24.03.2016, 06:14
Cham Paper Group Holding AG - Full year 2015: Progress and headwind
OREANDA-NEWS. The Cham Paper Group has closed another transformative year with a small profit. The financial year was challenging for the paper division on several levels. Extensive investment in upgrading machinery to increase capacity and efficiency in Carmignano and the relocation of coating operations from Cham to Italy resulted in greater restrictions on capacity and higher start-up costs than originally planned. The appreciation in the US dollar against the Euro also led to sharply increased cellulose costs, which could not be offset directly via higher prices. In the newly created real estate division, preparations for the transformation of the industrial site into a new quarter proceeded according to plan.
In 2015, the Group achieved revenue of CHF 194.3 million. This is 10.4% less than in 2014 (CHF 216.8 million), however, revenue grew by 2.4% in local currency. The operating profit came to a modest CHF 2.4 million (previous year: CHF 5.9 million), while the net result was just positive, at CHF 0.5 million (CHF 1.8 million). The profit has therefore improved slightly in the traditionally weaker second half thanks to the reduction in costs.
The paper division presented a contrasting picture
The trend in the paper division's revenue and profits did not match the opportunities presented by the market. The extensive investment in paper machine 4 in Carmignano to increase capacity and efficiency was completed on schedule, however, the start-up processes following the modifications turned out to be more difficult than expected and there was a delay in exploiting the increased production potential. The gains in efficiency are not yet apparent in the results because of the 10% increase (caused by movements in exchange rates) in the cost of cellulose, which accounts for around 50% of manufacturing costs. The challenges involved in the relocation of coating operations for the manufacture of complex digital imaging products to Italy were underestimated; it was not possible to keep to the budget or the timetable and this depressed profitability. However, demand for the Cham Paper Group's speciality papers was satisfactory to good in all segments. The three divisions Consumer Goods, Industrial Release and Digital Imaging are well positioned strategically and their products are appreciated in the market. Tonnage sold increased by 2.3% despite the restrictions mentioned previously, and the paper division's net revenue reached CHF 193.4 million. The gross profit decreased from CHF 28 million to CHF 18.4 million as a consequence, in particular, of the increase of approximately CHF 9 million in the cost of cellulose. Thanks to the reduction in the cost base, a marginally positive operating profit (EBIT) before restructuring of CHF 0.7 million was achieved (previous year: CHF 8.6 million); the figure after restructuring was CHF 2.5 million (CHF 5.6 million).
The real estate division developed as planned
Development of the Papieri site again made major progress in the financial year 2015: the municipality of Cham submitted the planning dossier, which had been produced jointly with the Cham Paper Group, to the responsible cantonal offices for preliminary review. The aim is to carry out the ballot on the development plan and the environmental impact assessment in autumn 2016. A possible scheduling concept was devised parallel to the development planning process. The space that has been released on the factory site is already being used on a short-term basis in a variety of ways by over 50 different tenants. The first contracts for new long-term tenants in the commercial area have also been signed. The relevant construction work has started and the real estate division generated revenue with third parties of CHF 0.8 million (previous year: CHF 0.7 million) and an operating profit (EBIT) of CHF 0.2 million (CHF 0.2 million). The development expenses for the Papieri project were capitalised.
Strong balance sheet and constant dividend
Despite the dividend payment, the abolition of the minimum EUR/CHF exchange rate and the associated reduction in the value of Italian assets in CHF, the Cham Paper Group still has a strong balance sheet. At the end of the reporting year, the equity ratio amounted to 50.6% (previous year: 52.8%). The Group is almost free from debt and has cash reserves of CHF 41.4 million. The site in Cham is still valued at acquisition cost. The Board of Directors will propose to the General Meeting of Shareholders that a dividend of CHF 3.00 (previous year: CHF 3.00) is paid per share, which will be exempt from capital gains tax for Swiss private investors.
New Delegate of the Board of Directors
Preparations are being made for a transfer of responsibilities in the Board of Directors of the Cham Paper Group: Susanne Oste, the previous Head of International Sales at Ziegler Papier, will be proposed for election to the Board of Directors at the General Meeting of Shareholders on 4 May 2016. She is to replace Urs Ziegler, who will continue to make himself available as a member of the Board of Directors, as Delegate of the Board of Directors. Susanne Oste has been being introduced to her responsibilities by Urs Ziegler since January 2016. Peter Schmid will not stand for re-election. The Board would like to thank Mr Schmid for his tremendous commitment since 2011.
