EQS-News

Report on CPH: Investor Day update

EQS Group-News: Research Dynamics / Key word(s): Research Update Report on CPH: Investor Day update 18.06.2021 / 08:06 This report is published by Research Dynamics, an independent research boutique Packaging division at the forefront of the way forward CPH hosted its annual investor day event on 14 June 2021 where CPH highlighted its continued focus on implementing differentiation strategy in its Chemistry and Packaging Division, while pursuing the cost leadership strategy in the Paper Division to mitigate an unfavorable operating environment. The focus was on the Packaging Division, which the company believes will be a major growth driver in the future due to highly favorable end markets and division's differentiated offerings. Further, the group remains focused on implementing strategic measures such as expanding footprint outside Europe, reducing dependency on the Paper Division and trimming down the exposure to the Swiss franc in currency terms to mitigate the ongoing headwinds.

Packaging Division to provide the next leg of growth
Strategy enabled growth: The Packaging Division's net sales have registered a CAGR of 8% since 2015, whereas EBIT margins expanding 800bps over the same period (2020: 13.3% vs. 2015: 5.3%). The double-digit margin in the Packaging division is attributable to the continued and 100% focus on the pharmaceutical market and on packaging films with the high barrier properties, expansion of the product range to higher-value and high-barrier films and other cost efficiency measures.

Long-term drivers in place for further lift: The global pharmaceutical market is expected to register a CAGR of 3%-6% during 2020-25e, with emerging economies clocking a much higher growth of 7%-10% (CAGR). Such growth will be driven by megatrends such as the ageing global population, urbanization, civilization, lifestyle diseases, and improved medical and medicinal care.

Levers identified for further expansion: The division's primary focus, i.e 90% of the pharmaceutical offerings, is on the primary pharma packaging (blister packs, solid dosage forms), while 10% is on special applications (ampoule packagings, syringe packagings, medical devices). The demand for blister packaging is expected to clock a CAGR of >4%-7% during 2018-23e, whereas the demand for PVC monofilms grows at 3% to 5%, the higher margin coated PVdC barrier films grows at 7% to 9% during the same period. In line with the growing and emerging trends, the company is studying the expansion possibilities into new products and markets. The blister packs, which are used as barriers, can also be used as protectors from contamination and/or for transport, thus have the potential to become an incremental addressable market for the company. Similarly, the company exploring way to become a packaging specialist for primary pharmaceutical packaging such as containers, bottles, ampoules, syringes, etc. made of plastic, or other materials such as glass, metal or paper for the pharmaceutical market.