CPH Chemie + Papier Holding AG Investor Day Perlen, 13 th September 2018
Agenda 2.00 pm Welcome 2.05 pm Presentation Course of Business 2018 2.50 pm Break 3.00 pm Presentation Perlen Packaging 3.30 pm Factory Tour Perlen Packaging 4.30 pm Aperitif CPH Presentation 13. September 2018 2
CPH Chemie + Papier Holding AG Investor Presentation Perlen, 13 th September 2018
Contents 1 The CPH Group 2 Investment Case 3 Financial Performance CPH Presentation 13. September 2018 4
The CPH Group At a Glance CPH is a diversified Swiss-based and internationally active industrial group that was founded in 1818. The shares of its holding company CPH Chemie + Papier Holding AG have been traded on the SIX Swiss Exchange since 2001, and its founding families remain anchor shareholders today. Business divisions Chemistry Packaging Paper 16% 28% 56% Production locations CH, DE, USA, CN, BRA, BiH Net sales 469.8 2017 in CHF million EBITDA 33.8 2017 in CHF million Balance sheet total 697.1 30.6.2018 in CHF million Equity ratio 57% 30.6.2018 Net debt / EBITDA 1.2x 30.6.2018 Personnel 1 055 30.6.2018 CPH Presentation 13. September 2018 5
The CPH Group Business Divisions Division % of total net sales Chemistry 16% Paper 56% Packaging 28% Products Molecular sieves Chromatography gels Newsprint paper Magazine paper PVC mono films Coated PVdC films Strategy Differentiation Cost leadership Differentiation Brand CPH Presentation 13. September 2018 6
The CPH Group Business Divisions Division Key figures 2017 Chemistry Paper Packaging Net sales: EBITDA: Production sites: Employees: CHF 75.5 million CHF 7.3 million CH / USA / CN / BiH 302 CHF 264.1 million CHF 9.1 million CH 345 CHF 130.2 million CHF 15.5 million CH / DE / USA / BRA / CN 363 Net sales 2017 by region 7% Switzerland 27% Rest of Europe 45% The Americas 20% Asia 1% Rest of the world 15% Switzerland 81% Rest of Europe 1% Americas 3% Asia 6% Switzerland 62% Rest of Europe 16% Americas 15% Asia 1% Rest of the world CPH Presentation 13. September 2018 7
The CPH Group H1 Divisional Income Statements CPH Group Chemistry Paper Packaging in CHF million H1 17 H1 18 H1 17 H1 18 ± in % H1 17 H1 18 ± in % H1 17 H1 18 ± in % Net sales 231.7 264.1 38.0 37.3-1.9 128.1 148.1 +15.6 65.5 78.7 +20.1 EBITDA 16.5 43.3 3.6 5.5 +52.6 4.8 25.3 +431.5 8.4 12.6 +50.7 EBITDA margin in % 7.1 16.4 9.5 14.7 3.7 17.1 12.8 16.1 EBIT 1.1 27.8 1.9 3.4 +85.3-6.0 14.8 n.a. 5.5 9.6 +75.7 EBIT margin in % 0.5 10.5 4.9 9.2-4.7 10.0 8.4 12.3 Personnel 979 1 055 272 286 +5.1 345 360 +4.3 352 402 +14.2 CPH Presentation 13. September 2018 8
The CPH Group Worldwide Operations 2017 net sales by region 78% Europe 12% The Americas 9% Asia 1% Rest of the world 2017 net sales by division 16% Chemistry 56% Paper 28% Packaging CPH Presentation 13. September 2018 9
The CPH Group Strategic Objectives Objective Balanced shares of net sales among the three business divisions Higher proportion of net sales generated outside Europe Less dependency on the Swiss franc in currency terms Action Expand Chemistry and Packaging Divisions as counterbalance to Paper Expand business in markets in growth regions Expand production capacities outside Switzerland 44% 22% 70% Result 36% 16% 36% 2013 2017 2013 2017 2013 2017 Shares of Chemistry and Packaging in total net sales Proportion of net sales generated outside Europe Proportion of total costs incurred in Swiss francs CPH Presentation 13. September 2018 10
Contents 1 The CPH Group 2 Investment Case 3 Financial Performance Appendix CPH Presentation 13. September 2018 11
The CPH Group Investment Case 01 Leading market position with autonomous brands in three industrial fields 02 Diversified portfolio of products and applications provided to a longstanding customer base 03 Achieve and maintain cost leadership in the paper sales markets, sole Swiss recycler of recovered paper 04 Expansion of chemistry and packaging divisions reducing exposure to paper and lowering currency movement risks 05 Financial profile showing results of corporate strategy implementation 06 Solid equity base and stable anchor shareholders with a long-term commitment CPH Presentation 13. September 2018 12
