Basically what we do. It's exactly the same approach.
But you're doing it with data centers as well?
Yes.
Yes.
Yes.
Okay.
Yeah, we're already engaged to, with that as a global market for us.
Yes.
But what we find is that with those key owners, they have regionalized approaches, and so we have to address those accounts globally, but with a regional kind of view as well.
But often, we act more globally than these guys. So we're always a bit step ahead.
Yeah
Because we have our people everywhere in the world. So we are already there in Ireland, in Spain, where you build these data center, we're there and can help you with local people. So that is all. They often wanna have advice for contractors because they cannot bring the U.S. contractors to Spain to build the plant, so they often seek advice also for that.
Yeah, and then we have a question from virtual participant as well, Brijesh from HSBC. So you can unmute and turn on your camera, please.
Hello.
Hi, hopefully you can hear me.
Yeah, we can.
Great. I have a question on the data center. You talk about 1 million-4 million of the what you call revenue proposition there. And when we look about from air cooling towards liquid cooling, do you see a change in the kind of roofing systems or anything you kind of point out where you see the I mean, with the kind of the rack density increasing? What’s the kind of what you call the energy requirement, and so is there a change in the specification of the products required, hence can your products be more relevant or less relevant in the changing dynamics?
Okay. Yeah, I would say one criteria or requirement that we're seeing, which is, I would say, relatively recent, with particularly within the data center market, is the growing need to I'd say really bring, as we pointed out earlier, solutions that have a sustainable impact. Looking at reducing embodied carbon, improving their overall, I would say, energy footprint. So improving the thermal characteristics of those structures, so that they have a lower energy demand on keeping them cooled and keeping them at the right temperature. So when we can bring solutions that check all of those performance criteria, but then also have an added benefit of maybe recycled content or basically circular products.
So one of our core roofing materials that we sell a lot into this market is one of the first Cradle to Cradle certified roofing membranes. Those things get the attention of these designers and these ownership groups. Those I would say are the trends we're seeing coming in that market.
Okay.
So really shifting towards more sustainable products and solutions, and they're always open to learning what's the newest and latest trend in that regard.
I think we're done.
And, um-
I'm getting signs.
Yes.
Hopefully it was interesting for you, and whatever's next, hopefully you're gonna enjoy as well. See you in the break.
Thank you.
Thank you.
Thank you.
... Infrastructure. To start, my name is Mike Campion. I'm the regional manager for the Americas. I'd like to introduce my team also. We have some great presentations coming here today. So first up will be Kyle Lloyd. Kyle Lloyd is the Executive Vice President of Commercial Construction and Infrastructure in the United States market. Then we have Jasmin Amberg. Jasmin is
... the project manager for tunneling and a member of the board of directors for Amberg Engineering. And, of course, Sarah Langley, and Sarah is our head of infrastructure development in the Sika UK. So, a few more. Welcome. So, you know, when we look at the new infrastructure development and also the monitoring, the maintenance, the repair, and refurbishment of infrastructure structures, this is really a part of the DNA of Sika. This is something we've done from our very first project over a hundred years ago, which was an infrastructure project, till today. This becomes a core element of what we do, and it's one of the largest pieces of our direct business on a global basis. And about 35% of the total turnover now of Sika is based on infrastructure work.
So it's really a big part of what we do. You know, and more and more, the customer is looking, as you heard this morning, more and more looking for durability and circularity. So this is a running theme now, so we have to continuously bring sustainable solutions for our customers to stay on the cutting edge and really to meet the challenging demands of these dynamic urban environments. So if we look now, we talked about these structures, and today we're gonna talk focus mainly on tunnels, on water supply systems, and on bridges, and generally, when we look at these, all three of these systems, we're talking about things that have a service life of a hundred years. You know, you heard this morning.
A hundred years is now the new target, where we don't look at two or three generations, we're looking at five or six generations or more. So really more sustainable solutions. But if you look now, what we have today, and this is the number of structures, infrastructure structures, that are currently at or nearing the end of their service life, and you're looking at somewhere between 35% and 40% of all these structures globally are nearing the end of their service life. So the requirement for, you know, monitoring, for repair, for maintenance, and for refurbishment of these structures is paramount, and it's really critical, and it's gonna become more and more important as time goes on.
When we look at these, you know, we heard from Alessandro this morning, you know, is it really what we're talking about is, you know. We talked about 20 years ago, we were still saying it's 40 years. Well, now most of these structures were built 60 or 70 years ago. So there's this huge demand now of old infrastructure that has to be rebuilt, and you see this when you travel around cities. You know, the population growth, the urban density has increased, traffic increases, populations moving around the cities. The current infrastructure can't take it, and that's why you see, you know, in every major capital in Latin America today, we're building ring roads or subways for public transportation, for car traffic, for freight, because you just can't take it with the existing structures.
So more and more we'll continue to see these built up, and again, they want these long-term lifespans. When we talk about why, why the needs for the refurbishment, and Thomas touched on this this morning. If you look at the Ponte Morandi bridge in Genoa in 2018, this was during a storm. It was in the middle of the day, the bridge failed. 43 people lost their lives in this accident. They fell into the, you know, storm-swollen rivers below and were lost. So really, you know, incredibly tragic. What can happen if infrastructure isn't maintained and constantly upgraded to meet the demands of today? We had a similar issue in Dresden.
Here, no one was injured, thank God, but still you have a huge disruption to traffic in the city and also the flow of commerce. And lastly, you know, a bit embarrassing now, my old hometown in Philadelphia, Pennsylvania, I-95. I-95 is the major north-south thoroughfare for the East Coast of the United States, from Florida to Maine, and this bridge collapsed and shut down Route 95. It was, you know, really became a national emergency to reopen this bridge very quickly. So we found quick solutions with recycled materials to get it back up and running. But you can see, you know, massive changes in infrastructure or just small problems in infrastructure has massive effects on people and business.
So when we look at these growing demands, you know, it's not just in one area. It's not in the emerging market, it's not in frontier markets, and it's not just in mature markets. It's every market around the world has a need, and this is from bridges and highways, it's tunnels, it's all level of infrastructure. So the potential is there. Currently, today on the books, we have about 3.7 trillion in new projects that are out there. So there's plenty to do. There's generations ahead of us who will still be refurbishing these structures. Hopefully, beginning now, we refurbish them in a more sustainable way with more sustainable products and particularly in new builds.
You know, you'll hear a bit, you know, maybe now we don't look at a hundred or even a hundred and fifty years to extend the service life of these structures. And now you'll hear a bit more on the specifics, some of these structures, so this way we can save time at the end for some questions. So that's it for me. Thanks. Kyle?
Thanks, Mike. So yeah, I'd like to start with a session about durability on infrastructure, and I'm gonna speak really more specifically about roads and bridges in this section here, but wanted to start with a quick video teaser. And as you see these bridges here, I'll talk a little bit more about the Sika product solutions that we can provide on some of these. ... I'm glad I don't have their job. I see this video and bridge inspectors. Okay, so today, really three topics I wanted to hit on is, you know, we've talked a lot about bridge and road infrastructure today, but really, you know, where does Sika bring solutions to these? So we'll talk about that a little bit with the illustration on the right.
Also bring an update on, in the United States, the IIJA, or the Infrastructure Bill, as we call it. Is the money flowing through? Are we seeing projects as a result? And then finally, wanted to highlight a few of the projects around the globe that Sika's been involved in. Really excited to talk about some of these, these pretty cool projects that we've had a pleasure to be involved in. When we talk about durability and bringing a bridge to, whether it's a hundred-year design service life or a hundred and fifty-year design service life, you know, this is just a very small snapshot of the Sika solutions that we work with, the bridge designers and the owners, and able to bring a longer lasting bridge. You know, it really starts with the columns.
We have Sika admixtures that are used not only in the concrete columns, but the bridge deck. And then on the bridge deck itself, really the idea, the concept here, is to extend the service life of a bridge, as you really want to talk about what you can put on the deck to make sure that that concrete surface is protected from de-icing salts, from freeze-thaw. And we've got several different waterproofing products. Actually, one of our newest acquisitions that Thomas mentioned this morning, Kwik Bond Polymers, actually has a really nice technology. That's an impermeable, typically goes on a bridge about 25 millimeters thick, completely isolates that concrete bridge deck from any of these chemicals or wear. So that obviously helps extend the service life of that bridge deck.
And then another, a weak point of any bridge are the expansion joints, and this is where the bridge has to be able to move through its design service life to accommodate for temperature changes, to accommodate maybe for slight movements in the bridge. And with expansion joint solutions, actually, we have a new product range, that we brought from our new Master Builders acquisition. It's, Watson Bowman , and they've got some very unique expansion joint systems that we utilize in, many of the bridges that have been built in, not only the U.S. and Canada, but, but globally. So I wanted to give a bit of a brief update as well on the Infrastructure Investment and Jobs Act in the United States. You may be very familiar with this bill.
It was passed in November 2021 by the Biden administration, and essentially what that did is it identified, you know, we really had a crumbling infrastructure in the United States, and with the current dollars allocated to that, we just weren't going to make much of a dent in these bridges that needed repaired and improved. So CHF 1 trillion investment approved in 2021. You can see on the right hand, these are the, the segment or the sector where the dollars were allocated to. I'm going to talk a little bit more specifically about the CHF 93 billion in roads and bridges in my part. However, when we talk about the other sectors here, public transportation, rail, airports, and water, still all very, very heavy involvement from Sika in these markets as well.
But really with my portion, I'll be talking mostly about the roads and bridges. This investment here was actually the largest federal investment in the U.S. public transportation ever, and I think Mike mentioned it earlier, the number of bridges in disrepair in the United States. You could probably spend all trillion on just bridges and still not fix them all, but certainly it's a good start. On the next slide, really what I wanted to show here, one of the questions we get asked, you know, from people outside the United States is, "Okay, where's this CHF 1 trillion going? Is it real money?
Are you seeing that translate into revenue?" And we're happy to say that, you know, now almost, not quite 40% of the CHF 1 trillion has started to flow through on projects now. Keep in mind, these have to be coordinated with the local state DOTs, with the Federal Highway. So you have this CHF 1 trillion to spend, but there's a lot of entities you have to work with. You have to design the structures, you have to build the projects, and then the contractors have to mobilize. So we're really just now getting into stages where we're seeing these dollars turn into construction projects and dollars for Sika. 113,000 bridge repairs actually are underway under this act, and then about 430,000 km of roadway improvements are being completed as we speak.
But I wanted to point out the two projects in the bottom. Actually, they're still in engineering and pre-construction phase. They haven't really broken ground on these, but these are two projects we're highly involved in, working with the owners and the designers on the Hudson River new tunnel project in New York City, to make sure that we can bring solutions through our concrete admixtures, waterproofing, and any other products that there's an opportunity for, to make sure that this is at least a hundred-year design life structure. So we're involved really at the very beginning of the design stages. Same can be said for the new bridge connecting Ohio and Kentucky. The bridge, the older steel bridge on the right is an existing bridge built, you know, several decades ago.
But because of the volume of traffic that crosses this river each day, they now have a new need for a new bridge. Both of these projects in the bottom are being funded with that one... part of that CHF 1 trillion. So these are real projects that have came to fruition now with this act. And same story on the bridge on the bottom. Our sales personnel, and design, and product management teams are working very closely with the entities designing these structures to make sure that, you know, we can contribute to solutions that will extend the service life. In particular, on the structure on the right, we're heavily pursuing our Kwik Bond Polymer. Our newest acquisition is being heavily considered as a surface on top of the concrete deck, so it's not just for refurbishment.
Also, our Kwik Bond Polymers were highly active in new bridge construction as well. And then I'd mentioned our Watson Bowman expansion joints, also trying to position ourselves well to be able to supply this project. Now, I wanted to switch gears a little bit on a project that's getting closer to completion, the Gordie Howe Bridge in Canada. It connects essentially the Detroit crossing right now is just a tunnel. Heavy, heavy congestion in that tunnel every day, and it was time really to build a new bridge structure here. Almost a $4 billion investment by both the U.S. and Canada, and about two and a half kilometers long, one of the five longest bridges in North America today. What was Sika's contribution on this bridge?
