- CEO confirms FY guidance, but may be towards lower end of range
- No sign of projects being cancelled; delays if war continues
- Inflation a key concern
- Sees no end to data centre boom
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.
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."
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.
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%.
Hasler said there had been no halt or cancellation of existing construction projects, but new developments could be delayed if the conflict continued.
Inflation was also a major concern, especially if central banks raised interest rates to contain it, he said.
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.
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.
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.
"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
Source: Reuters