EQS-News: Lenzing AG: Lenzing reports significant revenue growth and solid earnings for the first half-year

EQS-News: Lenzing AG / Key word(s): Half Year Results/Sustainability
Lenzing AG: Lenzing reports significant revenue growth and solid earnings
for the first half-year

03.08.2022 / 07:30
The issuer is solely responsible for the content of this announcement.

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Lenzing reports significant revenue growth and solid earnings for the
first half-year

• Revenue up by more than 25 percent, earnings impacted by sharp rise in
energy, raw material and logistics costs
• Key projects in Thailand and Brazil successfully commissioned
• Further development of the corporate strategy with a focus on
profitable growth and accelerated transformation to a circular economy
model
• Lenzing continues to advance purposefully towards Group-wide climate
neutrality
• Earnings guidance for 2022 confirmed: EBITDA expected significantly
above the 2021 level

Lenzing – The Lenzing Group’s revenue grew by 25.2 percent year-on-year to
reach EUR 1.29 bn in the first half of 2022, primarily due to higher fiber
prices. The earnings trend mainly reflects the cost trend in global energy
and raw material markets, which affected the whole of manufacturing
industry. Energy, raw materials and logistics costs rose sharply once
again in the reporting period, after cost pressure had already risen
steadily throughout the 2021 financial year. As a consequence, earnings
before interest, tax, depreciation and amortization (EBITDA) decreased by
13.3 percent year-on-year to EUR 188.9 mn.

The strength of the specialty strategy and of brands based on innovation
and sustainable activity as well as the continued focus on measures to
improve structural earnings in all regions mitigated this negative effect.
The EBITDA margin reduced from 21.1 to 14.6 percent in the first half of
the year. Net profit for the periode decreased by 24.8 percent to
EUR 72.3 mn, while earnings per share amounted to EUR 2.36 (compared to
EUR 3.06 in the first half of 2021).

“In the first half of 2022, we have accomplished an enormous amount
together in order to achieve our ambitious growth and sustainability
goals. Thanks to considerable efforts, we can be satisfied with our
business performance given the extreme developments in global energy and
raw material markets,” comments Stephan Sielaff, Lenzing Group CEO. “The
second half of the year will continue to be characterized by elevated
levels of uncertainty and extreme challenges on the energy and raw
materials sides. Lenzing is a company with an international footprint and
for this reason is partly able to offset certain local challenges
globally, albeit at significantly higher costs. Lenzing has analyzed
conceivable scenarios and developed appropriate responses. For months, we
have been preparing as best we can for a situation of acute energy
shortages, rising prices and supply constraints, and we will continue to
do everything within our power to ensure sustainable business performance,
and to continue to be a reliable partner,” notes Sielaff.

Gross cash flow reduced by 14.9 percent to EUR 169.7 mn in the first half
of 2022, mainly reflecting the earnings trend. Due to the higher level of
working capital, cash flow from operating activities amounted to
EUR 15.2 mn (compared to EUR 199.8 mn in the first half of 2021). Free
cash flow amounted to EUR minus 372.7 mn (compared to EUR minus 224.3 mn
in the first half of 2021), which especially reflected the investment
activities related to the projects in Thailand and Brazil. Capital
expenditure on intangible assets, on property, plant and equipment and on
biological assets (CAPEX) decreased by 8.7 percent to EUR 389 mn. The
continued high level of investment volume primarily reflects the
completion of the two key projects.

Personnel changes on the Managing and Supervisory Boards

In March 2022, the Lenzing Supervisory Board announced the appointment of
Mr. Stephan Sielaff as the new Chief Executive Officer of the Lenzing
Group. As of April 1, 2022, Mr. Sielaff succeeded Mr. Cord Prinzhorn, who
took over as interim CEO in the fourth quarter of 2021. This reduces the
Managing Board from five to four members. Chief Financial Officer Mr.
Thomas Obendrauf informed the Lenzing Supervisory Board that he would not
be available for a further extension of his contract, which expired in
June 2022. The Lenzing Supervisory Board is currently working on a
replacement for him. Until a successor is appointed, Stephan Sielaff will
perform the Chief Financial Officer’s duties on an interim basis, while
Thomas Obendrauf will assist the company in an advisory capacity.

Meanwhile, the Managing Board mandate of Chief Pulp Officer Christian
Skilich was extended early by a further three years until May 31, 2026.
Personnel changes also occurred on the Lenzing Supervisory Board. Cord
Prinzhorn took over as Chairman from Peter Edelmann, who stepped down from
the Supervisory Board at his own request with effect as of April 26, 2022.

Corporate strategy further developed

A comprehensive review of the corporate strategy was also conducted in the
reporting period. As a consequence, Lenzing will continue on its
profitable growth trajectory following the successful implementation of
the two key projects in Thailand and Brazil. The focus on sustainable and
high-quality premium textile fibers and nonwoven fibers is being sharpened
further, and the transition from a linear to a circular economy model is
being accelerated. On the basis of this further development of the
corporate strategy, Lenzing also adjusted its financial targets and,
assuming that a healthy economic environment prevails, will significantly
increase its EBITDA to over EUR 1 bn by 2027, with an ROCE of over
12 percent.