We supplied also all the admixtures that went into the concrete on this structure, and then on this structure, it was highly, highly critical that the expansion joints would be able to accommodate the design service life on this structure. The largest expansion joints supplied on a bridge in North America, these expansion joints are three meters wide, and that's to accommodate for the very significant amounts of movement that a bridge like this will undergo throughout its service life, from temperature changes, from slight movements in bridge foundations. But a really neat project to be involved in, and they literally just connected at the center. They started on the two shores and worked their way to the center and just connected them a couple months ago. Then I wanted to talk just a little bit about Kwik Bond Polymers, our newest acquisition.
Thomas talked about it this morning. Kwik Bond Polymers has a very unique technology where they supply what's called the polymer concrete. It's actually not... doesn't have cement in it, but essentially, it's a polymer, polyester polymer material that's actually used with sand and aggregate to essentially replace the need of a concrete overlay. It goes on typically about 25 millimeters thick. It's an impermeable surface, so what this does is it goes on top of the bridge deck so that that concrete surface is not exposed to de-icing chemicals or freeze-thaw, which freeze-thaw is one of the worst impacts on concrete that you could have. So we're essentially, you know, protecting that concrete surface deck by putting another better layer on top of it that then doesn't have to be replaced, you know, for many decades to come.
That system can also be used not only for refurbishment on older bridges, but anyone that, I'm not sure if anybody is here from New York City, but the Goethals Bridge in New York, they completed this new bridge a couple of years ago. Brand-new bridge, but they also wanted to design this with a service life of, you know, a hundred plus years. So the owners of this bridge decided to put a polyester polymer concrete overlay on top of the existing bridge surface, and this will actually extend the service life of that deck about another thirty years here. So again, it's a product that's not just for refurbishment of old bridge decks. Brand-new bridge here, and it was chosen actually as a wear surface to extend the life.
And then Thomas mentioned this morning really exciting project to be involved in in Montenegro. Multiple-billion-dollar investment, and this is to really connect the seaport of Bar to Serbia. Really, the statistics behind this project are quite amazing when we look at the number of bridges and the number of tunnels that had to be completed really to get this project to completion. You can see the geography they're working with, very one of the tallest bridges in Europe after construction is completed. One of the three phases, actually 60% of the roadway length was either a bridge or a tunnel. Pretty amazing when you think about the length of highway built and just how much of that had to be, you know, built with durable infrastructure here.
On this project, Sika provided, I think, if you remember, Thomas's slide from this morning, dozens of products, different products on this project. But most key was the concrete admixtures and all the concrete structures, the waterproofing and the shotcrete accelerators. And then the last project I wanted to feature here, you know, again, these are not just new bridges and new tunnels in areas like Zurich or New York City. You know, these are also, you know, significant needs in countries like Vietnam to be able to connect the north to the south, really to bring new commerce in areas that didn't exist before. So this was really one of the biggest projects in the history of Vietnam here. It's basically a brand-new, a highway system to connect the north to the south.
5,300 kilometers still left to build of this 2,000-kilometer project, so quite massive. And again, on this project, Sika supplied all the concrete admixtures for most of the concrete superstructure. We supplied the waterproofing membranes for the tunnels on this project. But again, you can see, you know, the value of these projects that we're involved in, you know, not small projects. It's another CHF 3.2 billion on this project as well. And then just one more slide I wanted to leave with is, if you look to your left here, our SikaProof system, and Jasmin's going to talk a little bit about the Riedberg Tunnel and Sika's involvement with Amberg Engineering on this.
This was a new innovative waterproofing system that we really just launched in the last year. And if you look at the conventional system to the left, excellent waterproofing membrane system that Sika's had for many years, but a lot of different components to it, can be a bit time-consuming to install. We've really taken that great system and now improved it by really making it a single system. Basically, just has to be attached to the concrete substrate, and the joints seam welded. But really, you know, a very durable solution, but now we also help the contractor by eliminating a lot of the steps. And with that, I actually want to turn it over to Jasmin to talk a little bit more about the project where this was used. Thank you.
Thank you. Thank you, and welcome from my side. I will take you now on a short trip underground and talk about the project Riedberg Tunnel and the future trends in tunneling. My name is Jasmin Amberg. I'm a project manager at Amberg Engineering, that is a design company specialized in underground infrastructure, and part of the Amberg Group. The complete Amberg Group consists of several companies, the total a little bit more of over five hundred employees worldwide and acting internationally. The other companies of the Amberg Group also focus on surveying, inspection, digital construction, facility management, and with the Hagerbach Test Gallery here in Switzerland, near to Sargans. We have an underground facility with for research, training, and testing. Sika is also a very important partner in Hagerbach. Coming now to the project of the Riedberg Tunnel.
The Riedberg Tunnel is a twin-tube road tunnel in the southern part of Switzerland, in the canton of Valais, and it leads directly through the slope of the Riedberg. Unfortunately, the slope of the Riedberg is an active landslide and moves very inhomogeneous and depending on rainfall, and locally can come to several centimeters per month. The tunnel is therefore exposed to a constraint differential deformation along its axis and needs a special design. Based on the monitoring of the slope, the long-term behavior of the tunnel was evaluated, and it was found necessary to create it as flexible as possible to avoid damage of the tunnel and to extend its lifespan. This was achieved with a special design of the joints between the blocks of the inner lining, allowing the tunnel to move like a snake or a chain.
This design also led to special requirements for the waterproofing of the inner lining, and this is where Sika got involved. After explaining the situation to Sika, they suggested to apply their new product, the SikaProof, with a bonding layer between the concrete and the membrane. With this membrane and the full bond, we could create waterproofed elements and prevent water migration between the concrete and the membrane. In case of damages of the membrane due to the blocks' movement, water can only penetrate through the joints between the blocks, here in red, or through a crack in the same spot as the damage of the membrane. In this case, the crack can get injected, and the problem is solved again.
And for this specific project, with these requirements, this was the perfect solution and had huge benefits, compared to a standard waterproofing membrane without a bonding layer. I brought you here some pictures from the construction site. On the top left, you see the tunnel with the outer lining. On the top right, you see the application of the drainage layer, and in the bottom, the application of the SikaProof membrane, in the tunnel. It's the exactly same system as shown here in the model, where you can have a closer look afterwards. In my opinion, this is a very good example for a fruitful collaboration between designer and supplier, leading to a win-win situation.
On one hand, we had the ideal solution to support the durability of the tunnel, and on the other side, there was a possibility for the first application of this new membrane for Sika. I want to highlight the fast reaction time of Sika. Only five days after our first contact, we had a workshop, and we found very fast the solution of the new membrane and had so continuous support of Sika during the development of the final design, the arguments with the client, and also for details for the execution plan, and this all worked because Sika was a solution provider and not only a material supplier. In the second part, I will focus on some future trends in tunneling and underground construction.
The trends I'd like to focus on, you already heard of them this morning during the presentations, is Urbanization, Digitalization, Climate Change, and CO2 neutrality. Urbanization leads to an increasing demand for reliable infrastructure, for example, metros or underground logistics solutions. Additionally, the integration of the underground space is crucial for the development of cities due to the lack of space above ground. Digitalization influences not our daily work and processes. This applies not only for planning and the construction, but also the operation and maintenance time of an infrastructure. Facility management relies on data from inspections, physical inspections, but also digital inspections, and also sensors in the infrastructure, and decisions will be supported by AI. Sponge cities can be mentioned as a keyword in regard to the topic of climate change.
The scarcity of water ask for sustainable management. We will hear later about that from Sarah. The goal of sponge cities is to store water from rainfalls and like a sponge, allowing to control the usage. This mostly underground infrastructure additionally mitigates impacts of heavy rainfall and flooding. CO2 neutrality is a more important goal for sustainable tunneling. The use of recycling materials and the reduction of concrete used in underground construction can contribute to that goal. And how can Sika support? Let me just mention some keywords. Sika should continue to be a solution provider and should be involved in the planning process. Aging infrastructure, as already pointed out before, and the refurbishment, it needs maintenance and refurbishment. The durability of products and the possibility for repair is an important part.
In digital planning and models, the input from the material side is also necessary. In addition, monitoring of the products during the life cycle of an infrastructure can be of interest for owners and also the suppliers. In general, it is important to take a comprehensive view and consider the entire life cycle of an infrastructure to find sustainable solutions. This requires your cooperation and involvement of the various stakeholders, right from the start. This was it from my side, and then I will hand over now to Sarah.
Good afternoon. So I'm gonna start by showing you a video. Water scarcity is becoming a more urgent issue globally, as 2.4 billion people currently live in water-stressed countries. This is due to a 20% decrease in fresh water resources over the past two decades, caused by excessive groundwater use, pollution, and climate change. By 2050, a massive 5.7 billion may be affected. Extreme weather events, such as droughts and floods, are also worsening the situation, with devastating consequences, and recent European floods make this all too real. Across Europe, many drinking water supply systems have been in operation for hundreds of years. Regular maintenance, especially of the waterproofing of these structures, is essential to prevent water loss. The largest share of the global pipeline's value is attributed to treatment plants, which account for just under 30% of the investment.
Other water and sewage infrastructure projects account for 27.4%, while water and sewage tunnels, desalination plants, distribution lines account for the remaining fund. Two examples of these globally are one in Saudi Arabia, which is a really significant development. It's a CHF 3.4 billion initiative to recycle nearly two billion cubic meters of water by the end of the decade. This accounts for 70% of the country's renewable water source. While in Australia, the government has committed CHF 2.4 billion-2.5 billion to the Murray-Darling Basin project. It's clear to see that global water stress is driving record investment in water infrastructure, and here's just a few examples that Sika has been involved in.
The Thames Tideway Tunnel project, nearing completion now, is currently the largest water infrastructure project in Europe, and I've had the privilege of being involved from the start with early discussions with the client's designer, and I was actually on site last week. At present, London relies on a 150-year-old sewer system, built by Bazalgette, for a population less than half its current size. As a result, millions of tons of raw sewage spill untreated into the River Thames each year, typically at each excessive rainfall. The Thames Tideway Tunnel repres.e.nts a CHF 5.6 billion investment, and provides a 25 km combined sewer running mostly under the tidal section of the River Thames. From early concept, Sika U.K. personnel were involved in discussions, both on the concrete production and on the waterproofing challenges.
This early involvement cemented Sika as one of the key suppliers to the project, resulting in millions of GBP worth of sales across all of our main business units, and that'll be the cross-selling that we were all discussing earlier. This included admixtures to the concrete and to the spray or shotcrete, membranes for caverns and shafts, and water bars for hundreds of construction and large movement joints. Challenges presented in both the pumpability of the concrete and the precast segment for the precast segments, and the complexity in joining existing aging infrastructure to brand-new, state-of-the-art structures. Sika rose to the challenge to work with design teams and contractors to ensure a robust solution for every asset across the scheme. Now a little trip over to Dubai. This deep storm water tunnel is a prestigious project awarded by Dubai Municipality.
It holds an estimated contract value of CHF 325 million, and the objective of this project was to collect and convey groundwater and stormwater runoff from the Dubai World Central area and adjacent communities, in total, around 380 square kilometers. The project consisted of a 10-kilometer tunnel of 11 meters diameter at between 30 and 45 meters below the ground. Sika approached the designer at a very early stage and was able to specify our solutions for protective coatings, both internal and external surfaces of the tunnel segments.
We were also able to tackle the waterproofing packages of the deep, deep shafts, which were originally specified as GRP, and because of our early involvement in the tunnel, we were able to swap these to Sika lastic spray-applied membranes and connection joints between the TBMs, TBM-driven tunnels, and the large shafts. Now on, further over to my colleague's area of the world, the Sunset Heights pump storage and reservoir in El Paso, Texas. This is a vital infrastructure facility, and it has been distributing drinking water to the city since the 1920s. This historic site comprises two four-million gallon concrete water tanks and a pumping station. The aging structures were in the process of being inspected for repair when a sudden earthquake hit. This was in 2020, so I think, they probably had more problems as well.
