Cham Paper Group Holding AG

DGAP-Adhoc: Cham Paper Group Holding AG: Dynamic revenue performance and clear-cut improvements in results

Cham Paper Group Holding AG  / Key word(s): Half Year Results

21.08.2014 07:00

Release of an ad hoc announcement pursuant to Art. 53 KR
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- Dynamic revenue performance thanks to favourable market conditions and
successful products
- Significant improvement in results, EBIT margin climbs to 4.7%
- Continued transfer of technology to Italy planned for 2015
- Urban planning competition for "Papieri" site successfully completed
- Healthy balance sheet, equity ratio again exceeds 50%

The Cham Paper Group got off to an excellent start in 2014. The favourable
economic climate, the continued growth in demand for the strategic products
of all key product groups in all segments, and the positive perception of
the Cham Paper brand have led to favourable half-year results. To further
optimise the competitive strength of the Group's speciality papers, the
company has decided to continue the transfer of technology from Switzerland
to Italy and invest accordingly in the Italian mills, which will lead to
another increase in productivity there. Relocation of the coating
technology operations currently run from Cham for producing the digital
imaging and barrier papers is scheduled to take place in the first quarter
of 2015, and is expected to result in a further staff reduction of approx.
50 in Switzerland.

During the first six months, total revenue dropped to CHF 116.7 million as
a result of less profitable products being discontinued. The production of
speciality papers at both Italian mills increased by 6.0% to 70,729 tonnes,
resulting in a revenue increase of 12.4% to CHF 101.0 million. In
Switzerland, proceeds from the production of finished base paper increased
to CHF 15.7 million. In the Digital Imaging unit in Cham, growth amounted
to 18.7%. At CHF 5.5 million (EBIT margin of 4.7%), the operating result
achieved by the Group was significantly above that of the corresponding
period in the previous year (CHF 2.9 million, EBIT margin: 1.7%), that
still being affected by the demanding transformation phase. The net profit
of the first six months amounted to CHF 3.6 million.

Dynamic growth of core products in all markets
Consumer Goods: The demand for flexible packaging papers showed positive
trends thanks in part to a slightly improved economy in our primary market,
Europe. The single-sided coated papers for high-end packaging were
particularly in demand. Developments in our key Asian market was in line
with expectations, the papers for the tobacco market in China in particular
generating high sales figures.  Capacity utilisation at our mill in
Carmignano which manufactures these papers was high during the first half
of 2014.

Industrial Release: Sales of our glassine papers trended slightly upwards.
Our primary market Europe remained stable, and thanks to the advantages
afforded by our superior quality we were able to expand market share.
Unfortunately sales in Asia fell short of our expectations as the price war
there did not allow for any profitable growth.

Digital Imaging: The market for digital sublimation printing of textiles
continues to exhibit above-average growth. Digital sublimation printing is
increasingly coming to supplant classic printing technologies so that the
market potential in this segment is on the rise thanks to the technical
innovations of our customers. Our recently revamped product range is
meeting with considerable interest in the marketplace. Sales in this area
have expanded significantly, particularly in Europe and the USA.

Continued reluctance of the market to accept barrier products
Although further progress has been achieved with the innovative Barnamic
barrier papers - these products are currently undergoing testing by several
potential customers - the restraint already observed last year with regard
to ordering continues unabated. Many customers (still) perceive a
switchover to this brand-new class of food packaging to be too risky. This
realisation has also meant that the business plan for the operations in
Cham has had to undergo a reassessment. At present it is clear that the
volume required for satisfying the fundamental economic prerequisites for
constructing a new coating unit in the area of Cham proposed for 2016 will
not be achieved in the foreseeable future.

Integration in northern Italy instead of constructing a new plant in
Switzerland
Consequently the Board of Directors is currently planning to have the
products to which finishes are currently applied in Cham integrated, along
with their associated technology, in the company's own coating unit of the
Carmignano mill in northern Italy, and to dispense with constructing a new
facility in Switzerland. Integration will be part of an investment
programme which has been initiated to modernise and expand capacity at
Carmignano and is to be completed in 2015. The associated reduction in
staff by approx. 50 at the technology centre in Cham will be deliberated
with social partners in a consultation procedure. Plans have been made to
support employees with a redundancy scheme in a manner similar to the one
that has proved effective during the past two years. This means that only
30 to 40 jobs will remain in Cham in the future. These include research &
development in the Digital Imaging unit, marketing & sales, small roll
processing and group functions. To carry through the transfer, we are
currently reckoning with provisions and value adjustments of approx. CHF
4.0 million. However, they are non-cash only in part and will be recognised
in the 2014 financial year.

