Shima Seiki

Free membership

Receive our weekly Newsletter
and set tailored daily news alerts.

Fibres/​Yarns

Lenzing reports sales and earnings decline in 2013

Lenzing Group, a market leading supplier of man-made cellulose fibres, has reported a significant backdrop of weak fibre selling prices as well as earnings decline, despite new record shipment volumes. The company is planning to deal with this situation by implementing a comprehensive cost optimisation programme, as well as making adjustments to the business strategy in order to minimise the risk. “We assume that the difficult market environment will continue in 2014 and perhaps far into the year 2015. For this reason, we have implemented timely and comprehensive countermeasures,” explained Peter Untersperger, Chief Executive Officer of Lenzing. “We are massively reducing costs at the same time adding impetus to the marketplace by promoting our specialty fibres Tencel and Lenzing Modal.”

21st March 2014

Knitting Industry
 |  Lenzing

Knitwear, Sports/​Activewear, Swimwear/​Beachwear

Lenzing Group, a market leading supplier of man-made cellulose fibres, has reported a significant backdrop of weak fibre selling prices as well as earnings decline, despite new record shipment volumes.

The company is planning to deal with this situation by implementing a comprehensive cost optimisation programme, as well as making adjustments to the business strategy in order to minimise the risk.

“We assume that the difficult market environment will continue in 2014 and perhaps far into the year 2015. For this reason, we have implemented timely and comprehensive countermeasures,” explained Peter Untersperger, Chief Executive Officer of Lenzing. “We are massively reducing costs at the same time adding impetus to the marketplace by promoting our specialty fibres Tencel and Lenzing Modal.”

Sales and earnings decline

EBITDA totalled EUR 225.4 million, down from the adjusted figure of EUR 352.4 million in 2012, but in line with the most recently published guidance for the year.

The EBITDA margin amounted to 11.8%, compared to the adjusted level of 16.9% in the previous year. Consolidated earnings before interest and taxes (EBIT) amounted to EUR 86.4 million in the 2013 financial year, compared to the prior-year level of EUR 231.5 million. The EBIT margin was 4.5%, down from the adjusted figure of 11.1% in 2012.

Consolidated sales in the 2013 financial year fell by 8.7% from EUR 2.09 billion to EUR 1.91 billion, which can be attributed to the drop in fibre selling prices, the company reports. There was also a loss of external sales totalling EUR 61.8 million, as a consequence of the complete conversion of the Paskov pulp plant in 2013 from paper to dissolving pulp, which is used within the Lenzing Group.

Comprehensive measures

The first cost optimisation programme entitled excelLENZ 1.0 was launched in the beginning of 2013, generating savings of approximately EUR 40 million.

This was followed by excelLENZ 2.0, which was initiated in November and is now being implemented. Cost savings generated by this programme of about EUR 60 million have been budgeted for the 2014 financial year.

In the light of current market conditions, the revised Lenzing strategy focuses on risk optimisation and further promoting highly profitable specialty fibres. The construction of the new Tencel production plant at the Lenzing site is the only capacity expansion project being currently implemented by the Lenzing Group.

Sales increases for specialty fibres

The focus for the company is now on expanding the share of specialty fibres in relation to total sales volumes. “In 2013 our specialty fibres Lenzing Modal and Tencel achieved an unchanged and attractive price premium of 50% vis-à-vis standard viscose fibres against the backdrop of good volume demand,” commented Friedrich Weninger, Member of the Management Board.

“Moreover, we have opened up new sales markets and regions for Tencel in preparation for the start-up of production at the new Tencel plant in Lenzing, and have further expanded our innovation pipeline.”

However, Lenzing was only able to partially counteract the weak price development for standard viscose fibres by increasing total sales volumes. On balance, fibre sales volumes reached a new record level of about 890,000 tons in 2013, a rise of 10% from the comparable level of 810,000 tons in 2012.

Outlook 2014

Hardly any change was perceptible in the difficult business environment impacting the business operations of the Lenzing Group in the first weeks of 2014 compared to the fourth quarter of 2013.

No major improvement is in sight with respect to the price situation on the global fibre market. According to Lenzing, the reasons are the historically high cotton inventories, high cotton production and surplus capacities in China for manufacturing man-made cellulose fibres.

www.lenzing.com

Latest Reports

Business intelligence for the fibre, textiles and apparel industries: technologies, innovations, markets, investments, trade policy, sourcing, strategy...

Find out more