But it struck just two hundred miles to the east. It caused significant damage to one of the reservoirs and quite notable leaks. The first tank was repaired and strengthened in 2021 and the second in 2023, and the key success factors here were that our products offered low VOCs and were fast-curing and easy to install. And that was important because the access to this incredibly large tank, obviously, the other one is a mirror, was by a very, very small access hatch. So it meant that we had to work with, the contractors, the owners, and a good collaboration on delivering materials, strengthening the structure, and working with site access and installation of the products. Sika's approach to water protection sets new standards within the industry.
By combining innovative technologies with a commitment to sustainability, Sika is not only addressing today's challenges, but also paving the way for future generations to have access to clean, safe drinking water and that vital water-secure future. I'm going to hand you back to Mike, and we'll take some questions. Thank you.
Thank you, Sarah.
Cheers.
Okay, friends, we have a few moments. Yes, please.
Thanks very much, so it's two questions.
Okay.
Can you talk about what percentage of infrastructure projects you think actually need this level of innovation, technology, product quality, et cetera? Is it everything, or is it actually a small sub-segment of infrastructure that is this technically demanding? And the reason I ask that is, who else can do these types of projects? Is it Sika and no one else? Is it Sika and two or three competitors?
Mm-hmm.
'Cause that would be useful to try and understand how easy it is to win this business and how relevant this business actually is in the total infrastructure spend.
Sure. I mean, I think over time, all of these structures will need to be replaced. When you look at the age, they're 60 years-70 years old. You know, they're not fit for purpose anymore. You know, if the city doubles in size, they're just not up to code. They're not up to specification, so eventually, they'll all need to be repaired. This is clear, and/or refurbished and upgraded, and/or replaced. So there's multiple routes. Having said that, so I think the majority will have to be done. Can other people do it? You know, we have competitors as well, and unfortunately, we're not completely alone in this space. However, I would say that Sika is unique in that the amount of cross-selling we can do.
Many of our competitors sell waterproofing. Some competitors sell concrete admixtures. Some will sell, you know, repair products. Very few can match us on the scope and the scale of our portfolio, or the breadth of our portfolio. So when we go on to. You know, we look at this vertical markets, and if we look at a vertical market tunnel, I can go in and in the old days, twenty years ago, I would go into that tunnel, and I'd sell $500,000, and we would throw a party. Now, if we don't walk away with $10 million, we're upset. So, you know, it's really, you know, as we bring these acquisitions, and again, as Thomas said, they're always strategically aligned with our core business, then we can add more and more to each structure.
... how many of these projects need that level of cross-selling? Or do you, or do you think-
Ah, okay. Yeah, okay.
You know what? I'm trying to understand.
Sure, sure. Yes.
Or some of them one or two projects, and then-
That... Yeah, that, that's a tricky question. You know, the exact percentage would be tough.
Yeah, I mean, on these infrastructure projects, I mean, it's, you know, it's a lot different than doing, let's say, a small shopping mall just because of how critical it is to moving people, you know, across rivers. And so really, owners, I think now, we all know the disruption that if you've got a bridge or tunnel that you have to bring down for service for an extended period of time, you know, it disrupts so much, even from a commerce perspective. So on infrastructure projects, I think really the requirements here are quite a bit more than, say, a commercial building, just 'cause of the disruption it causes if it only lasts, you know, 20 years or 30 years.
Just like that Hudson River Tunnel I was talking about, the tunnel that's existing just north of that is in pretty bad shape, but they really can't do anything with it until they get the new tunnel built so they can close the other one. So infrastructure projects, the requirements are definitely pretty high here on almost every single one.
And again, it's a bit tricky. So sometimes we do repairs, so it could be a spot repair. We could do some injection with a crack, we could do some spot patching. Others, maybe it expands, and we have to do a full new waterproofing. So every project's a bit different, and what level of repair do you need? And then if it's a full refurbishment, then it turns into a huge project.
Yeah.
It's various levels.
Okay, thank you.
Hi.
Probably an adjacent question.
Yes.
Taking this $4 billion bridge or the London Thames Tideway for $5.6 billion, these projects, how much product would you be able to sell into these projects in Swiss francs? You know, from to.
I mean, I think it comes down... If I can take that on Tideway-
Yeah.
Thank you. It comes down to kind of a percentage of the overall project, because you're looking to improve the longevity of the project itself, and you're also looking for that service life and the fact that it doesn't leak, and you don't have to do costly repairs within the 120 years.
Mm.
You know, in different sectors, obviously, it's different percentages. Certainly, I know that sort of tunneling is typically 2%, 3% of the total project value, but it differs. It is literally to do with what you need on each project.
Okay, but bridges will be less than these two?
I'm not sure. I don't do so many bridges. I build new bridges, but I don't refurbish bridges.
Yes.
So I'd have to.
Yeah, that was the-
Before I come.
I mean, new projects is one thing, and then-
Yeah
... refurbishment is another.
Well, refurbishment-
Refurbishment, you make more money, right?
Yeah, well, refurbishment really is exactly as they just said, comes down to how much is needed and when it's required.
Yeah.
Um-
Maybe the size of the overall project will be smaller in just a refurbishment, but the percentage would probably be similar as an overall percentage of the spend.
Okay, good.
Unless it's purely a refurbishment project.
Thank you.
Next to you. Mm-hmm.
Well, in infrastructure, you need a approach, obviously. You need a permission, which can take-
Yes
... decades. And the last point is then you need funding, you know?
Yes.
I mentioned the U.S., currently, less a problem. But globally speaking, how do you see our fundings increasing or decreasing? So because this is an important bottleneck, and then I will touch the second part of it.
Yeah. Every area of the world is a bit different. I mean, I know I spent a lot, many years in Asia, and it runs on political cycles. You know, when the new government comes in, or right before the old government comes out, they do a flurry of spending to win votes. And then sometimes, you know, the new government will also continue those projects. But we find that it's a very geopolitical influence on the funding. In other areas, it's a matter of political will. If a bridge collapses and people are injured, then you see immediately a flurry of,
Fully agree, but generally speaking-
Yeah
... do you see more funds coming to streams or not, if you compare it to last year, last five years, or?
I see. I would see much more coming because again, because of the age of the infrastructure. You see the percentage that is at or near service life. Something has to be done. They simply can't wait any longer. So, eventually things will start to fail, and then people will get hurt.
And then the follow-up question here: Would you assess how is the capacity for tendering and also with the contractors, you know?
Yes.
You can have too many projects, then all of a sudden, because it's funded, but you don't have the capacity with the contractors, but also for you, you send it to tender, you know, because you don't have-
Yeah
... enough ample capacity.
Right. Yeah.
No, I think, you know, speaking in the United States, I mean, you know, all these big projects, there's always, you know, several large general contractors bidding it. That's one of the things that we actually, you know, take in mind with new innovations, is knowing skilled labor, you know, may be decreasing over time. How can we design products like SikaProof, as a perfect example. If you see a side by side of this versus more traditional waterproofing membranes, you know, this is, you know, much quicker to install. So, you know, if they have less labor, that's something that we try to address with products that require less labor on their part to install. So we see that as an opportunity, actually.
Okay, and probably last one to Riedberg. The project started twenty years ago, was a CHF 53 million project. Now it costs-
Yes
... 250 million will be ended in 2027. And it was a complex project, so we need Sika to bring solution.
Yes, yeah.
What is the share of wallet from when I look back in 2024 to then 2027, when it should be finished? Did it increase really substantially, or, is it no change maybe?
I mean, maybe we could default back to this kind of, sort of percentage, where you're looking at 2.5%-3% of the total construction value. So as the, you know, inflation comes, the values of the products increase, you know, the share of wallet would also more or less increase. But, I mean, the overall value, but the share would be maybe similar.
And then when you start adding concrete and concrete admixtures and everything else, you know, you've got more trends. So it's... Yeah.
For me, it was-
It really is what your supply-
... somebody else, you know, because the TBM is coming once, you know? I thought this was a TBM.
Yes, yes. Yeah.
This was more the question: Is it really Sika products you were able to add to this?
Yeah, I mean, but
Five times more cost or-
TBMs are also very interesting for us because in the TBM construction, all those elements that they're very high performance, segments that go into those tunnels, that all has Sika admixtures.
Yeah, fibers.
Waterproofing, you know, fibers-
Yeah
-sometimes.
Coatings.
You know, you have foams, you have greases to run the TBM.
Yeah.
You know, there's again, a myriad of products. So we have TBMs running all over Latin America now.
Mm.
Again, in most of the major cities, there's TBMs running, and again, we pull huge value from those projects.
Yeah, we tend to focus on showing you the waterproofing 'cause it's pretty.
Yeah.
But then, you know, if we go into-
It's easy.
If you go into concrete, then, you know, there's things that you don't see.
Yes.
Right, we have to wrap up.
Okay. Any last question before we go? Nope.
No.
No, we're not allowed, apparently.
Thank you very much. I'm getting the kill sign. Okay. We have to wrap up. Thank you very much.
Whole group here? Good. Okay, so welcome to our breakout session. Here, we talk about refurbishment and the positive impact on performance and sustainability, and also cost. I'd like to introduce first my team here. So we have Christoph Ganz in our R&D. Then we have André and Laura Lopez. André, Corporate Target Market Manager for Refurbishment, and Laura Lopez, Market Development Manager, also in André's team. And myself, I think many of you met me already, Ivo Schädler. I'm heading the construction group in the group management. So I would like to start first and warm us up a bit into the topic. I think we all know this is nothing new. We all know that the construction sector is very relevant when it comes to CO2 emissions.
Roughly, 37% of the global CO2 emissions are generated by the building sector. That includes everything, and you know, these are large numbers. Nobody can really imagine what it really means, and that's why we tried here to translate it a bit. It means that the 3 billion cars are driving around for one year. I think it's very relevant. I think we all know that. What can we do? I mean, there are many initiatives, many actions, many ideas, but I think we believe, and that is also the topic around this day, that with the durability and if we can manage to increase the lifespan or the service life of, I say now, structures. I don't mean only buildings. I mean, of course, everything, also infrastructure.
There are some rules of thumb here. So if you're able to prolong the lifespan by twenty years, even either, let's say, building with higher quality or then with existing structures to extend the service life by the right renovation or refurbishment methods to you know to safeguard, and we hear this then in André's part, to safeguard this so-called embodied carbon in a in a structure. When we have lower replacement, I mean, that means less times demolish or tear down and new build then, of course, we minimize waste. We also consume less resources, less raw materials. That's very obvious. As we heard already this morning, in most of the cases, if we are able to extend the lifespan-...
The costs for the owner at the end are lower, and this is also proven in some specific projects. We also show some later on, and I think this is really the way to go. And then the last point I put on here is maybe a little bit not so well known or not like maybe always not always in mind. You know, especially in cities, if you tear down a structure, I would not be very political now, but also in this city, if you tear down a car park, might be more difficult to get the permission for a new one, or it can be whatever kind of structure.
That can also be a very important criteria or an argument for an owner to not go for a new building, but maintain a structure. We heard, I mean, you asked it this morning, it was a very good question. If we build now in such a high quality that everything lasts for 150 years or even longer, then our business model would be gone. Okay, in theory, maybe, but there is one figure here. If you just look into the mature markets, more than 65% of all buildings are older than 30 years. Also the bridges and the infrastructures, I think there's still a very long way until everything lasts 200 years. That's a bit to warm us up or introduce into the topic.
Then, before I hand over, just again to remind you, maybe you remember we showed some of the similar products earlier. I mean, they are not all new products, which is also an advantage in this field, I would say, because these products are proven for a very long time, have references. Because if you just go to a, let's say, an authority and say, "We refurbish now you this bridge," you know, they wanna know all the products you're using. Do they have references? Are they tested, you know, and this is very important. So our solutions for repair and refurbishment are these: around strengthening, waterproofing, insulating, protecting, and in general, repair.
