TARGET MARKET INDUSTRY

SIKA CAPITAL MARKETS DAY 2017

INDUSTRYWHEN ADHESIVES MAKE CARS LIGHTER AND SAFER

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SikaPower® FOR LIGHTWEIGHT VEHICLES

GLENN JARVIS, SALES MANAGER AUTOMOTIVE EUROPESIKA CAPITAL MARKETS DAY 2017

SIKA AUTOMOTIVE INNOVATIONS IN SEALING, BONDING, REINFORCING AND DAMPING

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Structural Bonding, Mixed Material BondingSikaPower®SikaPower® MBXSikaSeal®Sikaflex® UHM

Crash and VehicleDynamic ReinforcementSikaReinforcer® SikaReinforcer® HSBSikaStructure®

Bonding of ExteriorComponents; Headlamps,Spoilers, MirrorsSikaflex®Sikaflex® ULMSikaForce®Sikasil®

Glass Bonding, General Assembly Sikaflex®SikaTack®

Interior Lamination& BondingSikaMelt®SikaSense®SikaTherm®

Acoustic Systems / Noise,Vibration, Harshness ReductionSikaBaffle®SikaDamp®Sikamid®

Anti-flutter Bonding, Seam SealingSikaflex®SikaSeal®SikaPower®

SikaPower® STRUCTURAL ADHESIVESFOR LIGHTWEIGHT VEHICLE CONSTRUCTION

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Lightweight construction and multi-material design are megatrends in the automotive industry

Adhesive bonding is becoming the supreme joining technology

More safety, less weight, optimum stiffness: SikaPower® enables the body structure to absorb more energy

SikaPower® structuraladhesive for the automotive industry

SikaPower®SALES DEVELOPMENT

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2013 2014 2015 2016 FC2017

Sales in t

25% ANNUAL AVERAGE GROWTH

15%ESTIMATED

ANNUAL AVERAGE GROWTH

NEXT 3 YEARS

MEGATREND REDUCTION OF CO2 EMISSION – LIGHTWEIGHT DESIGNFROM TRADITIONAL STEEL BODY TO MULTI-MATERIAL DESIGN

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Evolution in vehicle material mix to achieve required lightweightingtargets and reduce CO2

Increased complexity and material diversity requires increased usage and evolutions of SikaPower® structural adhesive technologies

ComplexSteel Design

ALU / Steel Mix Full

Aluminium

CFRP basedBody

Multi Material Design

Traditional Steel Body

Volvo XC90Volkswagen Golf

Jaguar XE

Jaguar F Pace

RangeRover

Audi A8

BMW 7 Series

BMW i3

Alfa 4C

High-strength, epoxy based, toughened adhesives

Implemented in established body shop process:- Absorbing metal forming lubricants- Curing in existing paint oven at 160 - 200°C

Increasing car body stiffness vs. welding by > 15%

Allowing weight reduction by reducing sheet thickness lower fuel consumption / CO2 emission

Improved durability and corrosion resistance

SikaPower® – STRUCTURAL ADHESIVES FOR CAR BODY JOININGINCREASE STRENGTH/STIFFNESS OF CONVENTIONAL STEEL BODY

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BENEFIT: Improving crash safety, bond-line

read through, weight reduction

CHALLENGE: Lightweight materials and design

required specialized application technology and new generation adhesives for Zn-Mg steels

SOLUTION: High-strength bonding, SikaPower® 35 kg weight savings 3 Specific SikaPower® products for

bonding all different steel types 150 meter linear application

KEY PROJECTVW GOLF – STEEL BODY

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Newer adhesive grades optimized for aluminumwhich is much lighter than steel but weaker and not weldable

Enabling additional weight reduction

Improved crash performance

Preventing galvanic corrosion aluminum-steel

Usage up to > 200 meter seam length

ALUMINUM AND STEEL-ALUMINUM MIXSTRUCTURAL ADHESIVES FOR CAR BODY JOINING

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With Sika technology 420 kg weight saving compared to previous model

