April 9, 2019 / 3:55 AM / 15 days ago

UPDATE 2-Sika highlights tougher market conditions as sales growth eases

* Confirms 2019 sales guidance for 8 billion Swiss francs

* Growth in Europe, Americas, Asia-Pacific slows in Q1

* Company highlights labour shortage in U.S. market

* Shares edge lower (rewrites, adding CEO comments, share price, analyst)

By John Revill

April 9 (Reuters) - Sika cautioned about a “commercially challenging environment” after the construction chemicals maker reported slowing sales growth in the first three months of 2019.

A tighter labour market in the United States and reduced infrastructure spending in Mexico weighed on building work at the start of the year, the Swiss company said on Tuesday.

“Numerous major construction projects have been delayed in the United States due to the ongoing shortage of skilled labour. In Mexico, the change in government has led to noticeable cost-cutting measures in the area of infrastructure,” Sika said.

The U.S. jobless rate remained at 3.8 percent, among the lowest on record, data last week showed.

Sika, which makes chemical additives for concrete, said its first-quarter sales rose to 1.64 billion Swiss francs ($1.64 billion) versus the 1.63 billion francs expected by analysts in an Infront Data poll.

The company, which is seen as reflecting the health of the broader construction industry, said its local-currency sales increased 7.1 percent, down from a 11 percent rate a year earlier as sales growth decelerated in Europe and North America.

Sika’s stock edged 0.6 percent lower by 0900 GMT.

“People on both sides of the Atlantic are worried about a recession and that will affect the construction industry,” said Bernstein analyst Phil Roseberg, who described Sika’s figures as a solid start to the year.

“Sika is not immune to that. Their figures reflect the reality of the market.”

Still, Sika maintained its guidance of increasing its sales by 6 to 8 percent this year, confirming its goal of achieving full-year sales of 8 billion francs for the first time.

Sika, which last year headed off a hostile takeover attempt by France’s Saint-Gobain, said its growth would be boosted by further acquisitions and new factories, adding it planned to open up to nine new plants this year.

“The growth in local currencies and organically is a little bit weaker than expected,” said Bernd Pomrehn at Bank Vontobel.

“In North America there is a shortage of labour and equipment, which is affecting the whole construction sector. Sika’s results have a read-through for other construction companies which are also facing problems with a lack of labour and also increasing economic uncertainty.” (1 = 0.9982 Swiss francs) (Reporting by John Revill in Zurich and Ishita Chigilli Palli in Bengaluru Editing by Gopakumar Warrier and Keith Weir)

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