I would just like to mention this one here. I think you saw it, maybe some of you remember, we showed it already earlier. Structural strengthening. Very often, if we wanna reuse or change the use of a building or of a structure, of an infrastructure, the static loads or the design of the construction static design plays, of course, a very important or a crucial or a key role. And this is often the starting point if you know, if the decision has been taken to go for a new project or to be able to maintain a structure. That's why structure strengthening, very important. We call it door opener for us.
With this, I would like to hand over to André, who goes a little bit more into details, how we can achieve the targets here.
Thank you. Also, warm welcome from my side. I will spend the next eight minutes on how refurbishment can actually contribute to CO2 savings or decarbonization. Let me start with a few facts, most probably well known to you. Concrete is supposed to be one of the second most used material by man after drinking water. It's fourteen billion cubic meters that is consumed worldwide every year. So everybody of you is approximately consuming two cubic meters a year. So you can think about where you do that. Eight hundred kilograms per ton CO2 is released. Sorry, eight hundred kilo per cubic meter of concrete is actually released into the air.
Also for today's building, maybe not so well known, 50% of the CO2 emissions are actually in the embodied in the structure of the building. This is how this looks like when you look at the whole life cycle. So embodied energy is about 50%, and it's basically the energy or the CO2 that is released by the preparation of the material, by the raw material, by the construction energy you use, and also by transportation to the construction site or other raw materials. So this happens basically upfront or during the construction phase. Whereas during the life of the building, then you can be we see the operational CO2, which is approximately also 50%, and this is caused by heating, cooling, energy use of the building during its lifetime.
And then there's a little bump at the end, which is then the end of life of a building. Depending on what structure it is, this can be also higher. Why is this becoming more important? Because our buildings have become a lot more efficient in the recent past. So there was investments in better heating, better insulation, better cooling, more efficient energy use. That led to the fact that the operational energy, with the, by the more modern the building is, the operational energy goes down. But so far, we have not yet tackled the embodied part. And actually, it has been increasing because more material is used to do insulation and better roof structures and so on. That's why there's even a little bit higher use of embodied energy in a structure today.
When we want to change this in the future, we need to tackle the embodied carbon. How can you do that? Well, the biggest and most important lever is the extension of the lifetime of the building. By refurbishment, you can do that. Instead of new building, you extend the life expectancy of a building and avoid new emissions for new construction, for instance. Or you can use low-carbon materials that can be used in the erection of the building, but also during the repair of the building as well. We will talk about that in a second. Last but not least, there is, of course, a chance to do more durable designs to extend the life cycle of structures.
This is a, well, typical structure of a maybe a residential building, and you see that approximately 50% of the embodied carbon is in the structure of the building. So foundation, roof, walls, and ceilings are summing up to approximately 50%. So even if you completely repurpose the building, change the outer fittings, change the windows, the facade, and so on, you still can capture 50% of the embodied energy. And this is for a residential building. If you would do this calculation on a bridge, the figure would be a lot higher, of course, because the structure is a lot of made of concrete and steel, which is then, even more, embodied energy. That leads to the fact that we see, refurbishment becoming more and more important everywhere. Of course, in mature markets, we have a higher share.
Here's the example of New York, where approximately 70% of all building projects are actually refurbishment projects. But you see that this is now also coming to more developing countries, like in China. China is starting to look at their infrastructure. The bridges becoming 30+ years old, and there's refurbishment projects. Also, on buildings, in the past, the habit was rather to tear it down and build new, but now we are starting to restructure and refurbish these buildings as well, which is a nice growth driver, actually, in a currently challenged market like China. And the next ones to come, I mean, look at Mumbai here, only 5% refurbishment, but this will also come in a couple of years as the infrastructure is aging also there. Few examples. This one, maybe not a day-to-day Sika example.
It's a very nice project we did in Spain in the Pyrenees at the French border, directly at the French border. It's a repurposing of an old train station, and we applied a lot of products there: concrete repair, protection, building finishing products, coatings for the outside, adhesives for tiles and flooring. So quite a nice project for us, and look, it looks really nice now. It has been refurbished to a luxurious hotel, which is 9,000 sq m large. So 9,000 sq m, if you do that calculation, and this is only a rough estimate, don't get me wrong, you talk about 9,000 tons of CO2 you can save.
And if you stay with the example of the cars, this would be approximately 2,200 cars you can drive for one year, for the embodied energy you have been protecting with the refurbishment of such a structure. Now to something bigger. This is more a day-to-day project for Sika. Refurbishment of infrastructure is something we do quite often, and this is a nice example from my home country, Germany. In the north of Germany, we have been refurbishing a bridge at a length of four kilometers. We were applying repair mortars and waterproofing for the bridge deck refurbishment. This is quite a large bridge. It has been also extended from six to eight lines, so quite a big project, and you see it's covering, it's actually crossing parts of the Hamburg city there.
Very nice one. If you would do the calculation for this one on the CO2, as I said, in bridges and refurbishment, embodied energy is even higher. We would talk about 250,000 tons of CO2 just for this project, and this equals to 50,000 cars, approximately, a year, yeah. And then proving the point, renovation in China, we have been working on this project here. It's also a refurbishment of a train station in Guangzhou, one of the largest hubs for trains in Asia. Really big, and the total construction area here, we're talking about 453,000 square meters. We applied concrete mixtures, we had concrete repair products and protection products, and also waterproofing here.
If you would do the calculation for this one, protecting 1.2 million cubic meters of concrete, you talk about 1.2 million tons of CO2 in the end. So we are really talking about big numbers, 260,000 cars, if I stick to this analogy. Yeah, let me sum up very quickly. We all believe, and we are very convinced, that extending the life cycle of structures will reduce CO2 and also costs. I didn't even touch on costs, but there's, of course, the lever of cost reduction if you do a refurbishment in comparison to a new build. The refurbishment market is, at the moment, in mature markets, growing above the new build market, specifically in countries like Germany, where we have a very aging structure.
I believe that refurbishment is really the key competence of Sika, and we are well positioned to compete in this market and will benefit from the growth in the near-term future. Thank you, and I hand over to Laura to talk about our sustainable products. Oh, sorry.
I have this one. Good afternoon, everyone. So my part, it's a little bit. We heard that we need to produce these low emitting materials, these low CO2, so we found four paths to do it at Sika. So one is, of course, reformulate. We have a lovely team of R&D people that can do this. We just remove a little bit of cement or a big part, depends on the type of product, and then we just use binder, but we need to activate them with innovative technologies in order to not lose these properties, this technical performance of the materials. Again, we spoke about durability during the whole day, and that's essential for us.
Another path would be to use this bio-based, biomass balance, materials, so raw materials that come from renewable resources like vegetable oils, and not so much about fuel or, non-renewable type of, molecules. A third path could be, why not reducing the cover, the amount of consumption of product? Why don't we produce lightweight materials so we use less kilos, and therefore we use less quantity, less CO2? Or we have high-coverage materials, like in the case of flooring, coatings. And a fourth path, of course, is taking care of the packaging, where we put those, special materials. Some examples in, we look in the path of reformulating, we have an example of MonoTop. It's a structural concrete repair mortar, so when the concrete is bad, we can use this material to repair it.
We improve the performance of the material. We are really good at that. We just made it more durable. In this case, for example, increasing the resistance during wintertime to those salts that we put in the roads. But we also had a look into the safety of the workers, reducing the dust that is formed during the mixing of the material. Instead of getting these huge clouds of dust, we managed to reduce around 50% of it, and we reduced 30% of the carbon footprint in comparison with an internal reference. Because this probably doesn't sound anything to you guys, what we tried to do is with an attempt to simulate, we just placed some kilos of water tinted in those bases.
So you're seeing here, those 13.5 that just passed super fast, this one's, this is the kilos of CO2 equivalent that we actually save by repairing one square meter of concrete with this, special structural repair mortar. The other ones are for the upcoming materials that I will show you now in my slides. For example, this one is a PU, a polyurethane-based, coating for roofing. By using this material, you can see we are reducing around 35. That means in this small pail that you will see there is 5 kilos of water, so that's a lot of savings. But again, we take care of the workers. It is a non-flammable system. It's cold applied, so it's suitable for all environments and all conditions. Another example of biomass-based product will be this underwater grout, epoxy-based.
It's used for wet substrates or even underwater applications. It's suitable for drinking water approval, so that's why we will have a small demo right after, in an aquarium, and of course, it has a 10% of decrease. That will be the laminate that we see over there, so it's 6.5 kilos per pail, per set of Sikadur. An example of reduce the consumption of material will be this one. So it's a high coverage flooring. It's suitable for all kinds of environments. That tends to be a pain point for our customers, these wet damp substrates. So we improve the workability. That makes them also save some money, and then, of course, we have this 40% of savings.
Of course, the last path, as we mentioned, packaging, many ways of decreasing the CO2 in all the products that we produce, globally, and we have some PCR pails and cartridges. We can have some recycled or recyclable bags. We can have some plastic-free bags, and we can, on average, so to say, we can reduce around 25% of the CO2. And as promised, we can go now, to the little demo area here. So, if we try to use a conventional, epoxy resin for underwater applications, this would be whatever happens. So it looks like the water is clear, but it's not actually migrated to the surface, so we actually polluted the water. That's why it's not allowed to use conventional formulations for this kind of use.
If we want to repair, for example, the concrete piers or piles in a pier, in a harbor, we will use this kind of solution. So imagine that these stones are the concrete. We place a formwork that is the clear base that you see on the outside, and we will pump epoxy grout in it. You see from the top surface that there's no migration like we had before, and you see that the water is completely clear. This was the product that I mentioned that had drinking water approval, and you see that it's completely displacing the water without contaminating or washing out. Absolutely no pollution into the water. That's why we have to go for this innovative type of formulations to do these kind of applications.
If we try to do this with the normal systems, we will have to place some spatial formworks, dry out the area, apply normal repair systems, take out the formwork, and put back the water. And of course, time and cost are increasing. This is all from my side, so I hand it up to Christoph.
Perfect. Thank you, Laura, for this nice handover. It's now about me to continue this session on durability and recyclability, driving lifetime performance. Looking at the picture, this is a Google tech headquarters in the U.S., done with the Sika roofing system. I'm a R&D guy. I love to see the products applied, and makes really me happy to see how much we can achieve and what kind of great buildings we can do with our products. Now, to go with the specific topic, I have to elaborate first a little bit on the linear economy. You have the make, the use, and the waste phase, and where we can take levels. There are opportunities if it comes to our net zero pledge.
When you look at the make phase, more and more suppliers are coming up with CO₂-optimized solutions based on green energy, but also based on new raw materials they can provide towards us. That's a great achievement; it will help us a lot. What's super exciting also is that besides that, like the established, also new players are joining the field with renewable, bio-based, and also PCR grades, which helps us, like, in optimizing the overall CO₂ footprint. This is not just about the CO₂ footprint challenge; it's also about innovation. All these new raw materials will help us also to generate new products and really move on and supply for our customers new solutions, which brings them further forward. We have the use phase. That's about quality and durability.
I will elaborate more on the next slide. Then the waste phase in regards of the circular in regards of the linear approach, like, we go to landfill or incineration. When we want to close the cycle, like with any kind of recycling or reusing method, also in this phase, there's lots of opportunity. Many players are joining the field in regards of chemical recycling methods, new equipments, new technologies are popping up, and we can, like, elaborate on them, use them, and really bring us forward in regards of becoming circular. You've seen this with Thomas this morning, and I want to quickly re-elaborate also on this.
If you have a low quality, not durable, and not recyclable product, you have a carbon-intensive make phase, a short use phase, and then a carbon-intensive end-of-life phase as well when it becomes waste. If you look at our financial targets, maybe we want to grow in regards of sales and profit, and we have only such solutions, our carbon will also grow with that. To do it differently, there's many opportunities in here. Like you have seen from Laura, specifically, CO₂-optimized materials, raw materials can be turned into products. Then you have the use phase, which can be extended by high quality and durable products, so you have an extended use phase and therefore capture the carbon. It's very important to understand what is going on, so therefore, monitoring is the key.
