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Fibres/​Yarns

Lenzing reports solid business development

The Lenzing Group is currently operating in a challenging environment. Against this background, we are satisfied with the solid business development and the corporate strategy sCore TEN has a positive impact.

7th November 2018

Knitting Industry
 |  Lenzing

Knitted Outerwear, Intimate Apparel, Hosiery/​Socks, Sports/​Activewear

The Lenzing Group recorded a solid business development in the first three quarters of 2018. The decline in revenue and earnings compared with the same period of the previous year was essentially based on a mix of lower prices for standard viscose, more unfavourable exchange rates and price increases for key raw materials, the company reports. The Lenzing Group’s strategic orientation with a focus on specialty fibres had a positive impact in this environment.

Net profit for the period dropped by 39% from EUR 219.3 million in the previous year to EUR 133.8 million. Revenue decreased by 5.2% to EUR 1,636.2 million over the comparative period of the previous year. Apart from the high starting base, this was primarily attributable to the expected challenging market environment for standard viscose, less favourable exchange rates and lower production volume. EBITDA recorded a decline by 26.8% to EUR 290.6 million. EBIT fell by 36.2% to EUR 190.3 million.

Management Board ”“ Lenzing Group Heiko Arnold, CTO Robert van de Kerkhof, CCO Stefan Doboczky, CEO Thomas Obendrauf, CFO. © Lenzing AG

“The Lenzing Group is currently operating in a challenging environment. Against this background, we are satisfied with the solid business development and the corporate strategy sCore TEN has a positive impact. The new production line in Heiligenkreuz started up successfully and customers’ feedback has been positive,” said Stefan Doboczky, CEO of the Lenzing Group. “While many viscose producers are faced with a very tense profit situation, we are well positioned due to our specialty strategy and still expect a satisfactory full year.”

Key strategic measures were implemented during the first three quarters of 2018 in line with the sCore TEN strategy. The start-up of new capacities for lyocell fibres in Heiligenkreuz, the production start of Lenzing EcoVero fibres at the Nanjing site and the investment in another pilot line for Tencel Luxe filaments are important steps to accomplish the goal of increasing the share of specialty fibres in total revenue, the company adds.

Expansion of capacities

CAPEX (investments in intangible assets and property, plant and equipment) rose by 35.5% year-on-year to EUR 174.1 million in the first three quarters of 2018. This is primarily attributable to capacity expansions in Heiligenkreuz and the expansion of the existing dissolving wood pulp plant in Lenzing as well as the investments made so far in Mobile.

At the beginning of November, the takeover by the Lenzing Group of the remaining 30% of its Chinese subsidiary Lenzing (Nanjing) Fibres (LNF) from its state-owned joint venture partner NCFC was completed. The acquisition will have a negative impact on net profit of around EUR 21 million for the fiscal year 2018.

The purchase of the shares supports Lenzing’s strategic growth as a producer of specialty fibres from the renewable raw material wood in China and worldwide, the manufacturer explains.

Outlook

Demand development on the global fibre market remains positive. Lenzing expects wood-based cellulosic fibres to continue to grow at a higher rate than the overall fibre market. For 2019, Lenzing expects standard viscose markets to remain under pressure because of an ongoing oversupply and very high raw material prices. Lenzing’s specialty fibre business is expected to continue the very positive development.

www.lenzing.com

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