Cham Paper Group Holding AG

EQS-Adhoc: HY 2015: Challenging first six months

EQS Group-Ad-hoc: Cham Paper Group Holding AG / Key word(s): Half Year
HY 2015: Challenging first six months

20.08.2015 / 07:00
Release of an ad hoc announcement pursuant to Art. 53 KR.
The issuer is solely responsible for the content of this announcement.


Challenging first six months
Cham, 20 August 2015

- Positive trend in demand in all segments of the paper division
- Efficiency temporarily curbed by investments in machinery upgrades
- High pulp costs caused by currency effects impact on profitability
- Strong balance sheet - equity ratio 51.6%
- Real estate project remains on track

As expected, the Cham Paper Group's paper division had a challenging first
half in 2015. Investments in machinery upgrades to increase capacity in
Carmignano at the start of the year and the relocation of the coating
machine from Cham to Italy in the second quarter increased costs and led
temporarily to restricted capacity and production inefficiencies. The
strengthening of the US dollar against the euro also resulted in
significantly higher pulp prices, which could not be passed on directly to
customers in the form of price rises. In the new real estate division,
preparations for converting the industrial site into a new urban district
proceeded according to schedule.

In the first half of the year, the Group achieved a turnover of CHF 100.8
million. Although this is 13.8% lower than in the previous year, in local
currencies turnover is actually on a par with 2014. Operating profit before
restructuring costs came to a modest CHF 1.5 million (CHF 5.5 million in
the same period last year), with the net result virtually even at CHF 0.1
million (CHF 3.6 million).

Paper division
Turnover and profits did not develop in line with the opportunities
presented by the market over the first half of the year. The comprehensive
upgrade of PM4 in Carmignano to increase capacity and efficiency was
completed on schedule at the start of the year. The start-up process proved
more difficult than anticipated, however, and the full production potential
could not initially be utilised. It was not until February that the
machinery was operating at full capacity. The challenging task of
relocating the complex digital imaging products to Italy is also going
well, albeit with some departures from the budget and timetable. Production
costs have increased across the board under the impact of the pulp price,
which is traded in US dollars.

The paper division generated net turnover of CHF 100.4 million. Gross
profit decreased to a disproportionately high extent from CHF 14.9 million
to CHF 10.8 million, while operating profit came to CHF 1.4 million
(previous year CHF 5.0 million).

Market demand (however) is satisfactory to good in all segments. The
strategic positioning of all three segments in the paper division is

In volume terms, sales in the consumer goods segment were on a par with the
previous year in the first six months. The food/non-food and wet glue
labels segments enjoyed a positive trend, each growing by almost 12%. In
the tobacco segment, the fall in volumes in Europe due to lower demand and
more stringent legislation was not entirely offset by growing demand from

Turnover in products for industrial applications (IR) was up year on year.
The Cham Paper Group has further expanded its IR activities in the USA,
South America and Asia. Persistently high demand permitted the introduction
of price increases, which will boost the result in the second half of the

The market for digital sublimation printing continues to grow at an
above-average rate, prompting many new suppliers, particularly from Asia,
to crowd onto the market offering cheap products. Since production costs
are now lower, however, following the transfer of operations to Italy, the
Cham Paper Group will be able to hold its ground against the competition.

The transfer of coating technology has been delayed, leading to supply and
capacity bottlenecks. The sales team was unable to fulfil all customer
orders in the second quarter. Additional investments have since been made
in Italy to increase capacity and thus meet the rising demand for DI

Real estate division
Another event allowing the general public to have their say was held in
late January. This was an opportunity for residents to evaluate the master
plan and outline project devised for developing the Papieri-Areal site.
Based on their feedback, the outline project and the plan for the open
spaces were fleshed out and revised by the team responsible.

In early April, the community of Cham and Cham Paper Group Schweiz AG as
the landowner initiated the final phase of the joint planning process by
drafting the zoning plan for the Papieri-Areal. The contents of this plan,
comprising planning documents with binding regulations and a supplementary
planning report, are currently being finalised together with the
association and in consultation with specialist cantonal departments. An
environmental impact assessment is also currently being prepared for the
planned development of the Papieri-Areal and the municipal outline plan and
the building and zoning regulations are being revised.

