Cham Paper Group Holding AG: Progress in the transformation process

Cham Paper Group Holding AG  / Key word(s): Half Year Results

17.08.2012 07:00

Release of an ad hoc announcement pursuant to Art. 53 KR
---------------------------------------------------------------------------

- Return to profitability: EBIT CHF 2.7m, Net profit CHF 0.2m
- Group transformation process making good progress
- Sustained profitable growth in core products
- Orderly withdrawal from the Industrial Release sector (CCK)
- Commune of Cham supporting a planned transformation of the paper mill
site

The Cham Paper Group achieved a net turnover of CHF 155m in the first half
of 2012, down 9.4% on the previous year. This decline is in line with the
expectations that formed part of the group transformation that got underway
at the end of 2011. The fact that the Group has now achieved an operating
income of CHF 2.7m and a net profit of 0.2m means that the comprehensive
reorganisation of the Group can be achieved above the break-even point, in
line with objectives. In Cham, the controlled exit from the Industrial
Release area was completed as planned and the first of the two paper
machines was taken out of service at the end of June. In the remaining
Consumer Goods and Digital Imaging sectors, demand is continuing to develop
well.

The first half of 2012 was extremely demanding for the management and
employees at the Cham Paper Group. The company, which is currently
undergoing a transformation process, had to fulfil numerous demands at the
same time, particularly at the Cham site - planning for and carrying out a
socially responsible reduction in personnel, an orderly withdrawal from the
Industrial Release sector markets, preparing the relocation of entire
product groups (specifically the inner liners) to Carmignano, the
evaluation of raw paper suppliers for the products that are still to be
coated in Cham, as well as the intensification of development and marketing
activities, in particular for the market launch of the new 'BARnamic'
product family of speciality papers. Finally, the Group was able to secure
the support of the Commune of Cham and the canton of Zug in planning the
transformation of the paper mill site in an attractive new area of the
town.

Orderly withdrawal from the Industrial Release area
For the first half of 2012, sales volumes for silicone-base paper for
release liners in graphical applications for adhesive tape and stickers, in
which the Cham Paper Group is withdrawing from the production and
distribution of the CCK Clay Coated Kraft area, stood at around 7% below
the previous year (turnover of -12%). Mutually satisfactory solutions were
found for all customers. For those who had not found new suppliers as of
July 2012, reserves were produced to guarantee contractually agreed
deliveries until 2013. Paper Machine 4 in Cham, which was used to
manufacture these products, was finally taken out of service as planned on
25 June.

Consumer Goods still developing well
The Consumer Goods product area is continuing to provide a solid basis
within the Group. The volumes sold experienced an increase of one percent
despite a streamlining of the portfolio. The packaging solutions and
tobacco papers are of a high standard and still form the benchmark in the
industry. The launch of 'BARnamic' and the success we aspire to achieve
with this product family is vitally important to confirm that Cham Paper
Group has been successful in its development activities. With the new
barrier-papers from the 'BARnamic' family, which are produced in
Switzerland, the Cham Paper Group may have a unique selling point for some
time to come. Naturally, it is expected to take several years before we see
demand for large volumes of these innovative papers, however.

Digital Imaging significantly expand services
The still small yet high-margin division of digital imaging is marked by
continued success, especially in Transjet paper for textile sublimation
printing. The sales of this flagship product increased again by 15% in the
first half of the year. This is also a growing demand for consultancy
services in this particular area. To provide customer service in textile
printing, the Group maintains an application technology department in Cham,
which underwent a purposeful expansion in the first half of the year. A
range of printers, ink systems, software solutions, transfer presses and
calendars are available to realistically replicate customer processes and
to assist in process optimisation.

Structured personnel reduction
In February, management and its social partners in Cham approved a
comprehensive social plan that set out the framework conditions for a
socially responsible reduction of headcount in Cham from almost 320 at the
end of 2011 to around 100 by the beginning of 2014. The support measures on
offer, such as job centres and training opportunities, were appreciated and
have been actively used. By the end of the period, a total of 115 employees
were affected, nearly one third of whom had fortunately found a new job
prior to receiving their notice.

