Sika says US construction sector unsettled by Trump trade policy

By John Revill

ZURICH (Reuters) -Swiss construction chemicals maker Sika said on Tuesday the U.S. building market was "unsettled" in March, an early sign of the impact of President Donald Trump's unpredictable tariff policies.

Sika said it was not directly affected by trade barriers, but pointed to increased market concerns from potentially lengthy trade conflicts.

After a good start in January and February, Sika's sales growth slowed in North America during March as customers were unsettled by "mixed signals in terms of U.S. trade policy," the company said.

"Consequently growth for Sika has slowed in North America," said the company, whose chemical additives are used to strengthen and waterproof walls, floors and roofs in commercial, industrial and infrastructure construction projects.

During the first quarter Sika's sales rose 1.1% to 2.68 billion Swiss francs ($3.28 billion), narrowly missing analysts' expectations for 2.69 billion francs.

The results of the company, whose products are used in projects like the Gordie Howe International Bridge between Detroit and Windsor in Canada, give an insight into health of the broader construction sector.

Due to its local presence with 45 factories in the United States, Sika said it was able to outperform the market, while its global footprint mitigated the impact of trade barriers.

"In the U.S. in particular, we have implemented this decentralized model successfully and now produce close to 100% of our products locally for the U.S. market," CEO Thomas Hasler said.

"The same is true for Europe and Asia, where our local production network also gives us a strategic competitive advantage."

Sika said it would use the uncertainties to gain market share, with its organic sales up 0.9% during the quarter, outpacing the overall construction chemicals sector where sales fell by 0.5%.

It confirmed its full-year outlook for 3% to 6% sales growth in local currencies, as well as an over-proportional increase in earnings before interest, taxes, depreciation, and amortization (EBITDA).

"As long as there are no major accidents resulting from a possible trade conflict, its guidance seems achievable," said Bank Vontobel.

($1 = 0.8164 Swiss francs)

(Reporting by John Revill and Harshita Meenaktshi; Editing by Mrigank Dhaniwala and Kim Coghill)