2015 business year: CPH Group adversely affected by Swiss franc appreciation and falling paper prices

Perlen, February 26, 2016 – The CPH Group was severely affected by two developments in 2015: Firstly, the Swiss National Bank’s abandonment of the minimum euro exchange rate in January 2015 had a negative impact on all three business divisions. CPH generated 60% of its earnings in the eurozone in 2015. At the same time, the Chemistry and Packaging Divisions produce partly in Switzerland and the Paper Division exclusively in Switzerland. It is therefore a major challenge for an export-oriented company like CPH to cope with a currency shock of more than 10%.

The second development affected only the Paper Division, which accounts for 59% of Group sales. Demand for publication paper has been declining for several years for structural reasons. As a result of overcapacity, paper prices continued to fall in 2015, which had an impact on the Paper Division’s business performance. Although the Paper Division increased its sales volume to 538,000 tons in 2015, turnover fell by more than 20%.

All divisions increase sales

The two developments mentioned above led to a 14.7% decline in the CPH Group’s sales to CHF 420 million. “Excluding the one-off effects of the Swiss franc shock and lower paper prices, the Group increased its sales by 1.7% in 2015,” comments Dr. Peter Schildknecht, CEO of the CPH Group. All three divisions increased their sales volumes and market shares in 2015.

Swiss franc appreciation weighs on Group result – Chemistry and Packaging up on previous year

CPH’s EBITDA fell from CHF 50.8 million to CHF 12.2 million, mainly due to the difficult market environment in the Paper Division. The appreciation of the Swiss franc and lower paper prices depressed the operating result (EBIT) by some CHF 55 million, with the stronger franc accounting for CHF 25 million and the lower paper prices for CHF 30 million. Despite the productivity gains achieved, EBIT therefore fell from CHF 16.0 million to CHF -21.8 million. “Despite the challenging market environment and the strong Swiss franc, the Chemistry and Packaging divisions were able to improve their EBIT compared to the previous year,” says Peter Schildknecht.

At CHF -12.1 million, the financial result was significantly below the previous year’s figure of CHF -5.6 million, which is mainly due to the negative impact of the appreciation of the Swiss franc in January. There was non-operating income of CHF 2.0 million and the net result closed well in the red at CHF -33.1 million.

Dividend of CHF 0.60 proposed

The Board of Directors will propose to the Annual General Meeting on March 23, 2016 that a dividend of CHF 0.60 per share be distributed in the form of a capital repayment from capital contribution reserves, thereby confirming the Group’s ongoing dividend policy.

CPH accelerates expansion in Asia

The CPH Group’s business performance is strongly influenced by the Paper Division and the Swiss franc exchange rate. Targeted measures have already reduced the proportion of costs denominated in Swiss francs from 70% to around 50%. To further reduce its dependence on the paper markets and the Swiss franc currency area, CPH is investing in new markets and production capacities outside the Paper Division and outside Switzerland.

The Packaging Division had already decided in 2014 to build a coating plant in Wujian, China. The ground-breaking ceremony took place in spring 2015 and work is progressing according to plan. Production is scheduled to start in mid-2016 so that the first coated films for the pharmaceutical industry can be delivered in the Asian region during the course of the year.

At the end of 2015, the Chemicals division in Jiangsu province in China announced the acquisition of Jiangsu ALSIO Technology. ALSIO is a leading producer of molecular sieves in China and employed 120 people at the end of 2015. ALSIO complements Zeochem’s product range and improves the division’s global competitiveness. The new production site will be integrated into the Zeochem Group in the first quarter of 2016.

Outlook for 2016

Following the currency turbulence in 2015, exchange rates have stabilized at new levels. However, in terms of purchasing power parity, the Swiss franc is still significantly overvalued compared to its most important trading partners. The increased presence of the Chemistry and Packaging divisions in Asia will help to reduce the currency effects and high production costs.

The CPH Group’s operating success will again depend heavily on the Paper Division in 2016. There are signs of a slight recovery in paper prices. “Together with the efficiency improvement measures that have been introduced, the Paper Division should be able to break even in 2016,” says Peter Schildknecht. The measures to increase efficiency will also be continued with undiminished vigor in the other divisions. Peter Schildknecht: “The CPH Group is aiming to increase sales and return to profitability at operating level in 2016.”

Contacts

CPH Chemie + Papier Holding AG

Dr. Peter Schildknecht, CEO, +41 41 455 87 57, investor.relations@cph.ch
Christian Weber, Head of Corporate Communications, +41 41 455 87 51, medien@cph.ch

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