1 Leading market position with autonomous brands in three industrial fields Division Chemistry Paper Packaging 3 1 3 Positioning Number 3 worldwide for molecular sieves for industrial applications Number 1 in Switzerland for newsprint & magazine paper and waste paper recycling Number 3 worldwide for coated barrier films for pharmaceutical applications Brand CPH Presentation 13. September 2018 13
2 Diversified portfolio of products and applications provided to a longstanding customer base Chemistry Paper Packaging Main markets Industry, Energy, Pharmaceuticals Main markets Publishing Main markets Pharmaceuticals CPH Presentation 13. September 2018 14
3 Achieve and maintain cost leadership in the paper sales markets, sole Swiss recycler of recovered paper Procurement Production Sales Water Own sources Recovered paper Former Utzenstorf volumes and sorting facility Logistics Transport Market Electricity Liberalized market Biomass power plant Own hydro power plant Heat Steam from Renergia The PM7: Europe s most advanced paper machine Productivity 2009-2017 Production volume in tonnes +74% Personnel required -12% Fixed costs in CHF -1% Cost per tonne -32% Sustainability 2013-2017 CO 2 emissions in tonnes down 68 000 to 9 700 Almost carbon-neutral operation CPH Presentation 13. September 2018 15
4 Expansion of Chemistry and Packaging Divisions reduce the exposure to paper and lower currency movement risks November 2015 March 2016 June 2016 June 2017 August 2017 October 2017 Zeochem acquires molecular sieve manufacturer ALSIO of China. Zeochem sells its Uetikon operating facility to the Canton of Zurich Perlen Packaging expands to China, opening a new coatings production plant Fertilizer production ceases at the Uetikon site after 137 years. Capacities expanded at Zeochem USA for producing molecular sieves used to purify oxygen. Zeochem takes over the business activities of Armar and strengthens its deuterated products segment. November 2017 January 2018 March 2018 August 2018 Zeochem s new production plant in Zvornik in Bosnia- Herzegovina commences operations. Perlen Packaging acquires Sekoya of Brazil and plans new finishing plant for 2018. Zeochem acquires the molecular sieve distribution activities of Yusheng Chemical in China. Zeochem moves the production of deuterated products to the new location in Rüti. According to strategic targets CPH Presentation 13. September 2018 16
5 Financial profile showing results of corporate strategy implementation 600 18% 500 15% 400 12% 300 9% 200 6% 100 3% 0 2015 2016 2017 H1 2018 Net sales (CHF millions) EBITDA margin (%) 0% CPH Presentation 13. September 2018 17
6 Solid equity base and stable anchor shareholders with a long-term commitment Equity ratio development Shareholder base (as of 31 December 2017) 100% 1,7% 5,6% 5,0% 7,2% 80% 49,9% 60% 40% 30,6% 20% 0% 2015 2016 2017 H1 2018 Uetikon Industrieholding Public shareholders Ella Schnorf-Schmid J. Safra Sarasin Investmentfonds BoD, GEM and related parties Others CPH Presentation 13. September 2018 18
Contents 1 The CPH Group 2 Investment Case 3 Financial Performance Appendix CPH Presentation 13. September 2018 19
The CPH Group Key Figures in CHF million FY 2016 FY 2017 ± in % H1 2017 H1 2018 ± in % Net sales 434.8 469.8 +8.0 231.7 264.1 +14.0 EBITDA 36.9 8.5% 33.8 7.2% -8.6 16.5 7.1% 43.3 16.4% +162.4 EBIT 5.9 1.4% 2.9 0.6% -50.8 1.1 0.5% 27.8 10.5% +2413.2 Net result (including minorities) -7.7-1.8% 16.2 3.4% n.a. -2.2-0.9% 22.6 +8.6% n.a. Cash flow 28.3 14.5-48.8 12.6 33.4 +164.4 Free cash flow 1.9 12.9 +563.4 10.2 0.9-91.5 Balance sheet total 672.4 697.6 +3.7 672.2 697.1 +3.7 Equity 380.8 56.6% 396.2 56.8% +4.1 372.6 55.4% 394.2 56.5% +5.8 Personnel 985 1 019 +3.5 979 1055 +7.8 CPH Presentation 13. September 2018 20
Chemistry Business Development Net sales 80 60 40 20 EBITDA 10 8 6 4 2 20% 16% 12% 8% 4% 0 2014 2015 2016 2017 H1 18 0 2014 2015 2016 2017 H1 18 0% CHF million CHF million % of net sales 2017 net sales by region 1st half of 2018 7% Switzerland 27% Rest of Europe 45% Americas 20% Asia 1% Rest of the world Zvornik production ramped up US and Chinese facilities fully utilized Acquisition of molecular sieve distribution activities of Yusheng Chemical in China Armar integrated Manufacture of deuterated products moved to Rüti in summer 2018 CPH Presentation 13. September 2018 21
