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Bloomberg   CRI FP
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From an industrialist to a luxury player
Upside 36.3%
Price (€) 10.36
Market Cap (€M) 258
Perf. 1W: 1.77%
Perf. 1M: -12.9%
Perf. 3M: -7.83%
Perf Ytd: -11.3%
10 day relative perf. to stoxx600: 8.45%
20 day relative perf. to stoxx600: -13.2%
Earnings/sales releases23/03/2015 11:34

Faster forward


The FY2014 earnings delivery is a strong one with operating earnings up 59% to €22.9m on sales up a comparatively modest 2.5%. Net earnings are also well above expectations at €10.8m. Shareholders’ equity at €182.6m stands substantially above forecasts as it combines strong earnings and the positive translation impacts of having substantial operations in the $ area. With a net cash position of €9.3m, Chargeurs is on a very strong footing. This is also confirmed by the payment of a €0.2 dividend, after an 8-year dry season. This obviously is a strong signal coming from a conservative management.


The very pleasing dimension in these 2014 earnings is the jump in profitability of the Interlining operations. This was unexpected. It adds to the already good health of the Protective Film unit.

The already successful Protective Film operations have combined continuing volume gains driven by product launches and recovery in the construction business (a primary type of clients) most notably in the US. Volume gains have been compounded in their positive impacts by polyethylene’s (an input) declining prices and the strong dollar. Operating margins have shot from 5.6% in 2013 to 8% in 2014. The outlook is for the input effect to be a one-off (in effect polyethylene price swings are passed through) but volume gains and a better mix (new launches) should see operating margins edge up higher by possibly 50-100bp. As a reminder Chargeurs’ Protective Films has yet to crack open the potentially huge car market.

Interlining, a long-time victim of extreme competition in the textile industry and the resulting drive for the bottom, price-wise and quality-wise, has managed to buck the trend. In textile interlinings, the shift to lesser volume but higher quality demand seems to have paid off. On top, Interlining appears to have benefited from exploring fresh markets starting with the use of technical textile in advertising usage. This is only beginning and seems to have legs. Interlining’s operating margins have more than doubled to 3.6% on … sales down 3.6% due to the negative impact of being exposed to the Argentine peso. Although management is keen to stress that a lot of work is still needed to capitalise on all the potential provided by technical textile applications, a return to historical operating margins at 5% is no longer out of the question. The question has “only” become: when?

Wool-related operations have also shown a pretty brisk picture in 2014. A sharp increase in volume (up 7%) has offset declining euro prices (down 2%) while the shift to a pure, capital light commercial operation is proving effective in cancelling risks. The 3.2% operating margin recorded in 2014 (vs. 2.1% in 2013) may well be sustainable, provided the fall in crude prices does not increase too quickly the relative competitiveness of chemical fibres (which account already for the bulk of the world’s textile consumption).

In 2014, Chargeurs brought down its net debt to €-9m but nevertheless still recorded heavy interest charges on its gross banking debt. This is going to be slashed through renegotiations mostly completed in 2014.


We are positively impressed by the speed at which Chargeurs is regaining its nominal profit capability. Our earnings need to be cranked up as the holding company is one year ahead of its initial objectives. The going forward will combine presumably a degree of volume gains (QE support to the real world), $ positives (Protective Films US operations) and possibly a small additional impact from cheaper oil. The enormous discount of the share to its NAV and book value can no longer be justified by weakish operations. The 100% upside potential has been made relevant by this 2014 recovery.


15 May 15 Target Change
Chargeurs Redux

23 Mar 15 Earnings/sales releases
Faster forward

10 Feb 15 Earnings/sales releases
2014 sales above expectations

18 Nov 14 Earnings/sales releases
Volume growth confirmed

03 Sep 14 Earnings/sales releases
Sparkling H1 results from Protective Film busin...

12 May 14 Earnings/sales releases
Chargeurs has released Q1 sales up 1.9% pro-f...

09 May 14 EPS change
Solid operations and zero debt

11 Mar 14 Earnings/sales releases
Solid operations combine with zero debt