSibility for the future. Climatechange,populationgrowth, energycosts,rawmaterialsandwatershortagesthesearesomeof theglobalmegatrendsandchallengesthataresettochangeoursocietyinthe yearsanddecadesahead.Atthesametime,thesedevelopmentsactas powerfuldriversfornewtechnologiesandsolutions.

Sikapursuesadouble-prongedsustainabilitystrategy: itseekstodesignproductsandservicesthatmeet thedemandforefficient,sustainablesolutionsinthe targetmarkets; itcontinuouslyrefinesitsownoperationsinlinewith sustainablepracticeandbacksthisupbysuitable investmentinsustainabilityonthebasisofeconomic principles. challengeS and megatrendS thecommitmenttosustainabledevelopmentdemanded bytheglobalchallengesandmegatrendshasprecipitated changesintheeconomicenvironment.Buildings,infrastructurefacilities,installationsandvehiclesarenow constructedanduseddifferentlyfrominthepast.lowenergyhousesandcars,forexample,areincreasingly becomingthenorm.therisingdemandforsustainable productsischangingbothSikastargetmarketsandthe requirementsplacedonitsproducts.Sikaseekstocontributeproactivelytothesechangeprocessesthrough innovation.toppriorityisgivenheretosustainably developedandmanufacturedproductsthatenhance durabilityandpromotetheefficientuseofenergy,water andmaterials. thefollowingchallengesareparticularlyrelevanttoSika: Climatechangeandregulationofthecarboneconomy Populationgrowthandurbanization energycostsandrepercussionsforclimate Rawmaterialsandwatershortagesaswellaspoor waterquality

ForSika,ecologicalefficiencymeansdeliveringequivalent orbettersolutionswhileconsuminglessmaterialand energy.thisnecessitatesinnovationinbothmaterials andapplicationtechniques,backedupbysuitable methodstoassesstheenvironmentalimpactofproducts andworks.life-cycleassessmentisoneofthekeytools appliedintheproductdevelopmentprocess.Sikaalso supportsnationalandinternationalinitiativestoestablishsustainableconstruction(greenbuilding)certifi- cationsystems.Programsofthiskindareimportantin thattheyallowthesustainabilityofproductsand systemstobequantifiedandcompared. commItment Withacorporatehistoryspanningover100years,Sika isallthemorecommittedtosustainabledevelopment asaguidingprinciple.Inactivepursuitoftheassociated economic,ecologicalandsocialaims,thecompanyhas formanyyearsparticipatedinthechemicalindustrys ResponsibleCaresustainabilityprogram.ItisalsoacosignatoryoftheUnGlobalCompactcorporateresponsibility initiative,theCarbonDisclosureProjectandtheWorld BusinessCouncilforSustainableDevelopment,andhonorstheassociatedobjectivesandobligations.

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natIOnaL SuBSIDIarIES Of SIka HavE PartICIPatED In tHE rESPOnSIBLE CarE PrOgraM SInCE 1992

SuStaInabIlItY In the value chaIn Sikasmissionstatementspecifiesthefollowing:our aimistoaddressenvironmentalandsafetyconcerns throughoutthevaluechain.oneyearago,Sikalaunched aglobalprogramforsafetyandefficiencythatwas designedtoincreasethesustainabilityofitsownactivities.thisprogramfocusesonthereductionofwork accidents,ontheefficientuseofenergyandwater,and onmaterialsuseandwasteavoidanceatSikasites. Sikatargetsaconsiderablereductioninthenumberof accidentsinthecomingyearstogetherwithsubstantial cutspermanufacturedunitinenergyuse,water consumptionorwasteproduction,asappropriatefor theparticularsite. Subsidiariesinsome40countrieshaveparticipatedin thechemicalindustrysResponsibleCareprogramsince 1992.Asoftheyearunderreview,themajorityofthe manufacturingcompanieshavecertifiedenvironmental managementsystems,while25siteshaveachievedOHSAS:18001(occupationalhealthandsafety)certification. Sikachecksitsproductionfacilitiesforriskstostaffand localresidents,monitorsdamageandstoppages,and makescontinuouseffortstoimprovesafety.Internalauditsandcontrolsguaranteecompliancewiththespecified rulesandprocedures. onecornerstoneofsustainablecorporatemanagementis theprovisionofbasicandadvancedtrainingforemployees.thewide-rangingcoursesdealwithrawmaterials handling,occupationalsafety,statutoryregulationsas wellasproductpackaging,labelingandtransport.

Product SuStaInabIlItY Sikasetsouttoundertakeobjective,transparentand comparativeassessmentsofthesustainabilityofits productsnotonlyinmanufacture,butthroughouttheir lifecycle.theseanalysesmaypinpointnecessary improvementsforexistingproducts.theymayalso deliverimportantinsightsintorawmaterials,production processesorapplicationefficiencyandtherebypromote innovationandoptimizethedevelopmentofnew products.tothisend,Sikacarriesoutlife-cycleassessments(LCAs)duringtheproductdevelopmentprocess. theseservetoquantifyenergyandrawmaterials consumptionduringeachphaseofaproductslifecycle andmeasuretheassociatedimpactsonair,water andsoil.

