DGAP-Adhoc Cham Paper Group Holding AG: The Cham Paper Group charts the course for the future
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Cham Paper Group Holding AG / Key word(s): Strategic Company Decision
21.11.2011 07:15
Release of an ad hoc announcement pursuant to Art. 53 KR
The Cham Paper Group is responding to the fast-paced economic climate
precipitated primarily by forex effects and recharting its course for the
future.
-- Cham Paper´s strong market position is secured by:
- Focussing production on surface coating, Cham Paper´s core competency at
the Cham site
- Injecting vigor into innovation in a technology and R&D center for
sustainable Food & Packaging and -Digital Imaging solutions in Cham
- Relocation of production operations to the euro zone
-- The Group´s return to profitability will be ensured by way of site
location and product portfolio optimization throughout the entire Group
with the objective of improving cost structures and lessening the Group´s
dependence on the development of the Swiss franc:
- Concentration of the Group´s product line on higher-margin products
- Shutting down base paper production in Cham by the end of 2013
- Gradual expansion of production capacity in Italy
- Relocation of selected product groups to Italy
-- This reorganization will lead to a gradual reduction in the workforce at
Cham from 312 FTEs to approximately 100. This process will take place in
close collaboration with social partner organizations and cantonal
government agencies.
-- The proposed development of the site situated along the Lorze River, now
no longer required, into a new residential and commercial district will
open up new perspectives for the Cham Paper Group, the community of Cham
and the surrounding region.
The Cham Paper Group, a leading specialty paper manufacturer, is
reorienting its course for the future. After performing a thorough
evaluation of all possible strategic options, the Board of Directors and
the Executive Management Board are initiating a comprehensive restructuring
of the Group to sustainably secure the Group´s future for the coming
decade. The measures initiated take the economic and locational situation
of the surrounding community into account while leveraging the development
potential of all of the Group´s assets. The strength of the Swiss franc is
forcing the Group to relocate a large portion of its production capacity to
the euro zone.
R&D and surface engineering expertise - the key competencies securing the
Cham Paper Group´s future
The Cham Paper Group brand has an outstanding reputation in Europe and
Asia. The Group´s core competency - recognized in the marketplace - is
coming to be increasingly focussed on the coating and surface treatment of
paper. Thanks to its in-depth coating know-how and expertise in dealing
with innovative technologies such as curtain coating, Cham Paper is able to
offer products to its customers that provide for process optimization and
new solutions, i.e. genuine competitive advantages. One exciting new
development is barrier coatings without the use of aluminum and plastic, a
pioneering step in the food packaging industry in particular. The Cham
Paper Group is positive that these products will help it to generate
attractive returns in the long term.
However, not all specialty papers require the same high level of expertise.
Price pressure is mounting, particularly in industrial applications such as
release liners for labels and graphic arts applications (CCK or clay-coated
kraft); the requirements made of production efficiency and locational and
cost advantages are becoming more exacting. Forex effects have caused
profitable production to no longer be possible for large portions of this
market segment in Switzerland. Relocation to the euro zone is of interest
in terms of sustainability only for part of these products. The Consumer
Goods and Digital Imaging products and glassine papers are more attractive
in the long run. The Group has managed to show profitable growth here for
years now and the long-term prospects are also favorable.
Portfolio optimization and the reorganization of production allocation will
substantially improve cost structures and create currency neutrality.
In order to ensure a sustainable return to profitability, the Cham Paper
Group will have to quickly withdraw from less attractive markets in
Switzerland and Italy. The utilization of production capacity can be
thoroughly reorganized and optimized on a per-location basis by the
simultaneous relocation of selected product groups to Italy.
The Cham site intends to focus on its core competency, surface coating. To
be sure, the new curtain-coated specialty papers for the Consumer Goods
segment and the increasingly popular Digital Imaging products are to
continue to be produced in Switzerland in the future as well. In order for
the Cham mill with its special coating machines to be able to focus
entirely on the high value-adding and thus less forex-sensitive surface
treatment technologies, base paper is to be sourced on the market in the
future. In so doing, the Group´s site in Switzerland is to be transformed
into a technology, R&D and coating center and specialist solution provider
for a wide variety of industries. The proposed steps will result in the
shutdown of base paper production in Cham. Plans have been made to
decommission the PM4 paper machine in the first half of 2012 and the PM5 by
the end of 2013.
Starting in 2012, selected profitable Cham niche products for Industrial
Release applications are to be manufactured in the Italian mill in
Carmignano. The large volumes of specialty papers for the tobacco industry
currently providing for a large part of capacity utilization in Cham are to
be produced in Carmignano by the end of 2013. The mill in Carmignano is
already focussing completely on Consumer Goods in general, and on flexible
packaging products in particular, thus providing for expansion potential.