Strong balance sheet and more profound net current assets
Net current assets have decreased year on year by CHF 23.5 million to CHF
76.4 million, not least thanks to lower inventories. At the same time, the
group generated a positive free cash flow of CHF 4.4 million (previous year
CHF 12.0 million) in the first half of the year. For the warehouses in
Industrial Release, fixed purchase contracts exist with each customer. With
the decommissioning of the first paper machine and the outflow from the
warehouses, the net current assets will be reduced significantly in the
second half of the year. Net debt was further reduced in the period under
review to CHF 21.2 million. For some of the credit agreements, better
conditions were also achieved. By the end of the period, the Group had a
cash position of CHF 47.6 million, with a healthy equity ratio of 39.5% as
of 30 June 2012.

New additions to the management structure
As of 1 September 2012, Marcello Di Giacomo will be taking over the
leadership of the Carmignano site and will become a member of the Cham
Paper Group's board of directors. Mr Di Giacomo joins us from
Kimberly-Clark, where he managed a site in Italy. He has a profound
knowledge of the paper industry and a track record in corporate management
acquired in his earlier activity in various European countries. Over the
next 18 months, the Carmignano site will become the most important
production facility in the Cham Paper Group and the backbone of an
efficiency-oriented production and logistics platform in the eurozone. CEO
Peter Studer, who has led the company temporarily since 1 December 2011,
will also take on the additional role of Group Sales Director from 1
September. He will replace Christine Arnet, who has been responsible for
Sales for the last 15 months and will be pursuing a new direction outside
of the company. The Sales division is to be reorganised in order to reflect
the differing orientations of the sites in Italy and Switzerland, as well
as the innovation centre in Cham.

Important intermediate step in the rezoning of the premises at Cham 
On 12 June 2012, Cham town council voted unanimously in favour of the Cham
Paper Group's application to rezone the paper mill site to create a new
district of the town to live and work. In addition to a broad overhaul of
the basic principles, a vision with set targets is to be created and
approved. Eventually, the Commune of Cham and the Cham Paper Group will
jointly hold a competition as part of an urban development study brief. The
necessary planning resources will then be created and submitted in a
referendum to the people of Cham. In August 2012, the Board of Directors
assigned management the task of planning a new innovation and coating
centre, located away from the current company site, in or around Cham.

Forecast
The restructuring process within the Cham Paper Group remains a challenge
and will continue to place demands on the company for some time. The
persistence of the debt crisis and its consequences for the economy confirm
that we are adopting the right approach. From a current perspective, we are
well on schedule to complete the realignment of our paper activities by the
end of 2013. We anticipate a continued positive development of demand for
our core products and in this transitional phase a stable result for the
whole financial year.

For the full semi-annual report (German only), please go to our website:
www.cham-group.com, Investor Relations/Financial Reports.

Please note: Today, 17 August 2012, at 11:00 CEST, there will be an analyst
conference call (conference ID: 4558999) with CEO Peter Studer and CFO
Patrick Schmid to discuss the half-year results. To take part, call +41 22
592 73 12.


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

Information and Explaination of the Issuer to this News:

For further information please contact
Media and IR office Cham Paper Group Holding AG
c/o Dynamics Group
Edwin van der Geest / Philippe Blangey
Email media@cham-group.com and/or investor@cham-group.com
Phone +41 43 268 32 32
Swiss Security Number / ISIN / Ticker
Registered Share Cham Paper Group Holding AG 193 185 / CH0001931853 / CPGN

Cham Paper Group
Cham Paper Group is a leading manufacturer of coated speciality papers. The
Group generates value added for its customers by providing finishing-based
functional capabilities. Founded in 1657, at its three locations in
Switzerland and Italy the company develops and manufactures speciality
papers for use in the consumer goods, Industrial Release and Digital
Imaging sectors. The consumer goods sector 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
sector, 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. In addition to large-format
inkjet papers for indoor and outdoor applications, the Digital Imaging
sector also includes sublimation papers for digital textile printing. Cham
Paper Group has benefited from the trend for sustainable products and is
well established on the market thanks to the company's technological
innovation. Cham Paper Group (stock exchange symbol: CPGN) is listed on the
SIX Swiss Exchange as an independent company.

17.08.2012 News transmitted by EquityStory AG. 
The issuer is responsible for the contents of the release.

EquityStory publishes regulatory releases, media releases on the capital 
market and press releases.
The EquityStory Group distributes authentic and real-time financial news 
for over 1'300 listed companies. 
The Swiss news archive can be found at www.equitystory.ch/news

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