A cautiously positive outlook
The Board of Directors and the Executive Board are of the opinion that the Group is well positioned for the future. In all its three areas of operations, the paper division covers attractive and expanding markets. The modernised mills produce more efficiently than ever before and have built up additional capacity. As a result, the lengthy, demanding transformation process is drawing to a close. Assuming that the cost of raw materials stabilises, we are expecting a clear improvement in the operating profit in the ballpark of the EBIT achieved in 2014). The Real Estate Division will develop into a strong second pillar for the Group over the next decade.
Annual Report 2015
The complete annual report (in German) is available on our website in the Investor Relations section (see «Financial Reports») or directly under the following link:
http://ir.champaper.ch/cgi-bin/show.ssp?id=310&companyName=champaper&language=German
Key Figures
in CHF million, unless otherwise specified 2015 2014
Sales in tonnes 146,274 142,981
Net revenue 194,258 216,762
EBITDA 9,187 18,800
As a % of net revenue 4.7% 8.7%
EBIT before restructuring 627 8,930
As a % of net revenue 0.3% 4.1%
Restructuring income / (restructuring expenses) 1,795 -3,059
EBIT after restructuring 2,422 5,871
Profit 480 1,841
Earnings per share (in CHF) 0.65 2.48
Free Cash Flow -5,695 -5
Shareholders' equity 102,088 107,900
As a % of total assets 50.6% 52.8%
(Net debt) / Net cash -1,432 3,095
Investments in tangible and intangible assets 12,073 13,384
Number of employees (FTE) 389 417
Cham Paper Group
The Cham Paper Group is a leading manufacturer of coated speciality papers. Surface finishing lends papers properties that generate value added for its customers. The company, which was founded in 1657, has three sites, one in Switzerland (Cham) and two in Italy (Carmignano and Condino), and a global sales network. The decision to focus on development and sales and discontinue paper manufacturing in Switzerland has made way for a new project on the factory site in the centre of Cham. The Cham Paper Group is developing an eleven-hectare quarter there called the Papieri site. The Cham Paper Group (ticker symbol: CPGN) is listed on the SIX Swiss Exchange.
In 2015, the Group achieved revenue of CHF 194.3 million. This is 10.4% less than in 2014 (CHF 216.8 million), however, revenue grew by 2.4% in local currency. The operating profit came to a modest CHF 2.4 million (previous year: CHF 5.9 million), while the net result was just positive, at CHF 0.5 million (CHF 1.8 million). The profit has therefore improved slightly in the traditionally weaker second half thanks to the reduction in costs.
The paper division presented a contrasting picture
The trend in the paper division's revenue and profits did not match the opportunities presented by the market. The extensive investment in paper machine 4 in Carmignano to increase capacity and efficiency was completed on schedule, however, the start-up processes following the modifications turned out to be more difficult than expected and there was a delay in exploiting the increased production potential. The gains in efficiency are not yet apparent in the results because of the 10% increase (caused by movements in exchange rates) in the cost of cellulose, which accounts for around 50% of manufacturing costs. The challenges involved in the relocation of coating operations for the manufacture of complex digital imaging products to Italy were underestimated; it was not possible to keep to the budget or the timetable and this depressed profitability. However, demand for the Cham Paper Group's speciality papers was satisfactory to good in all segments. The three divisions Consumer Goods, Industrial Release and Digital Imaging are well positioned strategically and their products are appreciated in the market. Tonnage sold increased by 2.3% despite the restrictions mentioned previously, and the paper division's net revenue reached CHF 193.4 million. The gross profit decreased from CHF 28 million to CHF 18.4 million as a consequence, in particular, of the increase of approximately CHF 9 million in the cost of cellulose. Thanks to the reduction in the cost base, a marginally positive operating profit (EBIT) before restructuring of CHF 0.7 million was achieved (previous year: CHF 8.6 million); the figure after restructuring was CHF 2.5 million (CHF 5.6 million).