Digital monitoring makes it super easy because you have, like, constant feedback from your materials applied, and if you have this feedback, and if you know what to do with this feedback, you can take the decision, and the decision is you rather sustain it, repair it, you reuse it, or if it becomes end of life, you recycle it, so you manage the carbon, you have it completely under control, and if you do so, you can really grow the business, grow on sales, grow on profit, and reduce the CO₂ footprint at the same time. A few examples, this one is on quality. It's a roofing membrane you see in the video. It's a self-healing one, here on the right-hand side, the version. Left-hand, water rinses through. Right-hand, water is stopped by the self-healing technology in case of a post-damage happening to our system.
Like, it's based on the SikaRoof Sarnafil AT technology. This is our premium technology with like eas-- which is easy to apply, long-lasting, and all the benefits you see here. We have already sold 30,000 square meters since the launch, beginning of this year, and further 70,000 are confirmed. Super nice technology. I love it a lot, and it's also enabling our customers to protect their valuable assets. I quickly show you also, 'cause the video was quite fast, just to re-show you how this works in principle. Over here, you see there's the puncture, and underneath there's, like, the self-sealing technology. Nothing happens. And then in this case here, this is a conventional system, also with the puncture on top. And then you see here, it drains just through, and if you have such a case, you have a major damage in your infrastructure.
All right. Monitoring. We launched also recently the SikaRoof Monitoring System, which is a system, peace of mind for our customers, 24/7 , super easy to apply. You have seen there's also a post-damage happening to the membrane, and then water intrudes into, like, the roof build-up. It reaches to these control sections, and it sends signal out back to the customer, and the customer can react and go for a specific repair of the system. It's done for bitumen, it's done for single-ply solutions, launched in Switzerland. Now, global rollout is ongoing, and this gives us further revenue, but also further control of what is happening to take the right decision. You see how it works. This is on a specific roof. You can, by iPad or with your specific device, you can locate the sensor, you can check on the sensor.
What is the quality? Is it still watertight? Is water detected? Is the battery status still okay? Otherwise, you have to change the battery. Super easy and quickly to know, like, everyone can do that, even myself. And then you can see, like, also, like this is now coming okay. It's a good condition, green light, and, this is the full magic behind. Very easy.... To close it, close it like in the circular approach, you have seen the numbers this morning, also from, Adrian, in regards of, our recycling activities, on the membrane side, in roofing. Super nice. In U.S., we have it since years, now also ready in EMEA for Single-ply. That's very strong. And on the right-hand side, you see, an example. We had a customer in Switzerland, they want to level up by one floor.
They had a roof applied, and they approached us, and we could tell them, "Listen, you can do, like, your new business with us, like this level up of the floor, the waterproofing, and we take back your old membrane. And we are not taking back and doing whatever. We are taking it back, and then we submit it to our recycling process, and re, like, submitted it to the membrane." So in the end, it was like a membrane, which had to be, like, demolished, and we could take it back and put it back into, like, the same level of application, into like a waterproofing layer. And that was a super strong argument for our customer. We could give him a reference letter.
This is of high ESG value also for them, like, because they also have their net zero targets and which supported them, like, on their way there. So it's, I think, a beautiful one. I personally like it a lot, and I hope I could elaborate a little bit with you on our task regarding that, how we want to grow the business, how we want to grow sales and profit, while having carbon under control. Thank you.
Good. We still have some time for questions. Actually, almost ten minutes. Please, feel free, questions to the group. Yes, please.
Just a quick one.
Mic, yeah.
I think one of the questions we were trying to clarify is just understanding, if you look at refurbishment project versus a new project-
Mm-hmm.
Is the wallet share generally higher?
For Sika, you mean?
For Sika, yes.
That's a very interesting question. I would say it depends a bit, but in general, I would say it's higher in refurbishment. And I would even say our chance to win a project are significantly higher because you need to adapt your offer much more to the specific project. When it's a new project, when it's, let's say, infrastructure. Let's say, the worst is bridges in Germany. Not because Germany or not Germany, but it's a highly regulated market. And there, it's just, you know, you need to just provide this system according to the test reports. And then I say a little bit black and white, the only differentiation is the price.
Yeah.
But if you go for, more complex or even this one, then you can much better differentiate.
And just-
Yeah
... just so we understand the magnitude, because I think on the new projects, we were given somewhere between, you know, 2%-3%.
Mm.
-total-
Mm-hmm
construction costs or project costs. On the refurbishment side, I guess you could see projects where you're 50%, 80% of the cost?
Also.
Or... Yeah.
Yeah, I mean, that would be very nice, 80%.
Yeah.
It's maybe somewhere in between, I mean, we say as you say, right, in new project, it's somewhere around two, and in refurbishment, it can go up to double digit numbers, clearly, yeah.
Wide range also.
Yeah.
Thank you.
Yeah, we have online two questions even.
Yeah.
Even better. Please.
One from Brijesh, HSBC.
Connecting. Hopefully. It's working or a burning question to bridge in the audience here?
Hi, so can I just-
Oh, sorry. Yeah.
Ask a question?
Yes.
Sorry, technology.
We hear you now.
Okay.
Yes, please.
Great. So on this new type of solutions where you kind of provide the durability and recyclability of those projects, which are pretty nice to have and good to have in your portfolio, but when you look at the penetration of this type of products into the market, what would you say, I mean, if you divide between developed markets and emerging markets, would you say this is kind of still in single digit, or it's rising towards double digit? Any thoughts around that? The second part is really understanding the decarbonization journey. We have seen the last two years, at least, after twenty twenty-one, we have seen a kind of a slowdown in the decarbonization journey across Europe, and it's more like diluted.
So wanted to understand your long-term thoughts, how you think this decarbonization kind of stepping up in the next two, three years or into the future as well?
Shall I take? I mean, maybe the first one I can comment. I mean, maybe if I understand you correctly, so this is, of course, not just a slow part of this, let's say, this application refurbishment. This is very relevant, and also the systems are on the market since many years, even some more or less since the beginning of Sika. So it's... And we, as we try to show, it's mainly a topic in the-
... in this sense, in the mature markets, where the infrastructure is existing and has to be maintained and repaired. But there, of course, we talk about not just. It's not a niche or completely new systems here, so we talk really a very relevant part here, yeah. And then maybe the second one on the decarbonization, you said, if I understand you correctly, you saw a slowing down of the trend.
Yeah.
Okay. But you mean a slowing down of the measures in this direction?
Yeah, exactly. So we have seen a kind of this diluting effect of the decarbonization impact on the product share, and so any thoughts around it? Do you see that kind of happening in the marketplace as well?
Not really. I mean, we would see the... Or maybe if you have an input?
Yeah. I didn't want to interrupt you, Ivo. And I just want to, like, put it also a little bit into a different direction. It is, yes, CO2 and decarbonization is one thing. It's like part of our net zero pledge, but sustainability and circularity is much more. And when you look back at the last example, because you mentioned the recyclability, like, this is also something which has a high benefit also for the customer. The customer sees, like, "Okay, these products, they get recycled. They are putting back into, like, the cycle. They have this, like, overall ESG value, like we could provide it to the specific one." And it's also quite easy to understand. It's, sometimes the numbers, this is too abstract. Overall, the circularity and the sustainability is much bigger than just only the CO2.
Of course. Oh, please.
Yeah. I believe we are going full speed ahead, if you ask me. We are launching products that have lower CO2 footprints on the resin side, as well as on the cementitious side, since years, and they are now pushed into the market in many, many countries of the world. So I think we are continuing the story.
Maybe just to add one point, I mean, we target, of course, owners and clients where they have their own net zero targets. There, of course, we don't really see so much of a slowing down. For us, the topic is extremely relevant and adds really business. Any other? Yeah.
Thank you.
We have one question from Nigel Chia, from Temasek.
Please, yeah, we hear you, but can't... We see you, but hear you, don't hear you yet.
Hi. So my question is kind of following up from the one on wallet share. So new project, about 2%; refurbishment can be double digits. I think in terms of, like, looking forward, how should we think about this, "penetration?" Is it more of a ceiling? And, like, internally, what is the target kind of wallet share in both refurbishments and new projects?
I can take this. I mean, of course, it covers you know the full range of our offering. It depends, of course, in refurbishment, what is the main need, and as I tried to show, it can start with strengthening solutions. It can then go to you know to insulating, to protection. But our goal is, of course, always to you know to create or to understand first the need of the owner of the project, and then, of course, to cover as we call cross-selling. But I mean to really cover all these needs and with all our solutions we can provide. So it's not just a particular need.
It can be, of course, depending on the project, but we cover... When we look at this example here, this more historic building, there it was a variety of solutions which were needed.
I think in refurbishment, this is a good example for cross-selling opportunities also. When we talk about refurbishment, we often lead with a specified solution. It could be like strengthening, like we discussed in the beginning, and then we try to add other solutions, right? Repair mortars, sealants, and maybe even refurbishment of the facade then later on. So that's. The examples I shared here were quite good examples where we had always, from multiple segments, solutions provided to these projects. And this is what we are trying to do. So by that, we are trying to increase the share of wallet constantly.
Yep. Please, yeah.
Yeah, just follow up on that. I think today you have a rather balanced portfolio when it comes to new construction versus refurbishment, right?
Mm-hmm.
Is it fair to assume that in a refurbishment project, where you have actually a greater wallet share, that your profitability is also higher, and then assuming that going forward, refurbishment will be probably a higher part of your business, thinking about the longer lifetime, that actually that could be also a source of higher margins at the end of the day?
... Mm-hmm. Again, as I tried to say, this differentiation opportunities are higher in refurbishment, that's clear. And then, yes, I mean, related to that, of course, it's our target to achieve also the margin. But of course, it doesn't when we focus here on so much on refurbishment, doesn't mean that of course that we neglect the new projects, clearly. So it's just we go again where the money is, and as we said, in some of the mature markets, you saw it, New York, what was it? 70% of the activities are refurbishment. Of course, we go there, but we will never neglect the new projects, clearly not. So it's actually really a you know great opportunities to be present there.
But to position ourselves even more actively in refurbishment is really, you know, offers great potential. And maybe just to add what we said before, sometimes it can be a relatively small part, the strengthening I mentioned, which enters then, or which gives us the entry door into the project, or even enables or makes actually possible to maintain a building instead of tearing down and building new. Yes. So now we get the sign we-
Have to-
should close, and we are perfect on time. Thank you very much. Thank you.
Thank you.
Thanks a lot.
Okay. Right. Welcome to the last breakout session of today. And we're here to talk about the future and new opportunities in the concrete industry. With me here today, we have Melissa, who's our Junior Product Manager for Digital Solutions. Lukas is our Senior Scientist in the Department of Admixtures here in the central R&D head office, and Emmanuel is our Head of Research for Construction Materials. So we'll talk about concrete and the future of concrete, but let me take a few minutes to go a little bit back in history, to give you maybe some context.
If you look at concrete, you know, the modern concrete, the way we know it today, has been invented about two hundred years ago, and for the first hundred and sixty or hundred and eighty years, it was more or less the same mix design. So you used what we call river gravel, which is nice, rounded gravel that was dug out of rivers or deposits of where rivers were in the past. The same for sand, nice, rounded sand that also were deposits in nature, and then what we, at the time, was called ordinary Portland cement, which is made of 95% clinker and some gypsum or other materials to control the set time. And all of these ingredients mixed together with some water and very little bit of admixture will then give you a joint, a piece of concrete.
The difference is that over time, and with this mix design, the only thing that we had to influence with the admixtures was the workability, because if you don't use admixtures, you use water for workability, and that has a detrimental effect on the strength. But over time, in the 1990s, late 1990s, people used to look at secondary cementitious materials. Some of the deposits of sands and rocks were depleted, so the crushed aggregates or manufactured sand came into play. This had an effect not only on the workability, but also on early strength.
