Interim Results 2013: Further paper price erosion depresses CPH Group results

The CPH Group achieved consolidated net sales of CHF 245.0 million for the first six months of 2013, only minimally below the CHF 245.2 million of the prior-year period. But with further falls in paper sales prices and increased energy costs, Group EBIT for the first half of the year declined from the CHF -8.0 million of 2012 to CHF -13.6 million, while the net result for the period amounted to CHF -16.5 million.

Perlen, 27 August 2013 – The three divisions of the CPH Group (SIX: CPHN) were affected to varying degrees by general economic developments in the first six months of 2013. The Packaging Division further expanded its position in the pharmaceuticals market, achieved a double-digit percentage increase in its net sales for the period and witnessed healthy levels of both earnings and order volumes. The Chemistry Division experienced sideward trends in its markets along with the deferrals of several major projects by its customers, developments which resulted in lower order volumes (particularly for its Swiss Uetikon operations) and a slight overall net sales decline. The Paper Division felt continued strong predatory competition in the European market, with corresponding pressure on newsprint and magazine paper prices. The division did raise its sales volumes for the period, despite a general weakening in demand; but the higher volumes sold could not fully offset the price declines, and net sales were slightly down on the prior-year period.

«Der Bereich Papier steuert über 60 % zum Geschäft der CPH-Gruppe bei. Trotz der realisierten operativen Verbesserungen schlugen insbesondere die weiter gesunkenen Papierpreise im ersten Halbjahr 2013 auf das Gruppenergebnis durch. Auch die erfreuliche Entwicklung im Verpackungsbereich konnte diesen Rückgang nicht kompensieren», erläutert Peter Schildknecht, CEO der CPH-Gruppe.

The CPH Group’s consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the first-half period amounted to CHF 15.3 million (prior year: CHF 22.7 million), while consolidated earnings before interest and taxes (EBIT) totalled CHF -13.6 million (prior year: CHF -8.0 million). The net result for the period stood at CHF -16.5 million, which compares to a net profit of CHF 11.0 million a year ago (though the prior-year result also included CHF 24 million profit from real-estate sales).

The balance sheet total amounted to CHF 945.7 million at the end of June 2013. Equity totalled CHF 690.4 million, giving an equity ratio of 73%. Net debt stood at CHF 84.4 million, while liquid funds amounted to CHF 60.7 million. Personnel numbers rose from 841 to 880 full-time equivalents, an increase attributable to expansions within the Group’s packaging operations.

Full-year outlook
“The economic situation in Europe, which is the CPH Group’s prime sales market, remains far from easy, and the projected recovery is proceeding less strongly than expected,” Peter Schildknecht continues. “These trends are sure to have their impact on CPH’s further business performance; and our Group faces a sizeable challenge if it is to maintain its annual operating results at the levels achieved for 2012.”

While the magazine paper market remains beset by weak demand and corresponding pricing pressures, the current reduction in European newsprint production capacity and the resulting higher utilizations of the capacities remaining should permit price increases in this sector in the second half of the year. With these and the further operational improvements planned, the Paper Division should deliver a stronger business performance for the second-half period. But the division will still be hard pressed to maintain its annual earnings at their 2012 level.

The Chemistry Division will continue to vigorously pursue its efficiency enhancement programme, focus its business energies on higher-margin products and tap into new markets with stronger growth potential. Despite these efforts the division will be unable to fully emulate its 2012 earnings performance.

The global pharmaceuticals sector, which is the prime customer market for the Packaging Division, looks set to remain in sound business health in the second-half period. In view of this, the division is confident of posting an EBIT result for 2013 as a whole that is a tangible improvement on last year.


CPH Chemie + Papier Holding AG
Dr. Peter Schildknecht, CEO, +41 41 455 87 57
Michel Segesser, Head of HR & Communications, +41 41 455 87 51

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