EQS-News: Report on CPH: FY2020 earnings update
This report is published by Research Dynamics, an independent research boutique
EQS Group-News: Research Dynamics / Key word(s): Research Update Report on CPH: FY2020 earnings update 25.02.2021 / 07:13 This report is published by Research Dynamics, an independent research boutique Sound operating performance amidst a harsh environment Segmental performance Packaging: Net sales improved by 5.9% YoY (excluding currency: +10.7%) to CHF 162.3mn (CHF 153.2mn). Unlike the Paper Division, the Packaging Division benefited from the pandemic due to the massive jump in demand for medicinal products for which the company supplies packaging materials. The division that supplies films for blister packs used in the pharmaceuticals' industry experienced record levels of new product orders. Accordingly, EBITDA improved 17.2% YoY to CHF 27.8mn. The segment EBIT also increased to CHF 21.6mn (CHF 17.2mn) and the corresponding margin improved by 210bps YoY to 13.3%. The sizable decline in raw material prices also aided improvement in the segment's profitability. This aside, with an aim to cater to high growth markets like Latin America, the company is investing in a new coating plant in Brazil. Chemistry: Net sales declined 6.3% YoY (excluding currency impact: -0.7%) to CHF 73.3mn due to weaker demand from key end-user industries like Energy and Industrials. However, incoming orders for molecular sieves employed in the concentration of medical oxygen reached new record levels and partially offset the weakness elsewhere. The division undertook vigorous cost-cutting measures that led to a flat YoY EBITDA of CHF 9.5mn. EBIT however, improved 4.7% YoY to CHF 4.6mn, and the corresponding margin expanded to 6.3% (5.6%). Estimate changes Valuation and conclusion The global economy is expected to recover swiftly in 2021e with the IMF forecasting 5.5% growth in 2021. While this bodes well for the business in general, in the short-term, we expect the uncertainty to continue. Specifically, the Paper Division is expected to be under pressure due to an unfavourable operating environment. However, the Packaging and Chemical Divisions are expected to be the key beneficiary of a revival in the economic activity and should offset the expected weakness in the Paper Division to some extent. Operations aside, management's focus on offering sustainable solutions and simplification of the corporate structure should improve investor sentiment going forward. We remain encouraged by management's commentaries which did not include any significant changes to the mid-to-long-term goals. Moreover, we expect the group-level cost optimization initiatives to offer support to the company's stock price. Additional features: File: CPHN_FY20 Results_25.2.2021
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