Sika reaffirms targets, outlines CHF100 mln charges and 2028 savings plan

Investing.com -- Sika AG (SIX:SIKA) reaffirmed its midterm targets and detailed new spending and cost-cutting plans ahead of an investor event Thursday, outlining charges of up to CHF100 million next year and expanded efficiency measures through 2028.

The Swiss construction chemicals maker restated information first released in its third-quarter update, including expected one-off costs of about CHF80 million to CHF100 million in 2025 tied to structural adjustments in weaker markets.

Jefferies in a note said that these adjustments are “largely China” and involve “c.1,500 headcount reduction (c.4% of group), of which c.25% will be below the EBITDA level.” 

The company described maintaining “full commitment to China, albeit in a downsized form” in a statement.

Sika expanded on its “Fast Forward” efficiency program, which targets CHF150 million to CHF200 million in annual savings by 2028, with about CHF80 million expected to materialize in 2026. 

Jefferies noted that Sika now indicates the associated investment will be spread across 2025-28, giving more clarity than earlier communication.

Total investment requirements remain about CHF120 million to CHF150 million, with roughly one-third categorized as operating expenses and the rest as capital expenditure.

Sika in a statement said"heavily references digitalisation and supply chain," indicating these areas may feature prominently at the event. 

Jefferies also highlighted that the themes appear more detailed than what had been anticipated in their preview published earlier, which had outlined questions about the scope and timing of the program.

Sika’s broader profile as described in the report includes a global presence in construction and industrial chemicals, with about 80% of sales from construction end uses and the rest tied mainly to automotive applications. Jefferies reported that the company retains a market share of about 10% in its segment and places strong focus on research and development across its diversified geographic base.

Jefferies maintained a “buy” rating and CHF211 price target, representing a 34% increase from the prior closing price of CHF158. 

The brokerage listed Sika’s market capitalization at CHF25.4 billion ($31.4 billion) and noted that the valuation is derived from a discounted cash-flow model. 

Inputs include a 7.4% WACC, which Jefferies said is built from a 4% risk-free rate, 6% equity market premium, and an equity beta of 0.69x, alongside a 3% perpetual growth rate.

Risks to the outlook include variability tied to global or automotive market growth, cost inflation trends, the pace of innovation and potential currency movements involving the Swiss franc. 

Jefferies listed these as factors that could raise or lower future performance metrics relative to the company’s long-term plans.

The brokerage also noted that Sika’s previously stated savings, headcount actions and structural adjustments remain central to its strategy as it moves into 2026 and progresses toward its multi-year financial targets.