Balance sheet continues to be robust
During the first six months the Cham Paper Group succeeded in optimising
its level of trade receivables and inventories of raw stock and finished
goods on hand, which resulted in a reduction in tied-up capital of CHF 8.1
million. This infusion of cash was used in part to pay suppliers earlier
and thus benefit from more favourable purchasing terms. Following this
practice led to an increase in net working capital of 4.7%, which resulted
in a slightly negative free cash flow of CHF 0.8 million during the
reporting period. Despite repaying liabilities to banks in the amount of
CHF 6.8 million and a dividend yield to shareholders of CHF 2.2 million,
the Group had cash reserves of CHF 44.6 million at the end of the period
under review and thus is free of net debt. The equity ratio increased again
by 5.6% and now amounts to a comfortable 51.9%.

Test planning and urban planning competition in Cham concluded
In October 2013 four planning teams were tasked with the challenge of
developing a concept for utilising the "Papieri" site located in the
residential area of the municipality of Cham. In doing so they took into
account the objectives and issues that had been previously formulated in
concert with local residents in various workshops. At the end of June 2014,
a review committee consisting of external experts, representatives of the
municipality of Cham, Cham Paper Group Schweiz AG and various cantonal
agencies unanimously decided in favour of one of the four concepts as a
guide project for elaborating a master plan. A fully developed proposal is
scheduled to be submitted to the municipality of Cham for a referendum in
2016.

Positive outlook despite demanding tasks
The Board of Directors and the Executive Management Board are confidently
expecting continued business performance during the current year and
beyond. A slightly positive net result is expected for the year, despite
the provisions required for the technology transfer. In the wake of the
successful transformation, the Group is well-placed and will continue to
benefit from the strong performance capabilities of its products and
services in all markets. However, this is predicated on continued
improvements in performance at all levels in the future.


Please note: on 21 August 2014, at 9:00 CEST, there will an analyst
conference call (Confirmation Code: 2651850) with Delegate of the Board of
Directors Urs Ziegler and Head of Finance & Controlling Luis Mata to
discuss the latest developments in the Group. To take part, call: +41 44
580 72 15.

The complete half-year 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=311&companyName=champaper&langu
age=English.

The Cham Paper Group will be giving a company presentation on 2 October
2014 from 9:25 - 10:20 am at Investora, the small and mid cap conference,
at the ConventionPoint of SIX Swiss Exchange in Zurich. For further
details, please consult: www.investora.ch.


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Information and Explaination of the Issuer to this News:

For further information please contact:
Media and IR Office, Cham Paper Group Holding AG
c/o Dynamics Group
Edwin van der Geest / Philippe Blangey
e-mail: media@cham-group.com and/or investor@cham-group.com
Tel.: +41 43 268 32 32
Registered shares of Cham Paper Group Holding AG
Swiss Securities Number / ISIN / Ticker:
193 185 / CH0001931853 / CPGN


Cham Paper Group
Cham Paper Group is a leading manufacturer of coated speciality papers. The
group generates added value for its customers by providing finishing-based
functional capabilities. Founded in 1657, at its three locations in
Switzerland and Italy the company develops and manufactures speciality
papers for use in the consumer goods, industrial release and digital
imaging sectors. The consumer goods sector encompasses papers for flexible
packaging and base papers for label printing in the food, non-food,
tobacco, beverage and pharmaceutical industries. In terms of the industrial
release sector, Cham Paper Group supplies silicone-base papers for release
liners used in graphical applications and for adhesive tapes and labels.
The company also supplies base papers for process liners used in industrial
casting and laminating process applications. Facestock papers for the
self-adhesive industry round off the range. In addition to large-format
inkjet papers for indoor and outdoor applications, the digital imaging
sector also includes sublimation papers for digital textile printing. Cham
Paper Group has benefited from the trend for sustainable products and is
well established on the market thanks to the company's technological
innovation. Cham Paper Group (stock exchange symbol: CPGN) is listed on the
SIX Swiss Exchange as an independent company.


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Additional features:
Document: http://n.equitystory.com/c/fncls.ssp?u=NXFSNCEYIW
Document title: Press release Half-Year Report 2014


21.08.2014 News transmitted by EQS Schweiz AG.
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Language:               English
Company:                Cham Paper Group Holding AG
                        Fabrikstrasse
                        6330 Cham
                        Switzerland
Phone:                  +41 41 785 33 33
Fax:                    +41 41 785 31 50
E-mail:              mail.cham@cham-group.com
Internet:            www.cham-group.com
ISIN:                   CH0001931853
Valor:                  -
Listed:                 SIX

End of Announcement                             EQS Group News-Service

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