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acquISItIonS and InveStmentS

Supporting growth in the target marketS. Acquisitionsareanimportant elementofSikasgrowthstrategy,enablingthecompanytoenhanceitscore businesswithrelatedtechnologiesorimproveaccesstocertainmarkets.through capacityexpansionfine-tunedtomarketdemandsandinvestmentinplant efficiency,theGroupensurestheconsolidationofitsglobalgrowthpotential.

acquISItIon StrategY organicgrowth,i.e.growthdrivenbyentrepreneurial endeavor,isatthecoreofSikascorporatestrategy.this organicgrowthiscompoundedbycarefullytargetedexternalgrowthwhichoffersausefulwayofclosingexistinggapsinaccesstothetargetmarketsandconsolidating fragmentedmarkets.ParticularlyinnorthAmerica,Asia andpartsoflatinAmerica,Sikapursuesthispolicyasa meansofsteadilyimprovingitsmarketposition.Atthe sametime,however,thecompanyseekstostrengthenor extenditscorebusinessthroughtheselectiveacquisition ofrelatedtechnologies.Sikamainlyfindsthesetechnologiesinsmallandmedium-sizedenterprisesineurope,the USAandsomeAsiancountries.thefactthatsuchbusinessesareusuallyunabletomarkettheirsystemsworldwidesoonerorlaterprovesaninsurmountablebarrierto growth.Byacquiringsuchcompanies,theSikaGroup,asa globalplayer,isabletoleveragetheirfullpotential. Sikasacquisitionstrategytypicallyinvolvesthetakeover ofsmallandmedium-sizedcompanies.Whenevaluating atakeoveroffer,Sikareliesontheexpertiseandexperiencealreadygained,aswellasclearlydefinedprocesses. Giventhat,inmostcases,acquiredcompaniesarefully incorporatedintheGroup,Sikaisatpainstoensurethat thisintegrationrunssmoothly.Sikathereforepays particularattentiontothecorporatecultureofalltakeovercandidatespriortoanyacquisition. theregionsgenerallyassumeresponsibilityfortheparticularacquisitionprocedures.theprocessissupervised andcoordinatedatGrouplevel.

acquISItIonS 2012 InFebruary2012,Sikaacquired100%ofYean-IlIndustrial Co.ltd.,theSouthkoreanmarketleaderintunnelwaterproofing,throughitskoreansubsidiarySikakorealtd. thecompanyboastsastrongbrandandmanyyearsof experience inprojectbusiness.theacquisitionofYean-Il hasstrengthenedSikasmarketpositioninthekorean infrastructuresectorandmeansitcannowofferalarge selectionofcustomizedcombinedsolutionsandtechnologiesforthelocalmarket. Attheendofoctober,Sikatookoverthefireprotection coatingsandsystemsbusinessofMannheim-based RtgersorganicsGmbh,withaportfolioofwell-established,progressiveandenvironmentallyfriendlywaterbasedfireprotectioncoatingsandsystems. thecompanycompleteditsreorganizationintheMiddle eastbytheendoftheyear,inwhichitsstakeinassociatedcompanySikaSaudiArabiaCo.ltd,SaudiArabia, wasincreasedto51%andconsolidatedforthefirsttime asofDecember31,2012. Shortlybeforetheendoftheyear,Sikaannouncedthe acquisitionofInatecSRL,Paraguay.thecompany,based inAsuncin,isthenationalmarketleaderandisstrongly positionedintheareasofbuildingrenovation,structural waterproofingandconcreteadmixtures.havingitsown companytherewillenableSikatoshareinthestrong growthinParaguaysconstructionsector.Inatecssales networkwillalsoprovideSikawiththeopportunityto supplythismarketwithitsfullproductrange.thisacquisitionroundsoutSikasstrongpositioninlatinAmerica andcontinuesitssuccessfulstrategyofinvestingin emergingmarkets.theacquisitionandcompletionofthe transactiontookplaceinJanuary2013.

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Investments2012Capacityexpansion Replacement Efficiencymeasures Quality/Environment 0 10 20 30 40 50 60 56% 24% 16% 4%

InveStmentS 2012 Sikasunchangedinvestmentstrategyisgearedtoconsolidatingitsglobalpresence,builtupduringthelast fewyears,andunlockingnewmarketsorexpandingits activitiestothisend.toencouragefocusedgrowth, selectedmarkets,customers,technologiesandproducts areprioritized.Investmentrosesignificantlyyearon year,especiallyinthegrowthmarketsofAsiaandlatin America.Sikasdecentralizedmarketdevelopmentpolicy encourageslocalinvestmentinproductionandlogistics capacities,andbringsthecompanyclosertoits customers. Investmentsintheyearunderreviewincreasedfrom CHF117.1milliontoCHF131.3million,equivalentto2.7%of netsales.Akeyfocusofinvestmentwastheexpansionof productioncapacityintheemergingmarkets.theshare ofinvestmentdevotedtocapacityexpansionrosefrom 48%to56%.thebreakdownoftheremaininginvestment isasfollows:16%(2011:16%)wasusedforrationalization, 24%(2011:30%)wasneededtoreplaceexistingfacilities and4%(2011:6%)wasspentonenvironmentalprotection,healthandsafetyaswellasqualitycontrol. Sikawillcontinuetoinvestinthoseregionswherethe Groupcantapintonewmarketsandgenerategrowth. theseincludelatinAmerica,easterneurope,China,India, theMiddleeastandAfrica.

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PeRFoRMAnCe

Greatersales,greaterprofit.totalsalesup 6%toChF4829million.netprofit up31%atChF281million.theproportion ofsalesgeneratedintheemerging marketsroseby1percentagepointto37%. With17%growthinlocalcurrenciesin latinAmerica,9%innorthAmerica,7% inAsia/Pacificand8%inIMeA,2012 provedasuccessfulyear,despitethecrisis thatcontinuedtodogeuropenorth(-4%) andeuropeSouth(+1%).Sikasother segmentsandactivitiesbusinesssurged by26%,primarilyduetostronggrowth intheautomotivemarket.