161 meters of SikaPower® per car applied to increase structural stiffness and supplement self piercing rivets in fatigue

Specially developed version SikaPower® for use with various aluminum alloys including recycled grades

KEY PROJECTRANGE ROVER – FULL ALUMINUM BODY

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MULTI-MATERIAL DESIGN WITH COMPOSITES / CFRPSTRUCTURAL ADHESIVES FOR CAR BODY JOINING

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Latest generation enables multi-material joining of various metals and composites such as carbon fiber reinforced plastics CFRP

Mastered challenge: With conventional adhesives different thermal material expansions during oven curing lead to joint failure, part distortion, and residual tensions

Prevented through in-house developed and produced new toughened polymer technology

Different thermal expansion (∆𝛼) of steel / aluminum / CFRP in oven curing at 180°C:

CFRP

SteelAluminum

No expansion

1.9 mm/m

3.6 mm/m

KEY PROJECTBMW 7 SERIES – MULTI-MATERIAL BODY

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APPLICATION HIGHLIGHT:Mixed material bonding; steel – CFRP – aluminum

CHALLENGE: Solving the effect of high forces in bond lines due to different thermal expansions of metals and CFRP

SOLUTION:

Crash-resistant SikaPower® MBXadhesive resulting in 130 kgweight reduction over previous model. 150 meters of bond line between various substrates

FUTURE NEEDSLIGHTWEIGHTING CONTINUOUS DEVELOPMENT

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CO2 emissions targets and legislation set to continue to drive demand for reducing vehicle weight

Weight reduction targets will require more innovative structural joining and adhesive solutions

Electrical and hybrid vehicles will become increasingly important to drive down overall emissions giving new opportunities for SikaPower® structural adhesives and complimentary Sika Technologies

CO2 emissions target worldwide

US

ChinaJapanEU80

120

160

200

240

280

2000 2010 2020

Grams CO2 per kilometer, normalized to NEDCSource: ICCT (International Council on Clean Transport)

ELECTRIC VEHICLES – THE NEXT GROWTH DRIVER FOR SIKA

MORTEN MUSCHAK, HEAD TOOLING AND COMPOSITESSIKA CAPITAL MARKETS DAY 2017

SIKA AUTOMOTIVE INNOVATIONS DRIVE INCREASE IN VEHICLE CONTENT

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(CHF)

TESLA MODELS X, SCONTENT: > CHF 70

JAGUAR XFCONTENT: > CHF 100

TATA RANGE ROVERCONTENT: > CHF 100

AVERAGE VEHICLE CONTENT

4.855.15

5.576.19

6.757.36

7.94

8.69

2015 2016 2017FC 2018FC 2019FC 2020FC 2021FC 2022FC

Sales Content per Vehicle

VW PASSAT CONTENT: > CHF 80

PSA 3008, 308, 5008CONTENT: > CHF 70

AUDI A3, A4, A5CONTENT: > CHF 40

MERCEDES S-CLASSCONTENT: > CHF 60

VW GOLF 7, E-GOLFCONTENT: > CHF 40

In 2017 less than 1% of cars produced are Electrical Vehicles (PHEV and BEV)

Studies expect the number of EV to grow to 10-15 million cars by 2025 (8-12% of car production)

Strict emission regulations, government incentives and investment in the charging infrastructure will drive the change towards e-mobility Chinese government strongly pushing for e-mobility The diesel-gate will accelerate the process in Europe

Cost parity between ICE and EV is expected between 2023 and 2025. Cost reductions for the battery packs, lower maintenance and fuel cost will drive that process

ELECTRIC VEHICLES - A GAME CHANGER FOR AUTOMOTIVEUNTIL 2025 THE PRODUCTION OF EV WILL INCREASE TO 10-15 MN

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0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2016 2020 2022 2025

Electric vehicle sales in mn units

Europe US China ROWFigures: Estimation Sika

Electric vehicles have lower mechanical but higher electronic complexity

The complexity of the powertrain will reduce

The content of electronic parts will sharply increase

New electronic suppliers will deliver more than half of value (Panasonic, LG, BYD, etc.)

