DGAP-News: Report update on CPH Chemie + Papier Holding AG by Research Dynamics: FY2015 results (News mit Zusatzmaterial)

Report update on CPH Chemie + Papier Holding AG by Research Dynamics: FY2015 results (News mit Zusatzmaterial)

DGAP-News: Research Dynamics / Schlagwort(e): Research Update

Report update on CPH Chemie + Papier Holding AG by Research Dynamics: FY2015

results (News mit Zusatzmaterial)

01.03.2016 / 17:30

Für den Inhalt der Mitteilung ist der Emittent verantwortlich.

---------------------------------------------------------------------------

Currency hits 2015 results, recovery seen in 2016

2015: Volumes increase, but strong currency depresses earnings

CPH Group's revenues came under pressure primarily from external factors,

falling 14.7% y/y to CHF 420mn in 2015. The Swiss National Bank's decision

to remove the CHF/Euro exchange rate peg at the start of 2015, resulting in

the Euro falling from over CHF 1.20 to 1.09 by December 2015, had an

adverse impact on all divisions of CPH. The depreciation of the Euro

resulted in lower sales to the tune of CHF 50.4mn during the year. In

addition, lower product prices, especially for paper, put further pressure

on revenues. On a positive note, the company was able to improve sales

volumes across all divisions, even in the current sluggish global economic

scenario. At the operating level, the company posted a loss of CHF 21.8mn

for 2015, compared to a profit of CHF 6mn in 2014. As a result, the company

reported a net loss of CHF 33.1mn in 2015 compared to a net profit of CHF

10.5mn in 2014. The Paper division, which accounts for around 60% of CPH's

revenues, was the hardest hit since it exports almost 77% of its production

to the Eurozone. Revenues from the paper segment fell 21.2% y/y to CHF

247.8mn, resulting in an operating loss of CHF 28mn. The packaging segment

reported a 6.8% y/y decline in revenues to CHF 109.7mn, while the operating

profit stood at CHF 5.9mn, up 15.9% y/y. Revenues from the Chemistry

segment improved 3.8% y/y to CHF 62.5mn, with an EBIT of CHF -1.8 mn.

Strategically important 2016: Entry into China market

2016 will be a strategically important year for CPH, as the company begins

manufacturing operations in the rapidly growing Chinese market and

completes the acquisition of China-based ALSIO. This marks the company's

entry into low a production cost region and will significantly increase its

presence in the fast growing Asian market. These developments are expected

to lower the company's overall production costs and result in improved

margins. It would also lower the impact of currency fluctuations as it

reduces the exposure to the CHF.

Performance likely to improve

CPH's largest division, Paper, is expected to post an improved performance

in 2016 as paper prices are rising moderately after the sharp fall

witnessed over the last few years and sales volumes remain stable.

Efficiency improvements from the new PM7 machine and an increased

proportion of higher margin products are expected to improve the division's

profitability. The packaging division should benefit from the start of

manufacturing operations at the new China plant. Increased focus on higher

value products and the fast growing Asian region would support the

division's profitability. The chemistry division should get a boost from

the acquisition of China-based ALSIO, a manufacturer of molecular sieves.

The acquisition, expected to be completed by mid-2016, would help CPH

increase its footprint in the Asian market. The lifting of sanctions on

Iran opens a new potential market for the company, in face of the slowdown

in the US shale gas industry. These developments should help the company

achieve its target of reducing the contribution from the paper division, as

well as reduce costs incurred in Swiss franc. The recovery in paper prices,

along with stable sales volumes across all divisions and the China

acquisition is expected to result in revenue growth of ~5% y/y in 2016.

Valuation

At current price levels, CPH shares trade at a discount of 44% to its peers

on P/S basis. Similarly, CPH is trading at a discount of 32% to its 3-year

historical average P/S. With the currency stabilizing in Switzerland and

given the company's expansion measures in low cost production centres

coupled with the demand dynamics shifting from developed economies to

emerging economies, we expect the company to improve its earnings in the

near to medium-term. Also, with paper prices inching up towards the end of

the year in Europe, CPH should be able to reverse its losses sooner. Also,

the positives from the Packaging and Chemistry divisions would help CPH in

the long-run by reducing the dependency on its Paper division.

+++++

Zusatzmaterial zur Meldung:

Dokument: http://n.eqs.com/c/fncls.ssp?u=AMOELWTGHK

Dokumenttitel: CPH_FY2015 results

---------------------------------------------------------------------------

01.03.2016 Veröffentlichung einer Corporate News/Finanznachricht,

übermittelt durch DGAP - ein Service der EQS Group AG.

Für den Inhalt der Mitteilung ist der Emittent / Herausgeber verantwortlich.

Die DGAP Distributionsservices umfassen gesetzliche Meldepflichten,

Corporate News/Finanznachrichten und Pressemitteilungen.

Medienarchiv unter http://www.dgap-medientreff.de und http://www.dgap.de

---------------------------------------------------------------------------

441727 01.03.2016