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grouP rePort targetS

Sika StandS by medium-term targetS.Sikahasdefinedmedium-term financialtargetsthataretailoredtotheGroupsstrategyofgrowth. thesetargetsincludenetsalesgrowth,profit,cashflowandreturnoncapital employed(RoCe).

fInancIal targetS Withitsgrowthstrategy,Sikaseekstogainfurther marketshareinitskeysalesmarkets,withthelonger- termgoalofbecomingthemarketleaderinall regionsandtargetmarkets.Sikasfinancialtargetsare basedonthecompanysgrowthstrategyandfactor indevelopmentcostsintheemergingcountries.tobe abletofinancegrowthrequiresasoundoperatingcash flowtosalesratio.Growthisexpectedtoproducea higheroperatingprofitinabsolutefigures.thegrowth targetsrepresentmedium-termobjectivesinsync withSikaspotentialandincludesmalleracquisitions. Short-termeconomicdevelopmentsinindividualregions mayleadtotemporarydeviationswithoutneedingto redefinetargets.theBoardofDirectorsregularlyreviews theSikaGroupsstrategyandtargets,andadjusts theseasappropriate. medIum-term targetSnetsalesgrowthinlocalcurrenciesin% operatingprofitbeforedepreciationas%ofnetsales netprofitas%ofnetsales operatingfreecashflowas%ofnetsales RoCe*in%*Returnoncapitalemployed,seealsopage139

oPeratIve Performance fIgureS WhileSikasnationalcompaniesconductdailyassessmentsofkeyperformancefigures,theGroupworkswith monthlyappraisalsbasedonoperatingprofitperregion. Moderncalculationtoolsfacilitatetheevaluationof costandpricetrendsaswellasmeasuresatproductand customerlevel.Moreover,customerrelationship management(CRM)systemsfacilitatethedefinitionof customer-specifictargets,theappraisalofcustomerspecificperformance,andtheimplementationofdebtor analyses.Activeworkingcapitalmanagementhelps toreducecostsandimproveperformance.ERPsystem enhancementsareoptimizingtheperformance fundamentals.

reSultS2008 2009 2010 2011 2012

810 1214 >6 46 2025

7.3 12.0 5.8 3.6 20.3

-3.9 13.0 6.5 8.9 19.3

6.3 13.1 7.0 7.5 21.3

15.5 10.5 4.7 4.1 15.6

5.3 11.8 5.8 6.3 18.3

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25

grouP rePort grouP

riSe in SaleS and net profit. Inthe2012businessyear,Sikaliftedsales by5.8%toChF4829million.Sikasglobalpresenceenabledittooffsetweak demandfromeurope.10.7%growthwasachievedintheemergingmarkets. thegrossresultwidenedfrom50.5to52.2%.netprofitincreasedbyan above-average30.9%toChF281million.

double-dIgIt groWth In emergIng marketS Sikaincreasedsalesby5.8%toCHF4829millionin2012. Inlocalcurrencies,salesgrew5.3%.thisfigureincludes anacquisitioneffectof3.5%.exchangeratemovements hadapositiveimpactof0.5%. At17.0%inlocalcurrencies,thehighestgrowthwas generatedintheregionlatinAmerica.thiswasdriven bycontinualinvestmentsandtheexpansionofproductioncapacityintheentireregion.InnorthAmerica,Sika posteda9.0%increaseinsalesinlocalcurrenciesthanks toheavydemandforrenovationwork.Sikareported growthof6.8%inlocalcurrenciesintheregionAsia/ Pacific,benefitingfromasubstantialexpansioninsales inSoutheastAsia,stableorderbooksinJapananda markedrecoveryinChinainthesecondhalf.theregion IMEA(India,Middleeast,Africa)recordeda7.7%in creaseinsalesinlocalcurrencies. thedebtproblemandtheeurocrisishadnegative repercussionsineurope,causingadeclineinvolumesin mosteuropeanmarkets.Intheregioneuropenorth, salesweredown3.9%inlocalcurrencies.theregion europeSouthgrewby1.0%however,factoringout acquisitions,saleswere7.0%lower.

othersegmentsandactivitiesgeneratedstronggrowth of25.5%,whichincludessalesintheautomotivesegment.Sikasgrowthwasdrivenprimarilybytheuseof newtechnologiesanditsstrongpresenceinthepremium automotivesegment,whichisenjoyinghighgrowthrates innorthAmerica,latinAmericaandAsia.11.5%ofthe increaseisattributabletoacquisitioneffects. theexpansionstrategybeingimplementedintheemergingmarketstranslatedintofurthergrowthof10.7%.the proportionofsalesgeneratedbySikaintheemerging marketsis37%(previousyear:36%). Sikaincreasedsalesofproductsforthebuildingand constructionindustryby4.2%inlocalcurrencies,withan acquisitioneffectof3.4%.Salesofproductsforindustrial manufacturingwereup9.5%inlocalcurrencies,including anacquisitioneffectof3.5%. acquISItIonS In2012,Sikatookoverthreefirms.theacquisitionof thekoreancompanyYean-IlIndustrialCo.ltd.reinforced Sikasmarketpositioninkoreastunnelwaterproofing market,andthetakeoverofthefireprotectioncoatings andsystemsbusinessofRtgersorganicsGmbh providedSikawithaportfolioofwell-establishedwaterbasedfireprotectioncoatings.InDecember,SikaannouncedthatitwouldbeacquiringInatecSRL,themarket leaderinconstructionchemicalsinParaguay.

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30.9

%

rISE In nEt PrOfIt waS POStED In tHE rEPOrtIng yEar

ProfIt develoPment onthebackofapackageofmeasurestakenbySikain 2012,thegrossresultwaswidenedto52.2%(previous year:50.5%).Sikawasabletopassontosalesprices thesizableriseinrawmaterialcostsseenin2011,launch new,innovativeproducts,andimprovesupplychains. Accordingly,operatingprofitexpandedby23.5%to CHF428.8million(previousyear:CHF347.1million).the EBITmarginwas8.9%(previousyear:7.6%).Sikaincreaseditsnetprofitby30.9%toCHF281.1million (previousyear:CHF214.8million). InveStmentS, lIquIdItY and balance Sheet Sikasinvestmentstrategyisgearedtofurtherconsolidatingitspresenceintheemergingmarkets.In2012, SikainvestedintheexpansionofcapacityinBrazil, Chile,China,Colombia,Mexico,Mongolia,Peru,Russia andVietnam.tounderpingrowthintheyearunder review,Sikaincreasedtheinvestmentvolumeto CHF131.3million(previousyear:CHF117.1million).