Strengthening specialty fibers growth

In March, the new, state-of-the-art lyocell plant in Thailand was opened.
The production plant, which is the largest of its kind with a nominal
capacity of 100,000 tonnes per year, was commissioned as planned after two
and a half years of construction, and despite the challenges deriving from
the pandemic. The successful implementation of the project will enable
Lenzing to better meet growing customer demand for lyocell fibers, thereby
making the global textile and nonwovens industries more sustainable.

Specialty fibers are Lenzing’s great strength. By 2024, more than
75 percent of fiber revenue is to be generated from the business with
wood-based, biodegradable specialty fibers under the TENCEL™, LENZING™
ECOVERO™ and VEOCEL™ brands. With the opening of the lyocell plant in
Thailand and the investments in existing production sites in China and in
Indonesia, Lenzing will already have increased specialty fibers’ share of
fiber revenue to well above the 75 percent target by the 2024 target year.

The implementation of the pulp project in Brazil secures the Group’s own
supply of dissolving wood pulp and thereby also strengthens growth in
specialty fibers in line with the corporate strategy. With the successful
start-up on schedule, Lenzing, which holds a 51 percent interest in the LD
Celulose joint venture, reached a further important milestone. The plant
ramp-up phase is scheduled to be completed by the end of 2022.

Aiming for a carbon-free future

With the implementation of the two key projects in Brazil and Thailand, as
well as with the investments at the existing Asian sites in China and
Indonesia amounting to EUR 200 mn, Lenzing continues to march purposefully
towards Group-wide climate neutrality. In 2019, Lenzing became the first
fiber manufacturer to set a target to reduce its carbon emissions by
50 percent by 2030 and to be climate-neutral by 2050. This carbon
reduction target has been confirmed by the Science Based Targets
Initiative.

In order to further reduce carbon emissions in line with its strategic
targets, Lenzing will rely to an even greater extent in the future on
electricity generation from renewable energies. Lenzing is currently
working on the construction of several photovoltaic systems at its site in
Upper Austria. The total capacity of the ground-mounted system and the
three rooftop systems will amount to approximately 7 MW peak after the
expected commissioning in the second half of 2022.

The Indonesian site has been sourcing green electricity exclusively from
renewable sources since July this year and is currently being converted to
biomass. In Purwarkata, Lenzing invests in reducing CO[2] emissions as
well as air and water emissions. As part of this investment, Lenzing is
converting its existing capacities for standard viscose entirely to
capacities for specialty viscose under the LENZING™ ECOVERO™ and VEOCEL™
brands.

30 years of TENCEL™ fibers

With the positioning of its product brands, the Lenzing Group has been
sending a strong message to consumers since 2018. With TENCEL™ und
LENZING™ ECOVERO™ as umbrella brands for all specialty products in the
textile segment, VEOCEL™ as the umbrella brand for all specialty nonwoven
products, and LENZING™ for all industrial applications, the company
showcases its strengths in a targeted manner.

The TENCEL™ brand has been supporting customers and partners in the
textile and apparel industry with sustainable fiber innovations since
1992. In 2022, Lenzing is celebrating the 30th anniversary of its premium
textile brand, which today stands for high-quality, sustainable fibers,
digital technologies and transparency in the supply chain worldwide. This
brand success is also reflected in the company’s collaboration with more
than 300 partner brands. Since February, Lenzing has been conducting
customer and employee activities in various regions under the motto
[1]“Feel Good Fibers Since 1992” in order to mark the brand anniversary.

Lenzing and the TENCEL™ brand once again enjoyed very positive
international attention at this year’s Oscars, the Academy Awards, in
Hollywood. In 2022, together with RCGD Global (formerly Red Carpet Green
Dress™), three customized dresses made of TENCEL™ Luxe Filament and
TENCEL™ lyocell fibers were presented to a world audience.

Sustainability champion

During the first quarter, Lenzing was also pleased to receive the
prestigious ÖGUT Environmental Award 2022 in the “World Without Waste”
category. The Austrian Society for Environment and Technology (ÖGUT)
thereby recognized Lenzing’s contribution to transforming the textile
industry into a model of the circular economy. In 2021, Lenzing was
recognized on several occasions for its achievements as a “sustainability
champion”, including top ratings by CDP, MSCI and Ecovadis.

Outlook

The International Monetary Fund forecasts global growth of 3.2 percent for
2022. However, the war in Ukraine and China’s zero-Covid policy hit the
global economy hard in the first half of 2022. Extreme developments in
energy and commodity markets as well as global supply chain constraints
are currently posing a major challenge for the whole of manufacturing
industry. The currency environment is expected to remain volatile in the
regions relevant to Lenzing.

The recovery in global retail sales of textiles and apparel continued in
the first half of 2022, although the pandemic-related lockdowns in China
caused a regional slump in demand. The rising inflation rate is depressing
consumer sentiment, particularly in Europe and the USA, which is also
leading to a noticeable deterioration in sentiment in the textile value
chain. High stock levels across the entire industry are adding to the
pressure on demand.