Once these have been circulated to the municipal committees and endorsed by
the town council of Cham, the zoning plan and environmental impact report
will be presented to the cantonal authorities for preliminary examination
on schedule in early October. The aim is still to hold the vote on the
zoning plan and the environmental impact report in summer 2016. A potential
phasing concept has also been devised in parallel to the zoning plan

The space that has been freed up on the factory site has already found
numerous temporary uses by more than 50 different tenants, with new
enquiries still being received. The real estate division generated turnover
of CHF 0.7 million in the first half of 2015 and a more or less even
operating profit (EBIT). The development costs for the Papieri project have
been capitalised.

Balance sheet remains strong
Despite a dividend payment, the further weakening of the euro and the
associated lower valuation of the Italian assets in Swiss francs, the Cham
Paper Group still has a strong balance sheet. The equity ratio stood at
51.6% at the end of the first half of the year. The Group has no net debt.
The site in Cham is still valued at acquisition cost.

Positive outlook
The Board of Directors and the Executive Management Board believe the Group
is well positioned. The paper division serves attractive growth markets
across all three of its segments - consumer goods, industrial release and
digital imaging. Cost control continues to present a challenge. The
exchange rate between the US dollar and the euro and the associated higher
pulp prices will continue to impact negatively on the paper division's
operating result in the second half of the year.

A conference call is taking place at 9.00 a.m. today, 20 August 2015, with
Delegate of the Board Urs Ziegler, Head of the Paper Division Luis Mata,
and Head of the Real Estate Division Andreas Friederich, to discuss the
latest developments at the Cham Paper Group. The dial-in number is +41 44
580 72 18 and the confirmation code 8157031.The abridged presentation (in
German) for the conference call can be downloaded at:

The complete half-year report (in German) can be downloaded from our
website in the Investor Relations section (see "Financial Reports") or via
the following link:

For further information please contact
Media and IR office Cham Paper Group Holding AG
Edwin van der Geest
E-Mail and/or
Phone +41 79 330 55 22

Key figures at a glance

in CHF thousand unless otherwise specified           H1 2015        H1 2014

Sales in tonnes                                       76,664         76,956
Net turnover                                         100,799        116,946
EBITDA                                                 5,861         10,395
as a % of net turnover                                  5.8%           8.9%
EBIT before restructuring                              1,495          5,460
as a % of net turnover                                  1.5%           4.7%
Profit for the period                                     79          3,637
Earnings per share (in CHF)                             0.11           4.90

Net Cash Flow from Operating Activities                  470          2'031
Shareholders' equity                                  99,651        110,015
as a % of total assets                                 51.6%          51.9%
Net cash                                               1,486          1,818
Investments in tangible and intangible assets          4,553          2,873
Number of employees (FTEs)                               409            428

About Cham Paper Group
The Cham Paper Group is a leading manufacturer of coated speciality
papers. Its papers have surface coatings that give them functionalities
that offer added value for customers. The company was founded in 1657 and
has three sites, one in Switzerland (Cham) and two in Italy (Carmignano and
Condino), as well as operating a global distribution network.
The decision to focus on development and distribution activities and to
withdraw from paper production in Switzerland has created new space at the
factory site in the centre of Cham. The Cham Paper Group is developing an
11-hectare area there, the Papieri-Areal.
The Cham Paper Group (stock exchange symbol: CPGN) is listed on
Switzerland's SIX Swiss Exchange.

End of ad hoc announcement

Additional features:

Document title: Cham Paper Group H1/2015


20.08.2015 News transmitted by EQS Schweiz AG. - news

The issuer is responsible for the contents of the release.


Language:    English
Company:     Cham Paper Group Holding AG
             6330 Cham
Phone:       +41 41 785 33 33
Fax:         +41 41 785 31 50
ISIN:        CH0001931853
Valor:       -
Listed:      Foreign Exchange(s) SIX

End of News    EQS Group News-Service
388077 20.08.2015

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