networkingcapitalasapercentageofnetsalesimproved to18.7%(previousyear:19.8%),duelargelytoheadway madeinwarehouseanddebtormanagement.Intheyear underreview,operatingfreecashflowamountedto CHF302.5million(previousyear:CHF186.1million),yearendcashandcashequivalentswerehigheratCHF994.2 million(previousyear:CHF536.0million)andnet debtwasreducedtoCHF155.5million(previousyear: CHF338.7million). InJuneofthereportperiod,Sikasuccessfullyplacedbonds totalingCHF300millioninthemarket(CHF150million withatermof6yearsandacouponof1.0%p.a.plus CHF150millionwithatermof10yearsandacouponof 1.75%p.a.).theequityrationowstandsat47.1%(previous year:48.0%).

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grouP rePort regIonS

Sika experienced divergent trendS acroSS the variouS regionS. thebestperformerintermsofgrowthrateswastheregionlatinAmerica, followedbytheregionsnorthAmerica,IMeAandAsia/Pacific.negative trends,ontheotherhand,wereobservedintheregionseuropenorthand europeSouth.theothersegmentsandactivitiesbusinessexpandedstrongly.

euroPe north SikarecordednetsalesofCHF1250.9millionintheregion europenorth(previousyear:CHF1327.4million). Measuredinlocalcurrencies,thisisequivalenttoadrop of-3.9%(currencyeffect:-1.9%,acquisitioneffect:0.0%). theeuropeaneconomiesweredoggedbythesovereign debtandeurocrisis,whichtriggeredadownturnin marketvolumesinmostofthecontinentsnations.the thirdquarterof2012sawtheeurozoneasawholeslide intorecession.Germany,astheregionspowerhouse,just aboutmanagedtomaintainitseconomicmomentum. theGermanconstructionindustryprimarilybenefited fromlowmortgageratescoupledwithanupsurgeinreal estateinvestment.InSwitzerlandtoo,thebuilding sectordeliveredarobustperformancein2012.Bycontrast, businesswasweakinCentraleurope,withcountries suchastheCzechRepublicandhungarysufferingfrom alackofforeigninvestment.InPoland,the2012european FootballChampionshiphadapositiveimpactonconstructionactivity.

Intheregioneuropenorth,Sikawasgenerallyableto implementtheincreasesinconstructionsectorsale pricesneededtooffsetthepreviousyearssurgeinraw materialscosts.Asidefromthis,newandinnovative products,togetherwithefficiencygainsinvaluechain processes,alsohelpedtoimprovemargins.InSwitzerland,late2011markedcompletionofthelarge-scale concretingandwaterproofingworksfortheGotthard basetunnel.theabsenceofrevenuefromthislong-term contractnegativelyimpactedthenationalsubsidiarys resultsfor2012.Adjustedfortheendofthismajorcontract, SikaSwitzerlandslightlyoutperformedthemarket.Sika recordedpositivetrendsinRussia,Romaniaandnorway, withthelatterreportingdouble-digitgrowthfigures. Intheindustrysegment,2012salesremainedlargelyflat atthepreviousyearslevel:whilefiguresforthetransport industrysank,Sikamanagedtoexpanditsbusinessinthe wind-powersector. Sikasinvestmentfor2012intheregioneuropenorth wasfixedat0.7%ofnetsales.SikaGermanyinvestedin anewtrainingcenteratStuttgart.

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Netsales EuropeNorthin CHFmn

Netsales EuropeSouthin CHFmn

1750

1750

1400

1400

1050

1050

700

700

350

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0

0

euroPe South SikarecordednetsalesofCHF799.3millionintheregion europeSouth(previousyear:CHF802.9million). Measuredinlocalcurrencies,thisisequivalenttoarise of1.0%(currencyeffect:-1.4%,acquisitioneffect:8.0%). theconsiderableeconomicuncertaintyandlackofliquidityamongpotentialbuyerspreventedanyrecoveryin themajorityofmarketsintheregioneuropeSouthin2012. theunusuallycoldspellinmanycountriesatthestart oftheyearcompoundedthedownturninconstruction activity.Inthesouthernmostcountriesoftheregion,the developmentslumpcontinuedunbrokenthroughoutthe year.Alreadystrickenmarkets,suchasSpain,Portugal andGreece,shrankstillfurther.Yetevensalesterritories whichhadprovedresilientinthepreviousyear,suchas GreatBritainandFrance,startedtoflagin2012.Cement consumptionfellbyaround30%inSpainandPortugal, byover20%inItaly,by8%inGreatBritainandby5%in France.MoroccoandAlgeriaweretheonlyeconomiesto bounceback,thankstoanumberofmajorinfrastructure schemes. SikassalesinSpain,PortugalandGreeceplungedby around20%,mainlyduetoalackofinfrastructureprojects.Manycustomerswerehitbyliquidityproblems andthenumberofinsolvenciesroseinalloftheregions countries.themoodofgloompromptedvariouscompet itorstoabandonthemarkets,especiallyinthesouthernmostcountries.thisallowedSika,asastrongplayer,to gainmarketshareinsomesectors.