Batteries account for the biggest part in EV value with suppliers concentrated in Asia (Japan, Korea, China)

ELECTRIC VEHICLES - A GAME CHANGER FOR AUTOMOTIVECONTENT OF ELECTRONIC PARTS WILL INCREASE

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0

20

40

60

80

100

120

140

ICE EV

Value content ICE vs EV in %

OEM Trad. SupplierElectrical supplier Battery

POTENTIAL OF 20% MORE SIKA SOLUTIONS IN ELECTRIC VEHICLES SIKA

E-platforms require lightweight construction

Unique body structures require refined reinforcement solutions to ensure crash performance

Comprehensive acoustic solutions to dampen road and wind noise

Specific reinforcement for protection of battery box is required

Battery cells and modules require assembly, sealing and thermal management technology to prevent degraded performance

Relays, control modules, and sensors require potting, insulation, and encapsulation

ELECTRIC VEHICLES – WHAT DOES THAT MEAN FOR SIKA?ESTABLISHED SIKA APPLICATIONS AND NEW OPPORTUNITIES

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TESLA MODEL “S” AND “X”, MODEL 3 COMINGMEGATRENDS – ELECTRICAL AND HYBRID VEHICLES, SAFETY

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ACOUSTIC SYSTEMS

SikaBaffle® over 100 parts to block noise transmission, moisture, and dust

ACOUSTIC SYSTEMS

SikaDamp® over 200 parts per vehicle for structure-borne lightweight damping. 60% weight saving over competitive solution

REINFORCER SYSTEMS

SikaReinforcer® 16 parts to minimize roof crush, side impact and body stiffness performance

DIRECT GLAZING

Sikaflex® urethane adhesive for bonding front, rear and quarter glass on Models S and X

APPLICATION HIGHLIGHT: Structural inserts

CHALLENGE: Achieve superior crash performance and body stiffness with unique “falcon wing” door layout

SOLUTION: SikaReinforcer® structural inserts in 8 locations

Model “S”

Model “X”

Model “3”

VW E-GOLF 7 – SIDE CRASH APPLICATIONMEGATRENDS – ELECTRICAL AND HYBRID VEHICLES, SAFETY

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ASSEMBLY ADHESIVES

Sikaflex® plus SikaBooster® accelerated system for glass bonding

Sikaflex®-ULM for DVD bonding

REINFORCERS & ACOUSTICS

SikaReinforcer® plus High-strength Bonding Side Crash Safety

SikaBaffle® - 36 baffles

LAMINATION ADHESIVES

SikaMelt® interior door panels

BODY SHOP ADHESIVES

SikaPower®- 145 meter bondline steel to steel

VW GOLF VEHICLE FAMILY

E-Golf uses more than 30 Sika Products!

APPLICATION HIGHLIGHTS: Improving crash safety, bond-line read through, weight reduction

CHALLENGE: Lightweight materials and “E” Design required specialized application technology

SOLUTION: High Strength Bonding, SikaPower®, and Sikaflex® ULM contribute to safety, and 35 kg weight savings

ELECTRIC VEHICLES - A GAME CHANGER FOR AUTOMOTIVEELECTRICAL POTTING AND THERMAL MANAGEMENT

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Electric vehicles require significantly more electronic parts than traditional ICE cars

All these parts need electrical encapsulating material often with additional requirements

Thermal management plays an important role

Typical additional devices in an EV that require Sika solutions are: E-engine (stator) Battery module and pack Onboard charging module and portable

charger DC/DC and DC/AC converters, etc.

Consequently Sika will concentrate on this growing application field

0

200

400

600

ICE EV

Electronic content in %

ELECTRIC VEHICLES - A GAME CHANGER FOR AUTOMOTIVEBATTERY TECHNOLOGY WILL BECOME A MAJOR COMPETITIVE FACTOR

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A key performance aspect is an efficient temperature management:

High energy density batteries (battery packs)

Fast charging systems with high current flow

Uniform dissipation of generated heat (thermal conductive materials/gap filler, etc.)