The mix of admixtures that were being used increased a little bit, and now we see an accelerating trend of using more and more different secondary cementitious materials, some inert fillers, different secondary cementitious materials, and more and more crushed aggregates, recycled materials, to not have to dig out those virgin materials from the rocks, from the soil, and open new quarries. Therefore, the cocktail of admixtures that is needed to use to produce the same concrete with the same properties, whether it's in workability or compressive strength, also needs to be adapted and grows over time. Now, the question is, where is that needed? If you look at, this is a plot of the last thirty-five years of a selected group of countries where we have GDP per capita versus, on the vertical axis, cement consumption per capita.
And you see here very nicely that cement consumption peaks at a point where infrastructure is built, and then in countries where airports have been built, roads have been built, harbors have been built, the consumption of cement kind of goes down and hovers around 300, 400, 500 kilograms per capita. But in countries like China, we're looking at over 1000, 1000 kilos per capita. And then you see on the other hand, you see emerging markets, Global South, as we call it today, India, Indonesia, Vietnam, are still at the early stage of this curve, and we anticipate that cement consumption in those markets, as the infrastructure is being built, will grow significantly in the future.
That means the solutions that we're developing to reduce the impact of cement and concrete on the environment, if we want them to have an impact, it's not good enough to have them work in Western Europe and North America. They need to be workable and implemented in Africa and Southeast Asia and in India. So with that as an introduction, I'm gonna hand over to Lukas, who's gonna go more into technical details of those solutions and differences.
Thank you. So question is now: how do we make out of these changes, opportunities? And I will start with that slide. That's actually showing the decarbonization roadmap of the Global Cement and Concrete Association. Global Cement and Concrete Association obviously is representing a majority of our customers, so that's not our roadmap, that's the roadmap of our customers. And it also depicts some of the levers that they defined, what they want to do, what do they have to do in order to decarbonize their sector. I just picked three of them to illustrate a bit how such things can be the opportunities and how we feed them. And then in the next few minutes, we would like to show you specific examples on such things. First one lever, they defined efficiency in design and construction. That means they want to build leaner.
A pillar like that, today, three meters, they want to build in the future, one meter. That can be done, but you need to have the performance to do that. The same material, you could not do that, so you need higher performance concrete, or you need additional materials which help to have the static integrity of the stuff done. We enable, in the end, the concrete to be that performed, that something like that could be done. Efficiency in concrete production, less waste, less transport. Thomas was in the morning already mentioning the project. We were happy that we were upgraded to the main session there, but that touch, we will touch it a bit with return concrete. Waste generated in the whole industry, we can have products helping them to reduce the waste. You will see an example later on on that.
The last one, savings in cement and clinker. So that means less clinker in the cement, less cement in the concrete, and less concrete in the building. All of that, again, we can just do if performance is not touched. So if we remove clinker from cement and the performance goes down, that doesn't help a lot. Emmanuel will show a bit examples on that as well. So all of that we are in the end using, and we think we are pretty ready and continuing developing around the value chain of concrete to come with solutions, really enabling our customers to do what they plan and need and have to do. Philippe already introduced here the cubic of concrete or the cube of concrete, what it contains.
You have seen it contains a very small amount of admixture, and I would like to demonstrate you here with a very simple, quick experiment, why people are, in the past already, but in the future even more, adding that admixtures, and I forgot exactly that, because you're number four, now we are getting a bit lazy, you know, so I took cement and water, and that's actually the cement, ordinary Portland cement, as it was used for a decade already. It's 100 grams of cement, 28 grams of water. I'm mixing the two. That's the amount of water that the cement needs to actually become really hard, so more water does not bring much. Actually, more water would lead to more porosity. Porosity would mean less durability and less strength. Adding water is actually not helpful.
That's the amount of water it needs, but the problem of that, it would now become perfectly hard in twenty-eight days. That will be a stone, super solid. The problem is, that's completely not workable. So you cannot cast that into molds, you cannot pump that into buildings, you cannot work with that. So as a consequence, as shown by Philippe, in the past, people were adding more water. They didn't care, you know, then durability goes down, strength goes down, so you add a bit more cement to compensate that. All good, that's in the past. But nowadays, in the future, nobody wants to add more cement. Nobody wants to add more water, so people want to add less. And the only way out is actually then to compensate the lack of performance with admixtures. I'm demonstrating here with the admix. I take that product here.
I'm adding such small amount, it's actually 0.5 grams here in this experiment. I'm adding that now on top. I need to remix, and you will see how now the admixtures are heavily impacting the performance of this material. I need to re-stir a bit, and now you see the whole thing becomes perfectly fluid. It's castable, you can pump it, you can really work with it. So few drops on top of the other stuff are heavily changing the performance of the material. In the end, we're really enabling our customers to use the stuff. So you see, that's a key technology also for the future. If you want to build with more performance, you have to limit the water. The only way out is to add admixtures. Now, we also said, A, it's going to change.
That was now demonstrated on existing Portland cement, but cement will change, and Emmanuel will give you a bit insights in how this cement will change in the future.
Yep. Actually, this cement will change because it's the one responsible for the high CO₂ footprint of concrete, right? This clinker generates a lot of CO₂ during its production, so replacing this or decreasing the CO₂ footprint of this one is really an important key focus in the GCC roadmap. However, some cements with a lower CO₂ footprints, with a lower global warming potential, already exist in the market. There, you have a representation of the footprint of the orange cement. This corresponds to this Portland cement, but you see that there are other cements which are available in the European market, which comes with a much lower CO₂ footprint. This is achieved usually by blending the cement or the clinker with SCMs. This SCM can be natural materials like limestone, like volcanic ashes.
They can be industrial waste from other industries, like fly ash from coal power plants, slag from steel production. So we know how to reduce the CO₂ footprint, and these cements are already in use in the market since decades. But what you see is that over the last 25 years, the substitution rate, the ratio of SCM to clinker, hasn't moved much. It's blocked between 20% and 25%, and it's not decreasing. So that means that the CO₂ footprint of the cement in the market is not decreasing neither. There are several reasons for this. The first one is, that's a question of norms. I mean, every country has norms, construction codes, regulations that forbid the use of too low clinker factor cement for concrete construction.
This is to ensure the mechanical performance, to ensure the durability of the infrastructure, so there's a minimum clinker which cannot be overcome. This is slowly relieved by the governments, by the states, because they want to promote the CO₂ reduction, they want to decarbonize the industry, so they have unlocked this situation, and now we have norms which all allow lower CO₂ or lower clinker factor cements. But by doing so, the problem is that we have a performance gap, as was mentioned by Lukas. If you dilute clinker with non or less reactive materials, then you're losing performance. Now we have on the market cements, which sometimes are weaker, sometimes not meeting the requirements, and we need to troubleshoot this.
The only way, or not the only way, but at least that's a good way for us, Sika, to have new opportunities in this business, because this gap of performance, which is observed in the blended cement, we can correct with chemicals. So I give a few examples. I mean, in the recent years, we've been working on new solutions for the cement industry to produce slag cements, and with a new series of products called Slag Booster, we can offer products in the market that enable the customer to move from the current benchmark cements down to new cements, new slag cement with 20% saving in clinker. We have more or less the same. Wait for the picture. We have more or less the same with pozzolanic cements.
Pozzolanic cements are those made with volcanic ash, and there again, we have developed chemical toolboxes we call them that address the specific problems of this volcanic ash. I mean, they bring new problems in the cement, which are not the same as those brought by the slag, right? So they need a specific, dedicated solutions. We have worked on this, and now we are enabling our customers to move from a benchmark limestone cement to new types of pozzolanic cement with, once again, 20% lower CO₂ footprint. In both cases, these are products which are in the market. These are cements which are in the market, and which are starting to become the benchmark in their domestic markets. In both cases, I limit it to 20%. This is not a technological or performance limit we have.
I mean, we could do more, but the problem is that, these are the new norms. I mean, I say that the norm has changed to enable lower CO₂ footprints, but they are, they are not completely in existing. So there are still some limits, and the limits are now around 55% clinker. So this is where we stand. But, the problem is that these SCMs can be very powerful to decrease the CO₂ footprints with the use of, chemicals or well-designed chemicals, which are high added value products.
The problem is that if we look at the reserves or the availability, or let's call it the scarcity of these SCMs, look at natural pozzolan, slag, and fly ash, you see in orange or in gray, this is what is available, and you have to relate it to the amount of Portland cement which is produced every year. So there's definitely not enough to replace and to decrease the CO₂ footprints of all cements in the world, which means that there's a high demand on this alternative material, so there are price increases, and there's a need to look for new SCMs. And this is where calcined clays come into play. I mean, you may have heard about it or this LC3 cement, as we call them. Calcined clays are very interesting as a new SCM because they are. I mean, you see the reserve. There's a lot.
They are abundant, but they are abundant, very well distributed on Earth. I mean, they are globally scalable because you find them everywhere. Everywhere you are on Earth, you grab the ground, you have clays, you can calcine them. Everywhere you are on Earth, you can grab the ground, find limestone, you can produce Portland cement. So these two material can be produced anywhere. It's not the case of slag and natural pozzolan, for instance. Not every country has steel production.... not every country has volcanoes, right? So they don't, they don't necessarily have access to slag or pozzolan. Here, that can be generalized, that comes with a very low CO2 footprint.
That's a very flexible technology, but it comes with drawbacks, and the main drawback is that the rheological properties, the ability to mix the cement, is becoming even more complex than before, and this is illustrated now by Lukas.
So I prepared actually exactly same mix as we did before, but now I did it with a mix of a cement which contains 30% of calcined clay, so it's diluted clinker and has calcined clays. I took the same amount of cement, the same amount of water, the same amount of the same type of admix. I put it all in, and I mix it. Before, that was resulting in a perfectly workable mix, and this time, you see, I can almost not even mix it. It stays almost dry and crumbly and stuff. So these existing products, these existing plasticizers, are completely incompatible with this clay. So first materials coming, we found that out, and we said, "Hey, challenge, we should solve that," huh?
Yeah. So we've worked on that problem over the last years, and we have developed solutions for this. So the idea there is that you have to see, look at the curves. To make it simple, the dark gray curve corresponds to the flowability of the first cement, the Portland cement. The light gray curves corresponds to the flowability of this calcined clay cement, so you see it's down. And what we intended to, is to find new chemicals, new solutions, to bring the performance up to the benchmark or to the Portland cement, and this is the orange curve, and this is now illustrated by Lukas with this new experiment.
We succeeded in doing that. I prepared again the LC3 mix with the water it needs. Super stiff, super dry. Now we are adding the new technologies, the new products we have. Little bit higher amount than what we added in the beginning in red, some 20% higher, but otherwise very comparable. Here we go. Remixing that. Need to work a bit, and then you will see now these new technologies, these newest generations, they now make the whole thing work again. So we found the solutions which are now bringing the workability. Here we go. So this stuff becomes again flowing, castable, workable. So you see, we unlocked now really the potential, the opportunities. The mixes are there, but now thanks to the admixtures compatible to that, people, customers can really use it. Now they have a material which they can work with.
Okay, so you see that in the two approaches, whether the norms allowing to use more alternative existing raw materials or the implementation of new alternative or supplementary cementitious materials in the market, that creates needs for new chemicals, new solutions. What I can say, in both cases, we come with new formulations of higher added-value products and which require higher dosage in the field. So this is where we create our business or opportunities, right? But obviously, what is the market size there? I mean, that's the question, and for those of you who were there three years ago, the Capital Market Days, I was already explaining or saying that calcined clays are coming slowly but surely to the market. At that time, the situation was we had three operating plants in Colombia, in Denmark, and in Ivory Coast.
