EQS-News: Lenzing AG: ​​​​​​​Lenzing Group’s 2022 financial year defined by challenging market conditions and outstanding strategic success

EQS-News: Lenzing AG / Key word(s): Annual Results
Lenzing AG: Lenzing Group’s 2022 financial year defined by challenging
market conditions and outstanding strategic success

09.03.2023 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.

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Lenzing Group’s 2022 financial year defined by challenging market
conditions and outstanding strategic success

• Revenue rose to EUR 2.57 bn, while EBITDA declined to EUR 241.9 mn
• Implementation of EUR 70 mn cost reduction program proceeding
according to plan
• Largest investment program in the company’s history including the
lyocell plant in Thailand and the pulp mill in Brazil implemented on
time and within budget
• Outlook: Lenzing expects EBITDA in 2023 to be in a range of EUR 320 mn
to EUR 420 mn

Lenzing – The Lenzing Group, a world-leading provider of specialty fibers
for the textile and nonwoven industries, was increasingly affected by
extreme developments on the global energy and raw material markets in the
2022 financial year, in tandem with most of manufacturing industry in
Europe. The market environment also deteriorated significantly in the
third and fourth quarters, while worsening consumer sentiment placed an
additional burden on Lenzing’s business growth.

In the year under review, revenue increased by 16.9 percent year-on-year
to reach EUR 2.57 bn, primarily as a result of higher fiber prices. The
quantity of fiber sold decreased, while the quantity of pulp sold rose. In
addition to lower demand, the earnings trend particularly reflects the
increase in energy and raw material costs. Earnings before interest, tax,
depreciation and amortization (EBITDA) decreased by 33.3 percent
year-on-year to EUR 241.9 mn in 2022. The net result for the year was
minus EUR 37.2 mn (compared with EUR 127.7 mn in the 2021 financial year),
while earnings per share stood at minus EUR 2.75 (compared with EUR 4.16
in the 2021 financial year).

Given the trend in earnings and the pronounced deterioration in market
conditions, Lenzing launched a reorganization and cost reduction program
in the third quarter of 2022. Implementation of the program is proceeding
according to plan and is expected to save at least EUR 70 mn in costs per
year once fully implemented.

At the same time, additional measures will be adopted to strengthen free
cash flow, which stands at minus EUR 740.7 mn for the 2022 financial year.
This is mainly attributable to the investments in Brazil and Thailand.
Thus, in addition to the cost reduction program of EUR 70 mn, further
steps will be taken in the months ahead to reduce working capital and
reposition currency and energy price hedging. The temporary suspension of
dividend payments is expected to boost free cash flow. All of these
measures are being implemented against a backdrop of solid liquidity
reserves amounting to EUR 686 mn.

“Lenzing faced extraordinary headwinds due to the multiple crises last
year. Nevertheless, we can look forward with great confidence, as the need
for sustainable innovations in the medium and long term is undiminished,
while the demand for environmentally friendly fibers will continue to
grow. We will make structural adjustments to our cost base and emerge
stronger from this crisis”, says Stephan Sielaff, CEO of the Lenzing
Group. “Having responded quickly and decisively to all these external
challenges, we can also be very proud of our outstanding achievements
including the implementation of our investment projects in Thailand and
Brazil.”

Successful implementation of mega investment program

As the lyocell plant in Thailand is now fully operational, Lenzing has the
capacity to increase its share of specialty fibers substantially and is
even better equipped to meet structurally rising demand for
environmentally friendly TENCEL™ and VEOCEL™ branded lyocell fibers. With
a nominal capacity of 100,000 tonnes per year, the new production plant is
the largest of its kind worldwide. The requisite dissolving wood pulp will
also be provided by the new plant in Brazil in future. Despite multiple
challenges, especially relating to the pandemic, Lenzing realized both
projects on time and within the planned budget, and has successfully
placed the volumes produced to date on the market.

In China and Indonesia, Lenzing is currently converting existing
capacities for conventional viscose into those for environmentally
friendly specialty fibers. In Nanjing, Lenzing is about to complete the
conversion of a production line to TENCEL™ modal fibers. In Purwakarta,
the company is creating additional capacities for LENZING™ ECOVERO™
branded fibers. The Indonesian site is set to become a pure specialty
viscose provider in 2023.

Managing Board changes and strategy review

Significant changes to the Lenzing Managing Board were also approved in
the year under review. As of April 1, 2022, Stephan Sielaff succeeded Cord
Prinzhorn as CEO, who had taken over as interim CEO in the fourth quarter
of 2021. At the same time, the Managing Board was reduced to four people.
Nico Reiner was appointed as the new Chief Financial Officer as of January
1, 2023, succeeding Thomas Obendrauf. Meanwhile, the Managing Board
mandate of Chief Pulp Officer Christian Skilich was extended early by a
further three years until May 31, 2026.