Forced cooling (cooling rods or plates bonded to the batteries)

Portable charger cable

Onboard Charger

E-VEHICLES CHINA MEGATRENDS – ELECTRICAL AND HYBRID VEHICLESJMC MOTORS E100,E200,E300, SGMW BAOJUN E100, BYD E-BUS K7,8,9

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BATTERY SYSTEM

SikaAxson 2C PUover 1 kg per e-car.Assembly and thermal management of lithium battery modules.

BATTERY DATA COLLECTOR

SikaAxson 2C PU1.8 kg per e-vehicle.Dielectric potting (flame retarding and semi-rigid).

E-MOTOR

SikaAxson 2C Epoxy3 kg per e-vehicle.New epoxy potting product with highest thermal conductivity.

ON BOARD CHARGER (OBC)

SikaAxson 2C PU150 g per e-car.New PU potting product with highest thermal conductivity.

APPLICATION HIGHLIGHTS: Battery system, On Board Charger (OBC)Battery data collector, E-motor

CHALLENGE: High technical requirements, i.e. high temperature resistance and high thermal conductivity

SOLUTION: SikaAxson 2C PU and epoxy

E-BUSES CHINA MEGATRENDS – ELECTRICAL AND HYBRID VEHICLESFIRE PROTECTION AND GENERAL SEALING AND BONDING FOR THE BATTERY SYSTEM

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BATTERY BOX SEALING

Sikaflex®, SikaSil®, SikaPower®For fast curing, chemical and corrosion protection, weight reduction.

BATTERY HOUSE

Sika® Unitherm® PlatinumFire protection of the battery house.

NMC – BATTERY CELLSika® Pyroplast® Wood TFire protection between the battery cells.

BATTERY BOX BONDING

SikaMelt®, Sikaflex®For fast assembly and fire protection.

APPLICATION HIGHLIGHTS: Electric busses: Bonding, sealing and fire protection of the battery system

CHALLENGE: High technical requirements, i.e. fast curing, high thermal resistance

SOLUTION: Sikaflex®, SikaSil®, SikaPower®, SikaMelt®, Sika® Pyroplast®, Sika® Unitherm® Platinium

New and additional reinforcement solutions

Enhanced acoustic solutions

Structural bonding

5-7 x more electrical potting solutions than traditional cars

Adhesives and gap filling solutions with high thermal conductivity for the battery system

Fire protection systems for the battery housings

ELECTRIC VEHICLES – THE NEXT GROWTH DRIVER FOR SIKASUMMARY: SPECIFIC NEEDS OF E-VEHICLES MET BY SIKA SOLUTIONS

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Potential of 20% more Sika solutions in electric vehicles

SMART CURING IN ADHESIVE TECHNOLOGIES

THOMAS HASLER, HEAD INDUSTRY AND AUTOMOTIVESIKA CAPITAL MARKETS DAY 2017

STRUCTURAL BONDING MARKETMEGATRENDS IN THE MARKET

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KEY MARKET DRIVERS KEY MARKET NEEDS

Increased use of composite materials requires high strength bonding

Bonding replaces welding and fasteners to increase output and optimize cost

Use of mixed materials for weight and performance

Increase in manufacturing process efficiency

Total cost reduction(material/process)

Versatile/Customizable manufacturing processes

SIKA DRIVES INNOVATIONWITH SMART CURING SOLUTIONS

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Unsurpassed process efficiency for composite panel lamination

SikaForce® 3-Component

Eliminating fixture time for structural assembly bonding

Curing on Demand

Two innovations focused on the market’s number one priority:Best in Class Process Optimization

SikaForce®3-C INDIVIDUAL TUNING OF CURE SPEED

Composite panels deliver unparalleled performance:

Fire performance, insulation, weight, and strength

For use in:

Modern construction of warehouses, offices, and public buildings

Transportation by road, rail, marine, and recreational vehicles

Panel manufacturers have unique needs:

Optimization of process speed

Compensation for production climate

Reduction of ‘work in progress’

