FY 2014: Cham Paper Group achieves continued success
2014 was an important year for the future of the Cham Paper Group. The favourable economic environment and the strong market position of Cham Paper speciality papers led to a significant improvement in results, while considerable progress was made with the development of the Papieri real estate project.
Growth of strategically important products and clear improvement in results
The Cham Paper Group’s revenue with speciality papers fell by 6.6% to CHF 216 million in 2014. The Group achieved growth in strategically important product groups. Sales of speciality papers from the two Italian mills rose by 2.4%, resulting in a 1.4% increase in revenue to CHF 187 million. In Switzerland, re-venue from the sale of paper coated in Cham, particularly for the Digital Imaging product family, grew by 22% to CHF 29 million. Thanks to improved cost structures, the Group achieved an operating profit be-fore restructuring costs of CHF 8.9 million and an EBIT margin of 4.1%. This represents a significant in-crease on the previous year (CHF 1.8 million, EBIT margin 0.8%), in which the challenging transforma-tion phase was still ongoing.
Technology transfer from Cham to Italy
To further improve the competitiveness of our speciality papers, we decided to transfer additional tech-nology from Switzerland to Italy in mid-2014. The associated investment of around CHF 20 million in the Italian mills (of which CHF 13 million in 2014) will lead to a further improvement in productivity and capa-city in 2015. The relocation of the coating technology operations currently run in Cham for producing the digital imaging and barrier papers will take place in the first quarter of 2015. The associated restructuring costs for the redundancy scheme and write-downs on facilities in Cham reduced the operating profit for 2014 by CHF 3.1 million. The total net profit for the 2014 financial year came to CHF 1.8 million (pre-vious year: CHF 0.4 million).
Balance sheet streamlined and equity ratio increased to 53%
The paper division reduced the level of outstanding customer debts and optimised its warehouses for raw materials and finished products, which led to a reduction of CHF 13 million in tied-up capital. Some of the funds freed up as a result of this were used to pay suppliers earlier, which allowed us to benefit from more favourable purchasing conditions. At the same time, liabilities to banks of CHF 14 million we-re repaid. The Group had cash reserves of CHF 38 million at the end of the year and is thus free from debt in net terms. The balance sheet total was reduced by around CHF 30 million, while the equity ratio is now a comfortable 52.8% (previous year: 46.3%).
Town planning study concluded and master plan drawn up
The future use of the Papieri-Areal in Cham is increasingly taking shape. An assessment panel consis-ting of experts, representatives of the community of Cham, the Cham Paper Group and various cantonal offices had unanimously recommended following up a project proposal from the study commissioning process at the end of June 2014. The authors of the project were then able to develop their draft into a master plan with a framework for the project. We are now working flat out on the legal groundwork together with the cantonal authorities involved. The electors of the municipality of Cham will vote on rezoning in 2016.
Interim use intensified and head of the new real estate division appointed
The buildings and the Papieri-Areal have already come to life, with a total of 73 interim tenants using the space that has become free until the renovation and new construction work begins. The revenue obtai-ned from this will cover a large proportion of the project costs. Andreas Friederich has joined the Cham Paper Group and has been building up an internal real estate team since March 2015. On 1 July 2015 he will become the head of the new real estate division. This division will report directly to the Board of Directors’ real estate committee, which consists of Philipp Buhofer and Niklaus Peter Nüesch, as well as external experts.
New head of the paper division from 1 July 2015
The Delegate of the Board, Urs Ziegler, who has successfully completed the extensive restructuring of the Cham Paper Group since the end of 2012, will reduce his workload as planned from summer 2015 onwards. Luis Mata, until now the Head of Finance at the Cham Paper Group, will take over the operati-onal management of the paper division as COO from 1 July 2015.
Proposals to the General Meeting of Shareholders
The Board of Directors will propose to the General Meeting of Shareholders that an unchanged dividend of CHF 3.00 per share be paid (previous year: CHF 3.00), which will be exempt from capital gains tax for Swiss private investors. All five members of the Board of Directors will also be put forward for re-election.
Demanding challenges, but strategically well-placed
The Cham Paper Group is confident regarding the Group’s further development. The Paper business unit is well positioned and will benefit from the strong performance characteristics of its products in all markets. At the present time, the strength of the US dollar against the euro is having a detrimental effect on the margin. The real estate division will develop into a strong second pillar for the Group over the next decade.