Sika Profit Hits Record as Mortar Maker Battles Saint-Gobain

  • Net profit jumps 25% on cost control, weak commodity prices
  • Swiss company plans more factories this year in growth drive

Sika AG, the Swiss building-materials maker fighting a takeover by Cie. de Saint-Gobain SA of France, posted a record first-half profit on lower commodity prices and more stable exchange rates. The shares rose to a record.

Net income rose 25 percent to 246.3 million Swiss francs ($251.5 million) from 197.3 million francs a year earlier, the Baar-based company said in a statement on Friday. “Our investment in new products, national subsidiaries and the expansion of production capacity is paying off,” Chief Executive Officer Jan Jenisch said.

Sika’s earnings come amid a protracted legal battle that began after the founding Burkard family struck a deal in December 2014 to sell their 16 percent stake with 52 percent voting rights to French rival Saint-Gobain for 2.75 billion francs. Sika’s management opposes the plan, claiming a tie-up makes no strategic sense and leaves out minority shareholders not involved in the offer.

The company has “over-delivered” in the first half, according to Vontobel analyst Christian Arnold. “Saint-Gobain’s hostile takeover attempt remains an element of uncertainty for the future, unfortunately,” he said.

The stock advanced 1.2 percent to 43.99 francs as of 9:28 a.m. in Zurich, extending the year’s gain to 22 percent. That values Sika at 11.2 billion francs.

Organic sales grew 6.5 percent in the second quarter, the fastest in the last two years, the company said Friday. That was due to investment in new products and establishing new national subsidiaries and factories, it said.

The maker of mortars kept a target for sales growth of 6 percent to 8 percent and an “above-average” increase in margins in 2016. Jenisch has pledged to expand Sika with new factories as part of the case to stay independent.

The company said Friday it will open between eight and ten new factories, more than the previously promised six to eight factories, as well as three to four new national subsidiaries this year.

The outcome of the takeover battle is in the hands of a Swiss court, which is expected to decide before the end of the year on the legality of the board’s move to limit the family holding’s voting rights on decisions crucial to the future of the company.

Shareholders including the Bill & Melinda Gates Foundation Trust, along with the Microsoft co-founder’s Cascade Investment, Fidelity Investments, Columbia Threadneedle Investments and Southeastern Asset Management are opposing the Saint-Gobain deal.

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