That's the situation today, three years later. The capacity installed has increased significantly. Don't say that all these plants are active. They are all built, and they are starting trials, but the existing capacity today is 50 million tons per year, right? And it's increasing, not exponentially, but not far from. There's a lot of projects in the pipeline, commissioning of calciners, so this is a bit how the market is evolving. I mean, this technology of calcined clays, the modern technology of calcined clay, was invented 12 years ago here in Switzerland. Now, 12 years later, these calcined clays are a reality in the market, and that's the first time in 200 years that the cement market has changed so fast, right?
That creates opportunities for us because these cements cannot be put on the market without any corrective by chemicals, and so we have to be ready with these solutions. I think we are in Sika. We're still working on improving the solutions, but we do have working solutions, which helps us supporting our customer wherever in the world, because we are globally implemented. So we are always close to one producer or customer who wants to start calcined clay, and there we can then help them with tailor-made solutions for their specific problem, right? Interestingly, you see that, and that was a remark which was done by the other groups as well, I mean, why is it in the Global South mainly? I mean, this is in the Global South because these guys require, as was mentioned by Philippe, they need to build infrastructure.
They have big needs of... and especially Africa. Africa is interesting because in Africa, they don't produce a lot of clinker. They import it from most countries because they don't have good limestone to do it. They don't have slag, they don't have fly ash, but they have a lot of clays. So for them, this is a critical resource, and this is why they are implementing so many kilns there or so many calciners. We are present in Africa. We are supporting our customers, and the good example is that we start our major sales of this kind of products exactly in Africa, right? So these are the opportunities which are created on segments, on the cement segment. Now, I hand over back to Lukas. He will say mention how it work, how we move to concrete with this.
So we come back to our table of content, which is somehow concrete? We heard about cement. We now jump a bit to a different topic, which is actually already introduced in the morning, again, fibers. A lot of concrete produced also contains steel rebars. So typically, they are not in the concrete, they are already there, and then the concrete is poured on top, but in the end, in the building, they are in. And we heard in the morning that actually, steel rebars can be fully or partly replaced with fibers. We're not selling steel rebars, but we are selling fibers. I will not go into the nice demonstration, unfortunately. I would have liked to smash some more plates, but you see the plates as they were in the morning, so the reasoning why to go into fibers and stuff, I think is clear.
I would like to give you an additional input on these fibers, actually demonstrating you our latest technologies, latest, greatest products we developed with respect to fibers. Actually, fibers typically are mostly used in two applications. One of them being shotcreting, sprayed concrete, which is applied from shotcrete machines. Then they contain usually macro synthetic fibers, can also be steel fibers, but often macro synthetic, that's the fibers. The other application is slabs on the ground. So when we actually used these macro synthetic fibers from shotcreting into slabs on the ground, we realized the following: Slabs on the ground, usually you produce them by casting the concrete. After four or five hours, the concrete starts to become stiff, and then you have what we call a troweling machine. There's big machines going onto these surfaces, starting to trowel and to make nice flat surfaces.
Illustrated here by hand, so I would go over the surface. In fact, what turned out to happen is that these fibers, which are then in the concrete, they have a bit what we call a memory effect, so they sometimes stuck out of the surfaces, and then these troweling machines come over, they bend it, and they jump back up. With the consequence that after finishing all the surfaces, you have everywhere, here and there, fibers standing up, which are ugly, which may be a bit dangerous, and sometimes they also, because you wiggle them in all directions, they create damages on the surface. So in the end, you end up with a not very nice surface. Sometimes that's absolutely no problem, because you anyway put afterwards different layers on top, so no problem, but sometimes you want to avoid that.
So what we did, we saw the opportunity using fibers in slabs on the grounds. We found some first solution, but we also found new challenge, so we reworked the concept. Additionally to that, we have new generations of fibers. That's what we call the Stealth Fibers, stealth technology. So these fibers are now differently designed, and you see if now these guys, we took care that this memory effect is gone. So in fact, if here a troweling machine goes over, they bend, and then they stay down. So they are not going back. They designed in a way that this memory effect is gone.
With the consequence, they may also stick in the beginning out, but then when the surface is finished, when the troweling is happening, these fibers are actually bending down, and they are staying down, and in the end, you end up with a perfectly nice, smooth surface. No fibers standing out, no damage, no holes, no nothing. Just an example, so again, here to show how we develop, we find new challenge, we try to address the challenge, we come up with new stuff. These technologies now is also upscaled. We have lines, production lines installed in Europe as well as in U.S. to produce this latest generation of fibers. Good. Back to table of contents. We jump to a different aspect. Now, we talked about a few stuff, what we didn't talk or didn't give examples is aggregates. Aggregates are changing a lot.
Philippe mentioned it, that goes from recycled to whatever, you name it. We just picked one specific example, which is returned concrete, and I'm showing here. I will not repeat what Thomas was already explaining in the morning, but in fact, a lot of concrete is returned. That means too much ordered or traffic jams or something, leading to the fact that concrete trucks coming back to the ready-mix plants, bringing concrete back. In the past, they were dumping that. The concrete was lying around, getting hard. You have massive chunks of hard concrete. To dispose it, you had to crush it, you need heavy crushers, you need heavy machinery to somehow demolish that and get rid of it. So what we developed is this new product packed in water-soluble bags. So actually, the truck driver, knowing how much he has in his truck, returned concrete, he's dosing that.
Depending on the amount, he's dosing one, two, three bags, throwing it into the mixer. The mixer continues turning, mixing the product, and the product actually leads to a drying and crumbling of the concrete. The truck comes back to the ready-mix plant, still dumps it, but now it's not leading to hard, solid things. It's coming out now in a crumbled, somehow dry state. They still leave it lying around. The other morning, they can walk over with small caterpillars, and they have perfectly broken down stuff, which in principle is ready to do different purpose, either re-concreting or whatever you could do. Obviously, there is a big difference. That we were used how to design new concrete. To design with that new concrete, you need specific solutions, and that's again, something we come with a specific product, but we also come with more solutions.
We come with the needed solutions also afterwards in the concrete to reprocess that, and in this example, we will show you an extra one, because an important feature is how big are they? How round are they? How many big ones? How many small ones? That you would all need to know in order to re-concrete, to make your mixes. That's not easy, but we also come here with new solutions to our customers, and Melissa will give you a bit insight into that.
Thank you, Lukas. So Sika developed digital products. These are, yes, innovative solutions, but also very much in contact with our traditional technologies, and that's to enable the customer to reach his goals. We can see together a short demonstration of the Sika Sand App. The Sika Sand App is Sika's first digital product, and thanks to the Sand App, we can here now discover a little bit more about these recycled aggregates. So we only need to nicely spread our aggregates on, in this case, on a light pad. We already prepared them, and we then need to take a couple of pictures. We're gonna take the third picture, which is the last one now together. So let's take care that the phone is well aligned with the table.
We also have these two crosses that can help us a little bit, and I take the picture. So it seems okay. Otherwise, of course, I could retake it, but seems good enough, so I can press OK. This is my analysis, and then I can press Next. Here, there's some data that we already entered for about our analysis, and then Save. Here, it analyzed it for a couple of second. It only needs internet connection to work, and now our results are already ready. Let's see the first one. The first output is the particle size distribution. So as Lukas mentioned before, we want to know a little bit the size of the particles of sand and aggregate. So here we have this curve that show us a little bit this very important characteristic.
Another important output is the particle shape parameter that tell us more about the shape of our sand and aggregate. We were able to do the analysis here now in a couple of minutes without leaving the room, which is very convenient, and it's also even more convenient when you are, for example, in a job site, hours of car away from the laboratory. Now, we have analyzed our aggregates that goes into the concrete, so most probably we want to do a concrete mix design. We can then directly take the analysis that we did, share it, of course, eventually with other users if we like, or we can send it to the Sika Mix Design App. That is another digital product developed by Sika. Sending it automatically has some advantages.
It, of course, saves us some time and also let's say, reduce the chance of making mistakes, because otherwise, there would be a lot of numbers that I would have to enter manually every time. So the Sika Mix Design App is another application developed by Sika, and it calculates and optimize concrete mix design. Thanks to this application, we can calculate concrete mix design, then also eventually enter the test results and then have everything stored in a very organized and structured way, which is also quite convenient for organization because this is a very, very valuable information about our mix design that we don't want to lose.
Here on the screen, you can see two different mix design that we did to make an example, so a traditional one and a mix design that contains LC3 that was mentioned before in the presentation. What's difference? What's different exactly in these two mixes is, of course, in the binder. So in the traditional one, we have the cement, and in the LC3, we have the LC3 binder and the admixture. So in the LC3, we have the specific admixture that was mentioned and in a larger quantity. So we listened to the presentation, so we know which one is the best one in terms of sustainability, but we want to give to our customers and also to our sales force, a way to visualize it very, very easily and quickly, thanks to data.
So in the Mix Design app, we have integrated an LCA calculator, LCA, so life cycle assessment, that evaluates the CO2 emissions of the mixes that we create. And we can also then compare two or more mixes to find out which one is the more sustainable in terms of CO2 emissions. In this case, of course, we are comparing these two mixes that we mentioned, and very quickly, we can have an estimation in terms of CO2. So we see that LC3 mix is more convenient. We talked about two solutions now, two digital product that cover two important step of the concrete value chain that you can see in the circle. So raw material for the Sand App and mix design for the Mix Design app. We also have other solutions that covers other parts.
So for example, we partner with CiDRA regards to transportation of concrete, or we do R&M for the service life. And it's really important to highlight how this, the combination, like having data from the different steps of the concrete value chain, represent a long-term advantage, because then we can get insights on the single phases as well as on their interaction, and we are able to assist our customers in a better way. I will hand over to Philippe.
Thank you, Melissa. All right, so I think the purpose of today was to show you that concrete is a very basic mix of aggregate, sand, cement, and water, and that for the majority of its existence, it was using the same ingredients to produce concrete with a compressive strength of, let's say, thirty to forty newtons per square millimeter. But over time now, we see an accelerating trend of using more and more alternative raw materials, recycled raw materials, but in the end, the mix design still has to meet the same properties in terms of workability, durability, and compressive strength to meet the needs of the market. So this acceleration, of course, the side effects that those alternative raw materials...
Bring with us, we need to use more and different admixtures to counter those and to still allow the end user to have a similar concrete that they can work with on a daily basis, and our technologies are, of course, centered to achieve those. And I think the other point that was mentioned is that with the trends of cement usage and the trends of concrete use, it's important that those technologies are also workable in the Global South, in Southeast Asia, India, Africa, Latin America, and not only here in Switzerland or Germany or the U.S., to make an impact on CO2 and sustainability of the concrete industry. So with that, we finish the presentation part. We have about eight minutes left for Q&A before we head back to the main session.
Thanks very much. Just on this technology, out of interest, how much is that actually rolled out in the concrete market? And is it something that you give to your customer for free in order that they actually purchase the stabilizers, as like a freebie to get them on board?
So the Sika Mix Design, I think-
Yeah.
You're not talking about the Mix Design App. No, the Mix, the Sand App, sorry. So the Sand App, no, it's not for free. There's like, there's a business model and a structure price behind, based on license. The Mix Design App, which is the other digital solution that we saw a little bit more in details, that will be the base version for free. Meanwhile, we have two add-ons. One is the LCA that we saw, and then we have another add-ons that is a Shotcrete App that we didn't see in detail this time, and those are the business model for these are under definition still, but most probably there are gonna be a price, but not for the base version.
The rollout is a progressive rollout in the countries because especially for the Sand App, there's also some training required, so in every country. First, we train the Sika people to use it. It's like laboratory equipment, so you always need to get trained. It's not difficult, but it's important. Then they go, and they train the customers.
Just one follow-up. This may be a little bit of a bigger question. So we heard in the room next door about the technology for monitoring roofs.
Mm-hmm.
To make sure that you identified leaks, and then here, we're talking about the Sand App. These are all, like, more capital light technology add-ons, whatever you wanna call it. How much of your product development going forward, do you think will have these types of elements? And so you have more and more of the revenues coming from these, you know, I don't know, more capital light solutions that create a bigger moat for your competitive position for custom- or companies that are maybe just doing the product innovation, right?
Yeah.