InnorthAfrica,BulgariaandSerbia,thecompanyreporteddouble-digitgrowth.thenewmarketsinAngola, Montenegro,kosovoandAlbaniaalsoenjoyedpositive trends. InGreatBritainandFrance,Sikamanagedtomaintain salesintheconcretebusinessatthepreviousyearslevel, despitetheslightlyworseningmarkets.thesharpest dropinsalesacrosstheregioneuropeSouthin2012was sufferedbytheroofingandwaterproofingsegments. therefurbishmentmarketwaslessseverelyaffected. WhileSikapostedanincreaseinsalestoindustrycus tomers inGreatBritainandFrance,theweakdemandfor marineandautomotiveaftermarketproductsweighedon thecompanysperformanceinItaly. Inmostofthesoutherncountries,Sikawasabletoadjust itscostsinlinewiththedropinsalesvolumes.Atthe sametime,thecompanyexpandeditssalesorganizations inAngola,Serbia,northAfricaandGreatBritain.tobolsteritsmarketposition,Sikainvestedinanewmortar factoryinFrance.InGreatBritain,abuildingpermitwas obtainedforanewlaboratoryatPreston. theacquisitionofAximenabledSikatopushupitsadmixturesalesinItaly,France,SpainandMorocco.the technokollatakeoversecuredreadyaccesstothekey Italiandistributionmarket.Moreover,theacquisitionof CopsaallowedSikatomakefurtherheadwayinSpains refurbishmentmarket.

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Netsales NorthAmericain CHFmn

Netsales LatinAmericainCHFmn

1750

1750

1400

1400

1050

1050

700

700

350

350

0

0

north amerIca SikarecordednetsalesofCHF705.7millionintheregion northAmerica(previousyear:CHF617.4million). Measuredinlocalcurrencies,thisisequivalenttoarise of9.0%(currencyeffect:5.3%,acquisitioneffect:5.6%). In2012,asinpreviousyears,USmarkettrendswere largelydictatedbyexceptionallylowinflation,lowinterestrates,modestgrowth,amassivebudgetdeficit,rising nationaldebtandhighunemployment.onthepositive side,2012broughtanimprovementincreditconditions andtherealestatemarketslowlyrecoveredinthecourse oftheyear. thisgaveawelcomeboosttotheUSconstructionindustry,whichalsobenefitedfromfavorableweatherconditionsinthefirstquarterandthepent-updemandfrom theprevioustwoyears.Inthesecondhalfyear,theUS presidentialelectionsandpoliticaldebateonthenational budgetgeneratedamoodofuncertaintyinthemarkets whichdampenedbothpublic-andprivate-sectorbuildingactivity.therefurbishmentsegmentmaintainedits resiliencethroughouttheyearwhiletheindustryproduct marketsrecovered.Demandintheroofingmarket,onthe otherhand,declinedslightly. havingsqueezedSikasmarginsinnorthAmericain2011, thehighrawmaterialspricesstabilizedduringthereportingyear.this,togetherwiththesuccessfulpricemanagementinthemarket,madeamajorcontributiontothe improvementinSikanorthAmericasearningssituation.

overall,Sikamanagedtoachieveasubstantialincreasein salesintheregionnorthAmerica,withthehighestgrowth ratespostedinthewaterproofing,sealing&bondingand refurbishmentsegments. SikaUSAsuccessfullyintegratedAximConcretetech nologies. DuochemandAximCanadawereincorporated intoSikaCanada.Initialsynergieshavealreadybeenexploited.throughitstakeoversandrestructuring,Sika Canadahaswonmarketleadershipintheflooringmarket andmovedupfromfifthtosecondspotintheconcrete segment. latIn amerIca SikarecordednetsalesofCHF586.3millionintheregion latinAmerica(previousyear:CHF507.3million).Measuredinlocalcurrencies,thisisequivalenttoariseof17.0% (currencyeffect:-1.4%,acquisitioneffect:0.0%). At3.2%,economicgrowthinlatinAmericawasslightly downonthepreviousyearsrateof4.5%.thisexpansion wasmainlydrivenbystrongprivateconsumption.Many countriesintheregionalsobenefitedfromrisinginvestment,particularlyintherealestatesector. theeconomicuptrendinlatinAmericawasmostpronouncedinPeruandChile,withColombiaandMexicoalso postingrespectablegrowthratesof4%.the1%growth rateinBrazil,however,fellfarshortofthepreviousyears figure.Yet,despiteBrazilsmodestperformance,nu- merous foreigncompetitorscrowdedintotheconstructionmaterialsmarketbyacquiringsomeofthe countryslargerandmedium-sizedcompanies.

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Netsales IMEA

in CHFmn

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1400

1050

700

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0

SomelatinAmericancountrieswerebadlyhitbythede preciationoflocalcurrenciesandhighinflationrates (28%inArgentina,20%inVenezuelaand8%inUruguay). thepoliticalsituationinArgentinaandVenezuelaremainedproblematic,withbusinessoperationshampered byeconomicrestrictions. FavorableconstructionsectortrendshelpedSikato achieveafurtherappreciableincreaseinitstotallatin Americansales.SikaBrazilsucceededindefyingthe countryssluggisheconomicenvironmentbypostingan outstanding16%growth.SikaMexicoandSikaColombia likewisereportedasteepriseinsalesfigures.ofthe medium-sizednationalsubsidiaries,thoseinPeru, PanamaandUruguayboastedabove-parperformance. thesalesincreaserecordedbySikaintheindustry businessfailedtomatchtheratesachievedintheconstructionsector.thiswasduetothelowgrowthin theautomotiveaftermarketandtransportbusinessin Brazil. thereportingyearsawSikapressaheadwiththeexpansionstrategylaunchedin2011.Aftercompletionof afactoryatRecife,Brazil,atthestartof2012,work commencedonanewplantatBarranquilla,Colombia, inthesecondhalfyear.Sikaexpandeditsproduction capacityinPeru,Uruguay,ecuadorandGuatemala. Attheendoftheyear,Sikaannouncedtheacquisition ofInatecSRL,themarketleaderinconstruction chemicalsinParaguay.theacquisitionandcompletion ofthetransactiontookplaceinJanuary2013.

