The Lenzing Group has generated a substantial increase in revenue and earnings in the first nine months of 2016, compared to the first nine months of 2015, with significant improvements of cash flow and thus a reduction of net debt, which provide the basis for further investments.

The net profit for the period at EUR 162.1 million was 91.1% higher than in the first three quarters of 2015. Consolidated revenue rose by 8.2% in the first nine months of 2016 to EUR 1,578.4 million year-on-year.

Next to slightly higher sales volumes it was primarily higher selling prices of all three fibre generations – Viscose, Modal and Tencel – that contributed to higher revenues, the company reports. In the third quarter, it was specifically the sharp increase in viscose prices that fuelled the results.

Good business development

Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) rose by 52.2% to EUR 320.6 million. This corresponds to an EBITDA margin of 20.3%, up from 14.4 year-on-year. Earnings before interest and tax (EBIT) of the Lenzing Group almost doubled to EUR 221.7 million. Accordingly, the EBIT margin increased to 14% from 7.7% previously. Earnings before tax (EBT) totalled EUR 207.1 million, up 84.2%.

In the first nine months of 2016, the good business development resulted in a twofold increase in the operating cash flow to EUR 374.9 million. Next to the very strong operational performance it was particularly good working capital management that fuelled cash generation, according to the manufacturer.

As a consequence, key balance sheet indicators further improved. At the end of September 2016, net financial debt fell to EUR 64.2 million, compared to EUR 327.9 million as of 31 December 2015. Net gearing was down to 4.9% from 26.9% previously.

Investment programme

The strong balance sheet supports the investment programme already initiated: The expansion of specialty fibre production by 35,000 tons per year at the Heiligenkreuz, Lenzing and Grimsby sites is already underway.

Investment volume will total about EUR 100 million. In addition, pulp production will be modernized in Lenzing and Paskov by 2019, also at a cost of around EUR 100 million. This will lead to additional capacities of approximately 35,000 tons annually, the company reports.

“The Lenzing Group continues to implement the sCore TEN strategy with great discipline and the excellent business performance further helped our already strong balance sheet,” said Stefan Doboczky, CEO of Lenzing AG. “These nine months underpin our confidence and are an excellent basis for the implementation of our ambitious growth program.”

Outlook

The macroeconomic environment remains volatile especially given the recent political events, according to the manufacturer. Against this background the fundamentals of the wood-based cellulosic fibre industry should stay favourable in the mid-term.

Lenzing, however, expects viscose prices to be notably lower than the high peaks of the third quarter due to seasonality effects. Under the assumption of unchanged positive fibre market conditions and foreign exchange rates Lenzing says it aims to deliver excellent business results in the financial year 2016.

www.lenzing.com

Further reading

Lenzing invests EUR 100 million in pulp production