EQS-News: Lenzing AG: Lenzing continues on its recovery track in a persistently difficult market environment
EQS-News: Lenzing AG / Key word(s): Half Year Results/Sustainability
Lenzing AG: Lenzing continues on its recovery track in a persistently
difficult market environment
02.08.2023 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.
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Lenzing continues on its recovery track in a persistently difficult market
environment
• Revenue of EUR 1.25 bn and EBITDA of EUR 136.5 mn in the first half of
2023
• EBITDA and net result for the period significantly improved compared
with the first quarter of 2023
• Cost-cutting program and measures to strengthen sales activities being
implemented as planned
• Liquidity position strengthened by successful capital increase and
extension of credit terms
• Production of TENCEL™ brand modal fibers successfully launched in
China
Lenzing – The business performance of the Lenzing Group, a leading global
supplier of specialty fibers for the textile and nonwoven industries,
largely reflected the subdued market trends in the first half of 2023.
After the market environment deteriorated significantly in the second half
of 2022, signs of recovery were evident during the first and second
quarters of 2023 in terms of both raw material and energy costs as well as
demand. Textile fibers recorded improving demand, and business with
nonwoven fibers and with dissolving wood pulp proved to be very stable.
Revenue in the reporting period decreased by 3.4 percent year-on-year to
EUR 1.25 bn. This reduction was primarily due to lower fiber revenues,
while pulp revenues were up. In addition to the current market
environment, the earnings trend was particularly influenced by positive
one-off effects from the valuation of biological assets and inventories.
As a consequence, earnings before interest, tax, depreciation and
amortization (EBITDA) in the first half of 2023 decreased by 27.7 percent
year-on-year to EUR 136.5 mn. The net result amounted to minus EUR 65.8 mn
(compared with EUR 72.3 mn in the first half of 2022) and earnings per
share amounted to minus EUR 3.92 mn (compared with EUR 2.36 mn in the
first half of 2022).
As far as business trends in the second quarter are concerned, the Lenzing
Group recorded a recovery compared to the first quarter of 2023. Revenue
increased by 0.6 percent compared to the previous quarter to EUR 627.1 mn.
EBITDA amounted to EUR 106.8 mn (compared with EUR 29.7 mn), while the net
result for the period amounted to minus EUR 0.8 mn (compared with minus
EUR 64.9 mn in the first quarter of 2023).
“Lenzing is on a recovery track, as a comparison with the previous quarter
in particular shows, even though the current market environment continues
to weigh on consumer sentiment and thereby on the order situation in many
industries. We proactively implemented optimization measures on the cost
and liquidity side as well as on the sales side at an early stage, which
are having an increasingly positive impact,” notes Stephan Sielaff,
Lenzing Group CEO. “Overall, we remain cautiously optimistic, although
visibility remains limited, especially in the textile segment. In the
medium and long term, we continue to expect strong growth in demand for
sustainable products from Lenzing. The capital increase, which was
implemented swiftly and successfully, provides Lenzing with financial
flexibility and strength, and will form a solid basis for our strategic
growth.”
Nico Reiner, CFO of the Lenzing Group, adds: “We have significantly
strengthened our balance sheet and liquidity position not only through the
successful capital increase but also through the extension of credit
terms. Timing played a crucial role in these steps. Instead of speculating
about the future, we resolutely seized the opportunity to strengthen the
company and prepare for the many tasks ahead.”
Effective measures launched
Lenzing launched a reorganization and cost-cutting program in the third
quarter of 2022 and is fully on track with its implementation. More than
EUR 70 mn in annual cost savings are targeted once the program has been
fully implemented. In addition, measures were initiated to bolster free
cash flow, further steps were taken to reduce working capital, and
currency and energy price hedging were restructured.
At the same time, Lenzing launched a program in the reporting period to
strengthen sales activities and to improve revenue. In order to meet
market requirements at the highest level, Lenzing continues to invest in
the development of premium products in accordance with its “Better Growth”
corporate strategy and services and consistently places customer needs at
the center of its work.
Lenzing also successfully implemented a capital increase with subscription
rights for existing shareholders during the reporting period. The gross
issue proceeds of approximately EUR 400 mn will be deployed to strengthen
the balance sheet and liquidity position, to create additional flexibility
in relation to the financing strategy and to support the Better Growth
strategy. The effects of the capital increase will not be reflected in
Lenzing Group’s cash flow and balance sheet figures until the third
quarter.
“Better Growth” further advanced
In the first half of 2023, the implementation of the “Better Growth”
corporate strategy was also driven forward. This strategy is mainly aimed
at better serving structurally strong demand growth for specialty fibers
of the TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ brands. In line with its
strategy, Lenzing will pursue a profitable growth path following the
successful implementation of its key projects, sharpen its focus on
sustainable and high-quality premium fibers for textiles and nonwovens
and, in parallel, continue to push ahead with the transition to a circular
economy model.