Imea SikarecordednetsalesofCHF278.5millionintheregion India,Middleeast,Africa(previousyear:CHF263.9million). Measuredinlocalcurrencies,thisisequivalenttoariseof 7.7%(currencyeffect:-2.2%,acquisitioneffect:4.4%). thefalloutfromtheArabSpringdampenedeconomic growthinseveraloftheregionscountries.egypt, forinstance,washitbyalackofforeigninvestmentand ascarcityofcreditinallsectorsoftheeconomy.the warinlibyaheraldedthecollapseofalucrativeexport marketfortheMiddleeast.theentireregionalso sufferedfromthecivilwarinSyriawhich,forSika,par- ticularly impairedbusinessinlebanon.ontheother hand,businessdevelopedwellinstatessuchasSaudi Arabia,Qatarandoman. Atover5%,theyear-on-yearsalesincreaseachievedby Sikaintheconstructionsectorstillfellsomewhatshortof originalexpectations. Intheindustrysegment,Sikareportedsalesgrowthof some10%initsaftermarket,transportandmarine businessin2012.thedeclinesufferedbySikainthefaade systemsmarketwasaboveallduetotheslowdownin constructionactivityintheMiddleeast. Sikasinvestmentsin2012focusedoncountriesoffering highmarketpotential,specificallyIndiaandturkey.new nationalsubsidiarieswereopenedinIraq,Qatarand oman.Despitelowerdemand,Sikamaintainedtheexistingpersonnellevelsinegypt,Bahrainandlebanonso astobewell-equippedtogainmarketshareduringthe anticipatedeconomicupturn.

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Netsales Asia/Pacicin CHFmn

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aSIa/PacIfIc SikarecordednetsalesofCHF874.7millionintheregion Asia/Pacific(previousyear:CHF776.7million).Measured inlocalcurrencies,thisisequivalenttoariseof6.8% (currencyeffect:5.8%,acquisitioneffect:2.0%). economicgrowthinChinaweakenedconsiderablyinthe firsthalfof2012inthewakeofgovernmentinterventions.thoughaimedatcoolingtherealestatesectorand otheroverheatedmarkets,thesemeasuresalsotriggered aslowdownininfrastructureschemes.notuntilthe secondhalfyeardidtheresumptionofworkonmajor projectssmooththepathforasignificantrecovery. SoutheastAsiarecordedsubstantialeconomicgrowthon thebackofstrongdomesticdemandwhilebusiness trendsintheOECDcountries(Japan,Southkorea,AustraliaandnewZealand)remainedsteady.theJapanese economywasstimulatedbythelarge-scalereconstructionworkneededintheaftermathoftherecent naturalcatastrophes.Duetothedeclininginvestment inminingcausedbydwindlingcommodityprices,the Australianmarketsfacedaslightdownturninthesecond halfof2012. IntheregionAsia/Pacific,Sikaparticularlybenefited fromasubstantialexpansioninsalesinSoutheastAsia, stableorderbooksinJapanandamarkedrecoveryin Chinainthesecondhalfyear.InChina,Sikarecordedgrowth inmostofitstargetmarketsthroughouttheyear.only intheconcretesegment,whichisheavilyreliantoninfrastructureprojects,didSikasufferasharpdropinsales inthefirsthalfyear.theothernationalsubsidiaries intheregionalsoachievedstrongorganicgrowth,with someremarkablegainsinmarketshare.SikaJapan continuedtoexpanditslocalbusinessinthewaterproofingsegment.SikaSouthkoreamanagedtoliftsales considerablyafterlandinganumberofinfrastructure projectcontracts.InIndonesia,thailand,Malaysia, thePhilippinesaswellasVietnamwhichhadrecovered fromthepreviousyearscrisisSikacapitalizedonthe availablemarketopportunitiesforsalesgrowthand geographicalexpansion.thankstonewcustomersand newcontracts,SikaAustraliawasabletoreportadoubledigitsalesincrease.

In2012,SikasetupnewproductionfacilitiesinJapan, China,Indonesia,AustraliaandVietnam.thisallowedthe companytobroadenitsrangeoflocallymanufactured productswhilesimultaneouslyminimizingexchangerate risks.WiththeestablishmentofitsnewnationalsubsidiaryinMongoliainoctober2012,Sikaintendstotapinto afurtherlocalmarket. other SegmentS and actIvItIeS SikarecordednetsalesofCHF333.5millioninthe othersegmentsandactivitiesfield(previousyear: CHF268.1million).Measuredinlocalcurrencies,thisis equivalenttoariseof25.5%(currencyeffect:-1.1%, acquisitioneffect:11.5%). theautomotivebusiness,whichhasbeenmanaged centrallyonaglobalbasissince2011,formsakeypart oftheothersegmentsandactivitiesfield. theglobalsalesfiguresfortheautomotivemarketin2012 reflectedtheeconomicperformanceintheindividual regions.Whiletheeuropeanautomotiveindustry AsiaandnorthAmericarecordeddouble-digit contracted, growth.2012wasalsoawatershedyear,withcarproductioninChinaforthefirsttimeexceedingthatineurope (18.3millionagainst17.9million). the14.0%organicgrowthachievedbySikafarexceeded themarketaverage.here,Sikaprofitedfrombothits strongfootholdinthepremiumcarsegmentandits globalpresence.thepreviousyearsacquisitionsBiroin SwitzerlandandColautoinBrazilweresuccessfully integratedandcontributedtoanadditionalgrowthof 11.5%.toaccommodatetheincreaseinsalesandtherising numberofcustomers,Sikaexpandeditsproductionca- atGrandview,USA. pacity

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grouP rePort outlook

Sika iS confident of continued expanSion in the 2013 financial year. thankstoitsglobalpositionandspecificgrowthmodel,theGroup isforecastingafurtherincreaseinsalesandprofitfor2013.

In2013,Sikaexpectsthestronggrowthmomentuminthe emergingmarketsinAsiaandlatinAmericatocontinue. Bycontrast,europewillagainbemarkedbyuncertainties thisyearandpresentachallengetotheGroupsgrowth strategy.thankstoitsexcellentglobalpositionandits ownspecificgrowthmodel,however,Sikaisforecastinga furtherincreaseinsalesandprofitfor2013. Withitsprovengrowthmodel,Sikastandsagoodchance ofgrowingmorestronglythanthemarket.Particular sourcesofgrowthincludethecompanysincreasedmarketpenetration,theextensionofitsglobaltechnological leadershiprole,acceleratedexpansioninthegrowth markets,andmarketconsolidationthroughacquisitions.

