Shima Seiki

Free membership

Receive our weekly Newsletter
and set tailored daily news alerts.

Fibres/​Yarns

Lenzing Group achieves higher cost-saving targets in 2014

According to the manufacturer, operating results could be substantially improved thanks to the implementation of the excelLENZ programme.

25th March 2015

Knitting Industry
 |  Lenzing

Knitwear, Sports/​Activewear, Collections

According to the manufacturer, operating results could be substantially improved thanks to the implementation of the excelLENZ programme and its subsequent intensification.

The main reasons for this development were the sale of the Business Unit Plastics in the course of 2013. On a like-for-like basis of continuing operations, consolidated revenue remained at a constant level, up by 0.3% from EUR 1,859.0 million in 2013.

Countermeasures

Lenzing generated a significant improvement in its operating results, as EBITDA of the Lenzing Group rose by 24% from the challenging 2013 financial year from EUR 193.9 million to EUR 240.3 million. The EBITDA margin climbed to 12.9%.

This substantial rise in earnings can be attributed to massive cost savings achieved within the context of the excelLENZ programme, improvements in the product mix and the new Tencel fibre production plant in Lenzing accompanied by an overall leaner organizational structure.

“Our cost reduction programme led to savings far in excess of EUR 100 million in 2014,” commented Peter Untersperger, Chief Executive Officer of the Lenzing Group. “We will generate structural and sustainable savings of about EUR 160 million p.a. by 2016, about double the amount as originally budgeted. The operating results in 2014 show that Lenzing is well on track to assume cost leadership in the man-made cellulose fibre industry again”.

Difficult market environment

Robert van de Kerkhof, MBA, CCO. © Lenzing“We also do not anticipate any far-reaching price recovery in 2015“, said Robert van de Kerkhof, Chief Commercial Officer of the Lenzing Group. “The massive drop in oil prices put downward pressure on polyester prices, which in turn additionally burdened viscose fibre prices.”

“This was accompanied by cotton inventories bursting at the seams and ongoing surplus production capacities of China’s viscose fibre industry. In addition to cost optimization measures, we will focus more intensively on promoting our high quality specialty fibres, in particular Tencel and Lenzing Modal.”

By leveraging the price premiums of Tencel and Lenzing Modal compared to standard viscose fibres and due to currency effects, Lenzing fibre selling prices rose once again in the fourth quarter of 2014 for the first time compared to previous quarterly periods. The successful ramp-up of the Tencel jumbo fibre production plant at the Lenzing site in Upper Austria in the second half of 2014 made a major contribution to this development.

Outlook for 2015

The difficult economic environment affecting the fibre industry hardly changed in the first weeks of 2015 compared to the third and fourth quarters of the year under review. The difficult market environment on the market for standard viscose fibres is expected to continue in 2015.

From an operational perspective, a further improvement of the product mix in the textile segment, especially increasing specialty sales, such as Lenzing Modal and Tencel fibres, will be at the heart of Lenzing’s efforts.

The Lenzing Group is aiming to further consolidate its global competitive positioning by strengthening the commercial organization, resolutely continuing its excelLENZ programme in 2015 and by restructuring the technical areas.

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