Chargeurs SA has released a very strong set of figures for Q1 17 with lfl sales up 5.6% (excluding Luxury Materials, see table below) and pulled by the +10.2% of Protective Films, the key business of the firm.

 

For Q1 sales only releases, the information is only in a summary format but it is clear that the 10.2% lfl growth posted by the Protective Films business is an excellent figure.

The group combines better volumes with firming up prices (as would be expected from a cyclical industry) but also seems to benefit from its R&D efforts and ever better mix as a result.

Chargeurs SA is also purchasing two very small companies (combined 2016 turnover of €2.4m, expected to be up strongly in 2017) that supply equipment (“laminators”) improving the productivity of temporary protective films clients.

Such equipment will be sold to clients as a solution and improve the overall offer of Chargeurs, presumably creating as well more stickiness (so to say in this industry).

The yoy decline of Fashion Technologies is a non-event to the extent that 2016 saw an excessive proportion of the business booked in Q1. 2017 is better balanced with limited overall growth and a strong focus on bigger fast-fashion clients.

Here again Chargeurs is confirming its strategy of standing closer to bigger fashion groups by opening capacity next to their plants (new Ethiopian unit due on stream this year).

Technical substrates is in line while the Luxury Goods turnover surge has no impact on margins.

These strong Q1 sales figures help back a 7% upgrade to our 2017 EPS forecasts. The issue for the following years is that by 2017 it will have reached peak margins for the last 11 years.

More is certainly possible but will presumably depend on successful acquisitions that cannot be discounted at this stage.