Paper Business Development Net sales 350 300 250 200 150 100 50 0 2014 2015 2016 2017 H1 18 EBITDA 40 30 20 10 0-10 2014 2015 2016 2017 H1 18 20% 15% 10% 5% 0% -5% CHF million CHF million % of net sales 2017 net sales by region First half of 2018 15% Switzerland 81% Rest of Europe 1% Americas 3% Asia Broad balance in supply and demand prompts higher paper prices Waste paper activities of Papierfabrik Utzenstorf successfully integrated into the new APS Altpapier Service Schweiz AG Positive impact of currency exchange rate trends CPH Presentation 13. September 2018 22
Packaging Business Development Net sales 150 120 90 60 30 EBITDA 20 16 12 8 4 20% 16% 12% 8% 4% 0 2014 2015 2016 2017 2018 0 2014 2015 2016 2017 H1 18 0% CHF million CHF million % of net sales 2017 net sales by region First half of 2018 6% Switzerland 62% Rest of Europe 16% Americas 15% Asia 1% Rest of the world Record order volumes Capacities in Europe fully utilized; further transfer of work orders to China Expansion into Latin America through new holding in Sekoya of Brazil BLISTair single-use powder inhaler earns World Packaging Award CPH Presentation 13. September 2018 23
The CPH Group Consolidated Balance Sheet in CHF million 31.12.2017 30.06.2018 ± in CHF ± in % Liquid funds 80.2 74.6-5.6 Other current assets 162.1 170.8 +8.7 Fixed assets 455.3 451.7-3.6 Total assets 697.6 697.1-0.5-0.1 Current liabilities 105.4 108.6 +3.2 Long-term liabilities 195.9 194.3-1.6 Equity 396.2 394.2-2.0 Total equity and liabilities 697.6 697.1-0.5-0.1 CPH Presentation 13. September 2018 24
The CPH Group Consolidated Cash Flow Statement in CHF million FY 2016 FY 2017 ± in % H1 17 H1 18 ± in % Net result (including minorities) -7.7 16.2 n.a. -2.2 22.6 n.a. Depreciation, amortization, change in provisions 36.0-1.7 14.8 10.8 Cash flow 28.3 14.5-48.8 12.6 33.4 +164.4 Change in net working capital -6.4 17.7 9.1-5.7 Cash flow from operating activities 21.9 32.2 +47.0 21.8 27.7 +27.2 Cash flow from investment activities -19.9-19.3 n.a. -11.6-26.8 n.a. Free cash flow 1.9 12.9 +563.4 10.2 0.9-91.5 Financial and other long-term liabilities 18.8 0,6 0.6-3.1 Dividends to shareholders -3.6-3.9-3.9-3.9 Cash flow from financing activities 15.2-3.3 n.a. -3.3-7.0 n.a. Currency translation effects 0.1 0.2-0.2 0.6 Net change in cash and cash equivalents 17.2 9.8-43.0 6.7-5.6 n.a. CPH Presentation 13. September 2018 25
The CPH Group Net Debt and Leverage Leverage development Net financial debt in 2017 (CHF in millions) 8,0x 200 6,0x 6,6x 150 153,3 80.2 4,0x 2,0x 2,2x 2,2x 1,2x 100 50 73,1 2015 2016 2017 H1 18 Net debt / EBITDA 0 Financial liabilities Liquid funds + securities Net financial debt Comments Leverage strongly reduced over the past two years Net debt reduced by 11% in 2017 (82.1 => 73.1) Net debt H1 18 close to 2017 level despite CHF 24.5 million investments in business activities H1 18 Free cash flow before investments in business activities on high level (CHF 25.4 million) Net financial debt in H1 18 (CHF in millions) 200 149,8 74.6 150 100 75,2 50 0 Financial liabilities Liquid funds + securities Net financial debt CPH Presentation 13. September 2018 26
Outlook Optimistic for 2018 Chemistry Paper Packaging Conclusion of strategic realignment Transfer to Rüti of deuterated product manufacture Higher net sales and substantially improved earnings expected Newsprint and magazine paper prices expected to remain stable, but demand will continue to decline in the medium term Tangible improvements expected in net sales and earnings results Further expansion of production in Asia Integration of Sekoya and entry into service of finishing plant in Brazil Positive business trends and much-improved earnings expected CPH Group The newly-acquired companies should have a positive effect on net sales volumes in all three business divisions. Provided currency exchange rates remain stable, the CPH Group expects to report higher total net sales and an earnings result for 2018 as a whole that is a substantial improvement on the previous year. CPH Presentation 13. September 2018 27
Outlook Target Key Performance Indicators Annual organic net sales growth of 3% in the medium term Equity ratio of over 50% EBITDA margin of over 10% Liquidity of at least CHF 30-50 million Long-term average capital spending of CHF 15-20 million a year Dividend policy: payout ratio of 30-50%, depending on free cash flow CPH Presentation 13. September 2018 28
Any Questions Thank you for your attention CPH Presentation 13. September 2018 29