cph 2022 interim results: First-half net sales and net result substantially improved

“Demand for our products was strong in all three of our business divisions in the first half of 2022 and our production facilities were well utilized, despite the adverse impacts of the war in Ukraine, the coronavirus measures in China and the further challenges on the raw materials procurement front,” says Peter Schildknecht, CEO of the CPH Group. Group net sales for the period totalled CHF 360 million, an increase of 48% on the prior-year period, or of 51% excluding currency factors.

Chemistry facilities fully utilized
The products of the Chemistry Division were in sizeable demand in the first-half period, particularly the molecular sieves used to purify ethanol, natural gas and industrial gases and to concentrate industrial oxygen. Order volumes were strong, and the high utilization of the division’s production facilities sometimes led to longer delivery times. Net sales for the period amounted to CHF 56.4 million, up 18.9% on the first half of 2021.

Paper back in profit
With production volumes reduced by both permanent capacity closures and a strike lasting several months at one of the Paper Division’s competitors, the Western European graphic paper market showed favourable first-half developments. At the same time, the costs of procuring the division’s prime raw materials of recovered paper and waste wood saw further double-digit increases, and the costs of energy and auxiliary materials also continued to rise. The trends were reflected in higher paper prices, and the first-half net sales for the division of CHF 187.6 million were a 78.0% improvement on the prior-year period.

Packaging reports high order volumes
Demand for pharmaceutical packagings was high in the first-half period, especially within Europe. Numerous pharmaceuticals manufacturers also added to their packaging stocks, fearing possible future unavailabilities. All the Packaging Division’s production facilities were well utilized, and order volumes were high. With higher product prices and sales volumes and with a growing proportion of high-barrier films sold, the division raised its first-half net sales 27.5% to CHF 115.8 million.

Rising raw materials, energy and transport costs
The first-half period saw further substantial increases in raw materials, energy and transport costs. Waste paper remained in short supply, and recovered paper prices showed no signs of declining. Quite the opposite, in fact – not least because waste paper collected together with cardboard came increasingly to be used by the cardboard production sector to alleviate its own raw materials shortages. Other raw materials such as plastics and auxiliary materials also rose in price as a result of the higher energy prices or shortages in supplies. Material deliveries were further disrupted by a lack of sufficient transport capacities. All three business divisions were able to pass most of their increased raw materials, energy and transport costs on to the market in the first-half period.

The Paper and Packaging divisions were able to reverse their margin declines of the prior-year period, and the CPH Group raised its first-half EBIT from CHF 5.7 million to CHF 51.9 million. Some CHF 5.5 million of this EBIT improvement is attributable to the lower depreciation required following the fixed asset impairment at the end of 2021. The net result for the period was improved from CHF 5.9 million to CHF 47.5 million.

Net debt fully eliminated
With an equity ratio of 55% the CPH Group remains in sound financial health. Net debt was fully eliminated in the first-half period, and the Group now reports net cash of CHF 12.6 million.

2022 outlook subject to numerous uncertainties
The prospects for the second half of the current year are subject to several uncertainties. These include the impact of the war in Ukraine on energy supplies, the possible effects of the further course of the coronavirus pandemic in supply chain terms and the ramifications of the central banks’ interest rate increases in response to the present inflation. The OECD has lowered its forecasts accordingly, and now expects global economic growth for 2022 to amount to around 3%.

“The availabilities and the price trends of raw materials, energy and transport capacities will have a major influence on our further business performance,” concludes Peter Schildknecht. “Provided the broader economic environment doesn’t worsen, our full-year group net sales for 2022 will be substantially higher than last year’s, and we should report a group EBIT for the year in the high double-digit millions. And, barring the impact of any currently unexpected factors, our net result for the year should be in a similar range.”