The growing market in China continues to be supplied from Europe.
The Condino site will be further expanded. Concentrating on the production
of glassine papers, this Italian mill has successfully expanded its sales
during the last three years from 38,000 to 45,000 tonnes. Plans have been
made to expand its capacity in excess of 20% by 2014.
Site location and product portfolio optimization throughout the Group will
result in a substantial improvement in cost structures and a reduction in
the Group´s dependence on the development of the Swiss franc. In so doing,
the Cham Paper Group is recreating a basis on which profitable growth is
possible.
In the course of this restructuring the Group´s management structure will
also be adapted in accordance with the new exigencies in the course of a
highly coordinated undertaking. In one of the first steps CEO Peter Studer
will be additionally assuming the management of the Carmignano mill from 1
December 2011. The current mill manager Rainer Kürschner will be leaving
the Cham Paper Group at the end of the year.
Close cooperation with social partner organizations
The proposed restructuring of the Cham Paper Group will lead to a gradual
reduction in the number of FTEs at Cham from the present level of 312 to
approximately ca. 100 by the beginning of 2014. The 2012 trainees will not
be affected by these measures. The first capacity reduction step is to take
place with the proposed shutdown of the first paper machine in the first
half of 2012. This will affect approximately 130 employees. The second step
will be completed by the end of 2013 with the proposed production shutdown
of the second machine. The Board of Directors and the Executive Management
Board have contacted the social partner organizations and cantonal
government agencies and are seeking to carefully plan this process with the
involvement of all stakeholders in a socially responsible manner. The
objective is to sustainably secure 100 attractive, top-flight jobs. Plans
have also been made to ensure that the 34 trainees will be able to complete
their training.
From an underutilized industrial park to a new residential and commercial
district of Cham
By concentrating on R&D and surface coating technologies, substantially
less land area will be needed and a large portion of the underutilized
industrial park located in the heart of Cham will be available for other
uses. To this end, the Board of Directors of the Cham Paper Group has
commissioned a number of studies to investigate a step-by-step repurposing
of the land area. On the 100,000 m² grounds providing direct access to the
A4 and the north-bypass of Cham, new residential and employment
opportunities are to be created during the coming decades. Cham Paper will
be working hand in hand with local authorities to ensure that optimal
perspectives are created - for the community of Cham, its present and
future inhabitants and commercial enterprises, as well as for the Cham
Paper Group.
Current financial situation; Forex situation and impairment requirements
lead to a loss in fiscal 2011 - Return to profitability in 2012
The 2011 operating result is excessively burdened by the impact of the
strong Swiss franc. The company is reckoning with a loss from operating
activities (EBIT) of approximately CHF 10-15 million. Added to this: value
adjustments of assets and tax losses carried forward, restructuring
provisions and non-recurring effects of an estimated CHF 80-90 million that
will burden the 2011 net result. Of this amount, however, only CHF 20-25
million will affect the Group´s cash position over the next couple of
years. More details on the restructuring provisions and non-recurring
effects will be forthcoming at the annual financials press conference in
March of 2012. Thanks to its sound balance sheet and existing cash
reserves, the Group will be able to deal with the restructuring and
reorientation process through its own resources. The equity ratio will
continue to amount to a comfortable 40%. With a stable economy, the Cham
Paper Group should return to operating in the black in the course of 2012.
The Cham Paper Group will be conducting a media and analyst conference
today in Zurich at 3 p.m. It will be taking place in Zunfthaus zur Waag, at
Münsterhof 8, 8001 Zurich. No advance registration is required.
For 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
Phone: +41 43 268 32 32 / Mobile: +41 79 330 55 22
Swiss securities no. / ISIN / ticker
Registered shares of Cham Paper Group Holding AG 193 185 / CH0001931853 /
CPGN
Cham Paper Group
The Cham Paper Group is a leading manufacturer of coated specialty papers.
It generates added value for its customers by providing finishing-based
functional capabilities. Founded in 1657, the company develops and
manufactures specialty papers at its three locations in Switzerland and
Italy for use in Consumer Goods, Industrial Release and Digital Imaging
applications. Consumer Goods encompasses papers for flexible packaging and
base papers for label printing in the food, non-food, tobacco, beverage and
pharmaceutical industries. In the Industrial Release segment, the 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. Apart from large-format inkjet papers for
indoor and outdoor applications, the Digital Imaging segment also includes
sublimation papers for digital textile printing. The Cham Paper Group has
benefited from the trend for sustainable products and is well established
in the market thanks to its technological innovative prowess. It is listed
as an independent company on the SIX Swiss Exchange (ticker symbol: CPGN).
21.11.2011 News transmitted by EquityStory 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
Swiss Security Number: -
Listed: SIX
End of Announcement EquityStory News-Service
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