Ad hoc announcements
2021 net result impacted by impairment
In view of the continuing predatory competition in the paper segment, the CPH Group expects an extraordinary impairment charge of CHF 150 million to its paper production fixed assets in the 2021 financial year. The impairment will impact the net result for the year, which is expected to be negative broadly in line with the impairment charge. The impairment will have no cash impact, however, and the Group’s equity ratio remains sound at over 50%.
Perlen, 14 January 2022 – The European market for graphic printing paper has been in structural transition for years. Growing digitalization is prompting annual declines of between 6 and 8 per cent in the demand for newsprint paper. This in turn has created overcapacities at manufacturers and generated strong pricing pressures. The situation was further exacerbated in 2021 by steep increases in energy prices and raw materials costs. Although supply and demand in the paper market are currently almost evenly balanced following significant capacity reductions in 2021 and paper prices are thus set to rise in 2022, no medium-term easing of the present European market challenges is currently in sight. Demand will further decline over the next few years, and the resulting overcapacities are likely to keep pricing pressures high.
In view of this, the CPH Group has reassessed the value of its fixed assets. In doing so, it has concluded that an extraordinary impairment of CHF 150 million to its paper production fixed assets in Perlen is required. This will affect the Group’s net result for 2021, which will be negative broadly in line with the impairment charge. The impairment does not, however, affect earnings before interest, taxes, depreciation and amortization (EBITDA), cash flow or the cash position of the Group, which further maintains a sound equity ratio of over 50% also after the impairment.
The Paper Division of the CPH Group pursues a volume-based strategy with the aim of maintaining cost leadership in the fiercely contested European paper market sustainably and in the long term. In doing so, the division does also continue to hold a number of competitive advantages in the long run. With its advanced paper machines, the division can manufacture paper at its Perlen site with considerable efficiency and almost zero net carbon emissions.