COMPOSITE PANELS MARKET DRIVEN BY PERFORMANCE

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SikaForce® 3-COMPONENT SYSTEMFIRST TO MARKET SOLUTION

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3 adhesive components Combined in variable mix ratios Allowing custom tuning of the process speed Suitable for automatic and manual

application equipment

Allows customers to adjust speed along a continuous range

PRODUCTION PROCESS

SikaForce® 3-COMPONENT SYSTEMPRODUCTIVITY AND VERSATILITY

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Composite panels are built up with multiple process steps and bonding layers

Total panel must be assembled before final pressing

Traditional adhesives are limited to a fixed cure time leading to a long press time

SikaForce® 3-Component allows:

Real time adjustment of cure speed

Tuning of cure speed for each successive layer

Shortest possible press timeProduction time reduced from 90 minutes to 60 minutes

SikaForce® 3-COMPONENT SYSTEMDELIVERS UNIQUE VALUE TO CUSTOMERS

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30% FASTER production speed compared to conventional adhesive solutions

OPTIMAL PRODUCTION CAPACITY and simple compensation for temperature variation

10% LIGHTER weight adhesive with high structural strength

SIMPLE AND EASY ADOPTION of thetechnology for customers - commercially available application equipment

Project DescriptionCommercial vehicle trailer body manufacturer in Sweden

SikaForce®-7712 3-Component Polyurethane adhesive system

APPLICATION EXAMPLETRANSPORTATION

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Project DescriptionBuilding panel manufacturer with production plants in 4 countries

SikaForce®-7742 3-Component Polyurethane adhesive system

APPLICATION EXAMPLEBUILDING AND CONSTRUCTION

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Bonding technology prevalent in Europe and growing in emerging markets

Sika is well placed to capitalize on potential in all market segments

Early adopter customers already on board in truck-trailer and building panels markets

Rollout in progress on a key account basis with process specialists

HIGH POTENTIAL IN COMPOSITE PANEL BONDING

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20% TRANSPORTATION

60% BUILDING & CONSTRUCTION

20% HIGH PERFORMANCE

COMPOSITES

Addressable market in excess of CHF 500 million

Sources: IAL Consultants, Evalueserve & Sinotrust reports, Sika database

CURING ON DEMANDTHE NEXT REVOLUTION IN ADHESIVE TECHNOLOGY

CURING ON DEMANDREVOLUTIONARY ADHESIVE CURING TECHNOLOGY

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Curing pattern of conventional structural adhesives

Curing pattern of conventional structural adhesives

The bonding process with structural adhesives consists of three phases:

Process Window: Working time within the adhesive must be processed

Fixture Time: Adhesive requires time to reach certain handling strength

Service Life: Adhesive has fully cured and bonded parts can withstand loads

CURING ON DEMANDREVOLUTIONARY ADHESIVE CURING TECHNOLOGY

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Curing pattern of conventional structural adhesives

Groundbreaking curing technology designed for structural adhesives.

The cure mechanism enables Sika to formulate extremely fast curing adhesives with customizable working and curing times.

Unmatched snap cure effect to reduce fixture times

Variability in working and open times (short > long)

Unique intellectual property of Sika

CURING ON DEMANDREVOLUTIONARY ADHESIVE CURING TECHNOLOGY

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PROCESS EFFICIENCYup to 75% fixture time savings

with snap curing pattern

EASILY CUSTOMIZED open time tuned to customer needs

COST REDUCTIONWork in progress, production speed, space reduction based on elimination of wasted fixture time

Sika already has excellent access to the market through existing customer groups (e.g. automotive, commercial vehicles, marine, wind energy)

Fast growing, global megatrend – automation, enabled by Sika’s leading curing technology

Improvement in process efficiency is a relevant buying factor in the majority of the market

With continuous innovations Sika strengthens its position within the structural bonding market

CURING ON DEMANDLARGE ADDRESSABLE MARKET - PERFORMANCE DRIVEN

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Addressable market of CHF 2 billion

THANK YOU FOR YOUR ATTENTION