The real estate division developed as planned
Development of the Papieri site again made major progress in the financial year 2015: the municipality of Cham submitted the planning dossier, which had been produced jointly with the Cham Paper Group, to the responsible cantonal offices for preliminary review. The aim is to carry out the ballot on the development plan and the environmental impact assessment in autumn 2016. A possible scheduling concept was devised parallel to the development planning process. The space that has been released on the factory site is already being used on a short-term basis in a variety of ways by over 50 different tenants. The first contracts for new long-term tenants in the commercial area have also been signed. The relevant construction work has started and the real estate division generated revenue with third parties of CHF 0.8 million (previous year: CHF 0.7 million) and an operating profit (EBIT) of CHF 0.2 million (CHF 0.2 million). The development expenses for the Papieri project were capitalised.
Strong balance sheet and constant dividend
Despite the dividend payment, the abolition of the minimum EUR/CHF exchange rate and the associated reduction in the value of Italian assets in CHF, the Cham Paper Group still has a strong balance sheet. At the end of the reporting year, the equity ratio amounted to 50.6% (previous year: 52.8%). The Group is almost free from debt and has cash reserves of CHF 41.4 million. The site in Cham is still valued at acquisition cost. The Board of Directors will propose to the General Meeting of Shareholders that a dividend of CHF 3.00 (previous year: CHF 3.00) is paid per share, which will be exempt from capital gains tax for Swiss private investors.
New Delegate of the Board of Directors
Preparations are being made for a transfer of responsibilities in the Board of Directors of the Cham Paper Group: Susanne Oste, the previous Head of International Sales at Ziegler Papier, will be proposed for election to the Board of Directors at the General Meeting of Shareholders on 4 May 2016. She is to replace Urs Ziegler, who will continue to make himself available as a member of the Board of Directors, as Delegate of the Board of Directors. Susanne Oste has been being introduced to her responsibilities by Urs Ziegler since January 2016. Peter Schmid will not stand for re-election. The Board would like to thank Mr Schmid for his tremendous commitment since 2011.
A cautiously positive outlook
The Board of Directors and the Executive Board are of the opinion that the Group is well positioned for the future. In all its three areas of operations, the paper division covers attractive and expanding markets. The modernised mills produce more efficiently than ever before and have built up additional capacity. As a result, the lengthy, demanding transformation process is drawing to a close. Assuming that the cost of raw materials stabilises, we are expecting a clear improvement in the operating profit in the ballpark of the EBIT achieved in 2014). The Real Estate Division will develop into a strong second pillar for the Group over the next decade.
Annual Report 2015
The complete annual report (in German) is available on our website in the Investor Relations section (see «Financial Reports») or directly under the following link:
http://ir.champaper.ch/cgi-bin/show.ssp?id=310&companyName=champaper&language=German
Key Figures
in CHF million, unless otherwise specified 2015 2014
Sales in tonnes 146,274 142,981
Net revenue 194,258 216,762
EBITDA 9,187 18,800
As a % of net revenue 4.7% 8.7%
EBIT before restructuring 627 8,930
As a % of net revenue 0.3% 4.1%
Restructuring income / (restructuring expenses) 1,795 -3,059
EBIT after restructuring 2,422 5,871
Profit 480 1,841
Earnings per share (in CHF) 0.65 2.48
Free Cash Flow -5,695 -5
Shareholders' equity 102,088 107,900
As a % of total assets 50.6% 52.8%
(Net debt) / Net cash -1,432 3,095
Investments in tangible and intangible assets 12,073 13,384
Number of employees (FTE) 389 417
Cham Paper Group
The Cham Paper Group is a leading manufacturer of coated speciality papers. Surface finishing lends papers properties that generate value added for its customers. The company, which was founded in 1657, has three sites, one in Switzerland (Cham) and two in Italy (Carmignano and Condino), and a global sales network. The decision to focus on development and sales and discontinue paper manufacturing in Switzerland has made way for a new project on the factory site in the centre of Cham. The Cham Paper Group is developing an eleven-hectare quarter there called the Papieri site. The Cham Paper Group (ticker symbol: CPGN) is listed on the SIX Swiss Exchange.
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