Sikawillcontinuetopursueitsacquisitionstrategyin 2013byfocusingonexpandingmarketaccessand acquiringtechnologiesthatitlacksandwhichcanbe globallymarketedthroughitsnetwork. Sikaisconfirmingitsmedium-termtargetsfor2013and endeavoringtoachievetheannouncedbandwith.EBITDA isexpectedtoreach12%andnetprofitshouldexceedthe 6%mark.onlythesalesgrowthtargetof8to10%isunlikelytobeachieved,giventhecontinuinguncertain situationineuropa.Sikaisnowexpectinggrowthof4to6%.

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SuStaInabIlItY rePort and SocIal reSPonSIbIlItY

reSponSibility for the future. Globalmegatrends,suchasenergyand rawmaterialsshortages,urbanizationandpopulationgrowth,areconfronting companiesandcommunitieswithmajoreconomic,socialandecological challenges.Atthesametime,thesedevelopmentsactaspowerfuldriversfor thetechnologiesandsolutionsoftomorrow.Asatechnology-basedcompany andmarketleader,Sikaregardsthisasanopportunity.

Sikaaddressesenvironmentalandsafetyconcerns throughoutthevaluechainandadoptsthewidelyused GRI(GlobalReportingInitiative)systeminthereport. Inmeetingitssocialresponsibility,SikahonorstheprinciplesoftheUnGlobalCompact. topromotesustainability,transparentdataandinformationareneededonproductsandworksalongtheentire valuechain. tocollectthenecessarydataandinformation,Sikain 2012continuedwiththefollowingactivitiesfromthe previousyear: expansion ofproductsustainabilitydatabasesinline withinternationallife-cycleassessment(LCA)practice tostandardsoftheISO14040series. Measurement andimprovementofsustainabilityin Sikasownvaluechainthroughglobalsafetyand efficiencyprogramforenergyandrawmaterials. Introductionofnewsystemsforproductclassification andmarkingtoprovideuserswithmoredetailed productinformationandhonorourresponsibilityto ensuresafeproductuse. thefollowingfactsandfiguresrelatetoSikasglobal businessoperationsin2012,excludingthosesitesacquiredduringthelastthreeyears.Mostnewacquisitions initiallyundergoaprogramtoboosttheirsustainability performance.theextentofoperationscoveredbythe reportfortheyearunderreviewwasequivalentto98% oftotalsales(previousyear:97%).thesustainability indicatorsareconsistentwiththewidelyusedGRI(Global ReportingInitiative)system.

envIronment, SafetY and health InVeStMentInSAFetYAnDenVIRonMentAl PRoteCtIon Inthereportingyear,SikainvestedsomeCHF5.7million intechnicalequipmentforenvironmentalprotection (previousyear:CHF6.5million).Stepped-upeffortsover thepastfewyears,abovealltheincreaseduseofstateof-the-artequipment,havebornefruitandenabledSika toreducereplacementinvestments.Currentexpenditure stoodatCHF20.5million(previousyear:CHF21.9million). Worldwide,thenumberoffull-timeemployeesinthe fieldofenvironment,health,safetyandsustainability exceeded100. health and safety:At12.9per1000employees(previous year:13.3per1000employees),thenumberofoccupationalaccidentsinthereportingyearwithoveronedays lostworkingtimewasslightlydownyearonyear.Due toshorterabsencesafteraccidents,thenumberofdays lostpermillionworkdaysfellsharplyto866(previous year:1050). energy use:energyconsumptionin2012totaled1571tJ, markingaslightyear-on-yearrise(previousyear:1505tJ). Productionvolumesinthereportingperiodwerealso moderatelyhigherthanthepreviousyearslevel.48%of Sikasenergyrequirementwasmetbyelectricalpower (previousyear:50%).Asinthepreviousyear,afurther quarterofdemandwascoveredbynaturalgas,therest byheatingoil,coaland,toasmallextent,bydistrictheating.theenergyrequirementpertonofproductsoldfell to560MJ(previousyear:595MJ).

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Investmentsin environmentandsafetyin CHFmn

Expendituresfor environmentandsafetyin CHFmn

10

25

8

20

6

15

4

10

2

5

0

0

atmospheric emissions (Scope 1): In2012,Co 2emissions resultingfromtheuseofprimaryenergysources(Scope1) rantoaround47000tons(previousyear:31000tons). thisincreaseiswhollyattributabletotheinclusionof emissionsfromtheChinesecompaniesacquiredinrecent years,whichstillrelyonthecountrysenormousreserves oflow-calorific-valuecoaltomeettheirenergyrequirements.Comparedtonaturalgas,thisfuelgenerateshigh Co 2emissionsperunitheat.Chinasgassupplynetwork isstillundevelopedoutsidetheindustrialcentersand electricityisalsoproducedbycoalpowerplants.Sikahas initiatedmeasurestoreduceCo 2emissions.theseare forexampletheuseofalternativefuels,therecyclingof plasticwasteaswellasprogramsdesignedtocutpower consumption. co 2 emissions from consumption of purchased electricity (Scope 2):2012isthesecondyearforwhichScope2 emissionshavebeenreported.theconsumptionof purchasedelectricityinthereportingyearentailedCo 2 eq.emissionsofaround98000tons,afigureroughly twicegreaterthanthedirectemissions(previousyear: 100000tons).thisassessmentissubjecttoacertain degreeofinaccuracyasitreliesonunverifiedstatistics regardingtheenergymixforelectricitygenerationin theindividualcountries.SikaappliestheGreenhouseGas Protocolformulaeinitsestimates. Water use: Despitetheslightriseinproductionvolumes, Sikasucceededincuttingwaterconsumptionto1.87millionm(previousyear:2.0millionm).thecoolingwater neededbythecompanyismostlydrawnfromitsown authority-approvedwellsandisreturned,unpolluted,to thewatercycle.Coolingwateraccountedforroughly twothirdsoftheGroupstotalwaterdemand.theused waterquantityfelltoaround0.70mpertonofproduct (previousyear:0.75m).