Since 2021, Lenzing has invested more than EUR 200 mn in production sites
in China and in Indonesia in order to convert existing capacities for
generic viscose into capacities for environmentally responsible specialty
fibers. In Nanjing (China), the conversion of a production line to TENCEL™
modal fibers was successfully completed in the reporting period. As part
of the investments at the site in Purwakarta (Indonesia), Lenzing is
creating additional capacity for LENZING™ ECOVERO™ fibers. The conversion
work is proceeding according to plan, and the site is expected to be
converted into a pure specialty viscose supplier before the end of this
year.
Lenzing has proactively developed and promoted innovations in recycling
for several years (such as the REFIBRA™ and Eco Cycle technologies) in
order to provide solutions to the global textile waste problem. Since
2021, Lenzing has been working with Swedish pulp producer Södra to jointly
develop new processes for recycling used textiles on an industrial scale.
In the reporting period, the project[1]^[1] was supported by an EU grant
of EUR 10 mn under the LIFE 2022 program.[2][2]
Outlook
The war in Ukraine and the more restrictive monetary policy pursued by
many central banks in order to combat inflation are expected to continue
to influence global economic activity. The IMF warns that risks remain
elevated overall and forecasts growth of 3 percent for both 2023 and 2024.
The currency environment is expected to remain volatile in the regions of
relevance to Lenzing.
This market environment continues to weigh on the consumer climate and on
sentiment in the industries relevant to Lenzing. Recently, however, the
outlook brightened somewhat according to a global survey by the
ITMF.[3]^[3]
In the trend-setting market for cotton, signs are emerging of a further
buildup of stocks in the current 2022/23 crop season. Initial forecasts
also see a further buildup of stocks in 2023/24, albeit to a lesser
extent.
However, despite signs of recovery in both demand and raw material and
energy costs, earnings visibility remains limited overall.
Lenzing is fully on track with the implementation of its reorganization
and cost-cutting program. These and further measures are aimed at
positioning Lenzing in the best possible way for the expected market
recovery.
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. As a consequence, Lenzing is
very well positioned with its “Better Growth” strategy and plans to
continue driving growth with specialty fibers as well as its
sustainability goals, including the transformation from a linear to a
circular economy model.
The successful implementation of the key projects in Thailand and Brazil
as well as the investment projects in China and Indonesia will further
strengthen Lenzing’s positioning in this respect.
Taking into consideration the aforementioned factors and assuming a
further market recovery in the current financial year, the Lenzing Group
continues to expect EBITDA in a range between EUR 320 mn and EUR 420 mn
for 2023.
Selected indicators of the Lenzing Group
EUR mn 01-06/2023 01-06/2022
Revenue 1,250.2 1,293.6
EBITDA (operating profit before depreciation and 136.5 188.9
amortization)
EBITDA margin 10.9 % 14.6 %
Net profit/loss for the period^1 -65.8 72.3
Earnings per share in EUR -3.92 2.36
Cash flow from operating activities -29.2 15.2
CAPEX^2 -136.5 -389.0
30/06/2023 30/06/2022
Net financial debt^3 1,953.0 1,799.4
Adjusted equity ratio^4 36.6 % 37.8 %
Number of employees (headcount) 8,162 8,301
1) Profit (loss) after taxes
2) Capital expenditures: Investments in intangible assets, property, plant
and equipment and in biological assets as per the consolidated statement
of cash flows
3) Since the second quarter of the 2023 financial year, net financial debt
is presented excluding lease liabilities (see the supplement to the
management report “Notes on the Financial Performance Indicators of the
Lenzing Group”).
4) Ratio of adjusted equity to total assets in percent
Photo download:
[4] 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 [5]media@lenzing.com E-mail [7]s.knus@lenzing.com
Web [6] www.lenzing.com Web [8] 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. Due 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 nonwoven 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 2022
Revenue: EUR 2.57 bn
Nominal capacity (fibers): 1,145,000 tonnes
Employees: 8,301
TENCEL™, VEOCEL™, LENZING™, REFIBRA™, ECOVERO™, LENZING MODAL™, LENZING
VISCOSE™, MICROMODAL™ and PROMODAL™ are trademarks of Lenzing AG.
Disclaimer: The above key financial figures are derived primarily from the
condensed consolidated interim financial statements and the consolidated
financial statements of the previous year of the Lenzing Group. 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.
[9]^[1] Project 101113614 — LIFE22-ENV-SE-TREATS
[10]^[2] [11]https://cinea.ec.europa.eu/programmes/life_en
[12]^[3] Source: ITMF, 21^st Global Textile Industry Survey, July 2023
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02.08.2023 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: 1693583
End of News EQS News Service
1693583 02.08.2023 CET/CEST
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