In the trend-setting market for cotton, signs are emerging of a slight
increase in stocks in the current 2021/2022 harvest season, although
dynamics on international commodity markets and problems in the global
supply chain are likely to continue to have a significant bearing on price
trends.

The highly uncertain supply situation and the sharp rise in prices in
energy and raw material markets as well as ongoing supply chain
disruptions are currently creating an extremely challenging market
environment. As a consequence, earnings visibility has diminished further.

In structural terms, Lenzing continues to anticipate growth in demand for
environmentally responsible fibers for the textile and clothing industry
as well as the hygiene and medical sectors. For this reason, Lenzing
regards the further development of its strategy as having been validated,
and will continue to drive growth in specialty fibers and strengthen its
own supply of dissolving wood pulp, including boosting the sustainable
energy mix and the reduction of carbon emissions.

Taking into consideration the aforementioned factors and the first
earnings contributions from the key projects in Thailand and Brazil, the
Lenzing Group continues to anticipate that EBITDA for the full 2022 year
will be significantly above the level of 2021.

Selected indicators of the Lenzing Group
EUR mn 01-06/2022 01-06/2021
Revenue 1,293.6 1,033.3
EBITDA (operating profit before depreciation and 188.9 217.8
amortization)
EBITDA margin 14.6 % 21.1 %
Net profit for the period 72.3 96.1
Earnings per share in EUR  2.36 3.06
Cash flow from operating activities 15.2 199.8
CAPEX^1 389.0 426.0

  30/06/2022 31/12/2021
Net financial debt 1,502.0 977.0
Adjusted equity ratio^2 38.1 % 39.7 %
Number of employees (headcount) 8,278 7,958

1) Capital expenditures: Investments in intangible assets, property, plant
and equipment and in biological assets as per the consolidated statement
of cash flows
2) Ratio of adjusted equity to total assets in percent

Photo download:
[2] https://mediadb.lenzing.com/pinaccess/showpin.do?pinCode=jIYQO1QCDTU2
PIN: jIYQO1QCDTU2

Your contact for  
Public Relations: Investor Relations:
   
Dominic Köfner Sébastien Knus
Vice President Corporate Communications & Vice President Capital Markets
Public Affairs Lenzing Aktiengesellschaft
Lenzing Aktiengesellschaft Werkstrasse 2, 4860 Lenzing,
Werkstrasse 2, 4860 Lenzing, Austria Austria
   
Phone +43 7672 701 2743 Phone +43 664 8281576
E-mail  [3]media@lenzing.com E-mail   [5]s.knus@lenzing.com
Web    [4] www.lenzing.com Web    [6] www.lenzing.com
   

About the Lenzing Group
 
The Lenzing Group stands for the ecologically responsible production of
specialty fibers made from the renewable raw material wood. As an
innovation leader, Lenzing is a partner to global textile and nonwoven
manufacturers and drives many new technological developments. The Lenzing
Group’s high-quality fibers form the basis for a variety of textile
applications ranging from elegant clothing to versatile denims and
high-performance sports clothing. Thanks to their consistent high quality,
biodegradability and compostability, Lenzing fibers are also highly
suitable for hygiene products and agricultural applications.
 
The Lenzing Group’s business model extends far beyond that of a
traditional fiber producer. Together with its customers and partners,
Lenzing develops innovative products along the value chain and creates
added value for consumers. The Lenzing Group strives for the efficient
utilization and processing of all raw materials and offers solutions to
help redirect the textile and nonwovens sector towards a closed loop
economy. In order to slow the rate of global warming and to accomplish the
climate targets of the Paris Agreement and the EU Commission’s “Green
Deal”, Lenzing has a clear vision: namely to make a zero-carbon future
come true.
 
Lenzing Group facts & figures 2021
Revenue: EUR 2.19 bn
Nominal capacity: 1,145,000 tonnes
Employees: 7,958
 
TENCEL™, VEOCEL™, LENZING™, REFIBRA™, ECOVERO™, LENZING MODAL™, LENZING
VISCOSE™, MICROMODAL™ and PROMODAL™ are trademarks of Lenzing AG.
 
Disclaimer: The above financial indicators are derived primarily from the
Lenzing Group’s condensed consolidated interim financial statements and
the Lenzing Group’s prior-year consolidated financial statements.
Additional details are provided in the section “Notes on the financial
performance indicators of the Lenzing Group”, in the glossary to the
half-year report and in the condensed consolidated interim financial
statements as well as the Lenzing Group’s prior-year consolidated
financial statements. Rounding differences can occur in the presentation
of rounded amounts and percentage rates.

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03.08.2022 This Corporate News was distributed by EQS Group AG.
www.eqs.com

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Language: English
Company: Lenzing AG
4860 Lenzing
Austria
Phone: +43 7672-701-0
Fax: +43 7672-96301
E-mail: office@lenzing.com
Internet: www.lenzing.com
ISIN: AT0000644505
Indices: ATX
Listed: Vienna Stock Exchange (Official Market)
EQS News ID: 1411827

 
End of News EQS News Service

1411827  03.08.2022 

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