materials use:Despitetheslightriseinproductionvol umes, therewasnoincreaseinwastequantitiesinthe reportingyear,unchangedat49000tons(previousyear: 49000tons).Withthechangedproductmix,some18.0kg wastearosepertonofproduct(previousyear:19.0kg). Around40%ofthiswaste,particularlythatfrompolymer andmortarproduction,isreclaimedandrecycled.Waste fromthemanufactureofpolymermembranes,forexample,isgranulatedandreintroducedintoproduction. ProductIon and ProductS UnderthebannerInnovatingPerformanceandSustain- ability, Sikaseekstoenhancetheoutstandingand widelyappreciatedutilityofitsproductsbyoptimizing theirsustainabilityprofile,andsocreateaddedvaluefor itscustomers.thefollowingexamplesshowcaseSika solutionsthatcombinefirst-classperformancewithhigh sustainabilitystandards. SAVInGeneRGYAnDRAWMAteRIAlS Worldwideconsumptionoffuelssuchascrudeoil,coalor naturalgas,andotherresourcessuchaswater,ironore andcementisconstantlyrising,drivenbypopulation growthandgreaterpurchasingpower.Yettheseresources arelimited.theirextractionisbecomingincreasingly expensiveorisnegativelyimpactingtheclimate.theefficientandpurposefuluseoftheseresourcesisoneofthe greatestchallengestofuturegrowth. Sika solutions for saving energy and raw materials: Sikasconcreteadmixturesforhigh-gradeconcrete incorporatingrecycledaggregatesreducethedemand forgravel Specialsealsforargon-filledinsulatingglassunitsand forbondinglighterwindowsimprovetheinsulation performanceoflow-energybuildings Structuraladhesivesandpolymer-basedreinforcing componentsforlighterautomobileshelpsavefuel

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Occupational accidentsper 1 000 employees

Workingdayslost incaseofaccidentsper mn workingdays

Energyconsumptionin TJ

EnergyconsumptioninMJper ton sold

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0

0

example: Saving energy with grinding aids. Sikagrinding aidsforenergy-efficientcementproductionsaveapprox. 64MJpertoncement(0.035%dosage)comparedto grindingperformedwithouttheseaids.onlyaround10MJ ofenergyareconsumedinthemanufacturingchainfor thegrindingaids.thisresultsinnetsavingsof54MJper tonofcement,roughlyequivalenttothedailyelectricity consumptionofaSwisshousehold.extrapolatedtothe globalcementdemandof3294milliontonsin2010,Sika grindingaidscouldtheoreticallyhaveachievedenergy savingsequaltotheannualpowerconsumptionofaround 6.5millionhouseholds. CUttInGCo 2eMISSIonS theearthsclimateischangingwithmanifoldconse- quences forthewholeworld.thismakesclimatepro- tection,inparticularthecontinuousreductionof greenhouseemissions, acrucialtaskforthefuture. Sika solutions for climate protection: Adhesivesforthesolarindustryreliablybondveryhot surfaces highlyreflectivepolymericroofmembranesboostthe efficiencyofsolarinstallationsandlowerthecooling demandinbuildings offshorewindfarmswithspecialcorrosionprotection systemsachievelongerservicelivesunderrough conditions Viewedovertheirentirelifecycle,SikaSarnafilroof membranesentail30%lowerCo 2emissionsthanother lessdurableroofingsheets

example: cutting co 2 emissions with concrete admixtures.Concreteadmixturescanbeusedtoreducecement contentwithoutinanywayimpairingtheconcrete quality.largequantitiesofCo 2,whichisemittedduring thecombustionoflimestoneincementproduction, canthusbeavoided.Forexample,oneSikacustomerwho needed3600mofconcretefortheconstructionofa gasstoragetankoptedtousetheadmixtureSikaViscoCrete.theresulting9%netreductioninCo 2emissions wasinthiscaseequivalentto50tonsofCo 2.Appliedto theannualworldwideconcreteconsumptionof5billionm, thisofferspotentialcutsintheorderof72milliontons ofCo 2,afigureroughlyequivalenttotheannualCo 2 emissions ofAustria. SAVInGWAteR theprocessofglobalpopulationgrowthismakingclean wateranincreasinglyscarcecommodity.thecareful management ofwaterconsumption,purificationand storage aswellaswastewatertreatmentisessential. Alreadytoday,onebillionpeoplesufferfromalackof drinkingwater. Sika solutions for an adequate supply of clean water: ConcreteproducedwithSikaViscoCreteadmixtures requiresupto15%lesswaterthanconcretemixedusing standardprocedures Waterproofconcreteandinteriorcoatingsfordrinking waterreservoirsreducewaterlosses Spray-appliedwaterproofingmembranesforwatertightstructuresandwastewatertreatmentplants reducecontamination

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SikaAnnualReport2012

PeRFoRMAnCe

CO2emissionsin1000 tons

Waterconsumptionin1000 cubic meters

Wastedisposalandreusein1000 tons

50

2500

50

40

2000

40

30

1500

30

20

1000

20

10

500

10

0

0

0

example: drinking water tanks.ontheJungfraujoch saddle,highupintheBerneseAlps,aSikaproduct wasusedtoreinstateadrinkingwatertank.thedefectivewaterproofbarrierhadcompromisedthewater qualityduetocontactwiththeconcrete.themoststraight- forwardandeffectivesolutionconsistedinrelining thetankwithSikaplanWt4300-15CFeltsheetwaterproofingmem