Annual Report 2012 - Investor Relations

8Letter to ShareholdersA challenging year characterisedby reorganisationPhilipp BuhoferChairman of the Board of DirectorsDear Shareholders,For Cham Paper Group, the 2012 financial yearwas characterised mainly by the significant challengesthat had to be overcome during the first oftwo transition years, in order to be able to implementthe Group’s transformation process, whichwas introduced at the end of 2011. In addition to theformidable internal processes, it was vital to focussimultaneously on market cultivation and innovationmanagement. Despite a difficult economic environmentthe Group succeeded in remaining on course.In 2012, as a result of its reduction of capacity, theCham Paper Group’s net turnover fell by 9.6% toCHF 279.9 million, however it made encouraginggains in all core product groups. Due to the sharp risein energy costs and considerably higher purchasingprices for chemicals, which could not be passed ondirectly to customers in the form of price increases,the gross margin fell from 33.9% to 33.3%. The operatingresult (EBIT) amounted to CHF 3.2 million, thenet result to CHF –1.2 million. Thanks to the free cashflow of CHF 8.1 million achieved, the Group’s cashreserves remained unchanged at 49.0 million despitea reduction of bank loans by CHF 8.0 million and thebalance sheet remained stable.The 2012 financial year was extremely challenging for theManagement and employees of the Cham Paper Group.The company, which is undergoing a transformation process,had to simultaneously overcome many challenges,particularly at the site in Cham: the planning and introductionof socially acceptable staff cuts, the orderly withdrawalfrom the CCK markets of the Industrial Releasesegment, the preparation of the transfer of entire productgroups (Innerliner in particular) to Carmignano, the evaluationof raw paper suppliers for products, which shouldstill be coated in Cham, and the stepping up of developmentand marketing activities.Industrial Release: Growth in glassines and orderlywithdrawal from CCKWith an increase in turnover of 12.5%, the demand forglassine products made good progress and accountedfor another peak in the sales quantity of Condino mill. Inthe case of silicone-based papers for Release Liners fromCham, where the Group is withdrawing from the productionand sale of the CCK division (Clay Coated Kraft) forreasons of cost-effectiveness, the turnover in 2012 fellby 11% compared to the previous year, as expected. Forthose customers who had not yet found new suppliers byJuly 2012, supplies were produced, in order to be able toguarantee the contractually agreed deliveries until 2013.In February 2013, a cooperation agreement was concludedwith the Austrian speciality paper manufacturer Brigl& Bergmeister. This company will take over the technologicalknowledge and experience for part of this productgroup and will supply customers from the second half ofthe year.Consumer Goods: Continuing positive developmentof demandThe Consumer Goods product sector continued to makegood progress, despite the increasing pricing pressure,and provided a less cyclical, more solid base within theGroup. Our packaging solutions and tobacco papers meethigh standards and continue to set the benchmark for the