The 2023 business year - A robust result in a challenging environment

The CPH Group generated net sales of CHF 624 million for 2023, 14.0% down on the previous year. While the Group’s Chemistry and Packaging divisions set further sales records, net sales for the Paper Division saw a substantial decline. At constant currency, group net sales for 2023 were 10.4% below their prior-year level.

“Thanks to continuing strong demand for their products, our Chemistry and Packaging divisions were able to raise their net sales in 2023 to new record highs,” says Dr. Peter Schildknecht, CEO of the CPH Group. “At our Paper Division, however, a combination of lower paper prices and reduced sales volumes resulted in a sizeable net sales decline. Despite the challenging environment, though, we are able as a group to report our second-best-ever annual EBIT and net result.”

Chemistry: double-digit net sales and EBIT growth
The Chemistry Division generated net sales of CHF 124 million in 2023, a 12.6% increase on the previous year or an 18.2% improvement at constant currency. Molecular sieves for use inapplications and the energy sector and deuterated products for use in the pharmaceuticals segment, laboratory analyses and OLED displays all remained in demand, while declines were seen in the demand for the division’s products from the construction and medicinal sectors. The division expanded the capacities at its Rüti site and raised the efficiency of its US and Chinese operations. Thanks not least to a firm focus on high-value products, EBIT was raised to a new record high of CHF 16 million, a 14.1% improvement on the previous year.

Paper: steep decline in demand, but EBIT still solid
In a market which saw declines in demand of more than 20%, the 371 300 tonnes of paper which were sold by the CPH Group’s Paper Division in 2023 were below prior-year levels. Despite this, however, the division was able to further increase its share of the European market. With the lower sales volumes combining with strong downward pressure on paper sales prices, the division’s 2023 net sales were 31.7% down on the previous year at CHF 262 million. Net sales declined 29.1% year-on-year at constant currency. Divisional EBIT for the year amounted to CHF 31 million – a solid earnings result, but well below the record level of 2022.

Packaging: net sales and EBIT at new record highs
Once again, the production facilities of the Packaging Division were operated at close to full capacity throughout 2023. The division benefited from record levels of orders at the end of the previous year. The higher sales volumes helped generate record net sales for the year of CHF 237 million – a 2.9% improvement on 2022, or a 7.1% increase at constant currency. With pharmaceuticals manufacturers’ procurement resuming more normal practices, the division’s order volumes returned to pre-COVID levels. New slitting facilities commenced operations in Germany and Brazil towards the end of the year. The division’s very high capacity utilization and its broad product mix of films with various barrier properties both impacted positively on EBIT for the year, which was raised 52.6% to CHF 36 million.

Net result of CHF 79 million
Group EBITDA for 2023 amounted to CHF 102 million, a CHF 29 million year-on-year decline. After ordinary depreciation and amortization of CHF 19 million, group EBIT totalled CHF 83 million. The net result after taxes amounted to CHF 79 million (prior year: CHF 101 million). The CPH Group repaid the remaining portion of its CHF 100 million five-year 2% corporate bond upon the bond’s maturity in October 2023. The repayment was effected from existing cash. TheCPH Group remains in very sound financial health, with an equity ratio of 73%. The Group held year-end net liquid assets of CHF 107 million.

Investments in the divisions
The CPH Group invested CHF 35 million in fixed assets in the course of 2023 to further increase capacities in its Chemistry and Packaging divisions and further enhance the efficiency of its production facilities in all three divisions. Cash flow declined from CHF 129 million to CHF 90 million, while free cash flow increased from CHF 68 million to CHF 92 million. Annual personnel cost rose slightly to CHF 103 million. With capacities further expanded, year-end headcount increased from 1 181 to 1 195 employees.

Market entry in India
The CPH Group took a further step in its international expansion strategy in January 2024 with the acquisition of the Indian-based Sorbead India and Swambe Chemicals company, which is active in the molecular sieve and gel product segments. The acquisition gives the Chemistry Division its own presence in the Indian chemicals and pharmaceuticals markets, and further expands the division’s product range. The CPH Group also aims to establish its own company in India to share in the subcontinent’s strong business growth. The purchase transaction is expected to close in the second quarter of 2024.

Dividend of CHF 4.00 per share to be proposed
The Board of Directors will recommend to the Annual General Meeting in Lucerne on 20 March 2024 that a dividend of CHF 4.00 (prior year: CHF 4.50) per share be distributed for the 2023 business year. This would represent a dividend yield of 4.7%.

Outlook for 2024: many uncertainties remain
According to the forecasts of the International Monetary Fund (IMF), the global economy should grow by 3.1% in 2024. Following the continued interest rate hikes to help counter inflationary trends in 2023 and the recent uncertain market developments, the broader business prospects are presently hard to read. The continuing economic uncertainties and the geopolitical conflicts in Eastern Europe, the Middle East and Asia pose further questions in an already far-from-stable economic environment.