In addition, a comprehensive review of the corporate strategy was
conducted. As a consequence, Lenzing will continue to pursue its
profitable growth path following the successful implementation of the two
key projects in Thailand and Brazil, sharpen its focus on sustainable and
high-quality premium fibers for textiles and nonwovens, and further
advance the transition from a linear to a circular economy model.

“Sustainability champion”

Lenzing also enhanced its brands’ visibility in 2022 through targeted
communication measures. The TENCEL™ brand remains the fastest growing
ingredient brand in the textile and clothing industry, reaching second
place in the global brand awareness ranking.

Lenzing also received awards for its achievements in sustainability and
circularity from some of the world’s most respected organizations in 2022.
Once again, Lenzing received top scores in three categories in the A List
of the most environmentally friendly companies compiled by CDP, an
organization that is now firmly established as a gold standard on the
capital market. This was an achievement shared by only 11 other countries
worldwide. MSCI also confirmed its AA rating for Lenzing in December.
EcoVadis, an independent provider of corporate sustainability ratings,
awarded its exclusive platinum status to Lenzing for the second time. As a
result, Lenzing ranks among the top one percent of companies rated in its
sector.

Lenzing’s top position in the prestigious Hot Button Ranking compiled by
the Canadian non-profit organization Canopy confirmed its leading role in
the fields of sustainability and the responsible procurement of wood and
pulp. The key project in Brazil received a special commendation in the
“Transformational Climate Change Solutions” category of the
Transformational Business Awards 2022 issued by the Financial Times and
the International Finance Corporation (IFC), a member of the World Bank
Group.

Outlook

The war in Ukraine and the tighter monetary policy pursued by many central
banks to combat inflation will continue to exert pressure on the global
economy. The easing of China’s zero-Covid policy could lead to an
unexpectedly rapid recovery. However, the IMF has warned that risks remain
high overall and projects growth of 2.9 percent in 2023. Exchange rate
volatility looks set to continue in regions that are important to Lenzing.

These challenging market conditions are also continuing to weigh on
consumer confidence and sentiment in the sectors relevant to Lenzing. The
outlook has improved slightly of late, with inventory levels returning to
normal across the value chain. Nonetheless, subdued demand remains a
source of concern for market players.

Inventories in the bellwether cotton market have diminished recently,
although they remain above pre-pandemic levels. A decline in crops is
foreseeable in the current 2022/2023 harvest season. The sharp rise in
prices on the energy and raw material markets will continue to pose
significant challenges for the market.

Overall, earnings visibility remains restricted.

In structural terms, Lenzing expects a continued rise in demand for
environmentally friendly fibers in the textile and clothing industry, as
well as in the hygiene and medical sectors. Thus, with its “Better Growth”
strategy, Lenzing is very well positioned and will continue to drive
growth in specialty products, while pursuing its sustainability targets
including the transformation from a linear to a circular economy model.

In light of these factors and assuming a further market recovery in the
current financial year, the Lenzing Group expects EBITDA in 2023 to be in
a range of EUR 320 mn to EUR 420 mn.

Selected indicators of the Lenzing Group 
EUR mn 2022 2021
Revenue 2565.7 2194.6
EBITDA (earnings before interest, tax, depreciation and 241.9 362.9
amortization)
EBITDA margin 9.4% 16.5%
Net result for the year -37.2 127.7
Earnings per share in EUR -2.75 4.16
Cash flow from operating activities -43.2 394.0
CAPEX^1 698.9 844.3

  31/12/2022 31/12/2021
Net financial debt 1869.0 977.0
Adjusted equity ratio^2 37.8% 39.7%
Employees (headcount) 8301 7958

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

More information is available in the [1]online Annual Report 2022 of the
Lenzing Group.

Photo download:
[2] https://mediadb.lenzing.com/pinaccess/showpin.do?pinCode=U4hxFdYQHFnw
PIN: U4hxFdYQHFnw

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 ecologically responsible production of
specialty fibers made from the renewable raw material wood. As an
innovation leader, Lenzing is a partner of 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. Due to their consistent high quality,
their biodegradability and compostability Lenzing fibers are also highly
suitable for hygiene products and agricultural applications.
 
The business model of the Lenzing Group goes far beyond that of a
traditional fiber producer. Together with its customers and partners,
Lenzing develops innovative products along the value chain, creating 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 sector towards a closed-loop economy. In order
to reduce the speed of global warming and to accomplish the targets of the
Paris Climate Agreement and the “Green Deal” of the EU Commission, Lenzing
has a clear vision: namely to make a zero-carbon future come true.
 
Key Facts & Figures Lenzing Group 2022
Revenue: EUR 2.57 bn
Nominal capacity: 1,145,000 tonnes
Number of employees (headcount): 8,301
 
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 IFRS 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 Annual Report and in the
Lenzing Group’s consolidated financial statements.

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09.03.2023 CET/CEST 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: 1578111

 
End of News EQS News Service

1578111  09.03.2023 CET/CEST

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