Now it seems you're doing sort of tech innovation as well as product innovation.
I think it's a trend that we... You know, I think at the beginning, this was more or less more opportunistic. I think what we're doing now is to implement processes to make it more structured. We also have invested in a couple of startups to not have to do everything ourselves, where we now become the main shareholders and partner with them. And the goal, I think, is we have multiple goals. One is to make use of our products easier, and then, of course, it's something that comes in as part of the package, and some of them also really add additional services, and then we have either paid models, we have freemium models, where they have the base version for free, add-ons cost.
So following many of the, you know, the more pricing models that other industries have been using. I don't think that anytime soon this is gonna be a huge part of our portfolio, but we think it's a key part also because of the data. I think here, especially with the Sand App, if we would want to make a map of all the sand that's available in the world and had to draw it ourselves, it would take a lot of time.
But having our customers and our service people upload that data into a you know a data cloud will give us very quickly and has given us a lot of data points about how sand is today how sand evolves over time and how the admixtures that we need to develop for those products will also develop over time. And also same as the in-transit mix monitoring you know suddenly that we develop products that have two-hour slump keeping ability but we now see well 90% of the cement is placed within an hour and a half. So maybe that extra hour is giving cost but not really benefits to our customers. So that's data points that help us to customize and to adapt the product ranges that we have more to the customer needs than we had in the past. Any other?
We can also finish three minutes early, no problem. It was a long day. Time for a coffee in between. Okay, yes.
Maybe just a-
Yeah.
A little easy question, maybe. When you did your mixing over there, I mean, you were wearing protection glasses, and this process didn't look that dangerous?
No.
So, I mean, why have you done that? I mean, are your products that-
No, it's not-
... poisoning?
Because of the product. It's in fact, if you mix cement with water, that has a pH of around 12, and that may have a damage on eyes.
Okay.
Our products, you could even use to wash clothes at home. They are completely non-dangerous. So, protection of eyes because pH is 12.
Okay, but I think then we'll wrap up 2.5 minutes early. Okay, thank you very much.
To the plenary again for the conclusion of today.
Okay. Welcome back. Just briefly, a reflection that I would like to share before final chance for Q&A here. First of all, I would like just to thank all the contributors in the breakout session. I was again and again inspired by our internal, external, talking about markets, solutions, and our contribution as a company to the construction industry, manufacturing industry. Makes me always feel very proud of our team, the partnership with our architects, engineers, contractors. You know, we feel us as part of the bigger family, a family that has a real purpose, providing infrastructure, providing buildings, providing mobility, providing practical solutions for daily life. I think this is very meaningful. And in addition to that, with a drive that we can transform the industry we're in.
We are not stuck with what our parents and grandparents have done. We have it in our hands to make meaningful infrastructure, meaningful construction, transforming in a way that it serves the needs of the globe, at the same time, reduces the impact and makes sure that we have a meaningful, let's say, handling of the resources, the scarcity. I think that's also part why our employees are so engaged. They understand that we work together on a meaningful purpose, and we are straightforward, and we mean what we say. When we talk about net zero, when we talk about transforming, we walk the talk. That's very meaningful. That's also meaningful in the interaction with our customers, with our contractors. You have seen it, you know, construction is sometimes a crazy world, a lot of unknown.
When you have unknowns, you want to have partners around you that you can trust, that are reliable, and that don't let you stand in the rain when it gets tough. Sika is known as the partner to go to, especially when it gets tough, you know. Sika is there to support with everything we can, and together we can overcome challenges like this sliding mountain, where nobody would build a tunnel eventually if there's a choice. But if there's no choice, we make it happen together. For that, I think you have seen also the presenters. A big thank you to the presenters and also their enthusiasm. It's always inspiring. I hope you also got a bit of that spark when you went from session to session. That's Sika, that's our life.
That's why we also try to show you not only, let's say, our corporate slides and our initiatives and the strategy, there's much more behind, as I call it, the iceberg, you know. There is a lot below the surface, and once or twice a year, we open a bit the surface and the share the exciting team that stands behind that makes all the things happen, that we can then present to you and to the stakeholders. But just a few things that I think are remarkable in regards to what today has been conveyed, the infrastructure projects. Many questions came: Is it real? Is it turning into dollars? Is it happening?
I think Kyle mentioned $400 million are clearly assigned, and some of that is already in execution, some of it is still in the planning. But these are projects that will last several years, and it is a commitment in the U.S. from both parties, so this is something that is a clear commitment to catch up on this, let's say, backlog in the U.S. I look forward to see similar activities in Europe, because the European, let's say, market has similar needs, and I think that the examples that have been shown with collapsing bridges is just a wake-up call also to get real and to put money into infrastructure, which, by the way, is also one of the verticals in Europe that is growing, despite, let's say, the overall declining construction spend.
The infrastructure is the area where money flows, but more could flow, eventually. I think the durability and the circularity angle that we wanted to demonstrate, you know, this is perfectly in line with our DNA. Long-lasting solution has always been our segment. You know, there have always been others that have a different, let's say, positioning. We have this. We're now combining this and also looking at the total cost of infrastructure and building. This is an ecological and an economical benefit, and that will drive also lots of opportunities for us. Energy and water, I mean, this is clear. These are, let's say, the lifeline of our society. We need energy, we need water. And also there, I think we have a lot of potential. 30% increase in energy demand in the next 10 years, this is real.
You know, anybody that dreams that we need less energy, forget it, we need more energy. But of course, we need clean energy, we need renewable energy, we need energy in places where we didn't have it before. This is an call for us to move into this and provide solutions. Water has been mentioned. Some of the infrastructures are hundreds of years old and needs to be upgraded, need to be installed, need to be refurbished. For us, a great opportunity as we can provide long-lasting renovation solution, so that you don't have to do it again in 20 years or so. Then we try to highlight a bit the concrete.
Everybody talks about cement, and cement, and decarbonizing cement, and we talk a lot about taking cement out and replace it with LC3 or with SCM, cementitious material. I think we wanted to give a different edge to it with the steel, which is, I think, a very attractive area where we can penetrate with our competencies that we have built up in the last 10 years, and make this transformation from traditional steel reinforced floors to start with, into fiber-reinforced floors that offer a lot of, again, win-win-win, economical, ecological, and also on the labor saving. The steel layers, you know, they are expensive, specialized, and not available anymore, and this is also something where contractors are looking for solutions to overcome. The returned concrete.
Why has never somebody thought about the returned concrete and dumped it and then crashed it? You know, you have seen this in more details in the sessions. Yeah, such a simple solution, but again, simple sometime is very impactful, and we drive this now across the whole globe. This happens in Tanzania, this happens in Malaysia, this happens in the U.S., this happens everywhere. Everybody has the same challenge, and we have the smart solution. Data centers, I think we all need datas. We all have our, let's say, datas constantly with us. This will only go in one direction. This will further explode. AI is a key theme here.
So here, providing also the infrastructure for the future competitive advantage of society, AI, clearly also, let's say, build on to where we have the competencies. I think Christoph mentioned it. You know, we had in the beginning 90% penetration, maybe now we have 70% penetration. We have a high penetration in this. These are building, these are structures where you don't take second chances. You specify, and you're happy to have somebody that goes with you to any place on the planet and builds exactly this with you so that you have peace of mind. And the interior is where you make ton of money, and you want to have, let's say, everything around you keeping you away from any trouble.
So these were a few things that I think was worthwhile mentioning, just as rounding up today's Capital Market Day. But I would like also now to have a final opportunity for any questions or things that came up, popped up during the sessions that you would like to further clarify or understand. Everything is clear. Again, you know, I mean, this is unbelievable how our presenters have done a job, making everything so crystal clear that no questions remain. Are there still a question, Patrick, huh?
Yes, one question remains. In the last Q&A, in the morning session, you mentioned that of your addressable market, 110 billion, less than 10% is concrete.
Mm-hmm.
I was just curious, of the rest of the pie, if you could maybe describe the bigger pieces, how you see your addressable market?
Yeah. I mean, the concrete market is bigger than, let's say, the 10%, but here we also have, let's say, the addressable market, China. China is by far the biggest concrete market, so we also relativizing that. So concrete is super relevant, but China by itself has, let's say, a size that is almost the size of the rest of the world. So that's why it may look, compared to the other target markets, a little bit lower, but it is actually the exclusion of China or let's say, the reduction of China to really only the sensitive infrastructure where we are active and not to the main commodity concrete.
That makes it may look a little bit different. But when you look at the other target markets, the 8 target markets, you know, they are all somewhere around between 10 and 15 billion, no? It's not that one is at 40 billion and one is at five. You know, they are sizable. They are all of them have their opportunities.
Thank you.
Yeah. You're welcome. Yeah, Arnaud.
Thank you. Arnaud Lehmann from Bank of America. Something you didn't really discuss much today compared to the previous years is penetration in distribution. I know historically, this was a growth driver for you. It might still be in China. But what about the U.S., Europe? When I go on the website of Home Depot or Travis Perkins, and I type Sika, probably, I do find a decent range of Sika products available from these guys. So do you think you have more road to go in terms of penetration in distribution?
Okay, maybe, please excuse that. We have so many opportunities. We can't bring all of them in one day, but distribution, of course, is a super relevant and super strong driver. I mean, you know, we have about 40%, 42% distribution. The potential of distribution is probably 50+ %. So here we have, let's say, opportunities to tap into, and absolutely, it happens in North America, it happens in Europe, not only in China, it happens in Asia. Home Depot, by the way, is, in the meantime, our largest single customer, globally speaking. You know, and that happened over the past ten years, and when you go into Home Depot, and then you look at our penetration into the aisles. Or, Home Depot, another good example, Home Depot is challenged this year by a declining overall, let's say, retail consumption.
That's fact. The Home Depot approach is, you know, since I cannot grow, I look which articles are growing, what is growing? And they come to us and say, "You are winners. We want more from you. What can you do? How can you help us to grow in this declining market? Because we see your brand, your products are relevant." This shows the power that we have gained in the past ten years with key players, big box players, but also when it comes to, let's say, the pro side, the White Cap in North America again. You know, this shows me we have that traction. And also in Europe, you know, we have this leverage potential, and we bring it.
Traditionally, it has been more in the Europe South, you know, France, Italy, Spain, now Germany, with MBCC. You know, we are a big player in distribution in, in Germany. And of course, we are not there to administrate our presence, but to penetrate further. Similar to Home Depot, you know, the relevance of the brand, the relevance of what we can offer, outperforms what others can do. And it is in distribution, a bit similar to what we have heard in the sessions. The more you can solve out of one source, you know, the more you have the time to concentrate on bigger items. So also in distribution, as long as the products are turning over, you know, you want more of that, and you are, you go after other challenges.
The more you bring to the specifier, to the contractor solutions, you know, then can they- they can think about sliding mountains and, and things like that, and they don't have to repeat and re-engineer, with, fifteen different sources, something where you know you have a capable, very committed, source. That is in distribution similar. When I'm in Mexico, walking through the Home Depots there, you know, it's fantastic. You know, we cover aisle and aisle, with our solutions, and this is going into Brazil, this goes into Indonesia. You know, absolutely, distribution for me, very clear. Leveraging the strengths of the brand, the reputation we have. We are known, much more known than ever before, and we have to play this through the distribution.
Today it was not a core topic, but absolutely a core topic for us. Anything else I missed such that can elaborate on that? Good. I think we are a little bit exhausted, all these overwhelming impressions. That's great. That was the intention, that was the goal of the day. And so finally, thank you for coming. Thank you for joining us here. We also want to share a few more moments with you if you have time. We have some Apéro outside here. The team is here. We are here, so just some casual time together. We consider all of you, of course, part of our stakeholders, and very important and very excited to have you here. And I look forward to exchange. Critical exchange makes us stronger, but also you can also encourage us. It's also okay.
You know, you can criticize us, that's also okay, you know. But, you know, together, I think also together we are stronger also, fulfilling our aspirations, in whatever we are aiming at. Thank you very much!